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Monday, Aug 15, 2022

Small Goes Big

Ensuring contractor diversity on a major infrastructure project used to be straightforward: Set a goal for the percentage of work that goes to minority-owned or women-owned businesses then find those businesses and encourage them to bid.

For the businesses themselves, touting their minority-owned or women-owned certification was crucial.

Now, though, achieving a diverse contractor base is often a much more roundabout process. Under a state law passed in 1996, public agencies are prohibited from showing preferences based on gender or ethnicity in awarding contracts.

In recent years Los Angeles World Airports, the city agency that operates LAX, has shifted its preference in awarding contracts to certified small and local businesses. And getting certified as a small business is often more important than a company’s ownership status.

At least that’s the case for one of the largest public infrastructure projects now underway in Los Angeles County: the $5 billion contract to design, build, operate and maintain a people mover system at Los Angeles International Airport.

Consider Jamarah Hayner, a black woman who founded and co-owns JKH Consulting, a Manhattan Beach-based public affairs firm that has been hired as a subcontractor for the people mover project. JKH Consulting, which Hayner founded three years ago, is a certified small-business enterprise with 11 employees.

Hayner said she chose not to get her business certified as woman- or minority-owned, saying that in today’s infrastructure marketplace, such certifications aren’t worth the cumbersome paperwork process.

“These certifications are no longer as prevalent as they were 10 or 15 years ago,” she said. “What really matters now, especially in this region, are certifications as a small business, a disabled veteran business or a disadvantaged business.”

Largest city contract

The automated people mover project, which is expected to cost about $2 billion to build and $3 billion to operate and maintain, is the largest single contract by dollar volume awarded by a Los Angeles city agency.

It is designed to improve passenger ground access to LAX while helping to unclog vehicular traffic in the central terminal area. The 2-mile track will feature six stations and connect the nine terminals at LAX with the Crenshaw/LAX light rail line as well as a consolidated car rental facility near the 405 Freeway.

Samson Mengistu, chief operating officer at Los Angeles World Airports, said 70 of the 123 firms currently working on the automated people mover project hold small-business certifications. Another 30 have local-business certifications, and 26 have both.

“We are still at the beginning of this project, so we anticipate that the number of total firms involved, and the number of firms with various certifications, will increase over the duration of the project through 2023,” Mengistu said.

While LAWA sets varying targets for small and local business participation for the people mover project, the consortium of prime contractors — known as LAX Integrated Express Solutions, or LINXS — has the responsibility for carrying them out. 

The consortium is comprised of nine prime contractors: Irving, Texas-based Fluor Corp.; London-based Balfour Beatty; ACS Infrastructure Development Inc. of Coral Gables, Fla., Dragados of Madrid; Hochtief Solutions of Essen, Germany; Montreal-based Bombardier Transportation; Omaha, Neb.-based HDR Inc.; and Kansas City, Mo.-based HNTB Corp.

Supporting inclusivity

Besides being a minority-owned and woman-owned contractor herself, JKH Consulting’s Hayner is one of those helping to ensure contractor diversity on the people mover project — one of her roles is to support LINXS’ inclusivity department.

“I’ve reached out to lots of women-owned businesses and minority-owned businesses, especially those who have not done a lot of government contracting work,” Hayner said.

In dealing with women-owned businesses, Hayner said, a strong selling point on the people mover is that the project’s two top executives are both women: Los Angeles World Airports Chief Executive Deborah Flint and Sharon Gookin, director of third-party coordination at Fluor, who is also serving as project director for LINXS Constructors.

Another subcontractor on the people mover project that has chosen not to seek minority-owned certification is Irvine-based IDS Group, which provides structural engineering and management services.

Co-owner and President Said Hilmy, an Egyptian immigrant, said IDS used to be certified as a minority-owned business but opted not to keep that certification current because cities and other public agencies in Southern California are putting their diversity emphasis on small business.

IDS Group is a certified small business with 92 employees though Hilmy said if the firm keeps growing, it may soon exceed the generally accepted 110-employee threshold for small businesses.

Although the firm is based in Irvine, Hilmy said more than half of its work by dollar volume comes from Los Angeles County. At LAX, IDS is providing structural engineering services for stations on both the people mover and consolidated car rental facility projects.

Hilmy said he attended a workshop for small businesses interested in working on the people mover project and that the company’s experience doing engineering work at Orange County’s John Wayne Airport was a help in getting these contracts.

“These are really big and important projects for us — the first time we’ve gotten work on projects this size,” Hilmy said. “But they are also very demanding, requiring us to find people with the right qualifications to do the engineering work.”

For Hilmy, the LAX contracts are especially poignant. “When I first arrived in America as an immigrant, I flew into LAX, and that’s where I had my first view of this country,” he said. “It’s only fitting now that I get to work on transforming that very same airport.”

Small is diverse

Some small contractors working on the LAX people mover project take an expanded view of diversity, one that includes small businesses.

That’s the case for San Dimas-based geotechnical consulting firm Geo-Advantec Inc., founded seven years ago by longtime civil and geotechnical engineer Shawn Ariannia. Geo-Advantec is a certified small-business enterprise, but because the firm now has multiple co-owners, it does not meet the federal standard of being at least 51% owned by a person (or people) of minority status. Nonetheless, Ariannia believes his firm adds to the diversity of contractors on the people mover project.

“Without the goals that LAWA set for small-business enterprises on the people mover project, it’s doubtful that this company would have been able to compete successfully with the multibillion dollar companies,” Ariannia said. “With these goals, it’s the big guys who now have to hire small businesses to meet their targets.”

Howard Fine
Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

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