Blacks Want Fair Share of Utility Pie : Firms Don’t Give Enough Contracts to Minority Businesses

Black leaders from Jesse Jackson to Benjamin Hooks have continuously reminded Americans that, despite the growing number of black politicians, blacks have been blocked from obtaining a fair share of the nation’s $4 trillion-a-year economic pie.

Recently--partly as a result of Los Angeles Assemblywoman Gwen Moore’s “economic efficiency” legislation, which aims to correct serious inequities in the awarding of public-utility contracts--this issue has taken on significant meaning. In Southern California Edison Co.’s first report to the Public Utilities Commission since this landmark legislation was enacted Jan. 1, Edison disclosed alarming and, I would hope, embarrassing data about its business dealings and perhaps about the situation at other “progressive” corporations as well.

Edison admitted in its March, 1987, report to the PUC and the California Legislature that, despite numerous awards from minority groups for its outstanding reputation as an equal-opportunity company, it did virtually no business with black firms. Edison admitted that black businesses received only $41,000 of $345 million in construction contracts (1/100th of 1%) awarded in 1986. This is less than the cost of building one small home.

That black firms are ready and qualified to earn a piece of Edison’s $345-million contract business is demonstrated by the fact that in the same year, the same geographical area and the same type of contracts Southern California Gas Co. awarded $5 million in business to black-owned firms, or 5% of its total $108-million construction budget.

Most puzzling is that Edison set a goal for black construction contracts of just $26,000 for all of 1986. Consequently, its achievement of $41,000 exceeded its incredibly modest goal by nearly 50%.

The absence of opportunities for black contractors at Edison appears to permeate all aspects of its business contracts. In 1986 Edison awarded $1.1 billion in contracts, including janitorial and professional work. An insignificant one-quarter of 1% went to black-owned businesses.

Unfortunately, Edison is hardly the only example. Many other companies are not much better. In 1986 Pacific Gas & Electric Co. awarded just one-half of 1% of its $1.5 billion in contracts to black-owned firms; Pacific Bell, the state’s largest private employer, awarded only one-quarter of 1% of its more than $2 billion in contracts to blacks.

Overall, our state’s seven largest utility companies that are regulated by the PUC awarded less than one-half of 1% of their $7 billion in contracts to black firms, despite the fact that blacks represent more than 7% of their customer base.

Moore’s legislation seeks to compel large utilities to set substantial goals for awarding contracts to firms owned by minorities and women--without quotas or preferential treatment. Most important, representatives of a number of utilities have testified before the Legislature and the PUC that the achievement of these goals would make the utilities more efficient and eventually could reduce prices to all ratepayers. This would occur largely because more businesses would compete for the contracts, thereby creating a bidding war that would lower utility contract costs.

The effect on the economic development of the black community could be revolutionary if blacks received their fair share, or 7% of the $7 billion a year in utility contracts. A fair share would produce almost $490 million in contracts to black-owned businesses.

If large corporations refuse to aggressively ensure that minorities receive their fair share, how will they be able to distinguish their all-white business policies from the apartheid practices of South Africa? What significant economic difference (as opposed to policy difference) is there, for example, between a refusal to deal with the majority of the population, as in South Africa, and a corporation that decides to do just $41,000 worth of business with black-owned firms out of $345 million in construction contracts?

Over the next few years utilities will be seeking financial assistance from our state legislators and congressional delegation, both of which almost have their fair share of black representatives (11 out of 165). Unless public corporations such as Edison recognize the growing economic aspirations of black entrepreneurs, they may encounter stiff resistance to their pleas for economic assistance. This will be an especially difficult dilemma, for corporations that fail to do business with blacks nonetheless need to have the state’s 2 million blacks do business with them.

Business is not a one-way street. Blacks are growing quite weary of pouring huge sums of money into white corporate coffers and receiving nothing or very little in return. Moreover, the U.S. Supreme Court has upheld aggressive affirmative-action programs. We hope that these factors will bring about a major corporate policy shift that could spur an economic renaissance in the black community while providing a more stable base of support for corporate policies that depend on political good will.