LGBT-owned businesses get diversity boost

California just passed a law, first of its kind, requiring utility companies to target gay-owned companies in their procurement efforts. 

As a Mexican-American woman who started her own consulting firm in Los Angeles, accountant Sonia Luna has taken advantage of programs aimed at helping minority- and women-owned businesses compete for government and corporate contracts. But increasingly, the fact that Luna also is a lesbian entrepreneur hasn't hurt either.

Federal agencies, organizations such as the National Football League and more than one-third of Fortune 500 companies are now trying to expand their vendor pools by explicitly encouraging bids from gay, lesbian, and transgender contractors.

The little-known outreach efforts mirror long-standing "supplier diversity" initiatives aimed at creating economic opportunities for businesses owned by racial minorities, women and disabled veterans.

"It allows me to be even prouder of who I am," said Luna, who hopes her firm, Aviva Spectrum, will benefit from a new California law requiring large utility companies to report how much they spend with LGBT contractors. "And it allows the marketplace to acknowledge a class that has been denied recognition as a minority group."

The trend has not been without controversy.

While running for the GOP gubernatorial nomination in California this year, Assemblyman Tim Donnelly let his supporters know he voted against the groundbreaking utility contract law that took effect Jan 1.

"Government-mandated discrimination in favor of some market participants and against others is the very antithesis of equal opportunity, fair play and free competition," Donnelly said.

Public agencies are prohibited under California law from using race, sex, or ethnicity in the awarding of contracts, and the new law does not create any preferences or set-asides for LGBT-owned enterprises. Instead, state regulators will soon consider whether to set voluntary percentage targets for utilities such as Verizon, Pacific Gas & Electric and AT&T to meet.

To be certified as LGBT-owned, businesses qualify through a process overseen by the National Gay and Lesbian Chamber of Commerce, a 12-year-old advocacy group based in Washington, D.C. Applicants must submit documents proving ownership and prove their lesbian, gay, transgender, or bisexual status through personal references or other evidence.

Over 700 companies have completed the process in the last decade while the LGBT chamber has worked with corporations — and, since President Barack Obama took office, with the US Small Business Administration — to recruit those companies as potential suppliers.

A growing number of companies — including IBM, PepsiCo, ConAgra Foods, Marriott International and American Airlines — have recently started tracking how much they spend with LGBT contractors.

Denise Naguib, Marriott's vice president of sustainability and supplier diversity, said about 1 percent of the hotel giant's $450 million "diverse spend" last year was with gay-owned businesses that supplied everything from technology and furniture to translation services and flowers.

When it comes to winning a piece of the $500 billion worth of goods and services the US government buys from private companies each year, federal law does not recognize gay-owned enterprises as it does businesses owned by veterans, women, African-Americans, Hispanics, Native Americans, Asian-Americans, and Asian Indians.

LGBT chamber President Justin Nelson said that is unlikely to change under the current Congress. Nelson said he hopes to persuade Obama to issue an executive order similar to one Bill Clinton signed that directed government departments to develop plans for awarding 5 percent of their procurement dollars to women-owned companies.

The SBA has for the last three years participated in a contracting fair hosted by the LGBT chamber to give gay business owners access to federal procurement officers from more than a dozen departments. Last year, the agency also co-sponsored an economic empowerment tour that was designed to reach business people who were both gay and members of racial minority groups.

Deputy Associate Administrator Eugene Cornelius Jr. said the agency's involvement stemmed from a June 2009 memo Obama issued instructing his department heads to make sure their policies and programs did not discriminate against LGBT people as far as federal law would allow. But the SBA also sees targeting LGBT businesses as consistent with its mandate to serve other underrepresented groups, Cornelius said.

"What we can do is educate the federal government and local government that this community makes up the very communities they are trying to reach," he said.

In California, the NFL made history in November when the league and the nonprofit committee responsible for producing the 2016 Super Bowl invited gay-owned companies for the first time to a series of workshops where small suppliers heard about how they might cash in on the action. The game is scheduled to be played at the San Francisco 49ers new stadium in Santa Clara, California.

The outreach already has paid off in a small way for San Francisco photographer Christopher Dydyk, who heard about the Super Bowl contracting fairs from the Golden Gate Business Association, one of the nation's 70 or so gay chambers of commerce.

He met a representative from the Super Bowl 50 Host Committee at one of the events and was hired to document the launch of the committee's charitable arm this month.

Dydyk said he never would have thought to seek work in the Super Bowl, let alone that his being gay would open any doors.

"It's like when they are going through bids — this one is woman-owned and this one is minority-owned — it helps you stand out a little bit more." he said.