With more than $8.6 billion in federal infrastructure spending about to flow into Massachusetts, some Black businesses leaders are criticizing rules that will make it more difficult for some bigger and more successful minority-owned businesses to land contracts.
Under current federal regulations, smaller minority and women-owned businesses have an advantage in getting infrastructure contracts, but bigger firms making more than $10 million a year are excluded in some cases from the preferential contracting program aimed at increasing the use of diverse contractors.
The Biden Administration’s $1 trillion infrastructure law, signed last month, will build roads and bridges, improve ports, rail transit and the power grid, replace lead pipes in public water supplies and expand broadband internet, among other things.
On transportation projects alone, the White House has set a goal of spending 10% of the $370 billion with small disadvantaged businesses – which includes firms owned by minorities, women and veterans. But the program is limited only to firms with low revenues.
It’s unknown how many "disadvantaged" businesses in Massachusetts would try to win contracts and sub-contracts on infrastructure projects in the coming decade.
Greg Janey, president of Boston-based Janey Construction Management, told GBH News that the federal law puts too much emphasis on the annual revenues of contractors and not enough on their race and ethnicity in determining which companies should get a leg up on contracts.
“The language needs to be more detailed about what portion of those funds will be allocated towards minority businesses and not necessarily a small business,” said Janey, who is Black. As currently drafted, the program is “a race-neutral threshold and not a race-conscious threshold.”
Racial diversity was central to a development plan devised by Massport several years ago that made Janey’s firm one of the lead construction companies to build the $550 million Omni Boston Hotel, which opened last September.
Critics say that Washington’s plan to steer billions of dollars in infrastructure spending to disadvantaged businesses will need to include bigger and more experienced minority-owned businesses, not just the small ones.
“This huge windfall of spending is about to happen. And these are businesses that have learned the system. They've been successful and know how to navigate the system. Those are your best bets for success,” said Glynn Lloyd, executive director of the Foundation for Business Equity in Boston.
Lloyd also said that even when minority-owned companies become successful – with millions of dollars in revenue and hundreds of employees – they still face bias and discrimination.
“As a Black- or brown-owned business (it) doesn't stop,” he said. “It still exists.”
Minority business leaders outside Massachusetts are pressing members of Congress to change the regulations and lift the cap on annual revenues of minority and woman-owned businesses that would qualify under a preferential contracting program.
Harold Epps, the former commerce director for the city of Philadelphia, is part of that lobbying effort.
“We have a system that says, ‘If you are Black or brown, women, veteran-(owned) business, you have been disadvantaged over the history of the country. We want to help you with a foothold,’” said Epps. “But the minute you got something in place, you graduate out and have to go compete against a multigenerational, multibillion dollar company.”
Epps said members of Congress he’s reached are sympathetic but he’s unsure that will translate into a waiver of current regulations, imperiling the chances of meeting the Biden Administration’s target for spending infrastructure dollars with minority-owned businesses.
“The very companies that have the capacity will be locked out and we’ll come nowhere near that number if we don't change these guidelines,” he said.
The U.S. Small Business Administration declined a request from GBH News to comment on the concerns raised by Epps and others.
