Hostname: page-component-cd9895bd7-q99xh Total loading time: 0 Render date: 2024-12-25T07:59:01.208Z Has data issue: false hasContentIssue false
  • English
  • Français

CONTESTED TERRAIN

The Role of Preferential Policies in Opening Government and Corporate Procurement Markets to Black-Owned Businesses

Published online by Cambridge University Press:  26 January 2015

Timothy Bates
Timothy Bates*
Affiliation:
Department of Economics, Wayne State University
*
*Corresponding author: Timothy Bates, 204 Cherokee Road, Asheville, NC 28804. E-mail: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

Since 1969, the procurement powers of government have been used proactively to assist minority-owned businesses. Originating in the U.S. Small Business Administration, the practice of targeting procurement contracts to minority-owned business enterprises (MBEs) has expanded throughout government and corporate America. Compared to other minorities, Black-owned firms have been the most active participants. Preferential procurement has been controversial for decades, and its effectiveness for assisting bona fide MBEs has been repeatedly questioned. “Front-company” abuses have received abundant media attention; allegations of reverse discrimination have inspired legal challenges; the judiciary has often thrown out procurement preferences targeted to minorities. Less attention has focused on understanding whether racially targeted procurement preferences have assisted minority-owned businesses.

As the multi-billion dollar government and corporate procurement market opened up, employment in Black-owned firms operating in the impacted industries soared. Growing access to procurement opportunities encouraged firm creation and expansion. Government entities operating successful programs actively screened out front firms, eased bonding requirements, downsized and unbundled contracts, and paid MBE vendor invoices promptly. In the process, they effectively lowered key barriers limiting MBE participation in mainstream procurement markets. Well-designed and administered programs succeeded because they created a less discriminatory environment, thus allowing talented entrepreneurs to build large firms. Problems notwithstanding, preferential procurement programs have been highly successful, and this success is a reflection of declining barriers unleashing the creativity of new generations of Black entrepreneurs.

Keywords

Black EntrepreneurshipPreferential ProcurementAffirmative Action
Type
State of the Art
Information
Du Bois Review: Social Science Research on Race , Volume 12 , Issue 1 , Spring 2015 , pp. 137 - 159
Copyright
Copyright © Hutchins Center for African and African American Research 2015 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

