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Outreach Helps Small Businesses Compete for Large Construction Jobs

Minority contractor Joseph Troya was getting mighty sick of chasing down potential job leads and ending up with nothing but empty calories.

In the usual scenario, he would receive a form letter, inviting him to a meeting with other small-business contractors.

“You go and it’s a lot of nothing,” said the Carlsbad resident. “You can’t bond a $10 million job. You don’t meet those requirements that these guys want. They do the coffee and donut thing. ‘We’ll get back to you.’ ”

These days, Troya , who since has carved out his own niche , is trying to help pave the way for smaller businesses that want a piece of the action.

Since 1983, Troya and partner and brother-in-law, Jose Elias-Calles, have grown Consolidated Contracting Services Inc., into a medium-sized, minority-owned, 60-person company that racks up annual revenue of about $45 million.

The firm is currently based in San Clemente. But the Cuban-born Troya, company vice president and principal, has his eye out for a new location in North County. In the meantime, he is spending a lot of his time reaching out to the small fish who want to swim in bigger ponds , just as he had done previously.

“We are working with a lot of Fortune 500 companies,” said Troya. “We want to give back to the community and we try to hire minority contractors. It is our luck that we have hooked up with companies like Sempra and Chase Manhattan.”

Troya, who credits Sempra Energy for its efforts in hiring minorities and women, last year landed a $10-million contract with the firm. Consolidated Contracting Services is serving as general contractor for a two-story, 38,000-square-foot building that received Leadership in Energy and Environmental Design certification from the U.S. Green Building Council. Scheduled for completion in November, the building will be used for field operation crews.

Troya has had his share of lucrative contracts over the years, including projects for the San Diego offices of Hewlett-Packard Co., Price Enterprises Inc., Chapman University, Enterprise Rent-A-Car Co., JPMorgan Chase & Co., and SE Corp. Troya estimates that 70 percent of his business is in San Diego County.

But it hasn’t been an easy ride.

“Five years ago, we couldn’t get a contract from anyone on any of the big public jobs,” he said.

Troya believes in sharing the wealth by inviting minority- and woman-owned subcontractors to the job site.

“We ask them to come down and see how we can help them get a real job out of this,” said Troya. “If you are a small minority general contractor, it is really, really tough to work with the big people.”

Sometimes the response can be disappointing.

“They get comfortable at a certain point and don’t want to get out of that comfort zone,” he said. “You’ve got to have passion for what you do. If they don’t want to do it, you can offer free cookies all week long and they aren’t going to come.”


Paving The Way

Troya also lends a hand helping small businesses navigate through the often dizzying amount of paperwork required on a bid.

“We were trying hard to get them every piece of information, and work with them on bonding,” said Troya. “Once you mentor somebody you build a relationship that goes on forever.”

Troya helps out the mom and pop companies with one-on-one training.

“Sometimes, they are not thinking of tomorrow,” said Troya. “They don’t look up and say, ‘If I want to get out of just pouring concrete, and get others to pour it for me, I have to step back and see about growing my company.’ ”

So, Troya helps pave the way.

“Our CFO sits down with the subcontractors to do forms correctly,” he said. “We have to take a lot of time reviewing everything they do three times. But, to me, this is a lot better than saying, ‘That’s your problem. Come in next week and turn it in the right way.’ ”

Another major challenge for small woman- and minority-owned businesses is getting contracts in union shops.

“We needed to find a small minority local contractor that was union, and that is one in a million,” said Troya.

So, he talked with the unions and arranged for the subcontractor to sign up for a single project. Troya also has been willing to put up a portion of a bond, relieving the cash-strapped smaller subcontractor from carrying the full freight.

“If I have a small minority contractor in, say, air conditioning that happened to be the low bidder on a job that is $200,000, but they can only bond $150,000, I take the risk of the other $50,000,” Troya explained.

