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I think we can all agree the goal is a good one. Many would disagree this an effective way of solving those problems. As you say, this doesn't even counter th

I think we can all agree the goal is a good one. Many would disagree this an effective way of solving those problems. As you say, this doesn't even counter the problem. The "minority" is just skimming the "take" not building a business or anything else useful.

Anechoic 11y ago
The "minority" is just skimming the "take" not building a business or anything else useful. In same cases? Maybe. In many cases (including my own MBE/DBE-certified business) we are using those projects to build a business (2 bootstrapped partners to 8 employees and national recognition in 4 years) and to use some of that revenue & expertise to help folks that normally couldn't afford our services. And there are any number of businesses I can point to that are achieving similar success (of course there are also failures, but that's true of businesses in general). With regard to Frondo's claim "where you get the minority contractor who acts as a pass-through to give the real work to the majority-owned firm" - at this point I'm pretty sure that's the exception rather than the rule. The various state MBE/DBE certifying agencies are extremely diligent at policing this behavior and will slap down firms found to engage in it. Primes and subs are audited, contacts are reviewed, MBE/DBE subs are interviewed (included onsite visits) etc. MBE/DBEs must submit annual sworn financial statements, along with examples of contracts, invoices and evidence that firm can conduct the work it's contacted for (resumes of principals, references, list of equipment, and so on).
- Frondo 11y ago
  Oh it's absolutely the exception, and not the rule, the minority contractor who's a pass-through. It's just an inevitable byproduct of the people who have the money and power having found a way to abuse the set-aside/aspirational target system. I didn't mean to suggest that it was common (though I can see how I could have been clearer on that point!). Also, congratulations on using the MBE/DBE certification to build your business! That's excellent, and I'm quite happy for you.
rtpg 11y ago
But doesn't this prove the point? Either nobody was willing to bid lower: the system works. Or someone would be willing to bid lower but its a team filled with white guys: the system works. Maybe these other companies should think about their hiring practices considering that they exist in an area with a large minority that doesn't seem present in the team. I don't know the details though, maybe there's some capital requirements or something that's pretty hard to match
- Spooky23 11y ago
  The point is that the team of white guys is still performing the work. The only people making a return here are the well-connected minority/woman/veteran contractor and the politican or friend/family thereof who gets a cut of the action.
  - rtpg 11y ago
    Doesn't the point still stand? If they want 100% of the money (instead of 80% or whatever), they could get it by hiring minorities into their team (hell, higher the guy doing the subcontracting as a "business developer"!). Some people have commented in other threads that just subcontracting can get you into a lot of trouble if caught though.
    - Spooky23 11y ago
      If you think the point is to help minority businesspeople, then no. The legit business people who aren't just patsies often get screwed by these arrangements. They end up holding a massive short term liability that the big contractor (IBM, Oracle, EDS, etc) wants paid NOW, but the receivable is mired in some crazy 120 day late pay hell with the government. If we want to hire minorities to improve their lot, just hire them. Or require actual bids on contracts that a small business person can grok instead of blanket purchase arrangements that require Fortune 50 sized legal/contract teams to bid on. Of course, if the point is to generate extra income for the spouses of corporate execs and campaign contributions, than sure, these programs are uber successful.
Frondo 11y ago
Oh, but overall this system works very well as a way to give purchasing managers an incentive to look at these historically disadvantaged communities in their buying decisions. The abuse of the system I noted (the minority contractor acting as a pass-through) is not the common case at all. Buyers still have a challenge in finding qualified minority/woman-owned firms, but there are pipelines in place to help build those firms up. The set-aside/aspirational target system can support that, too, by favoring prime contractors that work with minority/woman-owned subcontractors. A lot of primes have mentorship programs that target minority/woman-owned companies to help them grow their businesses. In the government purchasing world, this stuff is all pretty non-controversial because it generally achieves its stated goal. I was just trying to say that abuse happens here too, but abuse of any system happens wherever there is a system.
- CamperBob2 11y ago
  Buyers still have a challenge in finding qualified minority/woman-owned firms, but there are pipelines in place to help build those firms up. Of course, in the real world, what happens is that the company owner/CEO gives his wife or another female relative 51% of the company, and/or the title of CEO or managing director. This dubious practice obviously doesn't scale up to large/publicly-held organizations, but it's widespread in the "small/disadvantaged business" community. It turns out that it's awfully hard to do the right thing by doing two wrong things.
  - Frondo 11y ago
    When you say it's widespread, I'm curious where you're getting your information. The purchasing managers I talk to all seem pretty keen on doing right by their aspirational goals, and the firms that try and cheat the system that way, well, it's known that they're trying to cheat the system. Furthermore, all this stuff is public record--all the purchasing decisions, awarded contracts, etc., and I know that the local papers here in the Pacific Northwest periodically sift through that data looking for signs of abuse. They do report it when it comes up, too, but it simply isn't prevalent, and I'd be quite surprised to see any interpretation of the data that would let you characterize it as "widespread".

