To the editors:
Robert McClory's article "Good Buying" on the city of Chicago purchasing department [December 4] purports to tell the story of how that department works. Does Mr. McClory moonlight as public relations man for the purchasing department or is he simply naive? As a contractor of several commodities to the city I can tell you that the article doesn't really reveal the way things work in Chicago.
I am the owner of a business which is located in the city of Chicago. I live in the city too. I am white. For ten years prior to Mayor Washington's "reform" of the purchasing department my company sold directly to the city. We won bids because we were the low bidder, not because of cronyism.
Since enactment of Executive Order 85-2, which stipulates that a certain minimum percentage of city business be placed with MBE (minority-owned) and WBE (women-owned) businesses, we have sold to the city through MBEs and WBEs. Here's how it works: the city makes available to MBEs and WBEs information as to what company previously sold a given commodity. The MBE or WBE firms then contact that company and request a quote. That company calculates its cost and resale amounts. This is the amount that would normally be quoted direct to the city. The MBE or WBE is then advised by the seller as to how much profit margin is advisable for the MBE or WBE to make. This is based on the previous experience of the seller and is hopefully not so large as to cause the MBE or WBE to lose the bid.
The MBE or WBE then quotes the city. Needless to say, the process of involving MBEs and WBEs as middlemen only serves to increase the price to the city. The MBE and WBE firms that we work with typically produce nothing. They merely process the paperwork.
The city purchasing department has made it clear to me that they will only revert to buying from white-owned firms if the MBE and WBE bids are excessively high. Otherwise, they seem to feel that it is reasonable to pay more for a given product in order to meet the percentages outlined in Executive Order 85-2.
The shame of this is that all residents of the city, white, black, and brown, are paying more for products than is necessary. All this in the guise of helping to establish minority- and women-owned businesses. Again, I stress, these particular MBE and WBE firms produce nothing! The MBE and WBE program is nothing more than an old-fashioned, Democratic, share-the-wealth program. Who pays for it? The taxpayers, of course.
My firm does the same volume of business in city commodities that we always did only now we sell through MBEs and WBEs. As much as I object to the reverse discrimination aspects of the city's program and the obvious consequences of higher taxes, I appreciate the fact that the city has established rules that permit me to stay in the game. I say this without embarrassment as I am convinced that the way we're doing business with the city is exactly as the city intends it to be done, though I'm sure that they would deny it. What intrigues me is that the Washington administration could call this reform and get away with it.
Robert McClory responds:
There is absolutely nothing to prevent this white contractor from bidding directly on city contracts as he has done in the past, using the indirect participation method discussed in my article to involve minorities and women. In that case, the city would incur no additional costs, and legitimate women and minority businesses would benefit. In choosing to work instead through additional "middlemen," this contractor is ultimately responsible for the higher price the city must pay. This is not the way the purchasing department intends business to be done, and, in a competitive market, it is not likely the arrangement can continue for long. Clearly, opening up the marketplace to those traditionally excluded is going to cost something. Also, the current program admittedly has more than a few loopholes. These are hardly reasons to scrap the effort and return control to the old "brotherhood."