Seattle School District's Mismanagements Gives Small Business Programs an Undeserved Black Eye

Small Business is the essential engine which is bringing the US economy out of its current slump. Small business entities represent 99.7% of all employer firms, create more than half of the non-farm private gross domestic product and produce 13 times more patents per employee than large firms. This country needs jobs and innovation to pull itself out of the present economic crisis and small business is poised to fill that need. Government promotion of small business including those owned by women and minorities pay huge dividends in the long run by opening opportunities and government contracting to those small, innovative enterprises.

The present Seattle School District scandal involving the now defunct Regional Small Business Development Program has been widely reported in local news media. A brash conman (Silas Potter) with little or no previous experience wrestled control of the School District’s program to himself. The Small Business Development Program encouraged small, locally-owned minority businesses to bid on school district projects. Small businesses with gross revenues under $1M qualified for the program. Mr. Potter treated the funds of the Regional Small Business Development Program as his private piggy bank distributing funds to his friends and cronies. Many of the recipients of Mr. Potters’ largess were prominent politicos including the Urban League ($595,000). The School District in return for these monies received little or no value from Potter’s well-connected friends.

The Seattle Times describes this scandal as a “perfect storm of Seattle School neurosis. It was born of political correctness. Nurtured by lax management. Prolonged by timidity about race.”

The most disturbing part of the reporting was the attitude expressed by James Kelly a recently retired president of the Urban League of Metropolitan Seattle who was interviewed by a Times reporter. Mr. Kelly was asked if Potter was a con artist “Kelly paused and laughed. ‘The Urban League loves everybody. We love Republicans, Democrats, rich people, crooks,’ he said.” Not an acceptable response from an organization that champions minority causes, including disadvantaged business enterprises.

How can the Urban League condone such misuse of public funds? Why would Mr. Kelly not condemn Potter’s self-aggrandizement at the expense of taxpayers, minority and small businesses? A well-intentioned program to help small, disadvantaged businesses was considered untouchable even when it went off track, that anyone who criticized it “could get you branded as a racist.”

If as a society we are unwilling to call a crook to the carpet simply because the offender happens to be African American, the program loses all of its credibility to the detriment of small, disadvantaged businesses. Unless we are willing to stand up and condemn these flagrant practices necessary small business programs essential to the national and state economy are doomed. This scandal should not distract from the vital goal to promote small business in government contracting.

Kudos to lawyer Ron English, lawyer for the Seattle School District who also serves as the Secretary for the Bar Association’s Construction Law Section. Ron, before the story broke, diligently reported Potter’s wrongdoing to the District but his complaints fell on the deaf ears of his superiors. Way to go Ron, you are a credit to our profession.

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