By Brian Johnson
Dolan Media Newswires
Minneapolis — When Dianne Holte added a guardrail division to her company about four years ago, she thought it would be a launching point for more contract work with the Minnesota Department of Transportation.
Turns out, she couldn’t make it work. The competition from established contractors was too strong, and the profit margins too small.
The bigger firms “wanted to be the only boy in town, and they bid work at such low margins, I could not compete,” said Holte, owner of Ramsey, Minn.-based Holte Contracting, a 14-year-old firm that deals mostly in excavation work.
She had to pull the plug on the guardrail division and pursue other avenues, including federal contracting.
“Last year I didn’t do much for MnDOT — right around $100,000,” Holte said. “Federal contracting is where I can make more money.”
Holte has plenty of company. Last summer, MnDOT’s Office of Civil Rights put together a proposal for a $1.5 million grant from a federal program designed to help disadvantaged business enterprises — small, female- or minority-owned companies — compete for contracts.
In February, the department received an $883,000 grant, which will go toward a Working Capital Fund, a mentor-protege program, training on such things as financial management and accounting as well as technical skills, and other efforts that are designed to help DBE firms compete.
MnDOT’s Office of Civil Rights, which establishes DBE participation goals for MnDOT projects, is working on a request for proposals to provide those services, according to Mary Prescott, the office’s acting director.
The goal is to work with approximately 158 DBE firms, Prescott said. That’s the estimated number of disadvantaged firms in the state that are under-used or have the potential to compete for more MnDOT work with some additional help.
For instance, they may need bidding and estimating help, or additional training to help them grow their firm, Prescott said.
Holte said the success of the initiative depends on how MnDOT uses the money.
She said the working capital money “will be a big help,” especially in the current lending environment, which makes it difficult for small businesses to obtain loans.
At the federal level, one thing that has already helped Holte compete for projects is participation in the Small Business Administration’s 8a program, which provides mentoring, business counseling, financial assistance and other help for small, emerging businesses.
Holte said the mentoring programs “have to be a win-win situation. Both parties have to be able to get some benefit from that relationship.”
Prescott said the mentor-protege program envisioned by MnDOT would be similar to the federal Small Business Administration’s 8a program.
But not everyone who could potentially benefit from such programs is sold on their benefit.
Paul Smallwood, owner of Maple Grove-based FlowSense, said the grants are great as long as they are not “wasted among bureaucracy.” He said the classroom-training sessions for things like financial management and bookkeeping are “worth the prices of admission.”
“I have personally participated on some of these programs and can vouch for the true value of this goal,” said Smallwood, a service-disabled veteran.
If MnDOT really wants to level the playing field, he said, it should “learn from the federal government” and set aside a portion of the budget for disadvantaged firms and allow them to bid against each other.
“This is the only way to help DBEs grow,” Smallwood said, “without relying on big prime contractors for handouts, being a front company for them.”