These requirements, sometimes they're mandatory and are called set-asides, sometimes they're not mandatory and are called aspirational targets, or they might have any number of other names. They all serve a worthwhile purpose; they help combat years or decades of preferential treatment by procurement officers to pick people of "the correct ethnicity".
Like, by now it's been pretty well-established that people tend to hire people that look like them, i.e. one of the factors that contributes into the disproportionate representation of various groups in the tech industry we often talk about.
Same thing has been happening in purchasing for a long, long time, and what you end up with is a situation where minority-owned firms will have been largely excluded from government contracting. When this happens for very long, it becomes self-reinforcing and self-perpetuating; there's no institutional knowledge in ethnic community A that passes from one generation to the next about large-scale project bidding or management, and you end up with this sort of disproportionate representation and the ensuing economic effects.
The set-aside or aspirational target is at least a start at countering that. Like everything, it gets abused by the people with the power and the money (which is where you get the minority contractor who acts as a pass-through to give the real work to the majority-owned firm; that minority contractor isn't building any business of their own, certainly nothing they could pass onto their kids or whatever), but it's better than what we had before, which was a system that perpetuated an even more unfair system for a lot of people.
EDIT: #yolo
As you say, this doesn't even counter the problem. The "minority" is just skimming the "take" not building a business or anything else useful.
In same cases? Maybe. In many cases (including my own MBE/DBE-certified business) we are using those projects to build a business (2 bootstrapped partners to 8 employees and national recognition in 4 years) and to use some of that revenue & expertise to help folks that normally couldn't afford our services. And there are any number of businesses I can point to that are achieving similar success (of course there are also failures, but that's true of businesses in general).
With regard to Frondo's claim "where you get the minority contractor who acts as a pass-through to give the real work to the majority-owned firm" - at this point I'm pretty sure that's the exception rather than the rule. The various state MBE/DBE certifying agencies are extremely diligent at policing this behavior and will slap down firms found to engage in it. Primes and subs are audited, contacts are reviewed, MBE/DBE subs are interviewed (included onsite visits) etc. MBE/DBEs must submit annual sworn financial statements, along with examples of contracts, invoices and evidence that firm can conduct the work it's contacted for (resumes of principals, references, list of equipment, and so on).
Also, congratulations on using the MBE/DBE certification to build your business! That's excellent, and I'm quite happy for you.
Either nobody was willing to bid lower: the system works.
Or someone would be willing to bid lower but its a team filled with white guys: the system works. Maybe these other companies should think about their hiring practices considering that they exist in an area with a large minority that doesn't seem present in the team.
I don't know the details though, maybe there's some capital requirements or something that's pretty hard to match
Some people have commented in other threads that just subcontracting can get you into a lot of trouble if caught though.
The legit business people who aren't just patsies often get screwed by these arrangements. They end up holding a massive short term liability that the big contractor (IBM, Oracle, EDS, etc) wants paid NOW, but the receivable is mired in some crazy 120 day late pay hell with the government.
If we want to hire minorities to improve their lot, just hire them. Or require actual bids on contracts that a small business person can grok instead of blanket purchase arrangements that require Fortune 50 sized legal/contract teams to bid on.
Of course, if the point is to generate extra income for the spouses of corporate execs and campaign contributions, than sure, these programs are uber successful.
At the local level, at least in the Pacific Northwest, this is exactly what happens. Local agencies have targets of anywhere from 15-30%, for how much they'd like to spend directly on contract dollars awarded to minority-owned/woman-owned firms.
Most are hitting between 5-15% now, but I'd say probably 4 out of 5 purchasing managers wants to do better and actively encourages their staff to do outreach to the minority/woman-owned small business communities.
Buyers still have a challenge in finding qualified minority/woman-owned firms, but there are pipelines in place to help build those firms up. The set-aside/aspirational target system can support that, too, by favoring prime contractors that work with minority/woman-owned subcontractors. A lot of primes have mentorship programs that target minority/woman-owned companies to help them grow their businesses.
In the government purchasing world, this stuff is all pretty non-controversial because it generally achieves its stated goal. I was just trying to say that abuse happens here too, but abuse of any system happens wherever there is a system.
Of course, in the real world, what happens is that the company owner/CEO gives his wife or another female relative 51% of the company, and/or the title of CEO or managing director.
This dubious practice obviously doesn't scale up to large/publicly-held organizations, but it's widespread in the "small/disadvantaged business" community.
It turns out that it's awfully hard to do the right thing by doing two wrong things.
The purchasing managers I talk to all seem pretty keen on doing right by their aspirational goals, and the firms that try and cheat the system that way, well, it's known that they're trying to cheat the system.
Furthermore, all this stuff is public record--all the purchasing decisions, awarded contracts, etc., and I know that the local papers here in the Pacific Northwest periodically sift through that data looking for signs of abuse. They do report it when it comes up, too, but it simply isn't prevalent, and I'd be quite surprised to see any interpretation of the data that would let you characterize it as "widespread".
I would like to mention, though, that I've literally never seen a contract issued by a state agency or local unit of government to purchase electronic component testing services or equipment (either directly or a larger contract with a subcontracted piece for that).
That's not to say it never happens, just that most of the contracting dollars I see spent are on construction and personal services (counseling and social work, IT services, and the like).
I would suggest that your experience probably isn't reflective of the disadvantaged business community as a whole, and I suspect any empirical evidence we could unearth (i.e. the public purchasing records, and so on) would support that claim pretty unambiguously.
