Women, Minorities Often Frustrated : Freeway Job Falls Short of Affirmative-Action Goals

The $2.5-billion Century Freeway project has fallen short of one of its major goals--to create economic opportunities for women and racial minorities, especially those living along the freeway route in such low-income communities as Compton, Lynwood, Watts and Willowbrook.

The 1981 federal court consent decree under which the freeway, light rail system and affordable housing project are being built set some of the nation’s highest affirmative-action goals--both for employment and for the awarding of construction contracts.

The court order also established various agencies to monitor affirmative-action progress and to help minority and female job applicants and contractors.

In addition, the consent decree urged the California Department of Transportation, which is building the freeway, and the Department of Housing and Community Development, which is in charge of the housing program, to employ as many workers and companies as possible from within the 17.3-mile Century corridor.

As the project nears the halfway mark, the minority employment goals have been met without great difficulty, but the number of women working on the project has been disappointingly small. Goals for directing freeway contracts to minority-owned firms have been even harder to achieve. While some female and minority contractors have flourished as a result of Century Freeway work, many more have failed because they lacked sufficient capital or know-how or because they got little help from Caltrans or from the Housing and Community Development agency.

Nor has the work produced the anticipated benefits in the corridor communities, where unemployment is still high, per-capita income is still low, and decent, affordable housing is scarce.

“One of the major goals of this entire project was to make the economic situation in that corridor lots better,� said Ronnie Jones, a black contractor, “but things are pretty much the same as they were before.�

Biggest Success

The biggest success has been achievement of hiring goals for racial minorities (defined in the court order as blacks, Latinos, Asian-Americans, American Indians and Alaskan natives).

Last spring, Caltrans raised the goal from 28.3% to 50%, under pressure from federal Judge Harry Pregerson, who presided over a long Century Freeway lawsuit and is now overseeing implementation of the consent decree, and from the Center for Law in the Public Interest, representing plaintiffs in the case.

Caltrans civil rights division officials say minority employment already stands at better than 50% on freeway jobs and more than 70% on housing construction. However, the project is expected to generate only 2,500 new jobs over a 10-year period, so even if women and minorities filled every job, the economic impact would be slight.

Female Hiring a Problem

And female hiring is a problem. Caltrans increased the goal from 6.9% to 10% for the project as a whole, including both freeway and housing construction. However, a recent study by the Century Freeway Affirmative Action Committee, an independent monitoring body established by the consent decree, found that only 1.3% of jobs were held by women.

“The 10% goal is ridiculous,� said Ron Kennedy, business representative for the Building and Construction Trades Council, representing building trade unions. “You’ve got probably one in 500 women who could work in construction and many of those wouldn’t want to.�

But Helene V. Smookler, of the Center for Law in the Public Interest, which negotiated the consent decree with Caltrans and the Federal Highway Administration, disagreed.

“The pay is good and there are a fair number of women out there who want the work,� Smookler said. But, she added, they are prevented from getting jobs by union limitations on female membership, by foremen who will not hire women and by “sexual harassment on the job.�

Problems Presented by Decree

Even tougher problems are presented by the consent decree requirement that a major share of contract dollars, on both freeway and housing construction, be directed to firms that are owned and operated by members of racial minorities or women.

Goals are set on a contract-by-contract basis by the Caltrans civil rights division, in collaboration with the Century Freeway Affirmative Action Committee.

Recent freeway contracts have required prime contractors to guarantee that about 35% of the work will go to female or minority subcontractors. On the housing side, the overall target is about 47%.

‘They Are Attainable’

These are among the highest affirmative-action goals on any public construction project in the country. Caltrans’ statewide goal, on non-Century Freeway work, is only 16% for female and minority firms combined. The federal requirement is 13%, combined.

“We have set the goals high, but we think they are attainable by using legitimate disadvantaged enterprise firms,� said G. L. (Jerry) Russell, chief of construction in Caltrans’ Sacramento headquarters.

The goals may be within reach in the housing program, where contracts are relatively small and there are a number of female- and minority-owned companies with experience in plumbing, insulation, electrical work and the like.

