Minority Contract Preference

The Minority Business Development Agency (MBDA) was established in 1969 as the only Federal Agency to specifically intended to increase opportunities for minority individuals to participate fully in the free enterprise system through the formation, development and preservation of competitive minority-owned firms (Richardson, 1995, p. 26). To accomplish its mission, MBDA facilitates the delivery of business development assistance through professional public and private business service providers, leverages financial resources to foster partnerships among and between the public and private sectors, and expands market opportunities for minority-owned firms for both public and private contracting.

Minority Preference Contract Programs

Programs to stimulate growth of minority-owned businesses have been in existence since the late 1960s (Dimeo, 1992, p. 54). One of the first successful programs was developed in 1971 by Atlanta, in part to secure biracial support for the construction of a rapid transit system that was earlier defeated in a referendum. Many of the early programs were race-neutral policies designed to prohibit discrimination of any kind, and eliminate bureaucratic barriers inhibiting the development of businesses by all disadvantaged people.

Eventually, the programs were modeled after the race-conscious program created by the Public Works Employment Act of 1977, which requir

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s Elimination of set-aside programs does affect minority contract awards (Theodore, 1995, pp. 1115-1116; Dimeo, 1992, p. 55). Subsequent to Richmond v. Croson, minority contracts in Richmond dropped from 39 percent to two-percent. In other cities that dropped set-aside programs in the wake of the Richmond v. Croson decision, similar outcomes occurred. In Philadelphia, minority contracting went from 25 percent to two-percent, and in Tucson from 28 percent to zero. From the outset, minority-preference programs have been politically contentious (Dimeo, 1992, p. 56). At all levels of government, a few minority-preference programs have been tainted by corruption. Critics contend, however, that the real problem is that the programs create exceptions to the lowest responsible bidder concept that is the backbone of government spending (Henderson, 1995, pp. 1141-1142). In many cases, preference policies aiding minorities, women, local firms, or American products force jurisdictions to accept bids that are from five-percent-to-15 percent higher than market levels in order to fulfill program requirements. The practice, critics charge, allows minority-owned companies to artificially inflate prices. Other critics contend that minorit
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