There are some controls in place. For example, my understanding is that in the federal government, contractors that are preferentially selected for various reasons must perform a majority (at least a technical majority, e.g. 51%) of the work in-house, although I don't know a lot about how that is measured or supervised so I'm not sure how effective it is. I have certainly seen cases that looked like abuse.
These days it wouldn't be a stretch to add "better for the environment" along the lines of "what is the best deal," since that is also a decision that affects everyone in the community, whether the company you hire pollutes more or less. Favoring contractors that pollute less seems uncontroversial.
Adding "addresses systemic racism that we have in the past committed and that has hurt a part of our community (who are also taxpayers, just like everyone else)" also seems pretty uncontroversial--unless you don't think racism exists or should be addressed.
When do we start addressing the systemic racism which systematically discriminates against business owned by people of the wrong colour — when that colour is white? I.e., addressing systemic racism by applying systemic racism seems pretty foolish.
In a perfect world, minority-owned and woman-owned businesses would never have faced any discrimination at all. In a perfect world, everyone would have competed on an even playing field since the beginning of government buying. That is not this world.
And the real-world consequence of those decades of discrimination is that minority communities had another barrier placed in front of their ability to build wealth in their communities--not the only one, of course, but still a real one and one that's definitely done lasting damage to those minority communities.
After all this time, and all that damage done, saying "well, we won't discriminate now but you still need to somehow catch up from decades of discrimination, and we won't do anything to undo the damage we did," if you think that's appropriate, then that's fine, you can think that. But it's only foolish if you don't really think at all about the history of the situation and the accumulated effects of that long history of discrimination.
You'd even be in good company if you wanted to take that shallow view--a lot of people I talk to don't seem to want to acknowledge that racism ever existed, or if it did it isn't a problem now, or if it is a problem then someone else should do something about it, and on and on and on.
(And, you know, all these aspirational targets, like spending 20% of our dollars on minority-owned firms, they're not hard-and-fast rules. If there are no qualified minority firms, then the work still goes to a white-owned firm, and after decades of discriminatory procurement practices there aren't necessarily a lot of minority-owned firms with the capacity to manage government contracting projects, so it's not like white folks are suffering in any way in the government procurement space.)
Except, y'know, for being ineligible for certain government contracts.
What's worse is that those people are being penalised without having been guilty of anything. This is utterly inimical to a free and health society.
Yes, there are some lingering negative effects from past racist discrimination: but there are also ongoing negative effects from current racist discrimination. You don't fix racism with more racism: you fix it by not being racist.
And that has done long-lasting damage to their communities. And they weren't guilty of anything, either! You're absolutely right, decades of systemic racism were utterly inimical to a free and healthy society, and minorities bore the brunt of that for a very, very long time.
Systemic racism created a very un-free and un-healthy situation. A lot of blameless people suffered through no fault of their own, generation upon generation.
Couldn't agree more, racism is bad, &c &c.
This small attempt to undo that--preferring minority-owned businesses for a certain amount of government dollars spent--doesn't really seem to be affecting white-owned government contractors, and it does seem to have a pretty positive effect at starting to undo the effects of all that (utterly inimical to a free and healthy society) discrimination.
Again, you can cling to that flag of "all racism is bad!!!" and that's fine. I'm at least somewhat satisfied that you went so far as to acknowledge that there has been discrimination in the past--a lot of people who sound like you are reluctant to even admit that there's ever been a problem. So, well done you.
In terms of outcomes and fairness and justice, however, there are probably better principled stands to take than the one against minority-owned/woman-owned contracting preference programs.
And there's this often-explicit assumption that the biggest thing holding back minorities is the white man. Nothing could be further from the truth today. The biggest problems faced by poor minorities are outrageous levels of violent crime among themselves, widespread illegitimacy, family collapse, and broken cultures that value the wrong things. Many groups have thrived against all odds throughout history, and they sure didn't get ahead with victimhood politics. The story of the Jews always comes to mind. Persecuted for over two thousand years, they not only survived but thrived in some of the most hostile environments possible, like repeated mass expulsions from different European countries, culminating but not ending with the Holocaust. When they got Israel, they quickly made it the richest, freest, and most powerful country in the region, by far.
I also want to reiterate my point from my earlier comment, which I don't think you responded to, that this kind of feel-good policy-making comes back to bite us. It hurts the taxpayer today by using up more of his money to provide the same service, and it hurts him tomorrow by obscuring what the real costs are and perpetuating bad decision making. The creeping inefficiencies become a permanent dead weight on our ability to invest elsewhere or weather a debt crunch.
If we want to have social programs that give minorities a leg up, then let's vote on those and forthrightly decide what portion of our national income we are willing to put that end. Hidden welfare for well-off minorities isn't the right way to do it.
I have relatives like you, too, who come out with something ridiculous like "the moon landings were faked!!" or "cancer's all a scam by Big Pharma to keep us doped up!!" and we used to go back and forth for hours about it. I eventually stopped engaging because these were people who were just carrying around a worldview in their heads that wouldn't allow them to have an honest discussion, and obviously bore no relation to reality.
So you go on thinking all the things you do. I don't think I or anyone would ever persuade you that you had some information wrong or some history wrong or some principles in your thinking wrong. I'm not even going to try, because I know what it's like arguing with folks like you.
Best of luck, and carry on!