But the goals are not attainable on the freeway part of the project, according to officials of the large, Anglo-controlled companies that hold all of the major contracts. They say efforts to achieve them have added 10% to 20% to the total cost.

‘Expensive Proposition’

“This is an expensive proposition for the taxpayer,� said Alex S. Rados, president of Steve P. Rados Co. of Santa Ana, which is doing about $85 million worth of Century Freeway work.

Most of the extra cost comes about because “there are not a sufficient number of qualified MBE’s (minority business enterprises) and WBE’s (women business enterprises) to do the work,� Rados said.

Prime contractors such as Rados then must hire minority or female subcontractors they know little or nothing about, and many of these “subs� are unable to do the work.

“We’ve had four or five cases already where a minority sub gets halfway through a job and then he disappears or goes belly-up,� Rados said. “Now we have to replace that subcontractor, which costs us money, and usually the guy leaves, owing a bunch of bills to his suppliers, and we have to pay those, too.�

‘Just a Voice’

The affirmative-action goals are so high that “it’s impossible to know all your subcontractors,� said Harry McGovern, general manager of MCM Construction Co. of Sacramento. “Sometimes they’re just a voice on the other end of the phone� offering a price that becomes part of the prime contractor’s bid in the hectic final hours that precede a contract award.

Once, McGovern said, he accepted a phone bid from a subcontractor he did not know, only to discover that the would-be minority entrepreneur did not have a telephone of his own and could never be reached again.

McGovern said MCM, which has five Century Freeway bridge and viaduct contracts worth about $75 million, now is having trouble with 11 different subcontractors, involving $5 million worth of work.

Keith H. Endersby, area manager for Morrison-Knudsen Construction Co., said his company has been forced to hire subcontractors “who really aren’t qualified to do the work� in order to meet its minority-female goals on two Century Freeway contracts, worth about $17.3 million.

“We wind up propping them up,� Endersby said, by supplying performance bonds, paying insurance premiums, handling work schedules and performing many other tasks that a competent subcontractor should be able to do.

‘It’s Costly’

“It’s inefficient and it’s costly,� Endersby said. “I don’t have an argument with the intent of the program, but some of the requirements make it extremely difficult to operate as a contractor and make any money.�

When the consent decree was written, “They weren’t trying to build a freeway, they were trying to set up a social program,� said R. E. (Jeff) Kasler, chairman of the board of Kasler Corp. of San Bernardino, which has been awarded about $84 million worth of Century Freeway work.

There is another side to this. Many female and minority subcontractors complain that some prime contractors are slow to pay and sometimes withhold payment for no reason.

Another common complaint is that prime contractors are quick to substitute an Anglo, male-run firm when a minority or female subcontractor runs into trouble on the job. Caltrans allows such substitutions if the prime contractor fails to find another female or minority subcontractor despite a “good-faith effort.�

Not Checked Out

Jeff Davis, who is in charge of contract compliance for Caltrans in Los Angeles, said most prime contractors do not check out potential subcontractors carefully.

“It’s become very apparent that getting the project first, and then worrying about the (minority and female) goals, is the way they’re all proceeding,� Davis said.

Russell, the Caltrans construction chief, agreed that some prime contractors withhold payments illegally and “play other games� with subcontractors but said that is not Caltrans’ problem.

“Legally, we don’t recognize anybody but the prime� contractor, Russell said. “It’s up to the prime to work out his arrangements with subs and, for the most part, we stay out of it.�

Russell disputed the major contractors’ claim that the affirmative-action goals are adding to project cost.

“I’ve heard those statements many times, and I’m sure the people making them believe them to be true,� Russell said. “But I and my staff have not been able to verify them.�

He said Caltrans’ own engineers estimate the cost of each contract before it goes out for bid and these in-house estimates generally have been higher than the prices that Rados, Kasler, Morrison-Knudsen and other major Century Freeway contractors have been quoting.

“So I don’t think there is any demonstrable proof that this program is costing more,� Russell declared.

But others disagree.

“We recognized from the very beginning that in order to actually achieve the minority business program, there would be additional costs involved,� said John Bates, director of engineering and construction in the Federal Highway Administration regional office in San Francisco. The Federal Highway Administration is paying for 92% of the Century Freeway.

