[Congressional Record Volume 154, Number 151 (Tuesday, September 23, 2008)]
[Senate]
[Pages S9338-S9340]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




     FEDERAL AVIATION ADMINISTRATION EXTENSION ACT OF 2008, PART II

  Mr. MENENDEZ. Mr. President, I ask unanimous consent that the Senate 
proceed to the immediate consideration of H.R. 6984, which was received 
from the House.
  The PRESIDING OFFICER. The clerk will report the bill by title.
  The legislative clerk read as follows:

       A bill (H.R. 6984) to amend title 49, United States Code, 
     to extend authorizations for the airport improvement program, 
     to amend the Internal Revenue Code of 1986 to extend the 
     funding and expenditure authority of the Airport and Airway 
     Trust Fund, and for other purposes.

  There being no objection, the Senate proceeded to consider the bill.
  Mr. KERRY. Mr. President, I want to say a few words about the FAA's 
Disadvantaged Business Enterprise, DBE, Program and the Airport 
Concessions Disadvantaged Business Enterprise, ACDBE, Program. As we 
are all aware, case law over the past decade has made clear that 
Federal race-conscious programs are subject to strict constitutional 
scrutiny to ensure that programs serve a compelling governmental 
interest and are narrowly tailored to address that interest. Gender-
conscious programs must meet heightened scrutiny to ensure that there 
is an exceedingly persuasive justification for the program. Still, 
under any reading of constitutional law, race- and gender-conscious 
programs are clearly permitted to remedy current discrimination and the 
present-day effects of past discrimination where there is a strong 
basis in evidence that such discrimination exists. As the Commerce 
Committee is aware, discrimination in business practices continues to 
be a serious problem. There are countless disparity studies and 
examinations of this topic and for that reason we have made only minor 
changes to the DBE and ACDBE program over time. Taken as a whole, the 
quantitative and qualitative evidence clearly suggests that 
discrimination remains a serious problem in our Nation.
  I serve both as a member of the Commerce Committee and as chairman of 
the Senate Small Business Committee. In these roles, I have the 
opportunity to review enormous amounts of information about 
discrimination against women and minority entrepreneurs throughout our 
economy and across our Nation. While we have made very real progress 
over the time that I have been in the Senate, there is no doubt that a 
lot of work remains to be done. Programs such as the DBE and ACDBE 
programs are making an important difference by offering real 
opportunities to companies that otherwise might not ever get a chance 
to compete. These programs are critically important in airport-related 
industries as well as in other areas of Federal contracting.
  The statistics are telling. On May 22, 2007, I held a hearing in the 
Small Business Committee addressing the effectiveness of SBA's programs 
for minority businesses. One economist who testified, Dr. Jon 
Wainwright, presented a number of troubling statistics to the 
committee. For instance, he explained that according to the most recent 
economic census data available, while African Americans constitute 12.7 
percent of the population, they own only 5.3 percent of businesses and 
those businesses account for only 1 percent of business sales and 
receipts. Latinos are 13.4 percent of the population, but only 7 
percent of businesses and 2.5 percent of business sales and receipts. 
Dr. Wainwright also noted that Asian and Pacific Islanders own 5 
percent of businesses but earned only 3.8 percent of business sales and 
receipts and Native Americans constituted .9 percent of the

[[Page S9339]]

