Note: This document also contains two cover feature sidebars which ran with the main article: "How It Worked for One Black Sewer Contractor," and "How It Was Made to Work for One White Auto Dealer." The sidebars appear at the end of this document.
By 10:55 AM the "bid room" on the fourth floor of City Hall is aswirl. Three white men are filling out forms at the last minute, carefully inserting them along with other documents in big brown envelopes and placing them on the counter at the front of the room. A half dozen others, their envelopes already sealed and submitted, mill around, shaking hands with acquaintances or chuckling at the pleasantries of a stocky, middle-aged man who speaks with a heavy Italian accent while clenching an unlit stogie between his teeth. Several black and Latino men and the few women present are already in their seats, looking a bit apprehensive. A sign on the wall says, "Courtesy is contagious."
In this unpretentious place, well off the beaten path, the city of Chicago buys the goods and services required to keep its myriad agencies functioning and its citizens reasonably content. According to the Municipal Code, every contract for more than $10,000 (except those for professional services) must be put up for competitive bid. Here, five days a week, bids are opened and contracts tentatively awarded.
This year the city is doing some $800 million in business (an average of more than $3 million a day) with thousands of contractors, suppliers, brokers, and service providers--a gigantic, ongoing commitment that makes the Illinois lottery look like a church raffle. Everything from parking tickets for the Police Department and dog food for the animal shelter to the construction of the southwest expressway and the resurfacing of the runways at O'Hare Airport will be bought through the open bid process in the room on the fourth floor.
Sometimes, when eight or more highly competitive contracts are up for award, the 36 chairs in this room will be filled early and the overflow will spill out into the hall. Today only three contracts are being considered--each a package of sidewalk repairs at scattered sites around the city. The total of all three is expected to be less than $1 million. So there are still some empty seats when, at 11 AM as scheduled, Arthur Lindsay, a retired Chicago policeman and now special assistant to the purchasing agent, steps behind the counter, opens the envelopes one by one, and reads off the bids. A hush falls over the room and everyone jots down the figures. Following the action is no easy matter for a neophyte; Lindsay throws around phrases like "controller's certificate," "addendum acknowledged," and "award criteria." The whole formality takes only about 20 minutes. Today's big winner appears to be the M & Q Construction Company, which has beaten six other bidders on each of the first two lots of repairs. The F & V Construction Company wins the third contract, even though its "base bid" is some $2,000 higher than another company's. The reason is that F & V's "award criteria" figure is less than its competitor's--a fact of life that everyone here seems to understand and accept.
When it's over there are neither cheers nor groans. The bidders get up and walk out the door or confer with the clerks behind the counter. More sidewalk repair contracts will be opened tomorrow, and many of these people will be back then. No one expects to win every day.
When Harold Washington ran for mayor in 1983, he presented himself first and foremost as a reformer. No city agency appeared riper for reform than the Department of Purchases, Contracts, and Supplies. An entrenched, overwhelmingly white network of favored contractors and suppliers seemed always to get the lion's share of contracts because the network had developed friendly and profitable relationships with many city government agencies--with the Department of Public Works, for example, or the Department of Streets and Sanitation. In his 1971 book, Boss, Mike Royko observed that people at every level in City Hall quietly took care of their friends and that a contractor who was not part of the "brotherhood" simply refrained from bidding on government work.
The brotherhood created two major problems: price markups and cost overruns meant the city often paid far more for a product or a project than it was worth; and competition, especially from minority and woman-owned firms (few of which ever attained brotherhood status), was stifled.
It was not that the purchasing department was the sole source of the cronyism, kickbacks, and sweetheart deals that had long characterized city business. But the department was the conduit through which all activity passed. It had nodded, winked, and shrugged so long that practices of gross favoritism had almost acquired the respectability of tradition. If reform in city business was to have any meaning in the Washington administration, the purchasing department seemed the place to start.
More than four years later, the purchasing department still has its share of troubles. There are now some who maintain that the old, white, male brotherhood has simply been replaced by a more integrated coterie of favored sons and daughters--no less unsavory, though somewhat more inept. Critics like to point to scandals that keep bubbling up. In early November, for example, two former purchasing department officials were among ten men indicted for accepting kickbacks from an automotive supply firm. But such quick and easy assessments can be unfair. The latest scandal, in fact, concerned alleged kickbacks made during the Byrne administration. Because the purchasing department must interact with every other city agency, the opportunities for corruption are as numerous as they are hard to trace. Reforming the operation is like cleaning up the Augean stables.
