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AEDC’s Program for Minority Firms Extends Its Mission

6 min read

Patricia Nunn Brown pulled out a batch of fresh business cards last week — just after Women’s Equality Day — and pointed out what’s new.

“Women” is now part of her title, and the group she leads at the Arkansas Economic Development Commission has been renamed the Division of Minority & Women-Owned Business Enterprise.

The changes reflect a new responsibility, promoting female-owned businesses in Arkansas.

And after 10 years of helping minority-owned companies get state procurement contracts and corporate business, she’s more eager than ever to get the word out.

“You’re the first person to get this card,” she told a reporter who met her at the AEDC’s downtown offices, where the conference room offers a view of Philander Smith College, Brown’s alma mater.

“As we add women to our program, we’re looking at a great opportunity to publicize it,” Brown said. “We want our phones to be ringing off the wall.”

On Thursday, Brown was at Gov. Asa Hutchinson’s side two floors below, along with AEDC Executive Director Mike Preston, as the governor trumpeted the program’s expansion.

“Arkansas is catching up,” Brown said. “Before, about seven states didn’t include women in their goals. Now we’re sort of mirroring federal programs as well.”

Businesswomen will now gain access to “real-world technical and professional assistance with certification, procurement, networking, capital and contracting,” Brown said.

Act 1080, passed by the Arkansas General Assembly this year, took effect Friday, setting a goal of spending 5 percent of the state’s discretionary procurement budgets with women-owned businesses.

The state’s online directory of minority-owned firms now lists some 275 certified companies, and Brown’s team is busy certifying women-owned businesses. That involves reviewing documents and making on-site visits to ensure that women own 51 percent of the businesses. Enterprises must have less than $10 million a year in revenue.

Brown proudly points to two firms that “graduated” from the program by topping that threshold: Platinum Drywall Inc. of Little Rock, led by Anthony Brooks, and Protech Solutions Inc., a Little Rock software and database company headed by Satish Garimalla. They still do state business, but their numbers don’t apply to state goals.

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Service-Disabled Veterans
Act 1080, which also added service-disabled veterans to the program, benefited from a bipartisan push in the House by Michelle Gray, R-Melbourne, and in the Senate by Joyce Elliott, D-Little Rock; David Wallace, R-Leachville; and Missy Irvin, R-Mountain View.

State goals for minority-owned firms overall remain at 10 percent, but 2 percent of that will be aimed at service-disabled veterans. The remaining 8 percent target is for companies majority-owned by African-Americans, Hispanics, Asian-Americans and other groups.

The goals are not quotas, and state offices face no penalties for falling short. But each state agency and division must dedicate an officer to report their annual “spend” on minority contracts. Yearly reports have been placed online since 2010.

“Some agencies do better than others, and take pride,” Brown said. “We have never fully met the goals, but percentages have gone up.” In fiscal 2010, the period of the first annual report, the state spent $53 million of its $1.24 billion “reported controllable budget” with minority-owned businesses, or 4.28 percent. The next year, the percentage slipped to a disappointing 2.4 percent.

It rose to 2.6 percent in 2012, 4.4 percent in 2013, 5.99 percent in 2014 and 7.46 percent in 2015, the last year for which the report is available on the AEDC website. “We had some issues with our portal in 2016 and had to take those numbers down,” Brown said. Figures for fiscal 2017 are still being compiled.

Elliott said she heard some grumbling about minority opportunities being diluted by the 2 percent goal for disabled veterans. “We were hedging against that,” she said. “But to get a bill passed, it made sense to have some unity. We’ve never met even 8 percent of the goal, and you can’t set quotas.”

She says state department heads must take minority contracting more seriously. “The state does millions and millions of dollars’ worth of business, and opportunities should be accessible to all Arkansans. If we’re not deliberate, we won’t change the dynamic.”

She is pleased that Brown and her team are making progress, and she singled out Arkansas State University in Jonesboro for its diligence. A-State’s minority-business effort made up 27 percent of its discretionary spending in 2015. By comparison, the University of Arkansas at Fayetteville’s was less than 1 percent that year, according to AEDC figures.

Brown also mentioned Goddess Products, an office-supply company owned by Leanna Godley, as a notable minority-owned vendor to the state.

The AEDC doesn’t keep statistics on the number of minority- and women-owned businesses in Arkansas, relying instead on data from the Census Bureau. A 2014 bureau survey found that 950,000 minority-owned businesses made up 17.5 percent of U.S. companies. Women owned about 1.1 million firms, or 19.4 percent.

“Those aren’t apples-to-apples numbers,” Brown said. “Businesses in our program must be for-profit, and they have to have been in business at least two years.”

Arkansas Minority Spending Annual Reports

Year Budget Spend Percentage
2010 $1.2 billion $53.1 million 4.28%
2011 $1.19 billion $28.7 million 2.42%
2012 $651 million* $17 million* 2.61%
2013 $687 million* $30.1 million* 4.38%
2014 $535 million* $32 million* 5.99%
2015 $316 million $23.6 million* 7.46%

* Budgets and state purchases made with minority business enterprises as reported in the MinorityView Portal
Source: Arkansas Economic Development Commission

Diversity and Job Creation
Diversifying the state’s business base is written into the AEDC’s mission, and Brown said creating jobs is another crucial goal. To that end, the state established the Arkansas Minority Business Advisory Council, appointing volunteer businesspeople to offer guidance to the state and to businesses themselves.

Another job creator is the Minority Business Loan Mobilization Program, which guarantees 90 percent of loans up to $100,000 for qualified minority- and women-owned businesses. “We’ve never had a default in more than five years, and we’ve created or retained at least 170 jobs,” Brown said. “In the minority community, creating even two or three jobs makes a huge difference.”

More than 30 loans worth $2.6 million are outstanding, with $1.8 million guaranteed by the state. Fifteen lenders are enrolled in the program.

“Act 1080 and all these efforts I hope will emphasize to government agencies and private businesses that minorities and women aren’t getting a fair shake,” said Wallace, a first-term senator and former Army Cobra attack helicopter pilot. “Ever since we’ve had these goals, we’ve underperformed across the board. So our agencies have to reach out, not only to women and minorities but to the disabled veterans. As a veteran, I know that those who served our country deserve consideration.”

Brooke Vines, CEO of Vines Media in Little Rock and a member of the Minority Business Advisory Council, testified before lawmakers in support of adding women to the program. “Many states require that a percentage of bids go to a woman- or minority-owned business, not to exclude men but to ensure that diversity is a part of all the decisions … It gives boutique shops an opportunity to get experience that they would otherwise not be considered for.” Girish “Gary” Patel, a Searcy hotelier who is also on the council, said the state must “promote women and make sure everybody gets a fair shot, but I think things have gotten much better over my four years on the council.”

Brown’s main message to businesses is that help is just a call away. “We partner with groups like APAC [Arkansas Procurement Assistance Center] and ASBTDC [Arkansas Small Business & Technology Development Center] and have lots of resources available.

“Private companies like Lockheed Martin also have large supplier-diversity programs, so this goes beyond state contracts,” Brown continued. “Corporations call us looking for minority- and women-owned businesses to supply services or products. We refer them to our certified list. But we also work with people who want to start businesses, and if interested people will just give us a call, we’ll get them some help.”

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