You Make Me Blush

City officials call Minneapolis's numbers on minority contracting "an embarrassment." So what are they doing about it? Uh, well, gosh...

At the downtown Minneapolis intersection of Fifth Street and Fourth Avenue, a wrecking ball has been taking its last bites out of the former Main Welfare building. Every time the ball slams into what appears to have been a back stairwell, it sends doghouse-sized chunks of concrete and rebar plummeting into the man-made canyon below.

The din is music to Jerry Steele's ears. The African-American owner of Steele Construction, which boasts a full-time crew of three, he has waited 16 years for the kind of contract that helps small firms like his graduate into the ranks of the stable and prosperous. Three years after applying for recognition from Hennepin County as a small, minority-owned business, Steele Construction made it onto a list of companies eligible for help in doing business with the county. In January, when the rubble at the site of the future public safety building is finally carted away, Steele will get his first big break in the form of a contract to manage subcontractors working on the project.

"I've seen my share of ups and downs," he laughs. "It's my hope that the opportunity I'm getting from Hennepin County will help this company to be a more substantial employer in this city, specifically in the inner city."

Contractor Steele Construction got its first big break with Hennepin County's jail project
Craig Lassig
Contractor Steele Construction got its first big break with Hennepin County's jail project

Before he landed his county contract, Steele had tried to get on another list of small firms eligible for assistance participating in government work--Minneapolis's Small Business Enterprise Program, housed across the street from the site of the new jail in City Hall. While the Minneapolis program is open to contractors of any race or gender, one of its stated goals is to increase the number of minority companies that do business with the city.

Thank God for Hennepin County, Steele says, because his encounters with the city program's overseers in the Minneapolis Department of Civil Rights gave him nothing but heartbreak. He says they wanted data he didn't have, numbers only a highly sophisticated bookkeeper could have produced, records going back longer than he'd owned the company. Steele grew so frustrated that he hired a consultant to walk his budding business through the paperwork. The specialist failed, too. Finally the two of them trekked down to City Hall and asked one of the program's certification officers for help finishing the paperwork. When the bureaucrat shrugged, Steele gave up.

It's not like he'd have been rewarded for surviving the red tape by a guarantee of a lucrative contract. At the end of the gauntlet, Steele Construction would merely have gotten free advice, a spot in a directory of small businesses, help with finding insurance and financing, and a hotline number listing upcoming city projects. "They don't do anything to make sure you get the job," says Steele. "You've still got to go out and be low bidder, you've still got to get more expensive insurance, still got to get more expensive bonding." (He and other fledgling minority business owners say they often can't find companies willing to provide them with insurance or bonding, and that when they do, it's invariably more expensive than it is for their white counterparts.)

The city program was supposed to help small businesses navigate such barriers. But Kenneth White, head of the civil rights department, recently told City Council members that when it comes to increasing the number of woman- and minority-owned companies doing work for the city, the 18-month-old SBE program has failed disastrously. "Our numbers are horrible," he reported to the council's Ways and Means Committee late last month. "It's an embarrassment." According to a report released at that meeting, in 1996 slightly more than 1 percent of city contract dollars went to woman- and minority-owned firms. Last year the number was even lower. The report contrasted those figures with minority participation rates in the late '80s and early '90s ranging from 14 percent to 18 percent.

When White finished presenting the report, a lone member of the public rose to speak. Ron Edwards, former chair of the Minneapolis Civil Rights Commission, the quasi-judicial panel that examines the civil rights department's findings, said the city's poor performance shouldn't have come as a surprise. "I was really disappointed to hear comments by White that he just now discovered that there is a disaster out there," Edwards said, adding that the council has reviewed the same "crisis" virtually every year since the late '70s.

In 1980, Minneapolis established goals for minority contracts ranging from 0.5 percent to 10 percent of the city's total contracting, depending on the type of expenditure. The program enjoyed some success, but came to a halt in 1989.

That year, the U.S. Supreme Court ruled on a suit filed by the Associated General Contractors against the city of Richmond, Va. The lawsuit claimed that a city program reserving a percentage of city business for women- and minority-owned firms discriminated against companies owned by white men. The high court agreed, with a couple of caveats; Richmond hadn't shown that the program's beneficiaries were indeed the victims of discrimination, and the city hadn't attempted any "race- and gender-neutral" measures prior to creating its set-asides. Moreover, the court ruled, it wasn't enough to prove that minority-owned businesses had experienced discrimination. Municipalities and other government agencies had to show that the bureaucracy in question had contributed to continuing "marketplace discrimination."

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