Yet in purchasing, as well as in other city departments, a concerted cleanup is under way. In the long run, that effort, largely behind the scenes and unheralded by the media, may prove the most important legacy of the Washington administration.
"I feel very good about what they're doing in Chicago," says Lewis E. Spangler, executive vice president of the National Institute of Governmental Purchasing. "There's tremendous progress." Similar programs to improve purchasing have been implemented in other major cities, he notes, including Philadelphia and Newark.
"Minority business in Chicago has picked up tremendously," says May Foster Thompson, executive director of the Chicago Regional Purchasing Council, whose membership includes major corporations as well as small and minority firms. "We get excellent feedback from our people--the sort of thing we'd never get in the old days."
"I think the city is bending over backwards to assist us," says Hedy M. Ratner, director of the 2,000-member Women's Business Development Center. "Sure, the old-boy network is still there, but they don't dominate anymore."
Asked to comment anonymously on the quality of city purchasing, a dozen business owners who bid regularly for city contracts concurred that important strides have been made. "Look, it's always better if you know the people you're dealing with," says a veteran electrical contractor. "But the purchasing people are about as straight arrow as you'll find anywhere in any branch of government today."
Last July the Chicago City Council approved Mary S. Skipton as the city's purchasing agent by a unanimous vote--one of those rare occasions when Washington loyalists and opponents found common cause. "She has done a beautiful job," says Third Ward Alderman Dorothy Tillman, referring to Skipton's performance as acting purchasing director for almost two years. "Business isn't done anymore in smoke-filled rooms. It's the end of the dark ages."
Alderman Edward Burke of the 14th Ward was not as ebullient as his colleague. As chairman of the City Council's Finance Committee until earlier this year, he had been the preeminent critic of purchasing practices, calling attention to suspicious deals and accusing the Washington administration of blatant hypocrisy. Yet he too voted for Skipton, he says, because "she's honest and I have no personal animus against her."
Two months after the mayoral election in 1983, Washington's transition committee submitted a report that cited the purchasing department's "fragmented responsibilities and control weaknesses"--deficiencies, the report insisted, that could only lead to "mismanagement, waste and misappropriation." Purchasing officials, it said, were not attracting enough new or minority business to create a fair and "competitive purchasing environment"; they lacked authority over "user" departments (other city agencies) and were hampered with "cumbersome and outmoded practices." Office files were so badly organized that purchasing experts hired by the team could go through only two contracts in an hour and could find no way to determine whether a vendor had a good track record.
Washington's first step, in November 1983, was to appoint William Spicer, a former career army officer, as acting purchasing agent. The fourth floor at City Hall was not the military, Spicer discovered. Underlings insisted on conducting business as usual, and he couldn't get rid of them because of the Shakman decree, which was intended to restrict patronage hiring and firing. "It was a hell of a problem," says Spicer.
"It was chaos, sheer chaos," says Charlie Banks, a veteran Chicago businessman who became Spicer's first deputy. "The city was paying 20 to 30 percent more for products than people paid on the outside, and we couldn't stop it. We couldn't even get the employees to take down their Jane Byrne calendars!"
Spicer's term was marked by some improvements in the system and a determined, though somewhat scattered, effort to steer more business to women and minorities. But progress was minimal, and the few improvements were drowned out by chronic charges that the mayor's office or James Montgomery, who was then corporation counsel, was interfering in purchasing decisions, that bid rigging continued unchecked, and that influence peddlers like Clarence McClain called the important shots.
Typical was the almost two-year-long uproar over the largest contract in the purchasing department's history: the people-mover transit system connecting the remote parking lots at O'Hare with the terminals. Despite strong opposition from minority firms (which were concerned that they would not get a fair share of subcontracts), a French company, Matra, was declared the winner, with a low bid of $113 million. Spicer, however, vetoed the award and gave it to an American company, Westinghouse. Matra went to court and, after a protracted fight featuring charges of gross interference by city officials, won back the contract.
