Meeting the mark; a city program for minority- and women-owned businesses is being revamped. Some disagree on how to best measure its success.

Now under scrutiny, a city initiative aimed at helping minority- and women-owned construction contractors continues to thrive at divvying up public contracts more equitably'. Few of those companies, however, become successful enough through the public program to "graduate" from it. And officials and advocates disagree on whether that is the best way to judge the program's success.

Some Chicago officials cite meeting the benchmark set by a city ordinance--25 percent of all city contracts must go to minority-owned businesses and 5 percent to women-owned--as the main goal of the city program, a portion of which a federal judge recently ruled must be revamped or face possible elimination by late June.

Others, bolstered by advocates, focus on how many of the businesses have successfully surpassed the program's earnings cap--about four a year, on average, in the last 13 years--and say improving that statistic should be part of the program's reassessment.

But the city keeps little data on businesses once they leave and acknowledges that measuring their long-term success remains a challenge.

The Minority & Women Business Enterprise Program has been helping such firms for roughly 15 years. In 2003, 46 percent of all city contract dollars--or $586 million--were awarded to those businesses.

When it comes to construction contracts--the area subject to the judge's ruling--40 percent of city dollars, on average, went to participating companies from 2001 through 2003, amounting to nearly $615 million.

"It's helping companies to get more business from the city, but we still believe that we have a ways to go," said Jennifer Hoyle, a spokeswoman for the city's law department, which defended the program in federal court late last year. "The hope was at some point companies would reach a point when they wouldn't need assistance anymore and they would graduate," Hoyle said.

Once a minority- or women-owned and certified business earns an average of $27.5 million annually for three consecutive years, the firm graduates from the city's program, and is no longer eligible for certification.

Jessica Faulkner, spokeswoman for the city's Department of Procurement Services, which oversees the program, said the city's most important goal is meeting the 5 and 25 percent benchmarks.

"We track the information needed to monitor compliance with our ordinance," Faulkner said.

The program's legitimacy first came under attack in 1996, when the Builders Association of Greater Chicago challenged it in court, resulting in U.S. District Court Judge James Moran's December 29, 2003, ruling.

A task force has since been assembled, and the city's law department is working to restructure the initiative in accordance with the judge's recommendations. All of the recommendations focus solely on city construction contracts.

The 31-page ruling calls the city's program "well-intentioned," but argues that it has to be tailored more narrowly to "remedy past discrimination."

Recent task force hearings were flooded with testimonies about the disparities Asian Americans face in breaking into the business.

Since the inception of the business enterprise initiative, formally launched by Mayor Richard M. Daley in 1990 after efforts from the late Mayor Harold Washington and others, thousands of companies have participated.

By infusing companies with money from public deals, the program bolsters a small business' capacity by providing it the credibility it needs to buy equipment and secure loans, advocates say.

Yet, many minority contractors involved say they remain reliant on the program to narrow the bidding field. And these contractors say their businesses would be in jeopardy of collapse if the program was eliminated--some estimate as many as 80 percent of the current bidders would go out of business.

To get certified as a minority- or women-owned business, a company must prove its ownership, control, expertise, location and earnings. Certification is valid for five years. Each year, all businesses must submit affidavits that declare their annual earnings and attest to their qualifications for the program. But, after a firm graduates from the program, it can apply for certification again as long as it can prove that it earned less than the $27.5 million annual average for three years, Faulkner said.

Some say there is little incentive to graduate at all.

"Most people do not want to graduate because they say, once you graduate, there is no business," said Alderman William M. Beavers of the South Side's largely African American 7th Ward, who is chairing the mayoral task force.

However, Beavers maintains graduation is critical to the program, despite public testimony to the contrary at recent hearings.

Linval Chung, who is Chinese, is one of those few business owners who successfully graduated.

Initially, his company, Reliable Contracting and Equipment Co., grossed less than $1 million in annual contracts. Gradually, Reliable grew to take on larger jobs, laying foundations for major projects such as highways.

"[The program] took us from $1 million to $10 million," Chung said. "But from $10 million to $17 million we went through the private sector."

Chung, like most others, joined the initiative because it gave him a start when he was struggling to make deals as an unknown. "As an outsider nobody returned my phone calls," Chung said. "I would be sitting there waiting for calls that never came."

Chung's eldest daughter, Tina, followed in her father's footsteps. Currently, she is affiliated with the program through her own construction company, Horizon Contractors Inc.

She said 90 percent of her company's work comes from public contracts. One of the firm's biggest jobs is routing electricity to new bus shelters.

In 1997, when she set up shop, 10 people were on her payroll. Seven years later, 40 people work for the electrical contracting company. Although she projects that her company will continue to grow, Tina Chung doesn't anticipate reaching the graduation earnings cap anytime soon.

She says her "ultimate goal" is to graduate because she wouldn't want to pass up jobs just to stay in the program, although she says there are advantages to remaining certified.

Some contractors say they are hesitant to leave the program because, in addition to winning city contracts, the program certification helps to lure private businesses seeking to earn favor with public agencies for employing minority-led companies.

Advocates say that the current controversy over the program presents an opportunity to more effectively promote graduation.

"Under the current program there is no incentive for graduating, because there is no transitioning program," said Ralph Hernandez, former executive director of the Hispanic American Construction Industry Association, a nonprofit founded to combat discrimination against minorities in the construction industry.

Hernandez, who was recently named commissioner of the city's Department of Construction and Permits, is also a task force member.

A transition phase, for instance, could allow businesses to retain their certifications and help continue to level the playing field between smaller minority- and women-owned firms and larger, white-owned businesses, which Chung argues have a tight grip on the construction industry.

Paul King, chairman of UBM, the largest African American-owned construction company in Illinois, graduated from the program and lauds its accomplishments.

But he cautioned that measures such as graduation rates don't address the real problem. Minority- and women-owned firms, he said, are still only making a dent when it comes to landing the most lucrative contracts.

"I compare our progress to the 10 biggest firms in Chicago that are doing more business than all of the black firms in the United States combined," King said. "We still can not hold a candle to the older, more-established firms."