Overview:
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Located within the Department of Commerce, the Minority Business Development Agency (MBDA) is the “only federal agency created specifically to foster the establishment and growth of minority-owned businesses in America.” Through management, technical and financial support programs, the agency aims at increasing the growth and competitiveness of minority-owned business, toward the goal of entrepreneurial parity.
Historically, minorities have been marginalized by the U.S. political economy and faced a constellation of challenges in starting and growing enterprises—including access to funding and vital socio-economic networks. Minorities continue to constitute a percentage of business ownership grossly disproportionate to their share of the general population. Where minority ownership has existed, it has largely been relegated to small-business enterprises. The establishment of MBDA and other government interventions after the civil rights movement helped to redress some of these issues, and in the last several decades of the 20th century, minority business ownership has increased dramatically.
Moreover, recent review of economic census data (1997-2002) placed the number of minority enterprises at a record high of more than 3 million in 1997, a figure growing at double the rate of all companies. The MBDA notes that the number of minority-owned firms has grown by 35 percent in the period surveyed. And over the last ten years, minority-owned enterprises accounted for more than half of an overall increase of 2 million U.S. companies. According to the MBDA, there are currently about 4.1 million minority-owned firms in the U.S., accounting for about $668 billion total annual growth receipts.
However, the same data also shows that, although minorities make up 32 of the population, minority business ownership accounts for only 18 percent of the population. And despite the 35 percent growth, average gross receipts for minority firms dropped by 16 percent, hovering at $162,000—a figure considerably lower than the $448,000 average for non-minority firms. Thus, while minority business assistance programs appear to have contributed to a healthy growth, the underlying goal of parity is still a distant concept.
History:
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The civil rights movement spurred various means of government intervention in, among other things, minority business and entrepreneurial development. As part of an initiative to foster minority capitalist development, in 1969 President Nixon established the Office of Minority Business Enterprise (OMBE), with the aim of providing management and technical assistance, information and advocacy for private-sector minority business development. The Office was renamed the Minority Business Development Agency and transferred to the Department of Commerce in 1979.
Around the same time that the OMBE was established, the government’s Small Business Administration (SBA) initiated programs geared toward supporting minority business development, including direct and guaranteed loan programs and the controversial “set-aside” or 8(a) programs, which reserve choice government contracts for minority business owners.
The new MBDA began in 1980 with a mandate to coordinate with SBA in helping form 60,000 new minority businesses and expand an equal number by 1990, enacted in part through a national campaign to increase private-sector and educational institutions in the initiative. During the 1980s, the agency’s international trade programs began to achieve success, and by the late 1980s the country’s domestic minority business profile had increased dramatically—to more than 800,000, up from an estimated 100,000 at the time of its predecessor’s founding in 1969.
In the 1970s and 1980s, corporate America followed suit, with many companies creating initiatives for increasing the number of minority- and women-owned businesses to provide their services and products. Minority procurement groups were established to liaise between large corporations and small minority businesses.
Early emphasis was focused on black-owned business development, but has since expanded to include other racial and ethnic minorities.
What it Does:
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The agency funds minority resource and development centers throughout the country that assist entrepreneurs/business owners with business plans, marketing, management and technical assistance and financial planning. MBDA also assists with government (contract) procurement, access to capital and Section 8(a) certification. Most services are free but some, such as technical assistance, are offered at a “nominal charge.” MBDA’s six regional offices dispense technical advice and information to a network of more than 100 local business development centers around the country, located in areas with the highest concentration of minority populations and the largest number of minority businesses.
MBDA provides funding for a network of 32 Minority Business Development Centers (MBDCs), 8 Native American Business Development Centers (NABDCs), and 9 Business Resource Centers (BRCs), located throughout the U.S. and staffed by business specialists.
Ethnic groups designated eligible (per legislation) are as follows: American Indian or Alaska Native, Asian, Black or African American, Hispanic or Latino, Native Hawaiian or other Pacific Islander and Hasidic Jew.
