Latest Disparity Data shows no Gains to ALANA Businesses

Minnesota’s Performance in Using ALANA Businesses Bruce P. Corrie, PhD In 2000 the Governor’s Working Group on Minority Business Development documented the use of ALANA businesses in the state as recorded in the existing disparity studies in the state. The report can be found at http://www.ethnictrends.info. The report found that out of state procurement during that period totaling $2.2 billion, just $36 million were awarded to ALANA businesses or 1.6 percent of the total procurement. Analysis of the latest disparity data of the state in 2009, paints a similar picture. Of a total of $3.3 billion in state contracts, ALANA share was $36 million or 1.08 percent.

Minnesota's Statutes to Jump Start Small Businesses

Bruce P. Corrie, PhD www.ethnictrends.info

There are core policy proposals that have been suggested to grow small and minority businesses. The good news is that Minnesota does not have to create new laws – it has Statute 16C.16 already in place. What it can do is to fill in the critical gaps within these policies.

The legislative web site refers to a statute as, "a compilation of the general and permanent laws of the state, incorporating all new laws, amendments, or repeals of old law."

So there is an aura of permanence about this statute. Let us see how it stacks up against some commonly suggested policies to use small and minority businesses in the state.

Common Policy Proposals (Many of these were recommendations to the State provided by the Governor's Working Group on Minority Business Development in 2000 after statewide hearings and analysis of public procurement policies. See www.ethnictrends.info for the document):

1. Set aside a percentage of public procurement dollars for small and minority businesses.

2. Set goals for utilization of small and minority businesses in public contracts.

3. Provide technical assistance for small and minority businesses bidding on public contracts

4. Provide a simple central certification for small and minority businesses in the state across all entities at the federal, state and local level.

5. Break up large contracts into smaller ones that is within the capacity of small and minority businesses to bid on.

6. Assistance for small bidders who cannot compete with large firms which get special rates on large orders from suppliers.

7. Assistance with bonding and insurance requirements,

8. Quick payments for services done.

9. Reduce onerous paperwork needed to do business with the government

10. Set up mentoring programs, joint bidding, apprenticeship and other programs to grow small and minority businesses and prepare people for the future workforce needs of the state.

11. Provide easy access to RFPs and documents needed for the development of bids.

12. Provide information on upcoming projects at an early time so that small and minority firms can make plans to bid on such projects or develop joint bids.

13. Hold public officials accountable to meet utilization goals.

MINNESOTA LAWS IN PLACE RELATIVE TO THE ABOVE POLICY PROPOSALS

1. Set aside a percentage of public procurement dollars for small and minority businesses.

MINNESOTA STATUTES ALLOWS 25 PERCENT OF STATE PROCUREMENT TO BE DEDICATED FOR SMALL BUSINESSES.

16C.16. Subdivision 1. Small business procurements. (a) The commissioner shall for each fiscal year ensure that small businesses receive at least 25 percent of the value of anticipated total state procurement of goods and services, including printing and construction….

..(b) The commissioner must solicit and encourage Minnesota small businesses to submit

responses or bids when the commissioner is entering into master contracts. If cost-effective, when entering into a master contract, the commissioner must attempt to negotiate contract terms that allow agencies the option of purchasing from small businesses, particularly small businesses that are geographically proximate to the entity making the purchase.

Subd. 3. Professional or technical procurements. Every state agency must for each fiscal

year designate for awarding to small businesses at least 25 percent of the value of anticipated

procurements of that agency for professional or technical services.

TARGETED BUSINESS

Subd. 4. Targeted group purchasing. The commissioner shall establish a program for purchasing goods and services from targeted group businesses, as designated in subdivision 5. The purpose of the program is to remedy the effects of past discrimination against members of targeted groups. In furtherance of this purpose, the commissioner shall attempt to ensure that purchases from targeted group businesses reflect a fair and equitable representation of all

the state's purchasing.

2. Set goals for utilization of small and minority businesses in public contracts.

MINNESOTA STATUTES ALLOWS GOALS FOR THE UTILIZATION OF SMALL AND MINORITY BUSINESSES IN PUBLIC CONTRACTS. THEY MAY BE AWARDED UP TO SIX PERCENT PREFERENCE IN THE BID. BIDS COULD BE DESIGNATED EXCLUSIVELY FOR SMALL OR MINORITY BUSINESSES IF 3 SUCH BUSINESSES ARE LIKELY TO BID

Subd. 6. Purchasing methods. (a) The commissioner may award up to a six percent preference in the amount bid for specified goods or services to small targeted group businesses.

(b) The commissioner may designate a purchase of goods or services for award only to small businesses or small targeted group businesses if the commissioner determines that at least three small businesses or small targeted group businesses are likely to bid.

(c) The commissioner, as a condition of awarding a construction contract or approving a contract for professional or technical services, may set goals that require the prime contractor to subcontract a portion of the contract to small businesses or small targeted group businesses.

3. Provide technical assistance for small and minority businesses bidding on public contracts

4. Provide a simple central certification for small and minority businesses in the state across all entities at the federal, state and local level.

5. Break up large contracts into smaller ones that is within the capacity of small and minority businesses to bid on.

MINNESOTA STATUTES ALLOW FOR LARGE BIDS TO BE BROKEN INTO SMALLER BIDS TO ENABLE SMALL BUSINESSES TO PARTICIPATE. 16C.16. Subdivision 1. Small business procurements. (a) ….The commissioner shall divide the procurements so designated into contract award units of economically feasible production runs in order to facilitate offers or bids from small businesses.

6. Assistance for small bidders who cannot compete with large firms which get special rates on large orders from suppliers.

7. Assistance with bonding and insurance requirements,

8. Quick payments for services done.

9. Reduce onerous paperwork needed to do business with the government

10. Set up mentoring programs, joint bidding and other programs to grow small and minority businesses.

11. Provide easy access to RFPs and documents needed for the development of bids.

12. Provide information on upcoming projects at an early time so that small and minority firms can make plans to bid on such projects or develop joint bids.

13. Hold public officials and contractors accountable to meet utilization goals.

MINNESOTA LAW ALLOWS PENALTIES TO BE IMPOSED ON CONTRACTORS WHO DO NOT MEET STATE GOALS FOR SMALL AND MINORITY BUSINESS UTILIZATION.

Subd. 6. Purchasing methods. (c)… The commissioner may establish financial incentives for prime contractors who exceed the goals for use of small business or small targeted group business subcontractors and financial penalties for prime contractors who fail to meet goals under this paragraph.

-- Bruce P. Corrie, PhD ethnictrends.info policyperspectives.org 651 641 8226