The scandal involving FBI mole Michael Raymond did not directly affect the purchasing department, since the contract he hustled for was handled by the Department of Revenue and the corporation counsel's office. Yet that only illustrated the purchasing department's scattered authority and lack of unified control.
By early 1985, it was apparent that change was necessary. A 300-page study by a management consulting firm, James Lowry & Associates, documented the weaknesses: the absence of a monitoring system, the scarcity of a trained procurement staff, and the slow payment practices (up to four months after work was completed). The deficiencies, Lowry said, gave contractors "a license to steal" and yet effectively barred qualified minority- and women-owned businesses from participation.
Lowry strongly recommended that control over all purchasing be placed in the purchasing department, that programs to advise new firms on how to compete for city business be established, and that minority and women participation goals be written into all contracts. "There's too much money involved," he said, "for a system to operate on faith."
Similar recommendations came from a study by Quaker Oats executives, who cautioned reformers that "after decades of this thing being a mess, it is going to take a massive effort to unravel it."
On April 3, 1985, Mayor Washington issued Executive Order 85-2, which stated, "The Purchasing Agent shall establish a goal of awarding not less than 25 percent of the annual dollar value of all city contracts to qualified MBEs [minority-owned business enterprises] and 5 percent of the annual dollar value of all city contracts to qualified WBE's [women-owned business enterprises]." The order gave the purchasing agent full authority to see that the 25 and 5 figures were adhered to, to certify who was and wasn't an MBE or a WBE, and to take appropriate action against cheaters.
Meanwhile, the City Council had passed the McLaughlin Ordinance (introduced by 45th Ward Alderman Gerald M. McLaughlin), which said minorities and women should be hired for work under all city construction contracts of $100,000 or more. Minorities, for example, are to supply 25 percent of the journeyman and apprentice work hours on a project, and women are to supply 7 percent; laborer hours are to be 40 percent minority and 10 percent women. The ordinance also established "award criteria," giving preference to bidders who pledge to use even higher percentages of minorities and women; that's how F & V Construction Company won the sidewalk repair contract mentioned above even though its bid was higher than another company's.
Within a few months the purchasing department had acquired a better set of teeth with which to bite--and a mountain of new monitoring responsibility. In August of 1985, the mayor's office announced Spicer's resignation, only to find itself in another mess when the Vrdolyak majority discovered that, due to a technicality, the City Council had the authority to override the resignation and elect Spicer to a two-year term as purchasing agent. This they did in the heat of the Council Wars, much to Washington's embarrassment. The hapless Spicer joined the effort, claiming he didn't really want to resign. The courts, however, quickly overruled this bizarre coup, and attention shifted to the newly named acting purchasing agent, Mary Skipton. This inexperienced white woman seemed an unlikely choice for such a controversial position. The Tribune noted in an editorial that "Mary Skipton was a minor purchasing official who does not yet have the background for running a multi-million-dollar purchasing operation and fending off vultures from both the mayor's office and her own staff."
"We are in control and we will stay in control," Mary Skipton firmly declares. "There is nothing going on in this office we do not know about. We do not like surprises." Skipton is not using the plural of majesty; she is referring to herself and her two top lieutenants, Leroy Bannister and McNair Grant, who are seated at her side.
Skipton is the 40-year-old only child of an Irish immigrant couple who settled in Uptown. Her late father worked as a laborer in the Department of Streets and Sanitation in the 1950s, but the family, she says, had no political connections or interests. She got a bachelor's degree in communications from Loyola University in 1969 and held a series of administrative jobs in the Chicago office of the federal Department of Housing and Urban Development before taking a post in 1983 as deputy for finance and administration with the city of Chicago's Department of Housing. HUD was cutting back on its employees, Skipton says, and she liked the sound of the new Washington administration. She attracted the attention of Brenda Gaines, then city commissioner of housing, which led to her appointment to the top job in purchasing.
Grant, also 40, the son of a retired Chicago Board of Education administrator, is a former bank loan officer and economic development consultant. Bannister, soon to be 40, is an attorney who worked in the corporation counsel's office before being named Skipton's first deputy. All three joined the purchasing department in 1985.