Regional Offices: Atlanta Regional Office, Chicago Regional Office, Dallas Regional Office, New York Regional Office, San Francisco Regional Office
International Initiatives
In recent years, the agency has placed increasing emphasis on helping minority businesses operate in the international marketplace. In 1992, MBDA signed an agreement with the International Trade Administration (ITA) to assist entrepreneurs with export procedures and help them compete in foreign markets. The agency also launched its own International Trade Initiative, which offers services—including data on export, trade, markets and technical assistance—to minority firms. MBDA has also organized “Development Matchmaker” delegations, composed of minority business owners from a wide range of industries, to foreign nations.
Where Does the Money Go:
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Information about Loans and Grants
Information about Contracts and Certifications
According to USA Spending, between 2000 and 2009 there was a total of $11,613, 954 worth of contracts distributed. Most of the contracts going to automatic data processing (ADP) and Telecommunications Services, Management and other administrative support services, lodging and electronic information services.
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Top 10 Contractors
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Ace Info Solutions, Inc.
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$4,308,239
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Nortel Networks Corporation
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$2,552,000
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Felix R. Sanchez
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$1,356,000
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Viva Entertainment, LLC
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$823,245
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Turner, Harper & Associates, Inc.
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$580,000
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TRT Holdings, Inc.
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$427,606
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H Group Holding, Inc.
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$387,000
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Onvia Inc.
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$239,000
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Xerox Corporation
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$224,542
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Management Technology, Inc.
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$140,000
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Top 5 Congressional Districts Where Work Has Been Performed
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District of Columbia (Eleanor Holmes Norton)
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$6,591,402
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Virginia 11 (Thomas M. Davis / Gerald E. Connolly)
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$2,552,000
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Virginia 10 (Frank R. Wolf)
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$810,958
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Maryland 04 (Albert Russell Wynn / Donna F. Edwards)
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$580,000
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Maryland 08 (Constance A. Morella / Chris Van Hollen)
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$442,054
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26.6% or $3,084,117 of all contracts was available through competition within a limited pool, while 4.7% or $543,958 was made available for everyone to compete, but only one bid or offer was received. The number of contractors for this period totaled 27 with 63 transactions. There is no recorded data for years 2001-2003, and 2007.
Ace Info Solutions, Inc.: An information-technology consulting firm providing services to government agencies and commercial clients. Company was formed in December 2000 and is located in Reston, VA. Ace Info received their first major Government contract in 2003 with the U.S. Department of Commerce and have since then, acquired contracts from other Government agencies such as the U.S. Department of Agriculture, the U.S. Environmental Protection Agency, the U.S. Department of Interior, the U.S. Department of Justice and the U.S. Department of Homeland Security. The company is lead by Jay Challa, the acting President and CEO.
Ace Info Solutions, Inc.: An information-technology consulting firm providing services to government agencies and commercial clients. Company was formed in December 2000 and is located in Reston, VA. Ace Info received their first major Government contract in 2003 with the U.S. Department of Commerce and have since then, acquired contracts from other Government agencies such as the U.S. Department of Agriculture, the U.S. Environmental Protection Agency, the U.S. Department of Interior, the U.S. Department of Justice and the U.S. Department of Homeland Security. The company is lead by Jay Challa, the acting President and CEO.
Nortel Networks Corporation: The Company was founded in 1895 as Northern Electric and Manufacturing. Mike S. Zafirovski is current President and CEO. Corporate headquarters are located in Toronto, Ontario, Canada. The company focuses in network application, implementation, management and support services. Products range from computer telephony integration, telephone terminals, fiber optic technology, security and VPN technologies.
Felix R. Sanchez: He is the founder, President and CEO of TerraCom. He is also Chairman and Co-Founder of the National Hispanic Foundation for the Arts. TerraCom is a communications and event-planning firm founded in 1995. It is a small 100 % Hispanic-owned U.S. business entity that is certified by the SBA as a Small Disadvantaged Business. The purpose of the National Hispanic Foundation is to advance the presence of Latinos in the entertainment and telecommunications Industries.