business population but earned only .3 percent of business sales and 
receipts. For women the numbers are also shocking: women constitute 
50.9 percent of the population but own only 28.9 percent of businesses 
and receive only 10.7 percent of business sales and receipts.
  Dr. Wainwright went on to explain that these disparities in business 
ownership and earnings exist in all 50 States and the District of 
Columbia and that similar outcomes had been evident in all previous 
versions of this same survey over the past 35 years. He also stated 
that he had conducted further analyses to determine whether the types 
of disparities he had observed were caused by discrimination or some 
other factor. He explained that he had conducted regression analyses to 
account for geography, industry, labor market status, age, and 
education among other factors. Even when this regression analysis was 
conducted, the disparities remained large, negative, and statistically 
significant for African Americans, Hispanics, Asian/Pacific Islander 
Americans, Native Americans, and women suggesting that race and gender 
discrimination are the cause.
  Also troubling were Dr. Wainwright's comments on small business 
finance issues. We know that credit is the lifeblood of 
entrepreneurship, but it turns out that minority business owners are 
far more likely to be denied credit than nonminority owners. Dr. 
Wainwright explained that these findings held up even when regression 
analyses were conducted to adjust for a number of balance sheet, credit 
history, and other characteristics. And Dr. Wainwright found that women 
were also likely to face some discrimination in credit markets. Dr. 
Wainwright was only one witness at the May 22 hearing and there were 
several others whose testimony was equally compelling. The fact is that 
discrimination remains a very serious problem in Federal contracting 
markets across this country.
  More recently, on September 11, 2008, our committee held another 
hearing on discrimination against minority- and women-owned businesses 
which focused on discrimination in access to capital. During the 
hearing we heard testimony from several witnesses about the serious 
barriers that minority- and women-owned businesses confront when 
attempting to obtain capital to start up, grow, and flourish. In the 
context of the FAA extension bill before us today, I want to 
specifically highlight the testimony of Don O'Bannon who is the current 
chair of the Airport Minority Advisory Council or AMAC. Mr. O'Bannon 
explained that, in his experience, access to capital is an enormous 
hurdle for minority- and women-owned businesses in airport-related 
industries. He gave us specific real-life examples of firms that had 
attempted to obtain both venture capital and more conventional debt 
capital and encountered extraordinary barriers due to discrimination 
that compromised their ability to grow and succeed.
  Of course, there are many other sources of information about 
discrimination in contracting. Literally hundreds of disparity studies 
have been conducted around the country that contain compelling 
statistical data about discrimination in the public and private 
marketplaces related to airport-related contracting. Just a few of the 
studies that have been conducted recently and include airport-related 
data were put into the record by Mr. O'Bannon during our recent 
hearing. These include: ``Race, Sex and Business Enterprise: Evidence 
from Denver, CO,'' NERA Economic Consulting, May 5, 2006; ``Dallas/Fort 
Worth International Airport Board Disparity Study Final Report,'' MGT 
of America, October 17, 2000; ``The City of Phoenix, Minority-, Women-
Owned and Small Business Enterprise Program Update Study: Final 
Report,'' MGT of America, April 21, 2005; ``Race, Sex and Business 
Enterprise: Evidence from the State of Maryland,'' NERA Economic 
Consulting, March 8, 2006; ``Final Report: Broward County Small 
Disadvantaged Business Enterprise (SDBE) Disparity Study,'' MGT of 
America, Inc., April 3, 2001; and ``Final Report for Development and 
Revision of Small, Minority and Women Business Enterprise Program, 
Nashville International Airport, (BNA),'' Griffin and Strong, PC, 
September 19, 2007. There are hundreds of additional studies, including 
many relevant studies that cover entities other than airports but that 
analyze the same industries and enterprise populations that do airport-
related work.
  But the statistics can only tell part of the story. Overlooked 
aspects of disparity studies are the sections that address anecdotal 
evidence. These are the accounts that individual business people give 
about the challenges they confront in doing business. When you read 
these studies, it quickly becomes clear that discrimination remains a 
problem at literally every stage of the business process. It is harder 
for women and minority entrepreneurs to start companies. They often are 
denied credit even when they have the same creditworthiness of male, 
nonminority entrepreneurs. And because of past discrimination, minority 
entrepreneurs often do not have access to family wealth. As one 
African-American contractor reported in a study about discrimination in 
the state of Massachusetts:

       Now I go to the bank--again I've been in business for 28 
     years, I've been very successful at times--I go to the bank 
     and say ``Okay. I need a $250,000 line of credit.'' I walk 
     out of there with $50,000. A [White] gentleman that used to 
     work with me was a former partner of mine, left, went to the 
     same bank, and walked away with $1.2 million. Okay? Now he 
     walked away because his house is not mortgaged. So he has 
     equity that they can touch to go back if he doesn't make 
     payments. They are looking at me and saying, ``He's already 
     leveraged himself. He doesn't have anything that I can 
     touch.'' So they don't want to give me any money. And not 
     that the fact of my business--my business is very solid. It's 
     just they won't give it to me because I started with nothing 
     and I've taken everything I've had and put it into the 
     businesses. They still think I'm worth nothing. That's . . . 
     discrimination . . . which is where minorities and women who 
     start from scratch and build their businesses up, that's 
     where we get hurt. That's where it comes back to backfire, 
     because we don't have that same leverage that somebody who 
     either inherited a business or had family that gave them land 
     or some sort of inheritance that they got some money.

  That is from ``Race, Sex and Business Enterprise: Evidence from the 
Commonwealth of Massachusetts,'' Volume 1, NERA Economic Consulting, at 
218-219.
  Even once minorities and women manage to start up a business they 
face serious discrimination in every stage of the contracting process. 
Sometimes that discrimination comes in the form of explicit gender or 
racial harassment. In a study dealing with the State of Texas, one 
Hispanic-American woman business owner related the following story:

        Some [of my male colleagues] do not want to work with a 
     woman. They feel they are wasting their time. [On one 
     occasion] a guy took me to check on a project, and when he 
     got out of his truck, he wanted me to touch him. I said, 
     ``Come on, let's get back to work.'' I had to be very strong 
     with him. There are not many women builders in the 
     residential construction industry either.

