‘We’re all losing:’ Contractors of color get about 1% of millions Portland spends on goods, services

No entity in Portland spends more money on a wider array of stuff than the city government.

In 2020, Portland awarded over $200 million for ‘goods and services’ — a broad category of city contracts that has historically encompassed everything from printers to police dogs. A review of last year’s purchases reads like a shopping list from an industrial superstore: $45,000 on night vision goggles for police officers, $28,000 on a restroom trailer for the fire bureau; $11,000 on outgoing envelopes for the city’s arts tax.

Every year, hundreds of millions of dollars flow from city coffers to pay for this diverse assortment of services and products. And yet the businesses the city contracts with are strikingly homogenous.

A review of procurement records by OPB found businesses owned by people of color receive a tiny fraction of these dollars — ranging from 3% to .8% over the last five years. City officials contend that’s because there are not a lot of these firms prepared for jobs with the city. But some contractors of color insist they’re out there — they’re just not being given a chance to compete.

From January 2016 through December 2020, less than 1% of the total number of contracts the city initiated for goods and services went to certified minority-owned firms. Over that same five-year period, these firms received a similarly-sized cut — 1.5% — of the $1.3 billion the city awarded.

Compared to major cities to the north and south, Portland appears to be faring poorly. In Seattle, businesses owned by people of color received 11.4% of dollars the city spent in 2019 in its comparable category of contracts. In San Francisco, the figure is 6.3% for that fiscal year.

Despite a city-led push to support businesses owned by people of color in the wake of last year’s racial justice protests, 2020 was no exception for Portland. Out of 631 goods and services contracts awarded that year, businesses certified as owned by people of color received only four. Businesses certified as owned by white women received six.

Combined, that’s a little over 1% going to firms owned by demographic groups that have historically struggled to land government work — and who the city has vowed to lift up for this reason.

Over the last two decades, Portland has pledged repeatedly to reverse a legacy of giving lucrative contracts to white-owned firms, helping them flourish while those owned by people of color were passed over. Some contractors see Portland’s lonely struggle to get past a few percentage points as a sign the effort has failed, and that bias remains deeply embedded in the way the city does business.

“If you keep getting the same results over the last 20 plus years, it’s time that you stop blaming the individuals for the results, but look at the systems you put in place to restrict those people from being able to participate,” said Maurice Rahming, the president of O’Neill Electric, one of the city’s largest local Black-owned contracting companies. “It’s not that we’re not there.”

City perspective

Jeff Blade, procurement supervisor for the city’s Bureau of Revenue and Financial Services, said that there’s a simple reason behind the consistently low rate: there are few state-certified businesses owned by people of color or women offering the goods and services the city needs.

“We would go to the state of Oregon website and look for certified firms for the procurements and most of the time we would find none,” said Blade.

To be formally recognized as a business owned by a person of color or woman, firms must be certified by the state. More than half of the firm must be owned by a woman or person of color to qualify, among other requirements. Currently, there are a little under 2,000 firms in the database owned by white women or people of color. That’s a lot less than a city like Seattle, which has about 7,600 of these firms registered with either the city or state.

The city said it has no way to tell the race or gender of the owner of the firms they work with that have not been certified. While records show many of these businesses are owned by shareholders or white men, it’s likely at least some are owned by women or people of color. Carrie Baxandall, the program manager for the state’s certification office, said while certification is meant to give a business’s bid a boost, not all business owners opt in: some may not want to fill out the paperwork or pass on personal demographic information.

Blade is skeptical the city can significantly boost its numbers. The bulk of the city’s goods and services contracts come from the city’s infrastructure bureaus, which spend millions each year on piping, concrete and asphalt to keep the city’s roads paved and water flowing. These commodities are expensive to produce and, he said, can be made most cheaply by an established, decades old corporation.

“There is a reality check in there,” said Blade. “There’re a lot of commodities out there that are very, very difficult to be provided by a certified firm if it’s even possible at all.”

Business perspective

Some business owners believe the city isn’t searching hard enough.

