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Are Stimulus Dollars Working for Minority Contractors in IL?
Produced by Adriene Hill on Monday, September 14, 2009
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Photo by Mark Susina |
Hundreds of millions of dollars are pouring into Illinois to fix up roads and highways as part of the Recovery Act, the federal plan meant to put people to work.
Federal Transportation Secretary Ray LaHood was recently in the state, touting the Illinois Department of Transportation's success at getting the money out to projects. But who’s doing all that work? Who’s getting all those road contracts? As part of our series, Hard Working, we analyzed contract documents from the Illinois Department of Transportation. Among other things, the analysis shows that minority- and women-owned businesses are getting only a small share of the money.
848: Breaking down the numbers
All year long I've been reporting on jobs and joblessness, trying to get a better sense of unemployment and where work might come from next. In February, when the stimulus plan was signed into law, many of the people I talked with were optimistic-money was coming, it looked like jobs were headed this way—to communities and neighborhood that are in desperate need of jobs, in places where the unemployment rate is estimated to be more than twice the city average.
Road projects and road work were a centerpiece of the Recovery Act; "shovel ready" quickly went from clever to cliché. In quick time the Illinois Department of Transportation started announcing and awarding projects all around the state.
If you were in the road construction industry, like the Mosley brothers in St. Anne, Illinois, the stimulus plan held great promise. They were hopeful the money would help ease the pinch of the recession and get their paving equipment back on the road. So far, the Recovery Act hasn't flooded Mosley Construction with work. It's not for lack of experience or effort. The brothers have a plaque from the Illinois Department of Transportation naming them subcontractor of the year in 2008 for work they did on the Dan Ryan. They show me computer files with data on the dozens of bids they've submitted on stimulus projects. They've won a few jobs but they tell me they're operating at only about 25 to 30 percent capacity and the business is still underwater for the year.
They don't seem to be alone in their disappointment.
Background and Numbers
WBEZ recently used the Freedom of Information Act to request contract information from the Illinois Department of Transportation to figure out who was winning stimulus dollars. Using the documents IDOT provided and data available on their stimulus Website we created two data sets. In both, our focus was understanding how much work is going to women and minority owned businesses, companies certified as a Disadvantaged Business Enterprise.
As background, every year the state of Illinois submits a goal document to the Federal Highway Administration. It outlines the percent of federal transportation money they think should go to disadvantaged business enterprises. For years that goal has remained 22.77 percent. The same goal applies to stimulus projects. The state says "the DBE goal was based on ample evidence of discrimination and was narrowly tailored to the statistical and anecdotal data and analysis." The constitutionality of the DBE goal has been upheld by the U.S. Court of Appeals.
The first data set gives us a broad look at the money awarded by the Illinois Department of Transportation as of last week. We compiled total contract awards to prime contractors (those are the general contractors who are responsible for hiring women and minority owned businesses as subcontractors) and the percent of the money those prime contractors subcontracted to disadvantaged business enterprises. We also compiled the goals that the Illinois Department of Transportation set on those individual projects.
Our second data set provides a more detailed snapshot of the specific women and minority owned businesses that are winning the subcontracts. As part of our Freedom of Information Act request, the Illinois Department of Transportation provided us with what is known as a utilization-plan for 119 contracts that were among the earliest awarded by the department (they were all scheduled to be part of the April 3 letting.)
Using our first data set we found that the Illinois Department of Transportation has awarded less than 10 percent of stimulus dollars to minority- and women-owned businesses. That's less than half of the goal the state set for itself with the federal government. In addition, we found that the percent of work done by minority- and women-owned businesses has been falling since 2005.  Disadvantaged business enterprises are getting a smaller percentage of stimulus funds than they did of regular highway funds last year.
Based on the data we compiled, it seems the state isn't falling short because prime contractors aren't meeting the individual project goals. Instead, our analysis shows that the state's goals on individual projects are low. Based on the information the Illinois Department of Transportation provided, if the state's goals for individual projects were met (and never exceeded) the percent of stimulus work going to minority and women owned businesses would be only 8 percent. The state is setting individual project goals much too low to meet its target overall goal of 22.77 percent. In this first data set, we found nearly $61 million promised to disadvantaged business enterprises; if the state was meeting its goal that total would be $145 million.
The second data set is even more illustrative.
With the contract information provided from the state we were able to create a database that includes the name, race and gender of the disadvantaged business enterprises getting stimulus work. While the federal government does not distinguish between the race and gender of the disadvantaged business enterprises in its goal setting and tracking—it seemed to us to be an important component in understanding which companies were actually being helped by the stimulus act.
In this second data less than 8 percent of the work was going to disadvantaged business enterprises. Black contractors received less than 2 percent ($4,346,507) of the total dollars ($260,472,254) represented by the contracts. Hispanic contractors were awarded about 2.5 percent. White women-owned businesses were awarded about 3.5 percent of the total contracts. 
Of the small pot of money going to disadvantaged business enterprises in our second data set, just over 50 percent went to women-owned firms, but almost all of that went to white women-owned firms. 