Alderman Burke is among those who believe that cronyism and political interest still dominate city purchasing and that Bannister was a sinister link between the mayor's fifth-floor office and the purchasing department one floor below. The suggestion elicited a stifled vulgarity from Skipton, whose usual demeanor is polite and very earnest. "No one is calling the shots but us," she said, "all three of us together. When I took this job the mayor said, 'If anybody tells you I want something done, don't do it. If I want something, I'll call you myself.'" According to Skipton, he never called.
Their coworkers say that the odd trio of Skipton, Grant, and Bannister really does work as a team of equals. That certainly appears to be the case in an interview situation. The three regularly interrupt one another, even in mid-sentence, to emphasize a point or make a correction. "I think it's lucky we've developed this relationship," says Grant. "In some departments they've got a lot of little fiefdoms."
The reform efforts have been aided by the retirement, removal, or resignation of most of the holdover staff that plagued Spicer. Within a few days of her arrival, Skipton says, a budget officer assured her a rise in one contract from $50,000 to $100,000 represented a 50 percent hike. "With that kind of math," she says, "I knew we were in trouble. I fired him on the spot. . . . I decided this department is going to be proactive, not reactive."
Indications of a more proactive department and a more equitable purchasing environment are impossible to ignore:
In the old days, city agencies often skirted the contract bidding system--and took care of their business friends--by insisting that a product or service was needed on an "emergency basis." In 1982, for example, more than 1,000 emergency contracts were awarded. A month after her arrival, Skipton put in mandatory guidelines that effectively halted the practice. In 1986, ten emergency contracts were signed; so far in 1987, only two have been.
Abuses also occurred through so-called sole-source awards to companies that presumably alone could fill the city's needs. In some cases the arrangement was legitimate and necessary; the existing electric and gas utilities, for instance, are clearly the sole sources for those services. In other cases, however, contracts were deliberately written so that only one of several qualified companies could fulfill the requirements. New guidelines and an active sole-source review board cut such contracts from more than 1,000 in 1985 to 800 in 1986; a further reduction is expected this year. For the first time the purchasing department has also assumed full authority over all professional service contracts--the kind Michael Raymond tried to finesse.
Contract modifications, amendments, and change orders--easy ways for vendors to up their profits after signing contracts--have been gradually reduced. Amendments alone totaled $51 million in 1985, then dropped to $21 million in 1986 and to about $18 million this year.
To date, more than 1,400 businesses have been certified as MBEs or WBEs. Their share of city business exceeds the goals of the Washington executive order. In 1986, 27 percent (or $116 million) of contract dollars went to minority businesses and 8 percent ($34 million) to women-owned companies. The figures for 1987 are expected to be slightly higher. Facilitating the entire operation is the department's unique "indirect method of compliance," which allows vendors who, for legitimate reasons, do not meet the requirements for minority and women participation in one part of their business to fulfill the requirements in another (see sidebar).
Despite the common assumption that race and sex goals, which contravene the free-market system, cost a city a lot in the long run, the cleaner and more efficient operation of the purchasing department has actually cut costs--$21.7 million reported in overall savings in 1986 and $14 million expected this year.
The old requirement that contract bidders post cash or check deposits along with their bids (to ensure they are serious) was rescinded by the Illinois legislature last year after pressure from the Chicago purchasing department. Now, easier-to-obtain bid bonds are acceptable--a policy praised by cash-scarce small companies.
Purchasing department personnel now meet regularly with business groups and local chambers of commerce--in white as well as minority communities--to explain purchasing processes and to encourage new firms to get into the game. The basic regulations, recently rewritten in more readable English, have been condensed from 19 to 7 pages.
All this progress has been achieved with a reduced staff. Budget cuts trimmed the purchasing department's staff from 241 in 1985 to 213 this year. Skipton and her aides also redistributed personnel, cutting the number assigned to office administration and warehousing--"where the patronage workers were concentrated," says Skipton--and adding 58 in the critical area of contract monitoring and compliance. Especially important to a tighter policy is the automated inventory control system, a computerized method of checking instantly thousands of details that once required hours of paper shuffling.
A random check of eight contracts awarded in May, June, and July of this year indicated that all of the contractors were at or above minority and women hiring goals. A $2.2 million street resurfacing contract with the white-owned E.A. Cox Company, for example, included $588,000 (or 27 percent) in subcontracts with two Hispanic companies and $190,000 (or 8 percent) in subcontracts with two woman-owned firms. Similarly, a $734,000 contract for traffic light modernization with the white-owned Aldride Electric Company included a 26 percent subcontract to a black firm and a 5 percent subcontract to a woman-owned firm. That woman owner is also black.
