I'm not sure how many are familiar with procurement policies in federal and State and Local government. In many RFPs the government mandates that a certain percentage of a contract award be set aside for either Minority owned business entities or Women Owned (MBE/WBE).

My question is, does anyone know if this has ever been challenged in the courts? Seems unconstitutional to basically say that if you are a White Male owned business entity, you are not allowed to win a certain percentage of a contract.

It is unconstitutional. And it is also the reason I have never opened up my own shop. I work in federal contracts, and I can't openly compete against WBE/MBE/DBE/HUB. Also, a lot of engineering firms outsource environmental work to these firms if they don't do it in-house. Makes it difficult to compete as well, as engineers need a place to fulfill these requirements and are looking to dump non-profitable items into the firms meeting the quals.

I've worked for an MBE....it's a complete racket.

I've seen some situations where it's such a racket that the non MBE/WBE is basically the prime contractor and the MBE/WBE is basically just a "sleeve" that processes invoices and payments and takes a cut.

ThunderCougarFalconBird said:

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I've seen some situations where it's such a racket that the non MBE/WBE is basically the prime contractor and the MBE/WBE is basically just a "sleeve" that processes invoices and payments and takes a cut.

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That is how nearly all of them work. Many times they are so flaky and temporary that they dissolve before the project is finished putting the primary contractor in an interesting situation. Many if not most are not true companies, they only cash paychecks and present themselves as the "face".

ThunderCougarFalconBird said:

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I've seen some situations where it's such a racket that the non MBE/WBE is basically the prime contractor and the MBE/WBE is basically just a "sleeve" that processes invoices and payments and takes a cut.

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That's more or less how it works for a not insignificant chunk of them. Or I see nearly every contractor has the company in their wife's name to qualify as a WBE even tho she has absolutely nothing to do with the business in reality.

aggiejayrod said:

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That's more or less how it works for a not insignificant chunk of them. Or I see nearly every contractor has the company in their wife's name to qualify as a WBE even tho she has absolutely nothing to do with the business in reality.

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This * 1000

aggiejayrod said:

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ThunderCougarFalconBird said:

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I've seen some situations where it's such a racket that the non MBE/WBE is basically the prime contractor and the MBE/WBE is basically just a "sleeve" that processes invoices and payments and takes a cut.

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That's more or less how it works for a not insignificant chunk of them. Or I see nearly every contractor has the company in their wife's name to qualify as a WBE even tho she has absolutely nothing to do with the business in reality.

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And if caught, they'll be prosecuted b/c that is against federal law. I've seen it happen.

The WBE participant has to materially participate in the business. They can't just be a name on the door.

AggieRain said:

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It is unconstitutional. And it is also the reason I have never opened up my own shop. I work in federal contracts, and I can't openly compete against WBE/MBE/DBE/HUB. Also, a lot of engineering firms outsource environmental work to these firms if they don't do it in-house. Makes it difficult to compete as well, as engineers need a place to fulfill these requirements and are looking to dump non-profitable items into the firms meeting the quals.

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I think engineering is the worst, especially TxDOT contracts. Would be impossible for me to open my own firm and do work with them. If they want to set funds aside for the DBE/HUB firms, make it a small business certification so white men aren't the only ones frozen out of starting up their own firms.

I get sourced a bunch of the env work these firms can't do.

Love it. Then in turn get sole-sourced projects below the $$$ threshold limit, with multiple re-issuances of the contract to avoid having HUB/WBE requirements.

I do a lot of municipal projects, and it is an absolute PITA where it is enforced. I also cannot stand the entire concept of it, nor the black market that has been created as a result of the requirements.

I went to a Houston Airport System pre-bid years ago about a project at Intercontinental. The project itself was a very technical project with a whole mess of various challenges that needed to be addressed. The pre-bid was about 10 minutes explaining the project, then the next 30 with one of the city's minority contract managers going over all of the MBE requirements to even bid on the job.

At one of my old companies we had a guy that we routinely used to "install" mechanical items because he was a MBE registered firm. We ran his guys, and one of the junior PM's would sit down with him once a month and go over his books with him so he could invoice us correctly. He was just there to take his cut, it was an absolute joke.

schmellba99 said:

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I do a lot of municipal projects, and it is an absolute PITA where it is enforced. I also cannot stand the entire concept of it, nor the black market that has been created as a result of the requirements.

I went to a Houston Airport System pre-bid years ago about a project at Intercontinental. The project itself was a very technical project with a whole mess of various challenges that needed to be addressed. The pre-bid was about 10 minutes explaining the project, then the next 30 with one of the city's minority contract managers going over all of the MBE requirements to even bid on the job.

At one of my old companies we had a guy that we routinely used to "install" mechanical items because he was a MBE registered firm. We ran his guys, and one of the junior PM's would sit down with him once a month and go over his books with him so he could invoice us correctly. He was just there to take his cut, it was an abo****e joke.

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Sounds like work at DFW Airport.

The USDA has been doing similar things with conservation assistance funds for years with funds set aside specifically for minorities even if some non-minority owned projects were more pressing.

One of many reasons not to work in austin!

Picking winners and losers based on race needs to end yesterday.

agracer said:

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aggiejayrod said:

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ThunderCougarFalconBird said:

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I've seen some situations where it's such a racket that the non MBE/WBE is basically the prime contractor and the MBE/WBE is basically just a "sleeve" that processes invoices and payments and takes a cut.

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That's more or less how it works for a not insignificant chunk of them. Or I see nearly every contractor has the company in their wife's name to qualify as a WBE even tho she has absolutely nothing to do with the business in reality.

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And if caught, they'll be prosecuted b/c that is against federal law. I've seen it happen.

The WBE participant has to materially participate in the business. They can't just be a name on the door.

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They'll hit your harder than Harvard hits a plagiarizing President.

Even in construction my entire career. Ministry participation is required in certain government jurisdictions. All federal projects require a % of participation from WBE, SDBE, VOSB, MBE, and a few others.

Most states and local governments require it. The worst % requirements can be found in Shreveport, Monroe(LA), and Austin.

I work in private industries, mostly downstream refining and chemical. It's creeping in at a fast rate too.

I spend more time lately in supply chain helping people fill out RFIs than actually doing more productive and valuable work.

I got out of the federal business right after this racket started up. Could see it coming a mile away and it only got worse. So many contracts where the set aside did nothing and couldn't handle anything just having money thrown at them. Most were all shady AF. As noted earlier, just a processor and not doing a lick of real work.

As noted earlier, saw plenty of women owned businesses which were anything but.

A lot of private projects are subject to it now because it's forced through the local incentives and tax abatements offered. Like many of you, most of my experiences with it have been pass-through jokes.

Has a case ever been brought against this? Seems blatantly discriminatory.

https://en.m.wikipedia.org/wiki/City_of_Richmond_v._J.A._Croson_Co.

kubiak03 said:

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Has a case ever been brought against this? Seems blatantly discriminatory.

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Even if it was found to be illegal, no municipality or the feds will give it up. Frankly, when it comes down to it, it is a mechanism for grift and corruption more than anything IMO.