“They keep saying they can’t find any women, they can’t find any minorities,” said Marcela Alcantar, president of a Portland-based concrete contractor. “But I’m here screaming as loud as I can, ‘I’m here.’”

Alcantar, an indigenous mesoamerican woman, has had her company Alcantar & Associates certified as both minority and women-owned. In two decades of business, the company has offered various services to local governments, including construction inspection work, which falls into the goods and services bucket of city contracting.

In 2017, after trying for multiple projects, she won her first for this kind of contract with the city: an inspection job with the transportation bureau. But Alcantar said the amount of work she anticipated never came her way. While the contract is marked in the city’s records as a $1.5 million award, she said she ended up being paid $26,000.

Alcantar’s frustrations with the city extend beyond one category of contracts. She also enrolled in the city’s Prime Contractor Development Program, an initiative meant to create construction contracting opportunities for historically disadvantaged firms like hers. She said she never got any work out of the program, but instead watched the city gravitate toward the same handful of well-established firms.

“People tell me ’21 years, oh you should be so successful,’” she said. “There are firms that have been 21 years in business and they’re making a killing. And it’s not because I’m not qualified. It’s because those firms the city had decided to invest in.”

The city’s excuse of not being able to find enough firms owned by women and people of color rings hollow to Alcantar. She is not the only one.

“The fact is that we do exist. The real issue is what are the barriers that you’ve put in place over the decades that are restricting us from being able to participate,” said Rahming, the president of O’Neill Electric. “And no one’s even asked that.”

Rahming said the most pernicious barriers come in the form of stringent project specifications — boxes that a contractor must tick in order to bid. The city said these rules are necessary to ensure the best product for taxpayers. But Rahming believes some serve no purpose, vestiges from a time when the city had no interest in seeing women or people of color competing for contracts.

One of the most egregious rules he’s encountered, he said, is a requirement that firms who bid on a project show five prior examples of working with the city. He compared it to the recently passed Georgia voting law, which imposes strict limits on voting anticipated to disenfranchise much of the state’s Black population.

“Although they say they want us to participate, the rules they put in place in the specifications restrict us from being able to participate,” he said. “Even though we can go other places within our state and provide the same service.”

Time for change

In late February, on the heels of a harsh audit of the city’s construction equity program and the resignation of the chief procurement officer, the city council met to steer the division in a new direction.

In the middle of a tense council session, Commissioner Mingus Mapps focused on a line graph shown to the commissioners depicting the paltry number of goods and services contracts won by people of color and white women last year.

“I’m not saying that we’re doing a bad job here — although it kind of looks like we’re doing a bad job here,” he said. “What I am saying is this looks like a real opportunity.”

In recent decades, the city has tried to make up for discriminatory practices of the past in two other categories of contracts: those for construction and those for ‘professional services’ — specialized services the city needs (e.g. designing a new park or a Vision Zero campaign). The city hired a host of staff focused on equity in contracting and set aspirational goals aimed at getting a more diverse assortment of firms bidding and winning this work.

According to the graphs presented to council that day, the numbers are moving slowly in the right direction. One such success story: last fiscal year, firms owned by people of color received 16% of payments awarded on “prime” construction contracts, where the contractor is responsible for delivering the project to the city. That’s up from 0% in 2011.

The goods and services bucket of city contracts has been relatively neglected by comparison. The city’s procurement office devotes no staff to diversifying the pool of contractors and sets no goals — despite being the contracting category where the city spends the most money.

On an average year, the city awards $295 million on goods and services procurements compared to $168 million on construction and $104 million on professional services, according to city data.

Blade, the city’s procurement supervisor, said there indeed could be room to improve in some of the services the city requires, such as maintaining HVAC systems and elevators, fields where entrepreneurs can break in without a huge cash investment.

Danny Reyes, the owner of minority-certified HVAC contracting company Control Techs NW, said he would welcome any change that ensured local government took a closer look at minority-owned firms like his.

“Portland is a pretty small town. You run into the same contractors,” said Reyes. “Nobody’s winning anything. We’re all losing.”