Are Local Minorities Firms Being Contracted?

Utility companies are licensed monopolies. They are authorized to provide services such as water, heating, phone and cable services. These services are virtually necessary, and we have no choice but to utilize some or all those licensed within our communities. You select them to provide the necessary services and then they bill you and you must pay them or get your service terminated with no recourse. “They got-cha!” as the saying goes.

Most of you don’t realize that these monopolies have a responsibility to the minority businesses located in your designated areas. They must include in their contracting activities enough amounts of subcontracting to the locally based minority firms within their territories.

Most of you do not know this and thus have little concern about the issue. That is so unfortunate! Minority citizens pay billions of dollars to these firms and when it comes to how diverse is their procurement practice, they don’t have a clue. Thus, in most cases, these utility firms are not being monitored in their procurement activities.

These utilities contract with the federal government via the General Services Administration. The services they provide the public are contracted. The services they pay to vendors in the performance of those contracts are subcontracts. We have a vested interest in knowing who those subcontractors are and how many of them represent the businesses located in those applicable areas, including ethnic minority-owned firms.

For example, the city of Indianapolis has a population that is 40% minority. The utilities that service the marketplace should be subcontracting with minority-owned firms to the amount totaling 40% of those subcontracts. Obviously, this isn’t happening and that is our fault! We aren’t policing it and it will not become a reality until we do. So, Indianapolis and every other populated area LET’S GET BUSY!

Here is our authority: The official publication and federal guideline is entitled, “GSA Procurement – Public Utilities’ Plans for Small and Small Disadvantaged Subcontractors, GAO/GGD-93-44”: “Under the Federal Property and Administrative Services Act of 1949, as amended, GSA is authorized to enter into contracts with public utility firms for a maximum term of 10 years for the purchase of utility services for federal agencies. Contracts may be either areawide – providing service for several agencies in a service territory – or single point – providing service for one facility. GSA’s policy is to obtain services under a formal, written contract if the estimated annual cost of the services will exceed $25,000.

In addition, the Small Business Act, as amended, generally requires that federal contracts exceeding $500,000 ($1 million for construction contracts) that have subcontracting possibilities contain subcontracting plans providing for the maximum practicable opportunity for small business concerns and small business concerns owned and controlled by socially and economically disadvantaged individuals. Under the act, failure to comply in good faith with subcontracting plan requirements will be considered a material breach of contract. Further, legislation stipulates that when a contractor fails to make a good faith effort to comply with a subcontracting plan, the contractor must pay damages to the government. Based on legislative history, overall congressional intent for the subcontracting plans was to improve opportunities for small and small disadvantaged businesses to do business with the federal government.”

Wait! It gets better: “Noncompliance with subcontracting plan requirements does not necessarily mean that utilities are not subcontracting with small and small disadvantaged businesses. However, without the plans, GSA can neither confirm that utilities have plans to use small and small disadvantaged businesses nor monitor compliance with such plans.”
So, when we ask a utility to submit their subcontracting plan to us, we expect to get it. This is public information. A bigger request would be: “Do you have a plan?” If they don’t submit a copy of the plan and a subsequent report on their success, then you must go to the GSA and ask for enforcement. They are in violation of federal law!

Back in the 1990’s we had great success in making these utility companies do the right thing. Perhaps it is time, once again, to awake them and put them in good compliance. At our 27th Annual Conference in Atlanta, GA during July 24th – 27th, we will give technical support to our participants on how they can implement the above within their local areas and with their applicable utility companies. Expect big fun! They are going to catch them “sleeping and out of compliance”. In the end, they will help bring millions of dollars to their local minority firms and that money will recycle many times within their community and create new jobs. This is what a Black chamber of commerce is about – bring economic empowerment to African American communities via entrepreneurship.
See you in Atlanta.

Mr. Alford is the Co-Founder, President/CEO of the National Black Chamber of Commerce. Ms. DeBow is the Co-Founder and Executive Vice President of the chamber.

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