by Bradley Parsons
Staff Writer
The new system for awarding contracts to small businesses has opened up new streams of City revenue and cracked down on businesses using minority fronts, according to the man in charge of the City’s purchasing.
Director of Procurement Devin Reed said better monitoring was one of the highlights of Jacksonville’s Small and Emerging Business Program in its first four months. In a status report delivered to the City Council last month, Reed said the program had given his office the tools to ensure that the City was buying contract work according to its guidelines.
That wasn’t the case under the old system, said Reed. The previous model, which set aside a percentage of City contracts for minorities, was difficult to enforce.
“The main difference this year is the infrastructure that’s in place now,” said Reed. “We have the things in place to make sure the program is administered properly.”
The potential for abuse was one of the primary reasons cited by Mayor John Peyton for replacing the old system last August.
As the new program was designed, the administration heard repeated warnings that quotas for minority and women-owned business participation would encourage further abuse.
There was particular concern about “fronts — white contractors who would install women or minorities as figureheads to snare the set-aside contracts.
Although set asides will remain in place for the first four years of the new program, Reed said a new commitment to oversight would prevent abuse. Compliance officers had already cited two small businesses for misrepresenting themselves as minority enterprises, he said.
Increased on-site inspections and interviews are part of the program’s enhanced monitoring. A series of inspections over the past two weeks revealed the discrepancies, said Reed.
“We’ve been conducting the interviews and inspections on-site of, and in a couple of instances, we have discovered small businesses that are less than the genuine article,” he said.
Those companies will be given a hearing to rebut the findings. But if they are found to have misrepresented themselves, the companies will no longer be eligible for the program.
The new program is designed to be race-neutral, but the previous program’s quotas will remain in place during a four-year transition. As a result, the program’s demographics have remained generally the same.
In the first quarter of fiscal year 2005, the City set aside $8.2 million for small and emerging business contracts. Women-owned businesses claimed just over $3 million, representing 37 percent of City contracts. Black businesses took 35 percent of the contracts accounting for about $2.9 million.
The program had also been successful in opening new areas of City purchasing to small and emerging businesses, said Reed. Under the old program, minority businesses largely found themselves competing for lawn-care and janitorial contracts, he said. The new program was having some success expanding their share of contracts for professional services like temporary staffing. Small and emerging businesses took 16 percent of those contracts so far in 2005, for $1.3 million.
The numbers for minorities look less impressive when compared against City spending for all contracts instead of just those set aside for small businesses. By that standard, black businesses accounted for just 3 percent of about $72 million in City spending.