Phoenix likely to end program that aids minority-led firms

Jahna Berry -
May. 19, 2010 12:00 AM
The Arizona Republic

Phoenix plans to change a 17-year-old program that helped steer city contracts to companies owned by women, minorities and small-business owners.

Under a plan the City Council is expected to approve today, the Minority, Women, and Small Business Enterprise Program will be race- and gender-neutral.

That means that women and minorities will not get preferential treatment when bidding for city contracts. Instead, a new program, which will begin on July 1, will help small businesses vie for city contracts.

The new program aims to have up to 10 percent of city contracts for goods and services, such as catering and printing, go to Valley small businesses. The city will also set up goals aimed at steering construction contracts to small businesses.

City officials say the change is necessary because the program is no longer needed and it's vulnerable to legal challenges.

Some small-business owners are happy the program has evolved, but others worry that firms owned by women and minorities may have fewer opportunities to get Phoenix contracts. Crystal Castrogiovanni, owner of Phoenix Pipelines, Inc. welcomes the switch even though the previous program helped her get more government construction projects.

"I don't anticipate that there will be a negative impact to our company because of the change," she said.

Castrogiovanni's 22-year-old company is working on utilities at the $1.1 billion PHX Sky Train project at Phoenix Sky Harbor International Airport.

She said she hasn't faced gender discrimination, adding that her business was successful even before it joined the city program. But the program is still needed because without the incentives, it would be tough for a local business to compete for city work, she said.

In some ways, the Phoenix program is a victim of its own success, city officials say.

When it began in 1993, a study showed that virtually no city contracts for construction subcontractors, goods or services went to women and minorities, said Joyce Grossman, deputy equal-opportunity director.

But since 2005, minority- and women-owned businesses won $48.4 million of the Phoenix contracts for goods and services out of the $2.28 billion awarded. Minority- and women-owned businesses were awarded $75.1 million of the $867.1 million spent on city construction contracts during that time period.

"We had achieved what we wanted, which was a level playing field," Grossman said.

Last year, 765 companies had registered as small-business enterprises; 618 of those were led by women or minorities.

Phoenix is the only city in Maricopa County with such a program. Tucson and the Arizona Department of Transportation had similar programs but have made them race- and gender-neutral, city documents show.

When the program began, Phoenix encouraged qualified Maricopa County companies to be certified as minority- or women-owned businesses and put them in a city database. The program set goals for women and minority companies to have an opportunity bid on goods, services and construction contracts.

The program has helped those companies get work in several ways. For example, if a construction company worked on a city project, Phoenix encouraged that company to farm out some of the construction work to small companies in the database.

And while Phoenix typically chooses the lowest bidder, a certified business had a chance to get a contract if it was close to the lowest bid.

Since 1999, the program gradually expanded to include small-business owners of any race or gender.

The program didn't hand out contracts to women and minorities. Instead, it gave them more opportunities to bid, said Lam Bui, owner of Complete Print Shop Inc.

"It gets you to the door," said Bui, who supports the change to the program.

If the program didn't change, it faced legal hurdles, city officials say. A series of federal-court rulings would make it difficult for the city program to survive a challenge.

A proposition on the Nov. 2 ballot would ban racial and gender preferences in public contracting.

Meanwhile, Ray Gonzales, Sr. owner of RBG Construction Co., worries that women and minorities may eventually become outnumbered in the small-businesses program, which means they could lose years of progress.

Gonzales added, "I hope that I am wrong."

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