Both Russell and Leonard Thompson, chief of the Caltrans civil rights division in Los Angeles, said the goals for minority and female business participation apparently are not too high because they are being met.

The most recent figures show that 35% of freeway contract dollars and 65% of housing construction dollars are going to female or minority firms, Russell said.

Using ‘Fronts’

But others familiar with the program say these figures are possible only because many major contractors are using “fronts�--subcontractors who are controlled by the prime contractor, not actually owned and operated by women or by members of racial minorities.

Some major highway builders, including Guy F. Atkinson Co. of South San Francisco and Yeager Construction Co. of Riverside, have declined to bid on Century Freeway work, partly because of the high affirmative-action goals.

“One of the real reasons (for not bidding on the Century Freeway) is the difficulty of meeting those goals,� said Jacques Yeager, president of Yeager Construction. “The goals are not realistic and the state knows it but won’t do anything about it.�

Minority and female firms go through an elaborate certification procedure before they are approved to work on the Century Freeway. Corporate records, tax returns and other documents are examined by Caltrans civil rights staff members, to make sure the company is not a “front.�

Effectiveness Questioned

Although the procedure is lengthy and expensive (it costs a subcontractor about $5,000 to be certified), many question its effectiveness.

“Certification is fraught with problems,� Caltrans attorney Ralph Livingstone said. “Some ‘fronts’ we catch, some we don’t.�

Spotting female “fronts� is a particular problem. When affirmative-action programs for women arrived on the scene a few years ago, many contractors simply turned over majority stock to wives, daughters or sisters who actually had little to do with running the companies.

“A lot of guys we were dealing with before, suddenly we were dealing with their wives,� said Endersby of Morrison-Knudsen. “As far as I can see, it’s the same company.�

Practice Halted

Caltrans civil rights investigators once examined community property holdings to try to determine who actually owned and ran the company, but that practice was halted by a March 10, 1987, memo from Larry E. Jenkins, manager of the Caltrans certification unit in Los Angeles, which read, in part:

“Whenever capitalization of a business is made by funds from a joint account (husband and wife), it is to be assumed that the woman financed the start-up of the business. No further research of where the funds came from is to be conducted. No WBE (women’s business enterprise) applicant is to be denied use of joint funds to establish her business.�

This directive has weakened their ability to identify non-legitimate female businesses, Caltrans civil rights investigators said.

One staff member produced a list of a dozen female “fronts� in the Los Angeles area that, according to this investigator, are now certified to work on the Century Freeway.

Difficult to Do Business

The cozy relationships between certain prime contractors and their female or minority “fronts� make it hard for legitimate female and minority firms to do business.

“The unrealistically high goals force prime contractors to deal with ‘fronts’ in order to meet the goals,� said an official of a small, black-run Los Angeles firm that has had trouble getting Century Freeway work. “There’s no way we can compete with that because the ‘front’ will always give the prime a better price.�

In a Washington interview, Federal Highway Administrator Ray Barnhart said the Century Freeway is “plagued with fronts and frauds� because of its “unrealistically high� affirmative-action goals.

Charge Denied

But Caltrans construction boss Russell vehemently denied this.

“I’ve heard Mr. Barnhart make that statement,� Russell said angrily. “We have what I think is generally considered one of the finest (certification) programs in the country, with or without his help.�

Later in the same interview, Russell declared, “If there are shams or frauds out there, nobody has shown them to us.�

But Russell was the only person interviewed by The Times, in four months, no matter what their relationship to the Century Freeway, who did not think that “fronts� were a major problem.

A variation on the “front� arrangement is the kickback scheme, in which a prime contractor hires a minority or female subcontractor but then retains a substantial percentage of the work for himself.

Make Deals

Some minority firms are willing to make such deals because, as one of them said, “60% of something is better than 100% of nothing.�

“Kickbacks are rampant,� said Mal Evans, director of the Century Freeway Technical Assistance Project, which provides financial and technical assistance to minority and female subcontractors. “The state could crack down on it by sending in a sharp audit team and finding out who is actually getting the money, but that hasn’t been done.�

The consent decree envisioned that the Century Freeway Affirmative Action Committee would monitor such problems as the setting and attainment of goals or the existence of “fronts� and kickback schemes.

