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.