There's no question some minority subcontractors are doing well, said Cleveland Chapman, president of Midwest Contractors for Progress, an association representing 30 black companies. It's equally certain that purchasing department policies help. "Before, we never knew what was going on," Chapman says. "One time in 1982 I waited more than four months before I got paid for a job. Now, they [Skipton's office] get on the backs of the comptroller's office [which issues the checks] and the other departments. They're trying harder."
Carolyn Jordan, whose underground sewer construction company has gotten a lot of city work, says purchasing department officials are "very progressive and making the system work for everybody." The problems confronting a black woman in a white, male-dominated industry are tremendous, she says: "The old-boy network figures you can't read blueprints. They only want to protect their own interests and shut us out. Well, I'm grateful for the opportunity to do some work and earn some money."
Gerry Gillette, the black president of Consulting Consortium Inc., a nine-year-old architectural and engineering firm, says he never got any city business before the Washington election. Now his firm's services are solicited by white-owned companies seeking to fulfill their minority goals. Though slow payment by the comptroller's office remains a headache, Gillette praises the purchasing department's efforts to cut through red tape. "The bureaucracy works better now," he says.
A veteran white contractor, Dan Walsh of the Walsh Construction Company of Illinois, acknowledges that more minority firms are coming into the business and that they're getting better at what they do. "Nobody can claim anymore that minorities aren't available for the jobs," he says.
All this does not mean a new, Camelot-like era has descended on Chicago. Indeed, life was undoubtedly calmer when the old brotherhood honored the traditional rites of buying and selling. A stirring of the waters can produce tidal waves as well as ripples.
Dan Walsh, whose company had long been involved in major Chicago projects such as the Eisenhower Expressway, says his firm hasn't done any business with the city for the past 18 months and doesn't plan to bid on future jobs. The reason, he says, is "increased surveillance" and the complexity of the new minority-participation rules. In previous administrations, he notes, an agency like the Department of Public Works would administer a contract from beginning to end, "but now everything's a big deal." Part of his disillusionment, he admits, stems from a penalty imposed on his firm by the purchasing department, which claimed his company had not fulfilled its minority subcontracting commitment on a job. "They withheld $900,000," says Walsh. "We didn't think it was fair."
Several other white contractors voice similar objections. "We've got enough private projects to keep us going," says one. "Who wants to be bothered with all this counting of heads and filling out forms? It's too much Mickey Mouse!"
McNair Grant admits that now when a contract is processed, there are many looking over the shoulders of contractors: review committees, the comptroller's office, the law department, and whichever agency has offered the contract for bid. The idea, he says, is to provide long and clear paper trails that preclude the fast and loose procedures of yesteryear.
Nevertheless, negative revelations about purchasing department employees continue to get press notice. Until he lost his job as chairman of the Finance Committee, the revelations were often provided by Alderman Burke, who admits he resented Washington's "continual prattle about reform." However, a check of the records indicates such implications and accusations were often without foundation.
In a typical case, an official of the Efengee Electric Supply Company was quoted in a Chicago Sun-Times story as having agreed to pay $30,000 to a black subcontractor in order to obtain a city contract for airport supplies. The official said the subcontractor, Production Dynamics of Chicago Inc., was expected (presumably with the purchasing department's blessing) to do nothing except collect its money and provide Efengee with the required minority partner. Charlie Banks, president of Production Dynamics, hotly denied that any such agreement had been made, and Efengee could provide no evidence of a contract or an agreement. According to purchasing department regulations, a prime contractor is required to do at least 50 percent of the work on a project, and a subcontracting firm must do at least 75 percent of the work for which it is hired before it may sub-subcontract any work.
Banks, who became an electrical parts distributor after resigning from the purchasing department in 1983, has been a target of speculation and rumor by gossip columnists almost every time he has bid on or won a city contract. The record indicates he has played by the rules and won contracts fairly with low bids. Not one accusation of impropriety has been sustained.
