Port authority awarded SWaM vendors $20.8M in FY '09

By Philip Newswanger | Inside Business

The Virginia Port Authority's track record for awarding contracts depends on the size and scope of the contract.

In fiscal year 2009, the Virginia Port Authority awarded 35 percent of its discretionary spending contracts to small, women- and minority-owned businesses.

But no major contract, such as the construction of an office building or a dike at Craney Island, went to a minority-owned business.

These projects are earmarked in the port authority's budget and not considered discretionary.

Most of the major contracts went to companies like E.V. Williams and McLean Contracting Co.

Virginia Port Authority spokesman Joe Harris explained the disparity.

"They don't have the horsepower to tackle the big contracts," Harris said, referring to small, women- and minority-owned businesses, known as SWaM contractors. "They become subs to the larger contracts."

To qualify, large contractors must have a certain level of insurance and bonding, Harris said. "Many of them don't qualify, so they become subcontractors," he said.

Contracts worth $100,000 or more require contractors to put up a payment and performance bond equal to the value of the contract.

So minority contractors try to become subcontractors on many of the big projects.

But the port authority requires every contractor to submit a plan for hiring SWaM contractors, Harris said. He said the plan requires big contractors to give 5 to 10 percent of the contract to SWaM vendors.

He added that the port authority doesn't count the number of subcontractors that are SWaM vendors, as does the state.

The port authority, however, provides the state with statistics on major contracts, which include the number of subcontractors that are SWaM vendors.

The port authority awarded SWaM vendors a total of $20.8 million in fiscal year 2009, which ended June 30, 2009.

These contracts are known as discretionary expenditures or funds that aren't earmarked for a specific project, such as paving or constructing an office building. The contracts are below $100,000 and could be for catering or office supplies.

The port authority's discretionary fund totals $60 million.

The Virginia Department of Minority Enterprise maintains a database of SWaM vendors, Harris said.

"So when we have a need, say catering, we go to that database," he said.

Of the $20.8 million the port authority spent with SWaM vendors, small businesses were awarded $16.2 million, in contracts in fiscal year 2009.

Women-owned businesses were awarded $2.84 million in contracts.

And minority-owned businesses were awarded a total of $1.8 million.

The statewide figures show a similar pattern in how contracts have been disbursed, except that contracts to women-owned businesses lag behind contracts to minority-owned businesses, but they are growing faster than awards to minority-owned businesses.

Contracts to small businesses rose to $1.55 billion in 2009 from $1.4 billion in fiscal year 2008, according to the Department of Minority Business Enterprise.

Contracts to women-owned businesses totaled $253.6 million in 2009 compared to $268.1 million for minority businesses for the same year.

But contracts to women-owned businesses soared 27 percent from 2008 to 2009 while contracts to minority-owned businesses rose by only 1.5 percent for the same comparable period.

Gov. Tim Kaine mandated in 2006 that all state agencies increase contracts to small, women- and minority-owned businesses to 40 percent of all purchases after a consultant, MGT America, released a report showing Virginia spent 1.27 percent with these vendors. Mark Warner commissioned the study before he left the office of governor.

The consultant said that total commonwealth spending with minority-owned firms was less than 0.44 percent of total spending.

In fact, commonwealth spending with minority business enterprises as a percentage of total spending is one of the lowest recorded in more than 100 studies conducted by MGT, the firm said.