By:  Ron Unterreiner, PEOPLE of Construction

When diversity, equity, inclusion, and belonging were the talk of the industry, I recall many conversations where leaders in our industry, including the major owners and general contractors, would publicly say that diversity was an important ingredient to the success of a project.  A diverse workforce and inclusion of minority and women-owned firms was a positive and needed step in the right direction, regardless of the requirements placed on a project to meet certain MWBE goals and percentages.

Major general contractors proudly boasted that they search for a healthy participation of MWBE firms and a diverse workforce on all their projects and consider this an internal company policy of their own volition, not a necessity born out of some mandate by a government, city, or private governing authority.  Those were comforting words and thoughts indeed.

Although I am not as active in the industry as I once was, I still work with multiple minority and women-owned firms through my work with PEOPLE, WBEDC, and RISE CDFI.  Thus, I still have a feel for the marketplace and one of the most important services I can offer to MWBE firms is introducing them to opportunities—help these business owners walk through welcome doors.  The opportunities I seek for my customers are with owners and general contractors that are willing to give a new firm a fighting chance—assuming all the right credentials are in place; owners and GCs that place a value on the importance of prompt payment: and that truly believe that DEI is either alive and well or should be alive and well.

In recent months it has become rather obvious to me that these owners and general contractors are getting increasingly harder to find.  I have heard comments from MWBE business owners that “they (MWBE firms) are no longer needed and thus have not been receiving bid invites.”  Ouch, that comment hurts.  The diversity directors—or HR folks that were touched to welcome and increase the use of minority firms within their companies—have all moved on to other positions within their firms or organizations and/or the diversity position within the firm or organization has been eliminated.  Whatever friend or friendly face the minority business owners once had with the marketplace is no longer readily available to answer the door.  There are some exceptions to this…but for how long?

In the heyday of DEI, which now seems like many moons ago, many GCs would only invite MBWE firms on projects that required minority participation…such as city work, certain county projects, and several of the major private and public organizations in our marketplace.  The thinking was that minority firms only had so much capacity and that GCs wanted to “save” that capacity for when it was really needed.  I understand that sort of thinking although I have never accepted this point of view—let the minority business owner make their own decision as to whether the project fits their capacity level.

In the business climate of today, where DEI is no longer an acceptable industry practice and where trade contractors are no longer expected to share their work with MWBE firms, this concept of “saving” your MWBE bid invites should be reviewed and adjusted.  The doors should be wide open to all qualified firms, regardless of the racial mix of the business owners or the number of certifications on their office walls. 

In my front row seat of working with established MWBE firms the idea of teaming with a trade contractor on a major project has simply been taken off the table.  Most MWBE firms want to work in a prime position but that did not keep them from accepting a huge part of their revenue stream from assisting a larger contractor in a second-tier position.  A rough guess would be that most of the well-established MWBE firms derived over half of their revenue from teaming with others on projects that had a requirement–or an owner desire– of meeting a minority participation goal.   And to some MWBE firms, the second-tier position was really their only source of revenue.  That chunk of business is no longer, gone forever–or at least for the foreseeable future.

So, what is the MWBE firm supposed to do at this point?  Where do they find the replacement revenue for over half of their business?  Is their business looked at as being a qualified trade contractor or as an MWBE certified firm that is no longer needed?  Why would a GC invite a minority owned business to participate on their project if there were no requirement for minority participation?  Wouldn’t the GCs best be served by sticking with the larger firms that have served them well for years?  Why would a trade contractor want to share a large percentage of their work and profits with an MWBE partner, unless there was a project requirement?

Maybe the single question that needs to be answered by our industry is what value does contracting with diverse firms and working with a diverse workforce have for our industry?  Is it really all that important or do we just say that because it sounds good?   Will a certain level of DEI help take our industry to the next level or are the leaders of our industry fine with the current status quo?

MWBE firms are struggling.  Their source of work has been severely impacted by the change in thinking in our country.  This impact will be felt deeper and stronger in the months and years to come.  As much as many folks would like to think otherwise, MWBE firms do not have the resources available to them to compete on a level playing field.  Do we sit idly by and watch them fail or do we keep our doors wide open and the bid invites flowing, regardless of whatever requirements may be imposed on us?

I invite all industry leaders, owners, and general contractors to ponder these thoughts.  My value to MWBE firms is useless without strong support from the industry.