Bit of a short LinkSwarm this time around, as I was focused on putting out a book catalog this week. Plus a lot of damn news from San Francisco.
- Ruiz Foods
- Cacique Foods
- Kelly-Moore Paints
- Landsea Homes
- McAfee
- Boingo Wireless
- Obagi Cosmeceuticals
- Chevron
- Aviatrix
- Review Wave
- Tesla
- NinjaOne
- AECOM
- MD7
- Wiley X
- Wedgewood LLC
- Green Dot Corporation
- Digital Realty
- Lion Real Estate Group
- Charles Schwab
- Oracle
- Hewlett Packard Enterprise (HPE)
- CBRE Group
- O. W. Lee
- Incora
- DZS (Dasan Zhone Solutions)
- QuestionPro
And those are just the ones with over 100 employees. There are much more with fewer (including Gordon Ramsay North America, which has a chain of restaurants, which has moved its headquarters to Irving, despite having no restaurants in Texas). (Hat tip: Ed Driscoll at Instapundit.)
For the past few years, Atlanta has been roiled by corruption scandals centering on the city’s decades-old program to favor minority-owned businesses in government contracting. The troubles started when Elvin “E. R.” Mitchell, Jr., a black contractor, began paying what became more than $1 million in bribes to city official and friend of the mayor Reverend Mitzi Bickers. Mitchell and his associates wanted to ensure that they could keep winning city-favored contracts and subcontracts for minorities, despite submitting bids higher than their competitors’. Mitchell also helped Bickers bribe officials in Jackson, Mississippi, so that she could secure minority-favored contracts on some of that city’s projects. Meantime, Larry Scott, head of Atlanta’s Office of Contract Compliance, which ensures that minority firms win contracts, started a side gig to help such businesses get favorable deals with the city—receiving over $220,000 in unreported income and partnering with the mayor’s brother and sister-in-law in the scheme. Mitchell, Bickers, Scott, and several other city officials have been sentenced on federal charges ranging from bribery to wire fraud.
Affirmative-action plans in schools or workplaces get the headlines, but the practice of favoring minorities in government contracts is almost as old, and even more far-reaching. Such favoritism—in the form of Disadvantaged Business Enterprises (DBE), or Minority and Women Owned Business Enterprises (MWBE) programs—exists across all levels of government and in states and cities of every political hue.
The subject of government contracting, or procurement, may not seem exciting, but its importance can’t be overstated. Nearly 10 percent of the U.S. economy goes through government contracts. The federal government spends over $600 billion yearly on contracts, making it the largest buyer of goods and services on the planet. State- and local-government spending on contracts totals about $1.3 trillion annually. Government contracts and purchases range from aircraft carriers and highway construction projects to office supplies and human-resources software. Favoritism to minority-owned companies pervades this vast universe.
Minority contracting was never a coherent way to make amends for the nation’s long, lamentable history of racism. Instead of righting historical wrongs, the policy has enriched a small subset of already-wealthy businesses, bred corruption and fraud, deepened racial divisions, and cost taxpayers countless billions of dollars—while doing nothing to help the truly disadvantaged. Indeed, minority residents of urban areas pay the highest price for lackluster and expensive services caused by such programs. One underappreciated reason for the unparalleled costs of American urban and infrastructure projects is that the government too often picks contractors based on their sex or race, not the quality or cost of their bids.
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Today, governments use several methods to favor minority contractors. At the federal level, Congress has stated that “not less than 5 percent” of all contracts should go to “disadvantaged” businesses. Regulations clarify a “presumption” that “Black Americans; Hispanic Americans; Native Americans,” and “Asian Americans” are disadvantaged. Government treats the goal as a floor, not a ceiling: in recent years, the true share of contracts going to disadvantaged firms has been around 10 percent, and politicians have urged the bureaucracy to push the total higher. The SBA then sets goals for individual agencies—recently demanding, for example, that the Department of Transportation offer 21 percent of all contracts to disadvantaged enterprises. It also requires that federal “prime contractors” (the lead contractor on a project) create subcontracting plans to maximize minority participation.
State and local governments set even higher goals for minority procurement but usually focus on encouraging large businesses to subcontract out to minorities. Chicago insists that 26 percent of all construction dollars go to minority companies and 6 percent to women-owned businesses. But a city-funded report noted that “almost all City funded construction projects require M/WBE” goals for subcontractors and that “project goals should exceed the ‘baseline’ goal.” Maryland has a target of 29 percent of contract dollars to minority firms. New York City and State have set a goal of 30 percent of all contracts going to MWBE, and the city itself goes into more detail, setting precise contracting goals for each race and business category (for instance, black-owned businesses should get 11.81 percent of all city professional-service contracts).
Agencies have various ways of meeting these benchmarks. Federal agencies can directly award contracts to minority firms, without a normal bidding process and through a no-bid deal, if they cost less than $5 million. This arrangement, of course, has caused abuse. After 9/11, the federal government, hoping to accelerate security purchases, expanded awards to “Alaska Native Corporations,” which had a special exemption that allowed them to get no-bid minority contracts of unlimited amounts. Federal contracts to these corporations increased 20-fold in the decade ending in 2009, when spending totaled almost $6 billion. The army’s infectious-disease center at Fort Detrick, in a no-bid deal, shifted the management of all its contracts to an Alaskan Native Corporation, whose most significant former venture was a failed cruise-ship line. Another such corporation won a port-scanning deal and then subcontracted it out to traditional defense companies; only 33 of the corporation’s 2,300 employees were Alaskan Natives. Though Native Americans are the smallest “disadvantaged” group assisted by the federal government, they get 2.7 percent of all federal contracts—more than twice the proportion of any other group.