We also looked at the concentration of dollars going to prime contractors. We found that more than 50 percent of the total stimulus work went to just 10 prime contractors.
We did a similar analysis for the disadvantaged business enterprises getting work. We found that nearly 60 percent of the total dollars went to just 10 DBEs. The state's database of qualified businesses includes more than 1400 DBEs.
The top prime contractor in our database received $25,524,742 in stimulus work. The top DBE contractor got $3,240,322 in stimulus work.
I spoke with Illinois Department of Transportation Secretary Gary Hannig early this morning about these numbers. He said that from the department's standpoint, it is the “shovel ready” mandate from the federal government that makes it hard for the state to give out stimulus money to minority- and women-owned businesses. He says many of the contracts awarded so far are for smaller projects that do not need subcontractors. He also noted that most of the state’s stimulus money for transportation projects is out the door.
U.S. Secretary Ray LaHood's office sent this statement in response to our numbers.:
"Working to ensure non-discrimination and diversity has long been a key objective of the U.S. Department of Transportation's federally assisted highway construction programs. The Federal Highway Administration encourages states to make good faith efforts to set—and achieve—their own goals for compliance with the Department's Disadvantaged Business Enterprise (DBE) Program. These goals are based on the availability of ready, willing and able DBEs to participate. However, we recognize that more can be done to ensure a level playing field and we are committed to expanding opportunities for them to fairly compete for these contracts. Recently, we announced a $20 million bonding assistance program to help DBE firms get bonding for work funded by the Recovery Act. Efforts like this are part of our continuing work to help remove barriers to the participation of disadvantaged businesses in federal highway contracts."
We have asked for an interview.
Congressman Bobby Rush's office also released a statement:
"In response to WBEZ Chicago Public Radio???s exclusive report on the level of Illinois-based minority contractor participation in resources provided by the American Recovery and Reinvestment Act (ARRA), compiled from data they received as a result of their Freedom of Information Request to the Illinois Department of Transportation, U.S. Rep. Bobby L. Rush (IL-01) offered this statement:
“I am very aware of the fact that many ARRA-funded projects in Illinois are not being fulfilled by minority-owned contractors, especially those led by African American-owned companies. For many years, I have worked tirelessly to address the myriad factors that contribute to the fact that our state has too few qualified contractors to compete, effectively, with general market companies. There are many factors that contribute to this including the general lack of information about when contracts are being let as well as several structural barriers—from the inability to get certified pursuant to state standards to things like the slower cash flow of government-run projects and the disparate impact it has on small business payrolls. These and other barriers are the issues my staff and I work on, literally, day in and day out.
“I want my constituents to know that I’ve recently met with U.S. Transportation Secretary Ray LaHood and the top executive he’s assigned to address this issue, Brandon Neal, Director of the DOT’s Office of Small and Disadvantaged Business Utilization, about ways to increase minority participation in federally-funded construction projects.
“In addition, yesterday, several of my colleagues in the Congressional Black Caucus and I met with Vice President Joe Biden on this and related economic issues surrounding the federal government’s efforts to quickly infuse states and local communities with targeted, ARRA-funded projects—projects that I voted for earlier this year. The Vice President was forceful and specific in outlining the actions the Obama Administration continues to take to ensure that the resources we voted for find its way, as soon as possible, to the communities that need it most. The Vice President was emphatic in stressing that he is rigorously holding all government agencies accountable for doing all they can to get resources out to the states right away and I was very reassured by his leadership and passionate commitment to the American people.”
I spoke to Congressman Danny Davis late on Friday about our findings. He had this to say: "I think the stimulus, it took a little while to really get it moving, but I think it is really beginning to move. Although, it looks as though especially at the Illinois of Department of Transportation that the minority components are not working nearly as well as we hoped they would work and not nearly as well as they need to work. That is a concern and that is something that really needs to be corrected."
We are awaiting comment from U.S. Senator Dick Durbin, Illinois Governor Pat Quinn, and the state official in charge of stimulus spending, Jack Lavin.
On Wednesday, our news magazine show Eight Forty-Eight, has scheduled a call-in show to discuss the issue in depth. In the meantime, let us know what you think the state can and should do.
With research assistance from Travis Truitt, Jeanne Power and Lauren Talley.
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Roger Clegg, Falls Church, Virginia // Monday, September 14, 2009 @ 10:30 AM
Why do race, ethnicity, and sex need to be considered at all in deciding who gets awarded a contract? It's fine to make sure contracting programs are open to all, that bidding opportunities are widely publicized beforehand, and that no one gets discriminated against because of skin color, national origin, or sex. But that means no preferences because of skin color, etc. either--whether it's labeled a "set-aside," a "quota," or a "goal," since they all end up amounting to the same thing. Such discrimination is unfair and divisive; it costs the taxpayers money to award a contract to someone other than the lowest bidder; and in 2009 it cannot be justified constitutionally (see comments we submitted to the Colorado DOT here: http://www.ceousa.org/content/view/655/86/ ).
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Loretta, Tinley Park // Tuesday, September 15, 2009 @ 7:28 AM
If you look at the lettings, how many projects to you see set aside for small business (shows in Red)? Zilch
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