His bonding company is willing to accept the risk, said Troya, because of its long history with Consolidated Contracting Services.

“We haven’t had a default yet and we have done it seven or eight times,” he said. “You have to mentor these guys. If you throw them to the wolves they are going to sink.”


Reaching Out

While the outreach efforts by San Diego-based Sempra usually are more broad-based, the company did assist Troya in his efforts to attract subcontractors, said Scott Drury, director of diverse business enterprises for San Diego Gas & Electric Co., a Sempra subsidiary.

“Joe made it a priority and reached out to work with my staff in this regard,” he said. “Joe deserves a lot of credit for the leadership that he has provided.”

On a broader scale, during the past seven years, Sempra has tripled the amount of money spent with woman- and minority-owned firms, said Drury. The company also made deposits of $1 million each to two minority-owned banks , the Neighbor & #173;hood National Bank in San Diego and Prom & #233;rica Bank in Los Angeles , for loans to minority- and woman-owned businesses, he added.

Some other tidbits offered by Sempra:

– & #8201;In 2006, Sempra utilities , San Diego Gas & Electric and Southern California Gas Co. , spent $251 million , more than 23 percent of total purchases , with woman-, minority-, and service-disabled, veteran-owned businesses.

– & #8201;The utilities’ subcontracting to woman- and minority-owned businesses has grown from $9 million in 2005 to $41 million in 2006.

– & #8201;Of the utilities’ work force, 53 percent is minority, and 30 percent female; six women work at the level of vice president or above, including Debra L. Reed, president and chief executive officer of Sempra Energy Utilities.

– & #8201;Some 51 percent of Sempra’s general work force and 30 percent of its managers are African-Americans, Asians, Hispanics and American Indians.

In April, Sempra made DiversityInc magazine’s 2007 list of “Top 50 Companies for Diversity,” ranking second in supplier diversity and 29th for overall diversity; and was recognized along with several other local companies by the San Diego Business Journal for diversity in the workplace.

Sempra has set a goal of expanding the diversity of its supply base for goods and services to 30 percent by 2015, said Drury.

“The concept is that the more we can invest in and grow the stable of woman- and minority-owned businesses, the stronger the diversity program is going to be,” said Drury.


Mutual Benefits

The Council for Supplier Diversity, formerly the Greater San Diego Business Development Council, is a nonprofit organization charged with bringing together corporations and minority business enterprises , known as MBEs , for the economic benefit of both.

Ronald B. Garnett, its president and chief executive officer, said that companies such as Sempra, SAIC, Union Bank of California, SeaWorld and Turner Construction Co., among others, “truly get it.” Consider it an example of enlightened self-interest.

“In the business world there are no set-aside programs, because in a competitive marketplace you can’t afford to do that,” said Garnett. “The suppliers that are ready to do business with companies provide innovations. They have learned by necessity to build a lean operating budget, while still providing quality of service, or creative ways of doing things in the supply chain.”

In other words, both sides end up buffing their bottom lines, further eroding the outdated perception that to do good is going to cost you, said Garnett.

Another reason why private enterprises invest in outreach programs is to be good corporate citizens, he added, enhancing their reputations, while, once again, tending to their bottom lines.

While private enterprises are winning recognition and kudos for their outreach efforts, how is the public sector faring?

“Private industry has done better than the city has, and there is no reason why the city can’t do better,” said San Diego City Council President Pro Tem Tony Young, 4th District.

As an example, Young gives high marks to San Diego-based Barnhart Inc., and its chairman and chief executive officer, Doug Barnhart, for outreach efforts involving the Lincoln High School construction project on 49th Street.

“I said, ‘Mr. Barnhart I expect you to be fair,’ ” said Young. “They did a wonderful job recruiting people from the community. It is an issue of fairness.”

Young has been concerned about what he calls the “horrendous” job the city has been doing in awarding construction contracts to minority- and woman-owned businesses.

