Government Sets Aside Money For Insiders

A three-month investigation by the Phoenix-based Goldwater Institute found that a federal program intended to help disadvantaged business owners win contracts at Sky Harbor International Airport in Phoenix is benefiting a small group of political insiders who are anything but disadvantaged.

The federal Airport Concession Disadvantaged Business Enterprise program (ACDBE or DBE) sets guidelines requiring minimum levels of participation by small businesses owned by minorities and women in airport concession contracting. Award winning investigative reporter Mark Flatten, formerly of the Mesa, Ariz.-based East Valley Tribune, shows that many of the DBE owners at Sky Harbor have a net worth in excess of $1 million and hold multiple city contracts, both on and off the airport.

Of the $52 million in sales attributed to disadvantaged businesses at Sky Harbor in fiscal year 2008, $15.4 million was generated by five DBEs owned by people active in politics. And of the more than 140 individual concession storefronts at Sky Harbor, city records identify only two that are not operated exclusively by a master contractor or owned, at least in part, by a certified DBE.

Public records show one of the top beneficiaries of the DBE program is long-time Democratic Party activist and Maricopa County Supervisor Mary Rose Wilcox. Ms. Wilcox entered into a joint venture with Host International in December 2004 to co-own a Chili’s franchise. In violation of federal and city guidelines, Ms. Wilcox did not bring any money to the partnership and has no real role in running the restaurant.

The investigation’s findings were released yesterday in “High Fliers: How Political Insiders Gained an Edge in Sky Harbor Concessions.”

The City of Phoenix could end the racial preference program on its own, but if that doesn’t happen quickly, voters may beat it to the punch. In 2010 Arizona voters will consider a Ward Connerly-backed Civil Rights Initiative that would ban race and gender preferences in government contracting and education programs.

An interesting long-term question is whether or not race and gender preference programs will be strengthened or eliminated as a result of an Obama presidency. The President himself has said that his daughters shouldn’t be the beneficiaries of any preference programs because they aren’t disadvantaged by either their race or gender. That’s certainly true. And it begs the question of necessity for the hundreds of preference programs in place throughout America today.