40 THE DISTRIBUTOR’S LINK Jim Truesdell James Truesdell is President of Brauer Supply Company, a distributor of specialty fasteners, insulation, air filtration, and air conditioning with headquarters in St. Louis. Mr. Truesdell is adjunct professor at Saint Louis University and Webster University. An attorney and frequently published writer, he is the author of “Total Quality Management: Reports From the Front Lines”. MAKING SURE DISADVANTAGED BUSINESSES ARE ‘REAL’ PARTNERS For many years distributors and contractors have been participating in social engineering of our society by bringing “Disadvantaged Business Enterprises” into active participation in the contracting process. This usually comes about when the parties are players in some project that is funded, at least partially, by government funds. This subjects the project to federal, state or local rules that set aside certain percentages of the contract for the “DBE’s” The intent is to encourage the development of these usually small, minority-owned companies into regular and active partners in our nation’s economic system. It hopefully will provide capital, experience, jobs, and important contacts to these companies. It is the actualization of the social justice advocates’ idea of taking public money and “funneling it back into the community.” A problem that often exists is that the DBE’s are not always what they seem. Sometimes they are mostly paperwork creations of a politically connected minority person or they might be a creation of the general contractor his or her self as a means of qualifying for a proposed job or for meeting some statutory requirement. Rather than contributing to the social justice goal they CONTRIBUTOR ARTICLE only serve to enrich a few powerful elite or allow the contractor to maximize profit by engaging a certified DBE without much disruption of the contract process. In recent months an aggressive US Justice Department has begun to attack these kinds of arrangements as “DBE Fraud” with the threat of fines and even imprisonment for the contractors and material providers involved. The National Association of Wholesaler-Distributors issued a “Legal Advisory” to its members urging them to ensure that any DBE’s with whom they work are actually rendering commercially useful services in the subject transaction. Instances where the disadvantaged business merely acts as a “flow through” buyer, restating purchase orders on their own letterhead, do nothing to build a cadre of qualified DBE’s who will eventually stand on their own two feet as contributors to the supply chain. A commercially useful function is performed by a Disadvantaged Business Enterprise when that entity carries out contract responsibilities by actually managing and supervising the work, negotiating product prices, determining quality and quantity, placing orders, warehousing, shipping and receiving, and paying and invoicing. CONTINUED ON PAGE 150
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