There was another flap about the $269,000 award of an O'Hare runway-resurfacing contract to the third lowest bidder, the Peter J. O'Brien Company of Chicago, which had failed to meet the minority and female participation requirements. The low bidder, the Pacific Company, charged it had been frozen out by demands that it meet impossible minority goals. But purchasing department records show that Pacific was given a partial waiver on minority participation, which would have allowed it to meet the goals, but was then unable to obtain a performance bond and an insurance certificate. Nearly 14 months after the original negotiations, the second lowest bidder, by then overloaded with other work, could not be held to the prices quoted in its original bid. At that point O'Brien agreed to its original prices. The company was then given a full waiver on minority participation because of the time that had elapsed and because the resurfacing was desperately needed.
"We're very much aware this agency could be the [administration's] Achilles' heel," says Skipton, "and people do what they can to show us up. I think the measurement of our success is an ability to stay out of the papers. The longer this management team is in place, the more credible we are and the more difficult it is to dig out items for press consumption."
A name frequently cited by critics of the administration is that of Howard Medley, a south-side moving company magnate and longtime Washington supporter who expanded into the construction business and obtained several lucrative city contracts. "I defy anyone to find anything out of line on his deals," exclaims Skipton. "Do you think we would jeopardize this office by trying to pull a fast one for someone as visible as Howard Medley? We go over everything he does with a fine-tooth comb!"
Perhaps Skipton's most awesome responsibility is monitoring contracts for race and sex balance. Ray Scannell, director of equal opportunity programs for the Construction Employers Association, calls it an impossible task--"like trying to monitor the wind." The purchasing department, he says, has enough to do just trying to obtain the best quality products at the lowest price. But, he says, "they have to also insist that companies walk on water--and then cite them for failure when they get wet."
The mere task of determining what constitutes a true MBE or WBE is incredibly complicated because the opportunities provided by the executive order have led to phony black-fronted and woman-fronted companies. The rules say the qualifying firm must be at least 51 percent minority or female owned, and the day-to-day operations must be directed by minorities or women. Cleveland Chapman says he believes hundreds, perhaps thousands of white-run companies with a few cooperative minorities on the payroll are proliferating, claiming large chunks of city business. Most of these pseudo-black or pseudo-Hispanic companies are subcontractors that were established as artificial satellites of large white firms to fulfill their minority requirements.
A case in point involves Baja Contractors Inc., which was hired in 1985 as a subcontractor by the white-owned Turner Construction Company to work on the new United Airlines terminal at O'Hare. Baja is owned by Humberto Jaimes, a Mexican immigrant, but it was so closely tied to the giant Material Service Corporation--Baja leased its trucks and obtained raw materials for its concrete from Material Service--that the purchasing department ruled it was more a conduit for the large company than a legitimate minority enterprise. The department denied Baja minority certification. Jaimes protested, filing a $2 million suit against the city and the purchasing department. In 1986, U.S. District Judge Milton Shadur said Baja could not be barred and called the city regulations "amorphous." A final decision from the U.S. Court of Appeals is now awaited.
"There was nothing amorphous about our regulations," says Grant. "They were exactly the same as those of the federal government." So that such disputes are minimized in the future, the city has developed very specific regulations of its own.
The Baja case, insists Skipton, illustrates that the purchasing department is not just rubber-stamping anyone who comes along under a minority label. More than 500 firms have been denied MBE or WBE certification or have had their certification revoked. "Of course some cheaters are getting through," says Skipton. "That's why we're making monitoring a high priority. But the number is nowhere near what some people think. Actually, it's pretty minuscule."
Denial of certification, naturally, can cause bad blood. One woman whose electrical contracting company was rejected on the grounds that her husband actually runs the firm says she is bitter. "The real reason," she says, "is that we're white and the administration is black."
Some Hispanics, too, express dissatisfaction with their cut of city work. Dr. Armando Triana, director of the Center for Research on Hispanics at DePaul University, says the new policies "have not provided much of a payoff for us yet." Though Hispanics account for an estimated 30 percent of Chicago's population, they have been getting less than 5 percent of city contract dollars, he says. Triana is especially upset that the results of a study on Hispanic business, conducted by a task force that he headed for Mayor Washington, have never been publicized. The study recommended that 15 percent of all city contracts be reserved for Hispanics. Yet Triana has nothing but praise for the city's "generally more favorable atmosphere toward Hispanics and its success in opening the process to firms that never before had opportunities for business."