  That is from ``Update of the State of Texas Disparity Study,'' Mason 
Tillman Associates, Ltd., January 2007, at 9-8.
  Another Hispanic-American woman contractor in Texas explained that 
sometimes the discrimination is not so direct, but it is still 
unmistakable. She stated:

       As a young woman, there have been several occasions where I 
     was told that if I really wanted an award, there were other 
     ways I could get it. This was not said directly to me, it was 
     implied [by] a White male [manager] at a [State] university.

  That is from ``Update of the State of Texas Disparity Study,'' Mason 
Tillman Associates, Ltd., January 2007, at 9-8.
  Sometimes the harassment rises to the level of threats of violence 
against a business owner or their property. In the NERA Commonwealth of 
Massachusetts study, one African-American businessman even gave an 
account of a threat to blow up his truck.

  That is from ``Race, Sex and Business Enterprise: Evidence from the 
Commonwealth of Massachusetts, Volume 1,'' NERA Economic Consulting, at 
219.
  Even when discrimination does not involve explicit harassment or 
threats, it still poses barriers to minority and women business owners. 
Unfortunately, the ``old boy network'' continues to be a problem in 
many industries. An analysis of the experiences of business owners in a 
study of contracting by the airport in Nashville, TN, demonstrates that 
discrimination not only hurts minority- and women-owned businesses, but 
it can also drive up the price of doing business:


[[Page S9340]]


       [One business owner] said his firm has tried to get in on 
     airport work and, in one instance, partnered with a much more 
     experienced firm to get into one particular area of 
     construction only to find that ``a couple of firms had a lock 
     on it''. According to [this firm], it is hard to get jobs 
     because people tend to use the same companies. [The business 
     owner] said he believes that subcontractors tell ``their'' 
     bidders where to come in with their numbers and they tell 
     them where they can make up the difference on the project and 
     how to pursue change orders. By the end of a project, his 
     competitors have been paid more than his original estimate, 
     which was rejected for being too high.

  That is from ``Final Report for Development and Revision of Small, 
Minority and Women Business Enterprise Program, Nashville International 
Airport,'' BNA, Griffin and Strong, PC, September 19, 2007, at 163.
  Another business owner in Nashville was explicit about the informal 
networks that impose barriers on minority businesses and the need for 
programs like the DBE and ACDBE program to address these impediments. 
The study stated:

       According to [one business owner], the airport made a 
     mistake in disbanding SMWBE requirements because there are 
     still a lot of ``good old boys'' playing golf and the like. 
     Having a diversity manager helps ``level the playing field'' 
     and provides ``checks and balances''.

  That is from ``Final Report for Development and Revision of Small, 
Minority and Women Business Enterprise Program, Nashville International 
Airport,'' BNA, Griffin and Strong, PC, September 19, 2007, at 164.
  Another point that these studies make clear is that discrimination 
against business owners is something that is experienced by all 
minority groups and women. It is not limited to only some groups. One 
study summarized its analysis of anecdotal evidence as follows:

       Nineteen percent of the respondents indicated that they had 
     experienced discrimination because of race, ethnicity, or 
     gender on one or more occasions (three percent very often, 10 
     percent sometimes, and six percent seldom). Forty percent 
     reported they had not experienced discrimination. The fact 
     that 19 percent of respondents reported experiencing 
     discrimination on at least an occasional basis suggests that 
     discrimination is not confined to isolated incidents. The 19 
     percent that experienced discrimination account for 63 
     surveyed respondents categorized as follows: 22 African 
     Americans, 17 Hispanic Americans, 16 non-minority females, 
     two Asian Americans, two non-minority males, and one Native 
     American. Three people reported discriminatory incidents but 
     did not indicate their demographic background.

  That is from ``Final Report: Broward County Small Disadvantaged 
Business Enterprise (SDBE) Disparity Study,'' MGT of America, Inc., 
April 3, 2001, at 6-30.
  These examples I have given are but a few from the voluminous body of 
research about race and gender discrimination in business. The evidence 
is troubling and should cause all of us to redouble our efforts to 
ensure that we do everything we can to eliminate the barriers 
confronted by women and minority business owners. The DBE and ACDBE 
program are indispensable tools in this effort.
  Mr. MENENDEZ. Mr. President, I ask unanimous consent that the bill be 
read a third time and passed, the motion to reconsider be laid upon the 
table, and that any statements relating to the bill be printed in the 
Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The bill (H.R. 6984) was ordered to a third reading, was read the 
third time, and passed.

                          ____________________