Reasonably Effective

In the early 1980s, the affirmative action committee was reasonably effective. Under the leadership of former Executive Director Clarence Broussard, the agency insisted that high minority and female participation goals be set and then sent investigators into the field to make sure the goals were being achieved.

Several suspected minority and female front operations were challenged by the affirmative action committee, and some of these firms either did not receive Caltrans certification or later were decertified.

Convinced that “people simply will not change if they’re comfortable,� Broussard set out to make them uncomfortable, fighting bruising battles with officials at Caltrans and the Department of Housing and Community Development.

‘A Special Mission’

He told staff members, “We’re like the Special Forces--small numbers sent in for a special mission, which is to correct past injustices. If you don’t want to do that, you shouldn’t be here.�

But Broussard’s confrontational approach eventually wore thin with the affirmative action committee’s board of directors, especially with Board Chairman Channing D. Johnson, a Pasadena attorney and businessman.

“I was spending too much of my time resolving the hassles he got us into,� Johnson said recently. “Lots of times, Clarence would walk into a meeting with a chip on his shoulder. . . . That’s not my style. I prefer to escalate according to need.�

The affirmative action committee board fired Broussard in May, 1986. Neither Broussard nor board members will discuss the reasons because, they said, they have signed a legal agreement not to do so. But the committee’s effectiveness was sharply reduced after Broussard’s departure.

Conflicts of Interest

Meanwhile, Channing Johnson’s effectiveness was eroded by his real or apparent conflicts of interest.

Johnson, who was chairman of the Century Freeway Affirmative Action Committee from the time the organization was established until last September, also saw fit, in his role as businessman, to bid on Century Freeway housing units. And in his role as an attorney, he represented builders, developers and suppliers who were doing Century Freeway business.

Johnson insists that he declared all of these potential conflicts of interest and abstained from voting on affirmative action committee issues involving his personal business interests or legal clients.

But Johnson’s business and legal relationships have caused considerable discomfort at Caltrans.

“I was totally unaware of the extent of his involvement,� said Russell, the agency’s construction chief in Sacramento. “We’d certainly prefer that it not be there.�

Agency Was ‘Unhappy’

David H. Roper, the Caltrans Century Freeway project boss in Los Angeles, said the agency was “unhappy� about Johnson’s Century-related legal and business ties, but he added, “At this stage of the game, we haven’t seen any evidence that there’s any hanky-panky out there.�

Johnson resigned as board chairman in September, saying in an interview that he now represents so many clients who do business with the Century Freeway that “I feel uncomfortable.�

Broussard’s departure and Johnson’s conflict-of-interest problems weakened the Century Freeway Affirmative Action Committee. Several key staff members resigned and important work was left undone. Visits to job sites, to see if minority and female hiring commitments were being kept, were sharply curtailed and there were few challenges of contract awards to suspected “fronts.�

Unfortunately, the committee slipped into decline just as its services were most needed.

Colossal Interchanges

Construction momentum has swung from the housing program to the freeway, where several hundred million dollars worth of contracts will be awarded in the next few months, as work begins on four colossal interchanges that will link the Century with the San Diego, Harbor, Long Beach and San Gabriel River freeways.

Many believe that the niceties of affirmative action are being swept away as pressure builds on Caltrans and its major contractors to complete the freeway.

Violation of the consent decree “is becoming more and more blatant,� said Evans, head of the technical assistance program. “The attitude now is, ‘Let’s just do it and see if we get caught.’ �

MINORITY GOALS

The Century Freeway project has some of the highest affirmative-action goals of any public construction in the country, both for employment and for contract dollars. Figures are supplied by state agencies.

EMPLOYMENT

Highway Work

Goals Actual Minorities 50.0% 53.0% Women 10.0% 0.6% Housing Work Minorities 50.0% 73.0% Women 10.0% 1.9%

CONTRACT DOLLARS

Highway Work

Goals Actual Minorities and Women 35.0% 35.0% Housing Work Minorities and Women 47.0% 65.0%