There are some who claim the entire initiative on behalf of minorities and women is unconstitutional, that Mayor Washington's executive order--issued as a fiat without any legislative approval--could be struck down by the courts. "It was a unilateral move," says Ray Scannell, "with no proof of a compelling governmental interest in the goal, no relationship shown between the remedy and the cure. . . . There weren't even any hearings beforehand."
The issue is moot since no one has challenged the order in court. However, Geoffrey R. Stone, dean of the School of Law at the University of Chicago, says there are indeed questions about the legality of the order. The operative Supreme Court decision (Fullilove v. Klutznick, 1980) held that a goal of 10 percent for minority business enterprises is constitutional; it did not determine whether a mayor, or a state or city council, may set such a goal, or how high a percentage is legitimate. "My own opinion is that the current regulations could withstand a challenge," says Stone, "though some modifications might be ordered."
Until someone tells them otherwise, Skipton, Grant, and Bannister say they will proceed with their agenda. "I'm proud of what we've done so far," says Skipton, "and we will not let up for anyone or anything. . . . We walked in here with impeccable professional reputations and we intend to still have them when we walk out."
Cover Feature Sidebar
"Minority Purchasing: How It Worked for One Black Sewer Contractor"
George Fed worked 20 years as a heavy equipment operator for asphalt paving companies in Chicago and never made more than enough to keep his family going. But when Harold Washington was elected in 1983, he decided to hew out a career on his own terms.
"It was tough," says Fed, now 45 and owner with his son Terrence of George Fed & Son Construction Company, whose specialty is sewer work. "At first we got a lot of these little $1,500 and $3,000 jobs and we learned as we went along."
The big prime contractors needed minority subcontractors to meet their required goals, and Fed was always available and ready to work. "I wouldn't have lasted without that boost from the city," he admits. "I didn't have the track record or the expertise."
Today Fed owns $1.5 million in equipment, including 31 trucks. He is not only sought after but respected as a competent sewer subcontractor. This year, about two-thirds of the $3 million in work he does involves city contracts. "Now," he says, "I'm ready to go after jobs as the prime contractor. The prime has the responsibility and the control, and it's the only way to really get ahead in this business."
Fed has found employees for his company by offering free classes in sewer construction in his south-side neighborhood. "Out of that I've gotten six or seven good working people," he says, "and some others who've gone with other companies. I think you ought to help your community, not just yourself."
Cover Feature Sidebar
"Minority Purchasing: How It Was Made to Work for One White Auto Dealer"
When a black-owned Ford dealership was chosen in 1985 to supply trucks for the Chicago Department of Public Works, a white Chrysler dealer in Schaumburg objected. He had been bypassed, he says, because he could not provide the required 25 percent minority involvement to fulfill the contract. "We are not minority-owned," he argues. "Chrysler is not minority-owned. And there was no extra equipment needed. Where are we supposed to go for minority participation?"
That problem is now being addressed by a purchasing department innovation called "indirect participation." If minorities and women cannot come in through the front door, they still may enter through the back.
For example, in 1986, Sam Pfeffer, the owner of Old Orchard Chevrolet Inc. in Skokie, entered a bid on a contract for 460 squad cars for the Chicago Police Department. He was the low bidder--by some $630,000--but, like the Schaumburg Chrysler dealer, he was white and could find no way to fulfill minority goals through subcontracts. Through indirect participation, however, Pfeffer, the city, and several small-business people came out ahead. Working with the purchasing department, Pfeffer hired a Hispanic-owned janitorial service, a female-owned advertising agency, and a black-owned towing service. Directly, none of these firms had anything to do with the police-car contract, but they were accepted as partial fulfillment of the city's mandated goals. Because Pfeffer's bid was so low, the police were able to order some 30 more cars than they had requested in the original order. "I had heard horror stories about how you can't deal with Chicago or the Police Department," says Pfeffer. "Well, I got absolutely top-drawer treatment."
Indirect purchasing methods are now used with many of the city's major suppliers, including Xerox and IBM--whenever minority or female subcontracting is simply not practical or feasible.
Art accompanying story in printed newspaper (not available in this archive): photo/Marc PoKempner.