The ceiling is expected to drop soon at the City of Chicago’s contract set-aside program, and Bonaparte Corp. could be among the first hit.
In ruling on a lawsuit that challenged the city’s affirmative-action program for minority- and women-owned construction firms, U.S. District Judge James Moran said in December that the upper limit for businesses eligible for the program should fall from $27.5 million in annual sales to something closer to $17 million.
With $20 million in sales, William Bonaparte’s 13-year-old electrical contracting business highlights the thorny political and legal issues the city must resolve to try to save the program, which awarded $619 million in contracts last year.
Bonaparte, whose office wall is adorned with pictures of him with powerful politicians and celebrities, from Bill Clinton to Michael Jordan, said government programs have opened doors for minority-owned businesses, but they remain shut out of work at most corporations.
“If you narrow the program to the point that you don’t allow companies to grow, we’re back to where we were when we had sharecroppers,” said Bonaparte, who is African-American. “You have the haves and the have-nots.”
Many supporters of Chicago’s program viewed the judge’s decision giving the city six months to restructure it as the best outcome possible given the legal issues involved. Yet the ruling leaves the city in a tight spot.
By narrowing the program enough to ensure satisfying the court, the city risks alienating business owners like Bonaparte who could be shut out of it. Yet by keeping the program structured too broadly, the city risks displeasing Moran, who can quickly kill the entire initiative.
“It is going to be a pretty tough nut to crack,” said Paul King, owner of the construction firm UBM Inc. in Chicago. “If you dilute the program sufficiently, what does anybody have anyway?”
Last week, Mayor Richard Daley named a 16-member task force, which comprises six aldermen and 10 business officials, to make recommendations about how the city should change the program. The city is expected a pass an ordinance to restructure the program by June 29, which is the end of the six-month period Moran gave the city to make changes.
Moran identified several problem areas with the program in his 31-page decision, he but didn’t provide a detailed road map to guide it into safe legal territory.
Still, rather than talking about how the program can be restructured to satisfy the judge, some Chicago aldermen have argued that the program’s goals should be expanded from their current levels of reserving 25 percent of contracts for minority-owned businesses and 5 percent for women-owned firms.
“I don’t want to get into numbers, but I think it ought to be substantially improved,” said Ald. Ed Smith (28th).
A group of five minority and women business organizations wrote last month to aldermen who had spoken out in favor of expanding the program, encouraging them to heed the judge’s guidance so the program survives in some form.
“If we ignore the lessons of Judge Moran’s ruling, there may be no program at all, not 50 percent, nor 25 percent minority and 5 percent female, nor any obligatory percentage,” the letter stated.
Moran ruled that although discrimination exists in the construction business, making a contract set-aside program appropriate, Chicago’s initiative doesn’t properly target disadvantaged firms. The judge was critical that the city rarely or never issues waivers to prime contractors when there aren’t sufficient minority- or women-owned firms to complete particular tasks.
Additionally, Moran said that the program should have a defined end point; that the city should seek to stamp out discrimination in bank lending and other areas; and that a net worth threshold for business owners should be in place to keep wealthy individuals from benefiting from the program.
“We definitely have to respond” to the judge’s concerns, said Ald. Freddrenna Lyle (6th), who is on the mayor’s task force. “I’m sure there will be people that will have to be graduated out of the program.”
Minority and women business owners say the problem with leaving the city program is the difficulty of getting work with corporations. Often their small firms are dependent on subcontracting work, which usually goes to businesses that have longstanding relationships with prime contractors unless an affirmative-action program is in place.
Yet Gloria Castillo, president of Chicago United, which seeks to connect business leaders of different races, said she expects the judge’s ruling will prompt many companies to take a look at the diversity of their suppliers.
“This is a wakeup call for the private sector,” said Castillo, who is also on the mayor’s task force. “This is the point at which you have to ask yourself, `Do you want a healthy city?'”
Such a movement would be a relief to minority and women business owners who are facing the prospect of losing access to city jobs.
“When you talk about people who already feel excluded, they don’t want to hear about less work,” said Florence Cox, executive director of Black Contractors United.
