Dulles Rail and Disadvantaged Business Enterprises

The face of a disadvantaged business enterprise: Buhpinder Sohi. Sohi studied engineering at Government Engineering College Rewa in India and has been CEO of EPCM, Inc. Consulting Engineers since 1999. (Nothing personal, Mr. Sohi, I picked your name at random from the list of Dulles Transit Partner DBEs.)

by James A. Bacon

The Dulles Rail project plods inexorably forward. The Metropolitan Washington Airports Authority has issued a Request for Qualifications Information (RFQI) to solicit qualifications statements from potential bidders on the 11.5-mile rail line. Companies who submit applications will be narrowed down to a short list of five firms. The contract will be awarded to the team that meets the technical requirements at the lowest price.

While MWAA has abandoned its pro-Project Labor Agreement methodology for selecting bidders, it does set a goal of sub-contracting at least 14% of the total contract value to Disadvantaged Business Enterprises (DBEs). DBEs are defined as firms that are at least 51% owned and controlled by “one or more socially and economically disadvantaged individuals.” (See the DBE goal here.)

Here’s the question of the day: How many of the DBEs who participated in Phase 1 were truly “disadvantaged”? Dulles Transit Partners published a list of its DBE firms here (go to page 8).

While DBE putatively is aimed at socially and economically disadvantaged individuals, it has evolved into a racial/gender spoils system. You will not find any “socially and economically disadvantaged” white people — someone who grew up in an Appalachian trailer park, say — qualifying as a DBE.

To my mind, the only group in a Virginia context that can be reasonably thought of as disadvantaged is African-Americans. Their ancestors were slaves, many of them lived through the Jim Crow era and many today remain disadvantaged by discrimination against their forebears. That’s not the case for all African-Americans living here in Virginia — clearly there is a strong and growing African-American middle and professional class — but enough of them can be considered disadvantaged that I’m willing to go along.

I don’t think of Hispanics as disadvantaged. Poor, perhaps. Disadvantaged, no. Maybe Hispanics were subject to vile laws and discrimination in other states but their arrival in Virginia in meaningful numbers dates back only 20 or 30 years. I’m sorry, but migrating to Virginia as a poor Hispanic person within the past generation does not make you any more disadvantaged than being born as a poor white person. (If you think speaking with a Hispanic accent subjects you to invidious stereotypes, try speaking with an Appalachian twang.)

It is absurd to think of South Asians, Koreans or Chinese as disadvantaged. If anything, these ethnic groups are privileged. Here in Virginia, they tend to be better educated and to enjoy higher incomes than whites.

As for women, we can argue about the corporate glass ceiling all day long. But can anyone seriously make a case that women are disadvantaged as small business persons? In a related question, how many of the “woman owned” enterprises designated as DBEs are owned by husband-wife teams in which the wife owns 51% and the husband owns 49%?

From eyeballing the Dulles Transit Partners list, I would guesstimate that half the DBE enterprises are Hispanic, with a significant number of Asians like Mr. Sohi pictured above. Are we expected to buy into the fiction that Mr. Sohi, who apparently emigrated from India to the U.S. with an engineering degree, qualifies as “disadvantaged”? C’mon. Of the rest of the DBEs on the list, a majority are women. Some of those women may be African-American, but I’d be willing to wager that most are white.

The DBE program is a farce, a racial-gender spoils system that is only marginally effective at creating opportunities for the one group — native-born African-Americans — that has a legitimate claim in Virginia to being socially and economically disadvantaged. But the DBE program is so deeply rooted that no one ever questions it. To do is is to risk being branded a racist or misogynist.

Post script. I’m not ragging on MWAA here. MWAA is following the law. All state and federally funded projects require DBE participation.

