MBDA Shifts Focus to Big Companies: Minority business advocates are worried
After 33 years, the Minority Business Development Agency (www.mbda.gov) is turning its attention to building capacity among companies that already are on their way to becoming big companies. MBDA officials rolled out the agency’s Strategic Growth Policy during this year’s Minority Enterprise Development (MED) Week conferences, which are held around the country. The policy, which will de-emphasize programs for start-up and small minority business enterprises, has sparked concern among longtime minority business advocates, who argue that the new direction goes against the spirit of the MBDA’s original mandate.
Heyward B. Davenport, the MBDA’s New York regional director, said, “We’ve been doing businesses one way for 30 years. We created 3 million MBEs, but only 3 percent, 84,000, are grossing more than $1 million in sales a year. That 3 percent comprise 60 percent of all gross receipts of MBEs. We need a new approach if only 3 percent have the capacity to grow bigger.” Davenport was interviewed by The Network Journal at MED Week in New York.
John Robinson, president and CEO of the National Minority Business Council Inc., argues that the remaining 97 percent cannot be ignored in any reallocation of resources. “We must be true to the mission and spirit of the original executive order by President Richard Nixon that set up the agency in 1969. We do understand that times have changed and focus may have to be changed, but . . . we must always keep in front of us the interest of the total minority community, be it the smallest of the small or largest of the large,” he says.
Ron Shinault, president of the National Minority Medical Suppliers Association, agrees. “I understand the need for the agency to [shift focus]. Given the nature of the way business is transacted, you almost have to get to that level in order to have the infrastructure and the systems and the capacity to compete with the Fortune 500 companies and as government contractors. [However,] if they’re saying they will shift away from companies earning less than a million, that concerns me. The federal government has an obligation, based on the tax revenues they receive from the population, that anyone who is a taxpayer should have the opportunity to compete for the portion of the federal government procurement,” he says.
The MBDA is the only federal agency mandated to foster the establishment and growth of minority-owned businesses. Its business development, resource and opportunity centers across the country offer a wide range of services to minority entrepreneurs.
Davenport says the new policy will not ignore smaller MBEs. “We will use portals [on our Web site] to get information to them on business plans, start-up information, etc.,” he says. The policy reflects changes in the business environment and subsequent pressures on the federal government and large corporations that issue vendor contracts, he says. “Bundled contracts are the wave of the future no matter what they say or who is in office because [they are] driven by global competition and productivity. MBEs have to perform at that level, so we need to address the issue of capacity in MBEs,” he says. The MBDA has to “shift focus from trying to be everything to everyone to trying to create strategies for companies that already are grossing $1 million in sales and have half a dozen employees and growing them to big companies. They are the ones that will be able to perform on the bundled contracts and create the jobs,” he says.