Economic Development

By Staff

Vol. 1, No. 1, 1978, p. 25

An order which was issued recently by the Secretary of Transportation, is expected to substantially increase opportunities for minority owned firms. However, the order has sparked a controversy in Atlanta over the definition of who is a minority.

The order, which is now being prepared as a guideline for state highway departments, will require that each state establish specific goals for using minorityowned businesses as contractors and subcontractors. The regulation is expected to require that state transportation departments appoint a compliance officer and staff to implement the goals. A policy statement expressing “a commitment to utilize minority business enterprises in all aspects of procurement to the maximum extent feasible” will be required of all recipients of federal DOT grants. Because of the size and priority that transportation department budgets usually receive, the order could open numerous opportunities for minority contractors.

The problem with the order is that a minority” company is defined as one 51%, or more owned and controlled by racial minorities, or by women, regardless of race. A coalition of civil rights and feminist leaders have vowed to have a “head-on tight” with the federal government over this definition.

In spite of the obvious uod in tentions of including women as minorities, many people feel that it will have a negative impact. Aside from pitting women against minorities in competition for contracting opportunities, the definition also permits the spirit and intent of the order to be violated while carrying out the letter of the law. An established contractor, by signing 51% interest in his firm over to his wife or daughter could become an “instant minority-owned firm,” thus thwarting the efforts being made to assist fledgling Black and other minority owned businesses.

At this point the order is still in the process of implementation by the operating elements of the Department of Transportation. The Department is still open to comment about the regulation for aid recipients, interested groups, and the general public. Comments should be addressed to Gary Gayton, Special Assistant to the Secretary for Minority Business Enterprise, Department of Transportation, Washington, DC.

The Atlanta group, known as the “Coalition on Minority and Female Participation in Government Contracts,” is composed of more than 25 civil rights and feminist groups. They are proposing that DOT issue two sets of regulations, one setting goals for racial minorities, and another setting goals for women, with neither group being forced to compete against the other. Surely this regulation can be adjusted in some way so that it will accomplish what was intended and prevent abuse by greedy contractors looking for loopholes. Again public comment is the means by which this will happen; write the Transportation Department and let then’ know what you think.

Despite the possible flaws in the order, this new regulation is an important ruling that warrants one’s full attention. The order allows DOT to terminate or deny federal funding to recipients who fail to carry out “an adequate minority business enterprise affirmative action program.” The order also requires that recipients (state transportation departments and others) must inform their contractors and subcontractors that failure to carry out this program may constitute a breach of contract which could result in termination.

Because the order has only recently been issued. implementation by state departments of transportation has not yet begun. However, several states, including Georgia, are now actively seeking minority firms to prequalify and list as contractors and subcontractors. As is the case with most government projects, the prequalifying, bidding and contracting process can be complex and demanding. Companies wishing to take advantage of contracting opportunities should start now to familiarize themselves with the process. P copy of the order as issued by Secretary Brock Adams can be obtained from the Department of Transportation, Office of the Secretary, Washington, DC. Ask for DOT Order #4000.7A, dated March 3, 1978.