Concerns raised about black access to stimulus funding

published March 19, 2009
in the Wilmington Journal

President Barack Obama's $787 billion federal stimulus package, now known as the American Recovery and Reinvestment Act (ARRA) of 2009, is designed to jumpstart the nation's failing economy not only through grants and middle-class tax cuts, but by funding state ''shovel-ready'' construction projects that will hopefully produce thousands of jobs and small business opportunities, especially in the black community.

Just last week, Pres. Obama unveiled new proposals to allow small businesses easier access to loans and capital through the US Small Business Administration in an effort to empower them to take better advantage of stimulus package opportunities.

But even before North Carolina fully determines how to distribute its $6.1 billion in federal stimulus funding, questions are being raised as to how African-Americans can best access their share of the opportunity pot.

The answers to those questions will ultimately determine just how fair and ''transparent'' the process on the state and local levels actually is.
According to the latest US Census Bureau statistics available on the subject, as of 2002, so-called ''minority-owned'' businesses represented 12.6 percent of North Carolina's businesses and generated $6.7 billion in revenues.

Those stats also show that of the 81,059 minority-owned businesses in North Carolina, only 14.8 percent had employees.

But again, that was 2002, seven years ago. How many of those minority-owned businesses are still operating? How many grew in the intervening years, only to hit hard times when the nation's economic bubble burst in the past nine months?

And even more importantly, how many jobs in black and other communities of color were lost as a result? With the state's unemployment rate at 9.7 percent in January, and black unemployment at 13.4 percent nationwide, accessing the opportunities of that ARRA provides has become a clarion call in the black community across the state and nation.

There's good news and bad news.

For starters, the Obama White House, which made it clear in a March 6 teleconference with The Wilmington Journal and other black news outlets across the country that African-American must go black stimulus project money, has reinstituted federal procurement protections for businesses of color.

''The Executive Branch shall distribute Recovery Act funds in accordance with: All anti-discrimination and equal opportunity statutes, regulations, and Executive Orders that apply to the expenditure of funds under Federal contracts, grants, cooperative agreements, loans, and other forms of Federal assistance,'' states a memorandum from the Executive Office of the President, Office of Management and Budget.

''Grant-making agencies shall ensure that their recipients comply with Title VI of the Civil Rights Act of 1964, Title IX of the Education Amendments of 1972, Section 504 of the Rehabilitation Act of 1973, the Age Discrimination Act of 1975, and any program-specific statutes with anti-discrimination requirements. Generally applicable civil rights laws also continue to apply, including (but not limited to) the Fair Housing Act, the Fair Credit Reporting Act, the Americans With Disabilities Act, Title VII of the Civil Rights Act of 1964, the Equal Educational Opportunities Act, the Age Discrimination in Employment Act, and the Uniform Relocation Act.''

According to Harry C. Alford, co-founder of the National Black Chamber of Commerce, ''This is simply beautiful.

It clears the way for small and minority, particularly Black owned businesses and potential employees to apply, compete and get their fair share of all this Stimulus Bill has to offer.

That is going to amount to billions of dollars and many thousands of jobs. If we do this right it is going to change our culture and communities for the better.''

Alford continues, ''Presi-dent Obama has provided us the roadmap. It is up to us to get on the road and work this marvelous deal. There won't be deals made in smoke filled rooms and out of our view. The memorandum also states:

''Of particular note, the guidance addresses Federal agency requirements to provide spending and performance data to the '''' website. To deliver a website that allows citizens to hold the government accountable for every dollar spent, the law and guidance require Federal agencies to implement mechanisms to accurately track, monitor, and report on taxpayer funds.''

In essence, there will be no games and we can view all the activity and provide input as it happens.

But will it be as simple as Alford implies.

North Carolina, through the Dept. of Administration, does have general statutes on the books outlawing discrimination against vendors seeking to do business with the state, and it also recognizes ''historically underutilized businesses'' and encourages other state and local government agencies to set goals allowing certified women and minority-owned businesses access to government contracts.

But was that working well before the stimulus package, and how will it work with stimulus, now that projects are being assigned?

Just this week, the NC Dept. of Transportation released a list of bids on ten stimulus funded highway projects up across the state. One of those projects, namely the widening of Mebane Street in Burlington, was awarded to Yates Construction Co., Inc. for $13.5 million.

Yates, a non-minority company, was the lowest of seven companies that vied for the project.

Several weeks ago, Gov. Beverly Perdue had announced that 70 highway and bridge projects in all would funded by federal stimulus money.

But how will the state, as mandated by language in ARRA, keep track of how larger companies who win contracts govern themselves in terms of minority hiring and sub-contracting?