Associated General Contractors of America, Inc. et al. v. City of Atlanta (1984) 253 Ga. 397.Google Scholar
Ayres, Ian and Vars, Frederick (1998). When Does Private Discrimination Justify Public Affirmative Action? Columbia Law Review, 98(7): 1577–1641.CrossRefGoogle Scholar
Bates, Timothy (1997). Race, Self-Employment, and Upward Mobility. Baltimore, MD: Johns Hopkins University Press.Google Scholar
Bates, Timothy (2001). Minority Business Access to Mainstream Markets. Journal of Urban Affairs, 23(1): 41–56.Google Scholar
Bates, Timothy (2006). Understanding the Urban Development Potential of Black-Owned Businesses. Journal of the American Planning Association, 72(2): 227–38.CrossRefGoogle Scholar
Bates, Timothy (2009). Utilizing Affirmative Action in Public-Sector Procurement as a Local Economic Development Strategy. Economic Development Quarterly, 23(2): 180–93.Google Scholar
Bates, Timothy (2011). Minority Entrepreneurship. Foundations and Trends in Entrepreneurship, 7(1–2): 151–311.Google Scholar
Bates, Timothy and Blanchflower, David (2007). Analysis of the Role of Businesses Owned by Minorities and Women in the Procurement Activities of the Metropolitan Pier and Exposition Authority. Final report to the Metropolitan Pier and Exposition Authority (Unpublished report).Google Scholar
Bates, Timothy and Howell, David (1998). The Declining Status of African American Men in the New York Construction Industry. Economic Development Quarterly, 12(1): 88–100.Google Scholar
Bates, Timothy and Tuck, Stephen (2014). Constraints, Opportunities, and the Decision to Pursue Business Ownership: Industry Choice among African American Owners of Small Businesses. Du Bois Review: Social Science Research on Race, 11(2): 233–252.Google Scholar
Bates, Timothy and Williams, Darrell (1993). Racial Politics: Does It Pay? Social Science Quarterly, 74(3): 507–522.Google Scholar
Bates, Timothy and Williams, Darrell (1995). Preferential Procurement Programs Do Not Necessarily Benefit Minority-Owned Businesses. Journal of Urban Affairs, 17(1): 1–17.Google Scholar
Blanchflower, David (2008). Minority Self Employment in the United States and the Impact of Affirmative Action Programs. National Bureau of Economic Research, Working Paper #13,972.Google Scholar
Blanchflower, David and Wainwright, Jon (2005). An Analysis of the Impact of Affirmative Action Programs on Self-Employment in the Construction Industry. National Bureau of Economic Research, Working Paper #11,793.Google Scholar
Boston, Thomas (1996). Five-Year Review of the Equal Business Opportunity Programs of the city of Atlanta. Atlanta, GA: Atlanta City Government.Google Scholar
Boston, Thomas (1999). Affirmative Action and Black Entrepreneurship. London: Routledge.Google Scholar
Chatterji, Aaron, Clay, Kenneth, and Fairlie, Robert (2014). The Impact of City Contracting Set-asides on Black Self-Employment and Employment. Journal of Labor Economics, 32(3): 507–561.Google Scholar
City of Richmond v. J. A. Croson. (1989). 488 U.S. 109, S. Ct.Google Scholar
Eisinger, Peter (1984). Black Mayors and the Politics of Racial Advancement. In Hahn, Harlan and Levine, Charles (Eds.), Readings in Urban Politics: Past, Present, and Future, pp. 141–168. New York: Longmans.Google Scholar
Federal Register (1999). Rules and Regulations, Vol. 64, p. 21 (February 2nd).Google Scholar
Gazelle Index (2012). Role of Government Contracting in Minority Business Development. Gazelle Index. <http://gazelleindex.com/archives/7540> (accessed November 29, 2012).+(accessed+November+29,+2012).>Google Scholar
Gentzendanner, Susan, Castillo, Ruben, and Davis, Milton (1990). Report of the Blue Ribbon Panel to the Honorable Richard M. Daley, Mayor of the City of Chicago (Unpublished report).Google Scholar
Granovetter, Mark and Tilly, Charles (1988). Inequality and Labor Processes. In Smelser, Neil (Ed.), Handbook of Sociology, pp. 175–221. Newberry Park, CA: Sage.Google Scholar
Grossman, Leonard (1992). Attracting a Racially Mixed Clientele is often Crucial for Growth. Wall Street Journal, April 3.Google Scholar
Jaynes, Gerald and Williams, Robin (1989). A Common Destiny: Blacks and American Society. Washington, DC: National Academy Press.Google Scholar
Jensen, Renaldo (1997). Ford Purchases from MBEs Reach a Record $2 Billion. Minority Supplier News (Winter issue).Google Scholar
Joint Center for Political and Economic Studies (1994). Assessment of Minority Business Development Programs. Report to the U.S. Department of Commerce Minority Business Development Agency (Unpublished report).Google Scholar
La Noue, George (1994). Standards for the Second Generation of Croson-Inspired Disparity Studies. The Urban Lawyer, 26: 485–540.Google Scholar
Levenson, Daniel (1980). A Study of Preferential Treatment: The Evolution of Minority Enterprise Assistance Programs. George Washington Law Review, 49: 64–80.Google Scholar
Long Bow Econometrics (1993). Assessment of State and Local Government Minority Business Development Programs. Final report under contract #50–SABE-2–00086, U.S. Department of Commerce (Unpublished report).Google Scholar
Lowry and Associates (1985). Study of Minority and Women-Owned Business Enterprise Procurement Programs. Final report to the City of Chicago (Unpublished report).Google Scholar
Martin, Heather, Berner, Maureen, and Bluestein, Frayda (2007). Documenting Disparity in Minority Contracting: Legal Requirements and Recommendations for Policy Makers. Public Administration Review, 67(4): 511–520.Google Scholar
Myers, Samuel and Chan, Tsze (1996). Who Benefits from Minority Business Set-Asides? The Case of New Jersey. Journal of Policy Analysis and Management, 15(2): 202–226.Google Scholar
Rice, Michael (1991). Government Set-asides, Minority Business Enterprises, and the Supreme Court. Public Administration Review, 51(1): 114–122.Google Scholar
Sroka, John. (1985). Hearings of the U.S. Commission on Civil Rights, Statement of John Sroka. Selected Affirmative Action Topics in Employment and Business Set-Asides, Volume 2 (March 6, 1985 proceedings): 38–40.Google Scholar
State of New Jersey Governor’s Study Commission on Discrimination in Public Works Procurement and Construction Contracts (1993). Final Report (Unpublished).Google Scholar
U.S. Bureau of the Census (1997). 1992 Economic Census: Characteristics of Business Owners. Washington, DC: U.S. Department of Commerce.Google Scholar
U.S. Bureau of the Census (1991). Survey of Minority-Owned Business Enterprises, 1987. Washington, DC: U.S. Department of Commerce.Google Scholar
U.S. Bureau of the Census (1996). Survey of Minority-Owned Business Enterprises, 1992. Washington, DC: U.S. Department of Commerce.Google Scholar
U.S. Bureau of the Census (2001). Survey of Minority-Owned Business Enterprises, 1997. Washington, DC: U.S. Department of Commerce.Google Scholar
U.S. Bureau of the Census (2012). 2007 Survey of Business Owners (SBO) Public Use Microdata Sample (PUMS) Data Users Guide: Technical Documentation. Washington, DC: U.S. Department of Commerce. <http://www.census.gov/econ/sbo/pums.html> (accessed November 5, 2012).+(accessed+November+5,+2012).>Google Scholar
U.S. Comptroller General (1981). The SBA (8a) Program: A Promise Unfulfilled. Washington, DC: General Accounting Office.Google Scholar
U.S. General Accounting Office (1979). The Davis-Bacon Act Should be Repealed. Washington, DC: General Accounting Office.Google Scholar