Anechoic 11y ago

The "minority" is just skimming the "take" not building a business or anything else useful. In same cases? Maybe. In many cases (including my own MBE/DBE-certified business) we are using those projects to build a business (2 bootstrapped partners to 8 employees and national recognition in 4 years) and to use some of that revenue & expertise to help folks that normally couldn't afford our services. And there are any number of businesses I can point to that are achieving similar success (of course there are also failures, but that's true of businesses in general). With regard to Frondo's claim "where you get the minority contractor who acts as a pass-through to give the real work to the majority-owned firm" - at this point I'm pretty sure that's the exception rather than the rule. The various state MBE/DBE certifying agencies are extremely diligent at policing this behavior and will slap down firms found to engage in it. Primes and subs are audited, contacts are reviewed, MBE/DBE subs are interviewed (included onsite visits) etc. MBE/DBEs must submit annual sworn financial statements, along with examples of contracts, invoices and evidence that firm can conduct the work it's contacted for (resumes of principals, references, list of equipment, and so on).

Frondo 11y ago
Oh it's absolutely the exception, and not the rule, the minority contractor who's a pass-through. It's just an inevitable byproduct of the people who have the money and power having found a way to abuse the set-aside/aspirational target system. I didn't mean to suggest that it was common (though I can see how I could have been clearer on that point!). Also, congratulations on using the MBE/DBE certification to build your business! That's excellent, and I'm quite happy for you.

rtpg 11y ago

But doesn't this prove the point? Either nobody was willing to bid lower: the system works. Or someone would be willing to bid lower but its a team filled with white guys: the system works. Maybe these other companies should think about their hiring practices considering that they exist in an area with a large minority that doesn't seem present in the team. I don't know the details though, maybe there's some capital requirements or something that's pretty hard to match

Spooky23 11y ago
The point is that the team of white guys is still performing the work. The only people making a return here are the well-connected minority/woman/veteran contractor and the politican or friend/family thereof who gets a cut of the action.
- rtpg 11y ago
  Doesn't the point still stand? If they want 100% of the money (instead of 80% or whatever), they could get it by hiring minorities into their team (hell, higher the guy doing the subcontracting as a "business developer"!). Some people have commented in other threads that just subcontracting can get you into a lot of trouble if caught though.
  - Spooky23 11y ago
    If you think the point is to help minority businesspeople, then no. The legit business people who aren't just patsies often get screwed by these arrangements. They end up holding a massive short term liability that the big contractor (IBM, Oracle, EDS, etc) wants paid NOW, but the receivable is mired in some crazy 120 day late pay hell with the government. If we want to hire minorities to improve their lot, just hire them. Or require actual bids on contracts that a small business person can grok instead of blanket purchase arrangements that require Fortune 50 sized legal/contract teams to bid on. Of course, if the point is to generate extra income for the spouses of corporate execs and campaign contributions, than sure, these programs are uber successful.

Frondo 11y ago

Oh, but overall this system works very well as a way to give purchasing managers an incentive to look at these historically disadvantaged communities in their buying decisions. The abuse of the system I noted (the minority contractor acting as a pass-through) is not the common case at all. Buyers still have a challenge in finding qualified minority/woman-owned firms, but there are pipelines in place to help build those firms up. The set-aside/aspirational target system can support that, too, by favoring prime contractors that work with minority/woman-owned subcontractors. A lot of primes have mentorship programs that target minority/woman-owned companies to help them grow their businesses. In the government purchasing world, this stuff is all pretty non-controversial because it generally achieves its stated goal. I was just trying to say that abuse happens here too, but abuse of any system happens wherever there is a system.

CamperBob2 11y ago
Buyers still have a challenge in finding qualified minority/woman-owned firms, but there are pipelines in place to help build those firms up. Of course, in the real world, what happens is that the company owner/CEO gives his wife or another female relative 51% of the company, and/or the title of CEO or managing director. This dubious practice obviously doesn't scale up to large/publicly-held organizations, but it's widespread in the "small/disadvantaged business" community. It turns out that it's awfully hard to do the right thing by doing two wrong things.
- Frondo 11y ago
  When you say it's widespread, I'm curious where you're getting your information. The purchasing managers I talk to all seem pretty keen on doing right by their aspirational goals, and the firms that try and cheat the system that way, well, it's known that they're trying to cheat the system. Furthermore, all this stuff is public record--all the purchasing decisions, awarded contracts, etc., and I know that the local papers here in the Pacific Northwest periodically sift through that data looking for signs of abuse. They do report it when it comes up, too, but it simply isn't prevalent, and I'd be quite surprised to see any interpretation of the data that would let you characterize it as "widespread".