Program To Aid Minority Firms Is Ineffective, Study Says

April 05, 1992|By Alisa Samuels | Alisa Samuels,Staff writer

Howard County officials have lost focus of the county's Minority Business Enterprise Program, which was created to provide economic opportunities to minorities, says a report released last week.

In 1979,the county established its MBE procurement program, aimed at giving a share -- at least 10 percent -- of the county's goods and services to minority-owned businesses through contracts and direct awards.

In 1990, the county gave 18.4 percent of the work to minority-owned companies as it issued $14.2 million in capital project contracts.But critics note that in competition for the more lucrative service contracts, minorities that year won only 5.4 percent of the $42 million in contracts available.

The seven-page report released last week, titled the "Minority Business Emphasis," concluded that the county's MBE program is ineffective and lacks incentives for participation by government agencies and the private sector.

The study was released at a Minority Business Trade Fair, sponsored by county governmentand area businesses.

The program also was criticized for being short-staffed and run part time by the county deputy chief administrator, Cecil E. Bray. By law, the county's MBE program isn't required to have a full-time staff, although one would be ideal, the report said.

"It (the MBE program) really has not advanced very much," said Earl Saunders, chairman of the Minority Business Program Subcommittee, which wrote the report after evaluating the program last spring. "It has been short on people and staff."

Since its creation, the county has basically overlooked its MBE program, Bray said, focusing instead on its overall economic development plan of attracting and retaining mainstream businesses.

"The (sub)committee said the same type of focus needs to be given to minority businesses," said Bray, also a subcommittee member.

Although the county's MBE figures indicate a successful program, closer examination reveals that the number of direct contracts awarded to MBE "is significantly less than the desired goal," according to the report.

Bray said he would like to see more direct contracts awarded to minority-owned businesses, although theprocess involves competitive bidding.

One reason for the low numbers is that no mechanism exists by which minorities can solicit participation in purchases under $7,500, where informal bidding is used, the report said.

The subcommittee suggested that the county rejuvenate the program by issuing more contracts to MBE businesses, providing incentives to attract white-owned firms to the program, appoint a full-time MBE administrator and review and update county procurement practices and the certification of minority businesses.

The subcommittee was created to evaluate the MBE program a year ago.

County Executive Charles I. Ecker has adopted the report's recommendations and is "moving full steam ahead," said his assistant, Beverly Wilhide. "Definitely, he has to work within budget constraints."

One way tomeet the recommendations in a tight budget is for the county to create partnerships with the business community and to increase awarenessof minority-owned businesses, she said.

Last week, the county moved forward by releasing its first minority business directory, which lists 93 minority- and 31 women-owned businesses in the county.

The directory and the report were released Tuesday at the free MinorityBusiness Trade Fair at the Florence Bain Senior Center in Columbia.

At least 150 people attended, giving minority vendors opportunities to meet and establish relationships with 30 of the county's major corporations, including the Rouse Co.

Lloyd E. Cleage, 42, owner ofColumbia-based Landmark Enterprises, which distributes computer hardware and software, said he attended to reacquaint himself with the business community and to establish contacts.

"I think it was something that was needed," Cleage said of the fair.

Mitchell Smith, executive director of the governor's Office of Minority Affairs, agreed.

"It's a fact we (blacks) still have a small piece of the pie, a slice of the American business enterprise," he said.

In 1990, a Maryland Department of Economic and Employment Development study found that Maryland has the most black-owned firms per capita of any state. But black firms here also have average annual sales 28.7 percent lessthan the average black-owned business across the nation, the study said.

Annual sales for black-owned companies in the state averaged $33,200, while other firms in the state averaged $169,590, the study showed. In 1987, there were 21,678 registered black-owned firms in Maryland.

"There are significant numbers of minority-owned businesses out here. The real issue is: How do we get them to the next step ofmaking more money?" Smith said, adding that the trade fair was a good start.

Minority-owned firms have difficulty gaining capital and credit, many at the trade fair said.

And there often is another hurdle: stereotypes.

"A lot of people think because a business is minority-owned there are things it cannot do," said Robert A. Nicholls,of the Small Business Administration, in Baltimore.

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