Only eight of the state’s more than 120 agencies, departments boards and commissions reported awarding a contract worth more than $25,000 to a minority group-owned business, an Arkansas Democrat-Gazette review found.
Some of the state’s largest agencies either have no contracts with members of minority groups or didn’t report the information to lawmakers during presession budget hearings as required by law. Other agencies are so small that they don’t award contracts above $25,000 to anyone.
The Department of Human Services had the largest omission, failing to report its $27.6 million in contracts to minority group-owned businesses. Department of Human Services spokesman Amy Webb said the omission was inadvertent.
Legislators are nearly done with hearings on budget requests for fiscal 2014 and 2015 in preparation for the 2013 legislative session that begins Jan. 14. Gov. Mike Beebe has proposed a $4.9 billion general revenue budget for fiscal 2014, which begins July 1.
Arkansas Code Annotated 25-36-104 (c)(1) requires agencies to include in their budget requests a list of all contracts worth more than $25,000 that are awarded to businesses owned by members of minority groups.
Under Arkansas Code Annotated 1-2-503, a member of a minority group is defined as black, Hispanic, American Indian, Asian or Pacific Islander. Arkansas Code Annotated 15-4-303 also defines a service-disabled veteran as a minority-group member. A business is considered minority group-owned if at least 51 percent of it is owned by someone who falls within those statutes’ definitions. Women are not classified as a minority-group members under Arkansas law.
After an Arkansas Democrat-Gazette article last year showed agencies weren’t reporting the information, the Arkansas Legislative Council added a place for the information on budget request forms that agencies submit.
Arkansas Code Annotated 15-4-302 (c) states that “all state agencies shall attempt to ensure that 10 percent of the total amount expended in state-funded and state-directed public construction programs and in the purchase of goods and services for the state each fiscal year is paid to minority-group businesses.”
That goal applies to all contracts, not just those worth more than $25,000.
Of the eight agencies that reported having contracts with minority group-owned businesses, three exceeded that 10 percent threshold. Sen. Joyce Elliott, D-Little Rock, who sponsored the reporting law, said many agencies don’t appear interested in including such businesses.
“I was hoping for better angels of commitment to this whole issue but that just does not seem to be the case. I don’t even see evidence of seriousness,” Elliott said. “We hear just a litany of there were no contracts, there were no contracts.”
Elliott said legislators may have to do more than just urge agencies to include minority group-owned businesses when spending tax dollars. One possibility - making the 10 percent figure mandatory.
“We’re going to have to look at legislation with metrics,” she said. “This is an untenable position for this state. It’s something that other states are doing much better with. I don’t want to have to pass legislation to address it, but obviously we are at that point.”
Budget co-chairman for the 2013 session, Sen. Larry Teague, D-Nashville, saidlawmakers benefit from having the information when making budget decisions.
“It’s important to know that we’re not discriminating and we’re giving everybody a chance,” Teague said. “If the law says they should do it, they ought to be doing it or we ought to do away with the law.”
Teague said agencies should do business with the best company for the job, but “it’s hard to imagine there aren’t more minority vendors who would qualify.”
Teague said he would need to learn more about the issue before saying whether the state should be doing more.
“I don’t know if I’ve ever put it on my radar,” he said.
AGENCIES REPORT
The Department of Human Services awarded the largest contract amounts to members of minority groups.
The agency had 10 contracts with minority groupowned businesses worth $27.6 million, Webb said. Those contracts include interpreters, counseling and the Tri County Rural Health Network.
But there have been reporting glitches.
In 2011, the department had to recompile the contract statistics after it gave lawmakers the wrong information. In 2012, the information was omitted entirely.
“We are working to determine what caused the error so that we can put some corrective measures in place to ensure that it doesn’t happen again,” Webb said.
Webb said Friday that the department couldn’t yet say what percentage of its contract dollars had been awarded to members of minority groups.
The Department of Finance and Administration’s Child Support Enforcement Office reported a $10.66 million contract with Asianowned company Protech. The Protech contract made up 86 percent of the money the office awarded in fiscal 2012.
The Department of Health, which failed to report the data in 2011, reported holding two contracts worth $1.49 million with a single minority group-owned company. It lists Advantage Communications Inc. as being owned by a black person. The contract, for marketing and consulting, amounts to 3.67 percent of the $40.48 million in contracts awarded by the department.
“However, we do partner with many minority groups on a wide array of issues. In addition, we provide grants and subgrants to minority groups and businesses,” department spokesman Ann Russell said.
The Arkansas Building Authority reported a contract worth $87,432 with black-owned business Clean Team Commercial. The contract is worth 3.2 percent of the $2.74 million in contracts awarded by the authority in fiscal 2012.
The Department of Workforce Services reported that 69 percent of its contracts are with businesses that qualify as minority-owned. The four contracts that met the reporting criteria were worth $540,466. Much of that money was spent on rent.
In 2011, the Department of Workforce Services reported a $151,045 contract with Advantage Communications.
The Department of Emergency Management has a $33,449 contract with blackowned business Southern Maid. It makes up 25 percent of the money awarded by the department.
The state Highway and Transportation Department reported f ive contracts worth $9.6 million out of the $604 million in contracts awarded. The contracts are with construction and paving companies.
The five contracts made up 1.6 percent of the total amount contracted. The contracts went to three companies, two of which are black-owned and one is Hispanic-owned.
Although not required to report it under Arkansas law, the department also reported having 106 subcontracts with businesses owned by members of minority groups.
The Department of Finance’s Revenue Services Division reported two contracts worth $146,749, or 1.17 percent of the contracts awarded by the division.
The Arkansas State Police reported two contracts with black-owned businesses worth $233,810, or 3.67percent of the $6.36 million in contracts awarded in fiscal 2012.
Spokesman Bill Sadler said state police intentionally look for contractors in Arkansas or who fit into one of the minority-groups state law urges it to work with.
“It’s the right thing to do,” Sadler said.
The Arkansas Game and Fish Commission’s budget request includes no reference to contracts with businesses owned by members of minority groups.
Commission spokesman Keith Stephens said the omission was not intentional. He said the commission had no contracts fitting the criteria and would inform the Legislature. Stephens said the information would be included in the future.
OTHER METHODS
How many state contracts over $25,000 are awarded to minority group-owned businesses also is tracked by the Finance Department’s Office of State Procurement, as required by Arkansas Code Annotated 25-36-104 (A)(1).
Although the office processes contracts larger than $25,000 for state agencies, the information in the office’s fiscal 2012 report does not match the amount reported to lawmakers by the individual agencies. Higher education institutions do their own processing.
The fiscal 2012 report shows the office awarded 562 contracts worth $1.03 billion during that time period. Of that, $11,652,653 or 1.12 percent, were contracts with minority group-owned businesses.
Of the contracts over $25,000, eight are with businesses owned by blacks and two are with businesses owned by American Indians and one is with an Asianowned business.
The report also lists contracts with minority groupowned businesses issued by the office worth less than $25,000. Those total $174,645.
Although not required in state law, the report also includes information about the total number of contracts awarded to women. According to the report, 1.2 percent of the total amount contracted by the office went to businesses owned by women.
Northwest Arkansas, Pages 15 on 12/09/2012