Law seen as not enforced

The head of Arkansas’ Economic Development Commission said Monday that the state won’t start doing more business with companies owned by members of minority groups until agencies’ directors are penalized for not doing so.

State law already encourages agencies to award 10 percent of their contracts worth more than $25,000 to a minority-group-owned business.

But few agencies meet that goal.

Commission Executive Director Grant Tennille told the Legislative Black Caucus on Monday that he is working on a way to measure state agency directors’ success in meeting the contract goals. The results would be listed on performance evaluations.

An Arkansas Democrat-Gazette review of budget documents in December showed that 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 business owned by a member of a minority group.

Agencies are expected to report the information on the budget request forms they submit to the Legislature.

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 pre-session budget hearings as required by law. Other agencies are so small that they don’t award any contracts above $25,000.

Tennille said the governor could penalize agency directors who don’t meet the goals on their performance evaluations and give better performance evaluations to those who do. “Changing the reality of these kinds of procurement decisions is something that really does have to come from the top,” Tennille said. “If the director isn’t driving it, it’s not happening.”

Arkansas Code Annotated 1-2-503, defines a member of a minority group 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 separate minority group under Arkansas law. The U.S. Census Bureau estimates that in 2011, 74.2 percent of Arkansans were non-Hispanic whites. It estimated that 15.6 percent of the population was black and 6.6 percent was Hispanic.

Gov. Mike Beebe said there needs to be some flexibility.

“We’ve got goals and things you try to achieve, and certainly I am supportive of trying to meet those goals. Hard and fast performance indicators, when sometimes there are other factors to be considered, become problematic,” he said.

Before agency directors can be held accountable, some contracts would have to be removed from the calculation to even the playing field, Tennille said. Some agencies have a handful of large contracts in fields where there is no competitive minority-group-owned business, such as utilities or college entrance exam creators where only one or two companies are qualified, he said.

“Because the numbers were never right, getting to 10 percent was not a realistic goal,” Tennille said. “We were measuring it against things we can’t have an impact on.”

The governor may consider a change to performance evaluations if the contracts where minority-owned business don’t compete can be removed and not unfairly counted against agency directors, Beebe spokesman Matt DeCample said. Tennille said he and the state Finance and Administration Department’s Office of State Procurement are working with state agencies to identify what contracts should be counted.

“We’ll have a much better chance of holding people’s feet to the fire in making that 10 percent a reality,” he said. “We’re raising the level of expectation from the level of something aspirational to something that is expected.” Rep. Charles Armstrong, D-Little Rock, said state agencies have to change the mindset that they can’t find a minority-owned business to bid on contracts.

“Without any teeth, they will still use this same story that we can’t find any qualified minority vendors,” Armstrong said.

The Arkansas Economic Development Commission has a list of minority-group-owned businesses on its website at www.arkansasedc.com/ small-and-minority-business. aspx. Sen. Joyce Elliott, D-Little Rock, said she supports penalizing agency directors who make little effort to award contracts to members of minority groups.

“Even something like that we probably need to be thinking about legislatively because, you know, executive orders come and go with whoever the governor is,” Elliott said.

Elliott sponsored the legislation creating the original 10 percent goal.

“This is a road we’ve been on for some time, and to see other people begin to meet us halfway is really a positive development,” Elliott said. “We do need to have more teeth, I think, in what we’re doing. In Arkansas we’re just not getting there.”

Front Section, Pages 4 on 03/21/2013

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