TerraCom
National Hispanic Foundation for the Arts
TerraCom
National Hispanic Foundation for the Arts
Viva Entertainment, LLC: Viva is in the business of delivering live, visual and interactive communications services. It is headquartered in Rockville, MD and has satellite offices in Chicago, Dallas, and Ft. Lauderdale. Lorne Greene is Co-Founder and CEO. Among services offered are: experiential marketing, creative strategy, live, visual and interactive experiences.
Turner, Harper & Associates, Inc.: Furnishes management consulting and business improvement services. It is headquartered in Gaithersburg, MD and has satellite offices in Oakridge, TN and Johannesburg, South Africa. Jeffrey Harper is current President and CEO. It focuses in strategic planning, organizational assessments, process and productivity improvement and program audits.
Company Profile (U.S. Dept. of Commerce)
Company Text File (U.S. General Services Administration)
Company Profile (U.S. Dept. of Commerce)
Company Text File (U.S. General Services Administration)
Controversies:
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Redefining “Minority Business”
Controversy erupted in late 1990 when the National Minority Supplier Development Council proposed a change in its definition of “minority business.” The proposal allowed certified minority-owned firms (defined as those with 51% or more equity or stock held by minorities) to sell equity to venture capital firms and reduce minority ownership to as little as 30%-- while still maintaining the NMSDC certification of “minority controlled.” The objective of the initiative was to provide equity funding opportunities for (mostly small) minority firms and expand owners’ opportunities, but raised a great deal of controversy among minority organizations, who feared that it would erode basic provision of affirmative action and serve unspecified business growth rather than the minorities who own them.
Re-defining “minority business”: Challenges and opportunities (by Matthew C. Sonfield, Journal of Developmental Entrepreneurship) (PDF)
A new US Definition of “Minority Business”: lessons from the first four years
(by Matthew C. Sonfield, Entrepreneurship & Regional Development) (PDF)
Suggested Reforms:
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SBA Proposal Sparks Differences of Opinion (by Becky Gillette, Mississippi Business Journal)
Debate:
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In recent decades, minority business development programs have elicited both praise and criticism. Advocates argue that programs have been historically—and are currently—necessary to “level the playing field” and create opportunities for minority business and growth, addressing challenges presented by a historical legacy of oppression and socio-economic exclusion of women and minorities. Proponents also cite job creation and general economic growth as benefits and incentives for funding minority business initiatives. On the other side of the debate, critics cry “reverse discrimination,” dependency and “big government.” The question of minority assistance and “set-aside” programs has risen to the Supreme Court, and there are now strict legal standards for Federal, state and local programs.
Critics also argue that the agency’s functions overlap with those of the Small Business Administration and that the two should be merged to cut “wasteful” spending. Supporters argue that the two agencies’ programs do not overlap or duplicate one another, and that each has a unique mission and range of services. MBDA has, however, had some difficulty with establishing itself as a distinct and independent entity in the public eye.
From the Cato Institute:
“Minority Business Development Agency (1997 appropriation: $28.0 million)
. The Minority Business Development Agency attempts to promote the development of minority-owned businesses through the provision of management and technical assistance and assistance in gaining access to capital. MBDA activities often focus on helping minority-owned businesses chase government contracts. To encourage the development of minority-owned businesses, the federal government should instead focus on removing the many government impediments to the formation and growth of minority firms, such as unnecessary regulations and the onerous burden of taxation.”
- Table of Contents
- Overview
- History
- What it Does
- Where Does the Money Go
- Controversies
- Suggested Reforms
- Comments
- Leave a Comment
Founded: 1969
Annual Budget: $29 million (FY 2009 estimate)
Employees: 100
Official Website: http://www.mbda.gov/
Minority Business Development Agency
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