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The City of Austin Disparity Study for 2022, conducted by Colette Holt & Associates, a large disparity-study firm started by a lawyer who had previously worked for Chicago’s city government, is typical. It approaches 300 pages and contains a recitation of every supposed ill that has befallen a minority business in the Texas capital. The report uses only anonymous quotes that make accusations against unnamed individuals about racism or sexism. “There is no requirement that anecdotal testimony be ‘verified’ or corroborated,” the report notes.
Try as they might, these studies have had little success proving racism or sexism in contracting. They typically use a “disparity ratio” to show the difference between the number of available minority firms and the number of government contracts going to these firms, though these ratios rarely account for the ability of different firms to perform government jobs. Yet studies conducted by Austin and Washington State found that MWBE firms were more likely to get contracts than were those owned by white men. A Missouri disparity study found that minority firms were more likely to get contracts than nonminority firms. A Chicago disparity study found that black and Hispanic firms were about twice as likely to get construction contracts, and Asian firms four times as likely, relative to their availability.
These reports’ surveys of minority firms find that most aren’t worried about discrimination. Of those MWBEs responding to a survey in Austin, 75 percent said that they had not experienced barriers to contracting based on race or gender. Over 85 percent agreed that they did not get different prices or terms because of their race or gender. Disparity studies ignore such data and argue that the minority of minorities who report unspecified discrimination need assistance.
When studies admit that there is no discrimination in contracting, politicians refuse to abide by them. Miami-Dade County made the mistake of employing a legitimate accounting firm, KPMG, for a disparity study, which determined that companies owned by blacks and Hispanics were not underused. The Miami mayor rejected the study. Los Angeles’s city council rejected a study that found that black firms did not suffer discrimination in contracting. The occasional lawsuit will surface, challenging these disparity studies when they provide no evidence of discrimination. But in such cases, governments will simply look for another minority contractor to conduct another study calling for more minority contracting.
Minority-contracting programs are a magnet for fraud. No-bid contracts represent an obvious avenue, but the most common kind of MWBE fraud is simple: contractors with subpar bids either lie about being run by minorities or lie about involving other minority businesses in the contract. The Wedtech scandal in the 1980s involved such fraud; though John Mariotta, a Puerto Rican immigrant, had started the company, it was partially run by Fred Neuberger, a Romanian Jew who escaped the Holocaust in Europe but did not count as “disadvantaged” for the purposes of the 8(a) program. Similar issues arose with the recent Atlanta scandals: while contractor Charles Richards was white and won many “prime” contracts, he promised to subcontract work to Mitchell’s minority firm, and then paid Mitchell without asking his firm to do any work. A 2016 Department of Transportation presentation stated that more than one-third of its contracting-fraud cases involved minority contracting and that, over the preceding five years, cases involving minority-contracting fraud had led to $245 million in financial penalties and 425 months of incarceration for offenders.
These cases tend to follow a certain playbook. A minority-owned front company wins the government contract, takes a small cut, and issues a pass-through contract to a white-owned firm. The largest such case in American history involved Schuylkill Products, a Pennsylvania firm that manufactured concrete bridge beams but had used a Filipino-owned front company for 15 years to win more than $130 million in contracts. The federal investigation led to several prison sentences in 2014. Front-company and pass-through fraud has dogged construction work at Chicago’s O’Hare airport and New York casinos. According to the New York State inspector general, the minority firms in the casino-fraud case did little more than submit invoices. A former Dallas councilman, meantime, went to prison for his role in setting up minority front companies for government contracts. Sometimes, the fraud is even more direct: in Seattle, the owner of a company that was paid to clean up homeless camps falsely identified as black on city forms. She also happened to be a city employee.
Hey, that sounds sort of familiar…
Target has repeatedly boasted about efforts to support the Gay, Lesbian, and Straight Education Network, also known as GLSEN, an entity which helps teachers place LGBTQ books in school libraries and hide their students’ so-called gender transitions from parents.
Conservatives have launched a boycott against Target after the retail behemoth marketed a female swimsuit as “tuck-friendly” and with “extra crotch coverage,” as well as hired an artist who creates Satanic items to make various designs for the company. Links between the company and GLSEN, which supports “affirming learning environments for LGBTQ youth” and activates “supportive educators,” resurfaced amid the backlash against Target.
The retail behemoth boasted last year about donating more than $2.1 million to GLSEN over the past decade, lauding the group’s mission to create “affirming, accessible, and antiracist spaces for LGBTQIA+ students.” Target also actively promotes GLSEN on its online store.
The Georgia Bureau of Investigation (GBI) and the Atlanta Police Department (APD) arrested Marlon Scott Kautz, age 39, of Atlanta, Savannah D. Patterson, age 30, of Savannah, Ga., and Adele Maclean, age 42, of Atlanta, on Wednesday on charges of money laundering and charity fraud in association with fundraising efforts for the domestic terrorists who are currently in jail.
“The GBI, along with the Atlanta Police Department, have arrested three people on charges stemming from the ongoing investigation of individuals responsible for numerous criminal acts at the future site of the Atlanta Public Safety Training Center and other metro Atlanta locations,” reads the GBI’s press release.
The trio ran a non-profit called Network for Strong Communities, which worked with another group called the Atlanta Solidarity Fund, which, at least on paper, was a bail fund for the thugs who attacked the training center property and other areas in Atlanta.
(Hat tip: Stephen Green at Instapundit.)
