Long awaited legislation supporting small business gets Mayor's signature

By Aldrich M. Tan

May 12, 2006

Mayor Gavin Newsom signed an ordinance Thursday afternoon that gives small businesses a fair chance in competing for public contracts.

Sponsored by Supervisor Fiona Ma, the Small Business Enterprise Ordinance aims to end discrimination in all aspects of public contracting in the city by giving the Human Rights Commission the power to centralize public contracting and make sure small local businesses are part of public contracting process.

"This has been a long and arduous process," Newsom said, "but the greatest challenge now is to make the ordinance real."

The legislation took many months to get to the Mayor's Office since its introduction at the Rules Committee on May 3, 2005. The ordinance finally passed the Board of Supervisors on May 2, 2006.

"I had many committee hearings regarding the ordinance," Ma said. "It was important to bring everyone involved to the table and find a compromise."

Discrimination based on business size continues to occur during the public contracting process, said commissioner Nazly Mohajer from the Human Rights Commission. Mohajer said she will also be co-chair of the Disadvantaged Business Enterprise, which the legislation creates.

"Smaller businesses have fewer resources available to them than larger businesses," Mohajer said.

Through the legislation, small business contractors will receive 10 percent discount for the purposes specifically of bidding for contracts but will be paid full price once the contract is accepted, Mohajer said. City departments will go directly to the Human Rights Commission to develop bids for city contracts.

"The city will have a centralized resource for city contracts negotiations," commission chair Malcolm Heinicke said.

For projects less than $1,000, city departments will select from three small business contractors through the Commission's microbusiness program, Mohajer said.

"The contracts will still be awarded based on merit," Mohajer said.

The Human Rights Commission must certify that the business meets the requirements of being certified as a small business before contractors can participate in the bid process, Heinicke said.

The ordinance also provides a stable steady funding stream for the Human Rights Commission to oversee the ordinance, Heinicke said. It would receive funding from the city departments as an overhead expense for the contract agreements. The percentage varies based on the size of the contract.

The Human Rights Commission will use the overhead money to increase its staffing and fund other expenses that help increase the organization's oversight of the program, Heinicke said.

"The Human Rights Commission is committed to making sure that the community is aware about the advantages of this program," Heinicke said.

Every entity of the city has to participate in this program, city administrator Ed Lee said.

"This legislation continues the pledge that we will get to equality in city businesses," Lee said.

In April 2, 1984, the Board of Supervisors passed an ordinance that combated public contracting discrimination against minority- and women-owned businesses, which were virtually excluded as city project contractors.

Proposition 209, passed in 1996, prohibited preferential treatment of any individual or group on the basis of race, sex, color, ethnicity, or national origin in the operation of public employment, public education, or public contracting, said Aileen Hernandez, chair of the Coalition for Economic Equality.

Even though the legislation itself cannot say that it protects the rights of minority- and women-owned businesses, the ordinance guarantees the employment of diverse local businesses, Hernandez said.

"Women and racial minorities happen to own most of the small businesses in San Francisco," Hernandez said.

The legislation's passing is only the beginning, Hernandez said. Discussions will continue to develop the policies needed to implement the legislation.

"We've got the skeleton but now we have got to put skin on the bones," Hernandez said.

The Small Business Enterprise Ordinance went through both the Small Business Commission and the Rules Committee and several times to the Board of Supervisors before it was passed on first reading April 25, 2006.

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