Diversity Lags In Va. Program To Help Firms

By Anita Kumar
Washington Post Staff Writer
Tuesday, August 19, 2008

RICHMOND -- Gov. Timothy M. Kaine's administration has achieved one of its top goals -- buying 40 percent of all state products and services from small, women- and minority-owned businesses.

But a Washington Post review of the state program designed to help such businesses secure government work shows that a vast majority of the 15,800 participating companies are small businesses owned by white men, a fifth are outside the state and an untold number have failed to receive any state contracts.

Critics, including state legislators and business owners, said the program does not work as intended.

"I think the concept, what it is supposed to be, is great. But it's not working," said Larry Hunt, who owns Integrated Digital Systems/Scan America, a small software and scanning company in Manassas that has not received any additional state contracts after enrolling in the program. "I've kind of given up on the state."

State officials agree that the Small, Women- and Minority-owned Business program, called SWaM, needs to be improved, but they said it has made significant strides in recent years despite regular complaints from businesses both in and out of the program.

"I'm amazed we have surpassed the goal. I really am," Kaine said. "But as we look at how we've done, it's clear that where we have knocked it out of the park has been an increase in procurement for small businesses. . . . I'm not yet happy where the numbers are for women-owned and minority-owned businesses. The numbers have improved pretty steadily since I came in, but they are still not at the level that I am happy with."

Since 1975, when Virginia opened its first minority business office, the state has been criticized for failing to help companies secure state contracts.

In the 1980s, state agencies began establishing goals for minority business spending, but after two decades, the number of companies receiving contracts remained about the same.

A first-of-its-kind study in 2003 found that less than a half-percent of state money in Virginia was spent on minority businesses, far behind other states, including Maryland and North Carolina.

Then-Gov. Mark R. Warner (D) called for 40 percent of spending by the state's 160 agencies, departments and universities to come from certified SWaM vendors. His successor, Kaine (D), campaigned on that goal and made it a top priority when he came into office.

Under Kaine, the state has quietly and aggressively worked toward the 40 percent goal, partly by adopting new guidelines that require state agencies to give significant scoring advantage to SWaM vendors for contracts exceeding $100,000.

In the spring, the goal was achieved, though the Kaine administration did not celebrate or even acknowledge the milestone.

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