Congressional subcommittee examines why $ 66 billion in infrastructure funds won’t target minority entrepreneurs

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Part of the promise of the $ 1.2 trillion infrastructure law recently signed by President Joe Biden is that it will include minority and women-owned businesses.

For example, the law creates a minority business development agency within the Ministry of Commerce to help non-majority businesses access contracts, capital and grants.

In addition, the Disadvantaged Businesses (DBE) programs already in place at DOT and the Federal Transit Administration create targets for non-majority business participation in federal contracts. These existing programs will ensure that at least some of the $ 110 billion spent on roads and bridges, as well as the $ 39 billion earmarked for public transit, goes to businesses run by women and people of color.

But the $ 66 billion set aside for passenger and freight rail transport in the law does not fall under those same requirements. Unlike DOT and FTA, the Federal Railroad Administration does not have an existing DBE program, meaning these dollars could follow the same path as past infrastructure projects where a relatively small number of large established prime contractors have secured most, if not all, of the public funds allocated.

A recent hearing in the House of Representatives aimed to avoid this outcome. Members of the Railways, Pipelines and Hazardous Materials Subcommittee heard testimony from six minority and female construction executives about their experiences competing for federal dollars at a hearing on the 9th. November titled “Does Discrimination Exist in Federal Rail Passenger Contracts?”

After listening to the leaders’ stories, Rep. Marilyn Strickland (D-WA) said the answer to this question was clear. “Without even having to do a disparity study, I knew the answer was yes,” Strickland said. “Those who testified demonstrated it.”

Leaders compared the procurement experiences for agencies that have DBE programs, versus those that do not, and highlighted the impact of DBE targets on leveling the playing field for small businesses. various businesses when they are present, as well as what happens in their absence. .

Keep the best jobs for themselves

For example, Melvin Clark, CEO of Pittsburgh-based rail contractor GW Peoples, said that instead of DBE requirements, prime contractors choose to do the most lucrative jobs themselves. “Private railways generally reserve the large-scale, high-profit, labor-intensive work for themselves,” Clark said.

Clark described the $ 93 million Englewood Flyover project on the South Side of Chicago that helped reduce traffic for Amtrak, and testified that African-American-owned companies only received $ 112,000 of that. funding because there was no DBE requirement in place.

“We argued and advocated that they should have someone of color there,” Clark said. “They said they had no obligation to meet any kind of minority participation targets and that they paid lip service to minority businesses.”

Evalynn Williams, president of Dallas-based engineering and consulting firm Dikita Enterprises, said this attitude is completely normal when it comes to rail contracts.

“Big companies would do 100% of the work themselves if nothing was done,” said Williams. She recounted an industry panel she spoke about on DBE programs, where one panelist felt that DBE programs were not warranted.

“He openly admitted that if it hadn’t been for the DBE program, they wouldn’t be contracting out to DBE companies,” Williams said. “He didn’t see it as discrimination, but his right to contract as he pleased. His remark was hurtful, but it wasn’t surprising.”

Sharper pencils for DBE companies

She spoke of the scrutiny that DBE companies often face in contracting, even after securing jobs, recalling how she was asked to provide additional documentation after winning a bid for a transportation project in common of medium size.

“The purchasing agent was uncomfortable,” she said. “He asked me for my tax returns, my finances, my bank credentials. It wasn’t typical.”

When she pushed back and asked the purchasing manager why he was asking for the additional information, “he confessed that he had never awarded a project of this magnitude to a black company,” Williams said. “And he was just trying to make sure we were financially capable.”

Others have testified to how the male-dominated construction industry often pushes female entrepreneurs away.

For example, Victoria Malaszecki, CEO of Mullica Hill, the New Jersey-based construction management firm Envision Consultants, said discrimination against women in the AEC field was so common it was. became unresponsive during his 27 years of activity.

“I have become unresponsive to the systemic discrimination that happens to me on a daily basis because of my gender,” said Malaszecki. “I thought that because I had worked hard, started from nothing, raised a family and ran a successful business, I was respected and equal to a man. But I am not. . Every day I have to prove myself to owners, customers and most of the disheartening, few employees who come and go. “

A tug named after a Confederate general

An entrepreneur gave details of the racial discrimination he said he suffered at work.

Kenneth Canty, CEO of Charleston, SC-based Atlantic Meridian Contracting and demolition specialist Janus Materials, testified about what he described as discrimination from the Swedish contractor Skanska on the $ 430 million Pensacola Bay Bridge project, which received federal funding through Florida DOT. (Skanska and Canty are currently in litigation over the project.)

“We began to experience racial discrimination which went from simple acts of what one might call insanity to erasing ignition codes from machines which quickly accelerated to sinking boats, to sabotage. equipment, which we filmed, ”Canty said.

Canty alleged that his crews were harassed by a tug that made unnecessary trips to the site, forcing its divers out of the water each time, and that the boat was named after someone “supposedly one of the high ranking members of the Ku Klux Klan and the Confederate War General, Albert Pike. ” Canty said the name of the boat was repainted later.

Pike was a Brigadier General in the Confederate States Army. His status as a leader of the KKK is debated by historians, but his legacy has been a lightning rod in the Black Lives Matter movement. His statue in Washington DC Judicial Square was overthrown by protesters in 2020, shortly after the murder of George Floyd by the Minneapolis police.

Skanska’s response

Maritza E. Ferreira, communications director for Skanska USA, told Construction Dive that the boat, which was built in 1958, was already named after Pike when the company bought it.

“He was bought, but he wasn’t named, by Skanska,” Ferreira said. “As soon as the history of her namesake was brought to our attention, we immediately withdrew the name of this boat.”

The tug is still officially registered as “Albert Pike” at Skanska USA until next year, however, according to US Coast Guard records. Ferreira could not confirm within the deadline whether Skanska asked the agency to officially change the name of the boat, a process which can take several months.

In a statement provided to Construction Dive, Skanska said Canty did not notify the company of any discriminatory action before his company’s contract was terminated and that the prime contractor was working to include DBE companies in its projects. Skanska said it has awarded $ 2.96 billion to 1,424 DBE companies over the past five years in its civil construction business in the United States.

“Mr. Canty never reported any discrimination issues while working on the project,” Skanska said in the statement. “Skanska has a strong track record of supporting minority and female-owned outsourcing companies in its civil engineering projects across the country and is extremely proud of what we have accomplished to provide opportunities and standardize the playing field for disadvantaged business enterprises in our construction operations across the country. “

“Racism is in fact profitable”

During the hearing, executives said prime contractors sometimes include DBE companies as “window dressing” when submitting bids, but then either let those same companies go or only give them menial jobs. , once the project has been won. Canty asserted that there is a simple business reason for this.

“They’ve gotten so big that racism is actually profitable for them,” Canty said. “That’s why they keep doing it.”

With the infrastructure act now law and funding set to hit the backlog of contractors as early as the first quarter of 2022, the subcommittee plans to consider whether and what DBE program should be instituted for the Federal Railroad Administration. what type of program might look like. As.

“Notably, this designation does not currently exist within the Federal Rail Administration,” Representative Jake Auchincloss (D-MA) said at the hearing. “We must not repeat the mistakes of the past.”


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