Squeezing a foot into the local marketplace is not easy for small businesses in the nation’s capital. Despite glowing government reports that the local business situation is dramatically improving, the community’s concerns are far from gone.

"Somehow, the minority business community is back almost on square one after all these years of different types of changes," said Alberto Gomez, owner of Prince Construction Co.

Gomez, a member of the Minority Business Coalition, said that people in the neighborhood business organizations "seem to be stuck," despite the government program designed to help them grow.

In 1976, the Minority Business Program was created to give assistance and preference to minority companies in contracting opportunities with the D.C. government. The program changed in 1992 when a U.S. Supreme Court case led to a complete removal of racial references in the program, and the term "minority" was changed to "local."

The current program – now called the Local, Small, Disadvantaged Business Enterprises (LSDBE) Program – is run by the Office of Local Business Development. D.C. government agencies, under the program, are supposed to spend 50 percent of their contract expenditures with local businesses.

Jacquelyn Flowers, director of the office, said that "efforts have been significant" to improve the program.

"When we came into the office, there was one agency that met the LSDBE goal," she said. "Last year we had 35 out of 50. If you look at the trajectory, we are at an increase."

Steve Jumper, public affairs director for Washington Gas, called the LSDBE program "a very solid program." Jumper chairs a task force to review the program in depth because, he said, "the mayor thinks the government can do even more."

The local business community also has said the government can do more – a lot more. Members of the LSDBE community, city council members, the Minority Business Coalition, the Local Business Opportunity Commission, and the D.C. Chamber of Commerce have all voiced their concerns. They question whether LSDBE goals are being met and the very essence of the program itself.

"It’s a system that’s broke," said Doug Shadd, president of the Bush Co., a local company that offers business and technical services. Shadd, also a member of the Minority Business Coalition, said he believes that if the program were properly implemented, "you would see something very different."

Barbara Lang, president of the D.C. Chamber of Commerce and a member of the LSDBE task force, acknowledges "there are some perceptions, clearly, that are there that we need to fix.

"And," she added, "perceptions become reality."

John Best, owner of the Capitol Entertainment Company, a local tour bus company, said he believes there is a large presumption in the government that small businesses don’t have the same capability as large ones, a presumption that prevents small businesses from obtaining contracts.

It is a stereotypical perception, he said, and it is absolutely not true. "My bus," he added, "can take you anywhere their’s can."

Critics of the program say these small businesses should be receiving between 35 and 50 percent of all D.C. government contracts. And when the government does give a private contract to a large company, the companies are supposed to meet LSDBE participation goals with 35 to 50 percent subcontracting and joint-venture requirements. Members of the local small business community say this is not happening.

"Companies get the money, but they don’t comply," said one member of the Minority Business Coalition. And, he added, they receive no punishment for their non-compliance.

The biggest problem, however, seems to be the essence of the existing program. According to many small business advocates, the current goals and preferences of the program cater to a much broader group than the original program intended.

"If you find out what the percentages are for the intended target, it’s going to be a lot less than 35 percent," said Councilman Adrian Fenty, D-Ward 4.

The program was originally created in 1976 to foster, nurture and support small, local businesses that were at a disadvantage in the D.C. market, said Gomez. "We are concerned with the people who live here and are struggling," he said, "not the ones that pack up and leave if their business falls through."

But under the current program, both big and suburban businesses can qualify as certified LSDBEs. So even if 35 to 50 percent of contracts and expendable agency budgets go to certified LSDBEs, actual small and local businesses would not receive all of the benefits.

"Under the scheme of things, it’s a façade, it’s a window thing. It appears that we are doing something to help small businesses," said Best.

Under the current program, a certified LSDBE gets four preferential points for being "local" and no points for being "small." Additionally, suburban businesses can also qualify in this program intended for "local" businesses.

"The categories that we have, ironically, do not provide any points for the small (business)," said Gomez. "If the participation includes the category of ‘local,’ then big businesses will have a big chunk. If you remove ‘local-big,’ then the figures could show a different level of participation."

Best said he thinks the term LSDBE is almost a political cliché now.

"Everybody flaunts this term ‘LSDBE,’" he said, noting that the program was intended to deal with economics, not politics.

As it exists today, he added, any business in the District can be certified as an LSDBE. Many of these businesses are large and wealthy, yet still qualify for preferences originally created to aid small, struggling businesses.

The system has caused incredible angst in the local business community.

"I’ve given up after two years of continuous fighting and frustration," said Shadd. "I’m beyond frustrated – I’ve moved on, it’s as simple as that."

Many businesses and their supporters, however, have remained hopeful, despite the flaws of the current system.

"I would not suggest that anyone become discouraged," said Best. "It is better, there is some progress to report here, but there is so much more to be done."

The fight has resulted in some action. The mayor’s task force, created to look at the program in depth, has conducted interviews, held forums, contacted developers and agencies, and spoken to many LSDBE owners. The task force is expected to report its recommendations to the mayor by Aug. 1.

Flowers at the Office of Local Business Development says the task force is a way to look at strengthening the existing program and building on the success already achieved.

But this viewpoint is somewhat controversial.

"The notion that the task force was set up because the program was going well is absurd," said Fenty. The task force, he points out, was not created until after a controversial request for members of the Local Business Opportunity Commission to resign and after the city council proposed legislation that would change the entire structure of the LSDBE Program.

"The mayor will decide if he is going to make that report public and how much of the recommendations he is going to accept. We can’t make them do anything," said the D.C. Chamber’s Lang.

Task force chairman Jumper said he is "completely confident that the report will result in some actionable recommendations."

But these assurances haven’t convinced business owners like Doug Shadd that the situation will improve in the foreseeable future.

"It’s not a priority of the mayor," said Shadd, who, like many others, believes greater small and local business participation could dramatically improve the city’s economy.

"They spend more time and energy figuring out how to collect parking tickets," he said.

Copyright 2002, The Common Denominator