August 31, 2000

Even after I-200, diversity is here to stay

Initiative 200, passed in 1998 by Washington state voters, was heralded by many (including both opponents and supporters) as a crushing blow to participation of minority contractors on government contracts in the state.

Well, the news is both bad and good. The bad news, according to the state Office of Minority and Women Business Enterprises, is that state “Executive Cabinet Agencies” expenditures (not including the Department of Transportation) for minority-owned businesses were down 25.5 percent for the seven months following passage of I-200 (and down 6.4 percent for women-owned businesses).

The good news is that diversity is here to stay and for a focused company, whether established or starting out, the opportunities have never been so bountiful.

Background of I-200

It is important to understand what I-200 is and isn’t. It is a state (that is, does not apply to federal contracting) initiative prohibiting the imposition in the contracting process of mandatory goals, quotas, set-asides, preference systems and consideration of factors relating to race, sex, color, ethnicity or national origin in the contract award process.

I-200 isn’t a repeal of the state MWBE statute or the certification process. It also doesn’t prohibit outreach towards minority and woman-owned firms, or efforts towards identifying and eliminating equal opportunity in employment and contracting.

The riddle

Why, then, if the opportunities are so abundant, is minority contracting down? To answer this question, we need to consider two types of firms.

The first type of firm is one which is established and basically no longer needs the “advantages” removed by I-200. Pacific Communications Consultants, Inc., for example, originally concentrated in diversity training and in development of programs designed to help clients achieve their minority and woman-owned business “quotas” on government contracts.

We now are involved in public involvement and community outreach (with a specialization in transportation and other public works projects). Rather than hinder our development, our background in diversity and affirmative action programs increased our competitive edge. This type of story is common for older minority-owned firms.

The second type of firm is generally (but not always) one that is either newly formed or newly entered into the competitive world of government procurement. These firms basically suffer from a lack of focus enabling them to compete successfully irrespective of the existence of I-200.

The solution

To the latter type of minority-owned business, I recommend a number of specific steps:

1. Choose a market niche. Determine what you want to do (and can do well), and then market to businesses and government agencies needing these specific goods or services.

2. Network, network, network. There are a variety of trade organizations which can provide both current information on contractual opportunities and various forms of mentoring and technical assistance. Such organizations include the Northwest Minority Business Council, the Hispanic Chamber of Commerce and others. Other groups exist with respect to specific types of businesses.

3. Avail yourself of government assistance. While the goals and quotas removed by I-200 are gone forever, government assistance to small business (including, of course, minority-owned businesses) is definitely not. The U.S. Small Business Administration, for example, offers a full range of (generally free) counseling and other forms of assistance.

A post-I-200 success:
Sound Transit

One of the most innovative and aggressive outreach and recruitment programs is being implemented by Sound Transit, the region’s multi-billion dollar mass transit project (known as Sound Move). Sound Transit’s board of directors was faced with the dilemma of making good on their promise to voters that the benefits of Sound Move would be made available to people and businesses in its service area, while anticipating the passage of an anti-affirmative action measure in the state such as I-200.

The solution adopted by the board is a model for inclusive promotion of diversity in the post-affirmative action era. Sound Transit’s guiding principles call for: workforce diversity reflective of the region, maximum use of local businesses, maximum use of small businesses, and maximum use of minority, women and disadvantaged businesses.

To implement this ambitious program, Sound Transit’s Diversity Programs Office was formed. Under the stewardship of Alec Stephens, the Diversity Programs Office has developed and implemented policies and procedures emphasizing education, training, outreach and compliance monitoring. Major Sound Transit contractors are required to submit programs adhering to the guiding principles as part of their bid packages.

Diversity is good business

The salient fact and increasingly important reality in the I-200 era is that diversity is good business. Major corporations and government agencies alike realize that their customers are increasingly diverse. They also realize that to attract and properly service customers, the worldview of such persons must be understood and appreciated; the management and staff of the organization must reflect the diversity of its customer base, and, ultimately, the organization’s internal culture will reflect the diversity of its constituents.

Thus, by focusing on the goods and services offered and availing themselves of the abundant networking and assistance opportunities available, all minority-owned firms should be able to fully participate in the prosperity afforded by a diverse marketplace.

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