Minority owned business Contract Opportunities

According to a story in the Providence Journal, Wallace was certified as a minority owned business and eligible to participate in federally-funded transportation projects that targeted contracting/subcontracting a portion of the business with minority owned businesses. Christina Rosciti, the daughter of a principal in a much larger construction firm, purchased a 49% interest in Wallace apparently for the sole purpose of using it as a front to keep more of the business in the family.

All was going swimmingly until the founder Wallace (an African American male) died, and the authorities began to question the firm’s minority status. In order to qualify for the federal minority owned business program (and most state and local programs), firms must be majority owned AND controlled by minorities. After the founder’s widow assumed the title of President, the firm had its minority status reinstated.

The reinstatement occurred in spite of several disturbing facts. Neither the founder’s widow nor Rosciti had any previous executive management experience. Rosciti had not paid taxes in years and clearly lacked the financial resources to buy her equity stake in Wallace, which was not a successful business until becoming the beneficiary of millions of dollars of business from Rosciti’s family businesses. There was also evidence that 15 employees were employed by both Wallace and Rosciti’s companies.

At the federal level, there are contract setasides for companies certified under the Small Business Administration's 8(a) program, and also Small Disadvantaged Businesses (SDB).  At the state level, where the bulk of U.S. Department of Transportation (DOT) funding for roadway and transportation infrastructure projects is allocated, each state and local transit agency must establish a goal for the participation of Disadvantaged Business Enterprises (DBE).  Keep in mind that a goal is not the same thing as a quota, meaning it is something that cannot be legally enforced.  Some agencies view their goals as a purely ministerial exercise, and fail to achieve their goals year after year.  Others make a more sincere effort to meet their goals and are more aggressive in getting their contracting officers and prime contractors to increase DBE participation, especially on large construction projects.

Many states, counties, and cities also have their own programs that may have setasides, bid preferences, focused outreach, or just set goals.  These programs are typically called Minority Business Enterprise (MBE) or Minority or Women Business Enterprise (MWBE) programs.