How can small companies owned by women and minorities compete for government contracts in the year 2000, when hiring goals allowed in the past are banned by state law?
The City of Tacoma is examining this issue as a result of Initiative 200, the state-wide ballot measure passed by voters in 1998. Judging businesses by their location and economic status, rather than on the race or gender of their owners, may be a legal way of helping such companies get a piece of the government contract pie.
I-200 prohibits state, county and city governments from considering race or gender when awarding contracts. In Tacoma, the results have been drastic. Because of the initiative, City subcontracting dollars going to firms owned by women and minorities dropped from almost 24 percent to just over 3 percent.
In 1997, these companies had $9.4 million of City subcontracting dollars, or 22.6 percent of the total. In 1998, the last year this form of affirmative action was legal, the dollar amount fell to $5 million, but the percent rose to 23.6. In 1999, the first year I-200 was in effect, the City awarded only $1.66 million in subcontracting money to these types of companies, or 3.3 percent of the total.
On April 4, the Tacoma City Council examined this situation during its weekly study session. Peter Guzman, coordinator of the Local Employment Apprenticeship Program (LEAP) and members of the group’s advisory committee addressed the council.
LEAP began in 1997 as an incentive program for contractors. It was designed to help low-income residents of Tacoma find jobs in the construction industry. A company that landed a City contract for over $250,000 was required to hire LEAP participants. An engineer would estimate the amount of hours it would take to complete the project. Ten percent of these hours were to be worked by LEAP participants, with the contractor receiving a subsidy from the City to offset the labor costs.
On January 1, 1999, when I-200 went into effect, LEAP changed from a voluntary program to a mandatory one. Contractors are now required to hire from LEAP as a condition of City contracts. The 10 percent requirement has increased to 15 percent.
Guzman works with union apprenticeship programs to employ city residents. When a company that does not use union labor wins a City contract, Guzman provides it with a list of local workers.
“Without this 15 percent requirement, we would see workers brought in from out-of-state and even out-of-country,” remarked Tim Strege, LEAP advisory board member. “This project has a long-term benefit as more people progress into journeyman-level jobs.”
One way Tacoma could help minority-owned businesses without violating I-200 involves the concept of a historically underutilized business, or HUB. The affirmative action programs wiped out by the initiative were based on race and gender. A HUB sidesteps I-200 by judging companies by different criteria.