One of the reasons North Carolina and other states are slow in ramping up their stimulus package disbursements is because of all of the enhanced transparency required by the Obama White House. But how comprehensive will their efforts at transparency be?

In Oregon, which is getting $6.4 billion in stimulus funding, state lawmakers there are developing legislation that would require private contractors who win stimulus project bids ''”¦to disclose the number of employees and the wages they pay,'' according to NNPA affiliate black newspaper, the Portland Skanner.

So far, it's the only state to do so.
''Oregon is taking an important step to make sure the recovery plan actually creates the jobs it is supposed to create,'' Nathan Newman, interim executive director of the Progressive States Network - a national network of legislators and advocates working to help states implement the recovery plan - said in a statement. ''Every state needs this data so that they can take money away from contractors who aren't serving the public interest and give it to programs that are. It's the best way to ensure that the recovery funds go into the hands of working families who have been the most hard-hit by the recession.''

Thus far, North Carolina plans to keep track of its $6.1 billion stimulus allotment via its website, www.NCRecovery. gov, run by the NC Office of Economic Recovery and Investment.

That newly created arm of Governor Beverly Perdue's office is headed up by Dempsey Benton, formerly the state Health and Human Services secretary, and one-time Raleigh city manager.

On the site, the office promises to ''track all federal dollars flowing into state and local governments as well as private businesses and nonprofit organizations,'' and elsewhere on the website, the NC Recovery Office further promises to ''”¦ensure that North Carolina's portion of the federal stimulus dollars are spent efficiently with transparency and accountability,'' but nowhere does the office say how.

In fact, under the question, ''How can North Carolina residents be sure that the funds are spent efficiently,'' the website states, ''Check back later for more information.''

Progressive States Network contends that ''no states are systematically requiring contractors to report the number of their employees, the hours they work, or the wages they receive, making it ''impossible to determine what amount of recovery dollars are really going to creating jobs.''

''Everyone is scrambling to put up these websites, but all the websites in the world won't make a difference if they aren't reporting meaningful data on whether contractors are actually creating quality jobs,'' PSN Interim Executive Director Nathan Newman said.

In Virginia, where Gov. Tim Kaine is also the chairman of the Democratic National Committee, he was forced to admit to NNPA that ''the portion of our discretionary spending on [state] contracts that went to minority firms was .4 of 1 percent.''

So with the amount of black business contracting so low, it's no wonder that there is further concern that African-Americans in Virginia are very leery of how the state will keep an eye on how its over $4 billion stimulus project allotment is distributed.

''The biggest fear that the African-American contractors have is that it will go to the majority contractors and they're going to divvy out a little bit of nothing to the smaller contractors,'' says Omar Sharef, president of the Chicago-based African-American Contractors Association. It represents more than 1,200 Black-owned firms in 11 states, including Virginia. ''The majority guys are already tracking this money. We want to see it on Main Street,'' says Sharef. ''Nepotism, cronyism and racism plays a deep part in this. Nothing is going to done equally and fairly for the small businesses.''

Sources say members of the Congressional Black Caucus have also been deeply concerned about how Black businesses and contractors will fare.

However, because of recent court decisions, there are few real mandates that can be made for Black participation and no set-asides or even percentage goals are legal, says U. S. Rep. Bobby Scott (D-Va.), a civil rights lawyer.

''There's language throughout the bill that encourages the use of minority contractors. But, unfortunately, the state of the law does not allow strong language that would require a reasonable portion of the funds to be spent with minority contractors,'' says Scott. ''All we can do is require it.''

Scott says there will be the ability to track exactly where the money went. If evidence of discrimination is found, that information can be used to impact or even overturn a string of court decisions going back 40 years that weakened minority business participation mandates.

Meanwhile, on the front end, ''spending decisions will be done by the states and localities,'' Scott stresses. ''Half the money won't be allocated for at least a year”¦we will have the opportunity to monitor the spending as it goes and try to take corrective action, but it has been extremely difficult to figure out how to direct funding to minority contractors.''

Civil rights organizations are concerned and closely monitoring the situation as billions of dollars pass through communities that are predominately Black.

Political observers say that once the money gets into the hands of state and local representatives, it will be incumbent upon Black businesses and contractors to strongly demand their fair share.

''If they do not fight for the distribution of these resources and demand that they get an equitable share of the resources in terms of these projects in terms of employment and Black businesses, it will not happen,'' says University of Maryland Political Scientist Ron Walters. ''So, this is going to be a tremendous test of the viability of Black elected officials.

The question is will they in their roles exercise their accountability to their community. That's going to be the key issue.''