California’s Gay Certification Program Explained
8 reported
A Marginal Revolution article by Chris Rufo and Austen Hufford reports on California's Supplier Diversity Program, which certifies businesses as gay-owned to qualify for contracting benefits. The program originated in 1986 when Governor George Deukmejian signed Assembly Bill 3678, requiring certain CPUC-regulated utilities to submit annual plans for buying from woman- and minority-owned companies. Two years later, the CPUC created its Supplier Diversity Program to enforce the law and set contracting goals for large utilities. Under Democratic governors, the program expanded to include gay-owned businesses: in September 2014, Governor Jerry Brown signed legislation recognizing LGBT-owned businesses, and five years later, Governor Gavin Newsom encouraged other energy-sector companies to award contracts to gay-owned firms. To qualify, applicants must provide a letter from an LGBT organization, proof of media identification as LGBT, or three letters from personal contacts on company letterhead attesting to homosexual orientation. Falsely representing a business as gay carries a penalty of up to one year in county jail. The article cites economic analysis by Luke Froeb suggesting set-asides reduce competition and likely increase costs for taxpayers, with Brannman and Froeb estimating a 15% revenue reduction in timber auctions from small business set-asides.
What’s reported
The program began with Assembly Bill 3678 in 1986, signed by Governor George Deukmejian.
The CPUC created its Supplier Diversity Program in 1988.
In September 2014, Governor Jerry Brown signed legislation recognizing LGBT-owned businesses.
In 2019, Governor Gavin Newsom expanded the program to encourage other energy-sector companies to award contracts to gay-owned firms.
Certification requires a letter from an LGBT organization, proof of media identification as LGBT, or three letters from personal contacts on company letterhead.
Falsely representing a business as gay can lead to up to one year in county jail.
Economic analysis by Luke Froeb indicates set-asides reduce the number of bidders and may involve higher-cost bidders, moving price against the government.
Brannman and Froeb estimate set-asides for small businesses reduce timber auction revenues by 15%.
Key figures
Chris Rufo (author of the piece)
Austen Hufford (author of the piece)
Governor George Deukmejian (signed 1986 bill)
Governor Jerry Brown (signed 2014 legislation)
Governor Gavin Newsom (expanded program in 2019)
Luke Froeb (cited economic analysis)
Brannman (co-author of timber auction estimate)
Sources: marginalrevolution.com
