PREFERENTIAL PROCUREMENT PROGRAMS AND MINORITY-OWNED BUSINESSES

Some minority business enterprises (MBEs) benefit from their participa tion in government preferential procurement programs and some do not. A subset of minority vendors identified in this study behaves in ways suggesting sensitivity to penalties for violating minority business ce rtification and procurement program regulations. These firms flourish in the absence of fraud penalties. A different group of minority vendo rs selling to government benefits from an environment in which MBE cer tification is comprehensive, bonding and working capital assistance ar e available, and assistance is delivered by a staff dedicated to aidin g potential and actual MBE vendors. The preferential procurement progr am can serve as either a valuable economic development tool for foster ing minority business development or it can promote MBE front companie s that pass their procurement contracts to nonminority firms. Some gov ernments choose to operate the former type of program, others opt for the latter.