8979: Black Business Not In The Black.

From The Chicago Reporter…

Empty jackpot

Illinois celebrates its program to steer state contracts to businesses owned by minorities, women and people with a disability. But a closer look shows the state may not be fulfilling its goals.

By Megan Cottrell

Shaking hands with officials from the Illinois Lottery, Bob Dale felt like a winner. No, he didn’t win the jackpot or even one of those scratch-off cards. But his business, R.J. Dale Advertising, had just sealed a $100 million contract with the Illinois Department of Revenue, one of the largest contracts awarded to a black-owned business in Illinois.

But looking back on his big win now, Dale doesn’t feel so lucky. Low commission rates and sky-high legal fees from state audits meant R.J. Dale Advertising didn’t even make a profit for being the lottery’s chief advertising agency.

“Quite honestly, it damn near put us out of business,” he said.

The lottery, on the other hand, fared well. During its five-year contract term, revenue from the lottery increased by $490 million. Dale and his colleagues hoped that success would generate new business.

As it turned out, the lottery contract opened no new doors for the firm. Major corporations “didn’t care about the phenomenal success we had,” Dale said. “They just weren’t interested in hiring a black-owned business.”

Many minority business owners say they still face significant discrimination in the marketplace. To help remedy that, some states, including Illinois, have created programs to make sure that some government contracts go to diverse businesses.

Dale’s contract was part of the Business Enterprise Program, Illinois’ effort to award government contracts to businesses owned by minorities, women and people with a disability. But a Chicago Reporter investigation found that even though the State of Illinois sets lofty goals and touts its overall successes, some of its departments aren’t even coming close to the program’s goal of steering 20 percent of all contracts to target businesses.

Between fiscal years 2007 and 2010, 13 out of the 28 state departments with at least $10 million in their contract budget during those years failed to meet the program’s 20 percent goal, including five of the six departments with the largest budgets. Four of these departments even fell short of the 12 percent minimum required by law.

And even when departments are meeting their goals, the money is often going to one big contract with one single firm, like Dale’s lottery contract. Forty-five percent of state departments awarded more than half of their contract dollars for the program to just one firm.

Dale said every time those goals aren’t met, it means minority communities miss out. If every department had met its goal, businesses owned by minorities, women and people with a disability in Illinois would have earned another $586 million between fiscal years 2007 and 2010.

“The black unemployment rate is at least twice as high as the general market, maybe even three times as high,” Dale said. “Every time we don’t get a contract, that’s jobs that black people don’t get.”

Read the full story here.