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Contracts aimed at diversity in the U.S. still go to white-owned businesses, study finds

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Up to 28% of corporate and federal contracts set aside for diverse small businesses in the U.S. are still executed by white men at large public companies.

That’s the finding of a study by BJM solutions, a Trumbull, Connecticut-based economic consultancy firm.

It shows that a significant portion of federal funding for "so-called" minority- and women-owned businesses in the U.S. is actually spent on these pass-through firms, which represent larger corporations owned by white men, said Fred McKinney, the author of the study.

Nonwhite enterprises are being used as a front, and that’s a violation of government and corporate regulations, he said. And it takes business away from legitimate minority- and women-owned firms.

“This is illegal in the federal space," McKinney said. "It's probably illegal in some private spaces, if federal or public sector dollars are being used. And the protection against this happens to be the certifying organization."

The new study is based on a survey of those certifying organizations and 400 corporate supplier diversity professions from across the country. It was conducted in February.