Last month, the Government Management, Organization and Procurement Subcommittee of the U.S. House Committee on Oversight and Government Reform held a hearing on minority contracting issues. The Subcommittee discussed existing federal programs for minority-owned business enterprises (MBE) and disadvantaged business enterprises (DBE), as well as the challenges that these businesses have faced. The testimony featured one panel including the Small Business Administration (SBA) and the Minority Business Development Agency of the Department of Commerce (MBDA), and representatives of minority and small business development divisions within the Departments of Transportation (DOT) and Defense (DOD) and the General Services Administration (GSA), and another panel of minority contractors.
The testimony of the federal agencies focused on what the agencies had done to help MBEs and DBEs and the continuing challenges the contractors face. Largely, the government witnesses focused on a lack of access to capital. David Hinson, National Director of the MBDA, which is an agency of the Commerce Department, noted that it is working on a surety bonding initiative with a goal of identifying $100 million in private capital through a public-private partnership and to grow to $1 billion over time.
The panel of minority contractors and legal experts included representatives from the Minority Business Enterprise Legal Defense Fund, Mid-Tier Advocacy, the Airport Minority Advisory Council (AMAC), the Associated General Contractors of America (AGC) and the Thelton E. Henderson Center for Social Justice at Berkeley Law. Most of these panelists stated that discrimination generally existed in all aspects of contracting, including contract formation, awards of contacts, bonding, insurance and credit.
Other key issues addressed during the panel of minority contractors were contract unbundling, multi-tier subcontractors counting toward small business participation goals, small business size standards and prompt pay requirements. In written testimony, the Minority Business Enterprise Legal Defense Fund noted that minority-owned construction firms were not able to meet bonding requirements, which constrained their participation in federal contracting opportunities. The written testimony stated that insurance brokers lack incentive to serve the minority construction firms, whose contracting opportunities are generally smaller in size.
Surety Bond Associates provides specialty surety bond services to small, minority and women owned contractors designed to eliminate the barriers that prevent them from accessing the financial resources necessary to actively compete.