Figures compiled by the city for the period from July 1, 2006, to June 15, 2007, show a zero in the box for African-Americans under “prime contracts.”

This compared to $162,571 allocated for the category Asian/Pacific; more than $1.65 million for Hispanic; and more than $44.1 million for Caucasian. While African-Americans scored somewhat better for subcontracts, earning $110,000, it was still less than Asian/Pacific, $289,323; Hispanic, more than $483,000; and Caucasian, $10.1 million.

Sharing Young’s concern is San Diego City Councilwoman Donna Frye. But, after reading the numbers for minority participation, Frye recalled telling Young, ” ‘At least you got a box.’ Woman-owned businesses don’t even get a box. Half the population has no presence on the planet.”

In a recent interview, Frye added, “There really is no program or initiative or incentive to really do something for making sure that contracts that are awarded by the city actually represent the people who work in our city. They are not represented and there is a cavalier attitude that says, ‘If we don’t meet any goals or objectives, or don’t do anything about it, so what?’ That has been the attitude for a very long time, and it has not changed much.”

Frye is frustrated.

“For two years, there have been no reports that have come out,” she said. “Some of these issues get to the back burner and are not addressed as they should be. It’s sort of amazing to see, in this day and age, that woman-owned businesses don’t even get acknowledged that they even exist.”

Frye wants to institute a system of checks and balances to make sure that contracts are being rewarded equitably.

Young also wants an accounting and a better system to promote fairness. “We need to create a strategy to effectively recruit woman- and minority-owned businesses for city projects,” he said. “People have stopped applying for opportunities in the city.”

Garnett also believes that more effort is needed.

“The city knows that this is a good thing to do, and that it does add value for the whole community,” he said. “Somebody should be driving it. I don’t think that it should be that much different, as a city or county. You want to represent all of your citizens, and be fair and equitable, and find ways to save money and bring innovation.

“This cycles back so the community is strong economically in all sectors , the same as benefits corporate America. But the way government works versus corporations is the handicap.”

Garnett doesn’t accept excuses.

“There needs to be a strong look at what it is that you really want to accomplish, and what blocks you from getting there, and removing the obstacles,” he said. “That’s how business works. I’m not sure that is getting done.”


Politics Of Diversity

Jim Ryan, executive vice president of The Associated General Contractors of America, San Diego chapter, disagrees, especially with any hint that his industry is racist and practicing discrimination.

“We actually are accomplishing something in bringing diversity to the city,” he said. “The city is accomplishing nothing. We are doing everything possible , training, recruiting, mentoring doing just about everything we possibly can to make our industry a real reflection of the county makeup and population. If the city would just calm down and stay out of it.”

As for the city’s diversity efforts, Ryan said, “For decades, they have come up with programs that don’t work and have no basis in logic. They are simply political vehicles to help them get votes.”

Ryan added, “To become a contractor, you have to know how to build something. We started close to 20 years ago, opening up apprenticeship programs to minorities and females. We will continue to make the industry diverse.”

On Oct. 10, the City Council Rules Committee gave the green light to prepare a request for proposal , with public input , to conduct a study on the city’s hiring practices a report that is expected to cost from $500,000 to $1 million.

The committee also received an update from the mayor’s office that an equal opportunity consultant, Franklin Lee, had been retained to advise on the city’s equal opportunity contracting program. According to Frye, Lee also had been involved in a similar review for the city a dozen years ago.

“He had worked on a disparity study on what was not being done, and is still not being done 12 years later,” said Frye, in an interview following the meeting. “The simplest thing to do is to enforce the policies that are already in place.”

A member of the mayor’s staff is scheduled to return to the committee on Nov. 7 to give an update of “where we are in the process,” said Young.

“We cannot just say that Mr. Lee is going to come in and provide all of the solutions,” he said during an interview following the meeting. “The city can look at its own departments, purchasing and contracting, and find ways to make it a level playing field , starting today.”

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