I can tell you from first hand experience that the programs are constantly abused through fraud.
I can tell you that on a number of occasions I was asked to serve as a “pass through” and take a cut off the top in order to meet Minority Business goals. A pass through does no work. And the prime vendors want it this way. They don’t want the minority vendors working with them. It’s a forced arrangement. The funds merely “pass through the minority firm and go straight back to the prime vendor with a “cut” to the minority business owner”. Each time I refused to participate in these schemes I was punished in one way or another. The programs can never work unless the minority owned business has a direct relationship with the government and this means submitting invoices to the government and being paid from the government instead of through the prime vendor.

I have never had a minority vendor’s contract that I didn’t have to fight like hell for or hire an attorney. On one occassion, after my firm had been designated as the female vendor on a contract at the county, I had the prime vendor tell me that they would speak with the Mayor to get an exemption from utilizing me and that they would hire an attorney to waive the requirement. It was only after I hired an attorney that we were able to settle on my receiving participation, and that was purely in the delivery of equipment because the prime demanded that under no circumstances was I to have any staff on the project. And this is one of the more “Tame” occurrences. We made a small profit before legal fees after fighting over the contract for 18 months.

The only way an 8a firm can become a big company in federal contracting is to play the game of pass through. 8A firms owned by African Americans get 9 years of preferriental treatment in federal contracting. 8A firms owned by American Indians get a LiFETIME of preferriental treatment in federal contracting. Hence, there are a slew of American Indian Owned 8a firms that are $800 million to over $1 billion in size and……and a large percentage of that growth is due to acting as a pass through. And these firms do nothing to help their “breathern” on the reservations. In most cases, these firms are run by greedy sellouts. Of course there are a small number of them that are reputable.

Once you do one pass through, they or should I say “the prime vendor contracting community” has the goods on you to blackmail you for the rest of your existence because everyone knows its against the law to take money without doing the work.

This is the dirty little secret that no one likes to talk about in federal contracting. Examine the staff of any one of those 8A firms that play the game and their people have little to no skills to warrant the type of work that “passes through” their firms. It’s a sham.

And since the minority business needs to get paid directly from the government then why have the designation? The designation should be based upon economic standing for disadvantage regardless of color and the relationship should be direct. Otherwise, it’s just a wasteful program.

Just look at the abuse of the minority and female vendor programs in Chicago contracting. We all know how these programs were abused under the Daley administration with White Owned firms fronting through their wives and compliant “minorities” willing to play the game of pass through.

A lot of Black people are going to be angry over this one but any honest contractors out there would agree with it.