Minority Purchasing 

How It Worked for One Black Sewer Contractor; How It Was Made to Work for One White Auto Dealer

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."

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.

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