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  1. larryg Avatar

    Here’s a company worth understanding better in the context of this subject:

    Chugach Alaska Corporation


    Corporate Office

    Chugach Alaska Corporation
    3800 Centerpoint Drive, Suite 700
    Anchorage, Alaska 99503
    Phone: 907-563-8866 Fax: 907-563-8402

    Regional Offices

    2800 Crystal Drive, Ste. #200
    Arlington, VA 22202
    Phone: (703) 336-0100
    Fax: (703) 299-9061

    1082 Makepono Street, Honolulu, HI 96819
    Phone: (808) 841-9500 Fax: (808) 841-9600

    4955 Corporate Drive, N.W., Ste. #100
    Huntsville, AL 35805
    Phone: (256) 665-9204

    2700 East Sunset Road, Suite #5
    Las Vegas, NV 89120-3507

  2. Yup, Alaskan natives have faced a long history of discrimination here in Virginia.

  3. constructionandlaborguy Avatar

    MWAA is following federal/state DBE requirements/targets. They are common in federal/state/local funded public works projects in the construction industry, for better or for worse. The DBE set-aside regulations and system have certainly been abused by illegal pass-through arrangements and other acts of fraud, but in theory and in reality, this is also a means to ensure small businesses get a crack at these subcontracts as most DBE firms are small.

    I know of a number of legitimate DBEs and they would have no chance at getting any of these types of subcontracts as the larger firms dominate them on price and performance. One wonders why we have a system that doesn’t reward the best, but the theory is that giving these smaller DBE firms a crack at these contracts allows them to grow and keep tax dollars local. If DBE firms “grow up” and succeed, the public benefits by preventing a concentrated oligopoly of the largest firms winning all of the contracts.

    I’m not sure that I agree with this social engineering, but there are significant barriers to market in the construction industry so I generally support programs that lead to a larger pool of qualified contractors chasing work. However, I’m not sold on these programs being a long-term success.

    There are also small business contracting targets and requirements and many argue both of these programs serve the same purpose but the DBE programs are rife with fraud and abuse and should go. I have seen data/reports supporting both sides of the argument, so I really can’t tell you if these DBE programs are worth it.

  4. constructionandlaborguy Avatar

    If you haven’t read the Phase 2 RFQI yet, check it out:

    There is no PLA mandate or preference but MWAA refers to PLAs as a “workforce agreement” and reiterates such an agreement is voluntary. No extra points or anything that favors prime contractors who use a voluntary PLA.

    MWAA says primes must self-perform a minimum of 25 percent of the construction work. That means if a prime voluntarily enters into a PLA, a minimum of 25 percent of construction trade work will essentially be performed by union labor. If a prime self-performs more work than the minimum 25 percent, or the PLA used by the prime contractor extends to subcontractors, more jobs will go only to union members.

    Federal prevailing wage and benefit rates determined by the Davis-Bacon Act apply to Phase 2. The public can look up rates for Fairfax and Loudoun County at http://www.wdol.gov by the type of construction and trade.

    MWAA will short list to a max of 5 primes and invite them to submit price proposals.

    There is a schedule of bid-related activity in here on page 15 of the pdf. Award is May 2013.

  5. DJRippert Avatar

    Welcome to Washington, Jimbo! The ranks of federal contractors getting privileged bidding positions are filled with companies owned by wealthy Indians who got a first class education in India and then voluntarily immigrated to the United States.

    Constructionandlaborguy is right. This is commonplace. In fact, it’s pervasive.

    In 1985 I worked for a prime contractor doing some work for the IRS. We had a sub-contractor who provided some technical people. The sub qualified as disadvantaged. I met the owner and asked him about his status as a disadvantaged business owner. He told me that he qualified as a Native American. He had sandy brown hair and blue eyes, grew up in the suburbs of Chicago. If he told you in a bar that he was Native American you would have presumed him to be a liar.

    Hell, Bacon – you see yourself as a descendant of Pocohontas – right? Maybe you qualify for special treatment! Make MWAA devote a portion of their advertising budget to this blog. It’s only fair for all the mistreatment you have suffered.

    Ha, ha Jim – you have only scratched the surface of this scam.

    And no – a poor white kid from the trailer parks whose Mom was a drunk and whose Dad beat him would get no special preference.

  6. reed fawell Avatar
    reed fawell

    The only abused minority left is the country is the All American White Guy. And what he’d do to the India born engineer except let him into his USA.

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