Ever since Franklin D. Roosevelt's New Deal, the federal government has come to the aid of economically and socially disadvantaged Americans with a a multitude of well-intentioned programs. The aged, the farmers and the factory workers were the first to be helped. Small businesses and schoolchildren subsequently benefited. More recently, there has been a spate of legislation to better the lot of the racial minorities.
Some of the programs have been a boon to the underprivileged; others have turned out to be a lot of empty words; still others have been strangled in official red tape. We have taken a close look at one obscure operation, the Minority Business Resource Center.
Congress set it up two years ago as a special agency to see that minority businesses got a fair share of teh repair and maintenance work on the nation's railroads. For this noble purpose, the center was entrusted with $8.5 million to fund low-interest loans to the minority businesses. Not a cent has yet been lent to the intended grass-roots recipients.
Instead, the agency, an adjunct of th Federal Railroad Administration, has been underwriting consulting firms to study the problem. An estimated $3.8 million has been paid out to the consultants. While some of the contract produced helpful information for minority businessmen, many merely generated reams of paper.
The arbitrary and haphazard use of consultants by the center wa one reson Transportation Secretary Brock Adams hired Gary Gayton as a special minority assistant. Gayton said one of the first things he did was instruct the center to "tighten up" its use of consultants.
There has been grumbling even from people who fought for the legislation that created the Minority Business Resource Center. Sen. Birch Bayh (D-Ind.), the center's original sponsor, and Rep. Parren Mitchell (D-Md.), leader of the Congressional Black Caucus, have questioned whether the agency is fulfilling the intent of Congress. "The activity going on is circular," grumped one congressional source. "They haven't gotten off the dime."
Kenneth E. Bolton, who has run the center since its formation, defends it by citing the difficulty of starting a federal agency from scratch. Consultants had to be used to get the center off the ground, he said. Bolton also stressed the need to study the requirements of minority businessmen before lending them the available money.
The agency also has been caught up in minority politics. Minority groups, now more powerful than in the past, are demanding a hand in running the expensive federal programs. Bolton, holdover bureaucrat from the Ford regime, is said to have survived the transition by being sensitive to those political demands.
There has been considerable pulling and hauling, for example, over the small business investment company that will handle the loans. One of those seeking the $5 million deal is the Washington-based Opportunity Funding Corporation. The company has some political powers on its board, including Jesse Hill, an influential adviser of the center's advisory board.
The company failed to submit its application in time, and a rival firm, the Inner City Broadcasting Company of New York City, was the only bidder to meet the deadline. But Bolton extended the deadline and was set to give the contract to Hill's firm, we were told, until our reporter Peter Grant began making inquiries. Now Bolton has recommended that both firms be subsidized at a cost of $3 million each.
Other instances of how consulting firms are benefiting from the program:
The Booker T. Washington Foundation helped push the legislation setting up the center. The first $1.2 million contract was awarded to the foundation to develop a program. When it came up for renewal this year, a staff report to Bolton wa highly critical of the work. The $38,000-a-year head of the agency nevertheless recommended giving the foundation an additional $900,000. After intercession by Gayton, the contract was whittled down to $600,000 contract to determine how women business owners could participate in th loan program. Knowledgeable sources tell us the grant was hastily contrived to get the women out of the agency's hair. Upon expiration, the contract was conceled on the grounds the work performance was shoddy. A representative of the women's group insisted that the initial award was too small to get the program off the ground.
On the credit side, the center joined minority groups and congressmen in getting Conrail to promise it would award $100 million in business to minority businessmen.
Bolton attributed any problems of the agency to its newness and the difficulty of minority programs nationally. "For 100 years minorities have been shut out of the free-enterprise system," he said. "They're not going to be brought into it overnight."