California prioritizes ‘certified’ LGBTQ-owned businesses for public utility contracts

The program, which began in 1988 and operates through the California Public Utilities Commission (CPUC), originally encouraged state contracts with minority-owned and women-owned businesses. It was in 2014 when then-Gov. Jerry Brown signed legislation adding LGBT-owned businesses to the program. Five years later, under Gov. Gavin Newsom, the program was expanded while encouraging additional energy-sector companies to participate.

Under the program, the CPUC in 2022 announced that it had set an "aspirational goal" of 1.5 percent "for the inclusion of Lesbian, Gay, Bisexual, and Transgender (LGBT) certified businesses in competitive contracting process with California-based utilities." The approved order set "voluntary procurement goals" for each year, starting with 0.5 percent in 2022, and ending at 1.5 percent in 2024. City Journal noted that if the goals were met in 2024, the CPUS-regulated utilities would have sent around $633 million to LGBTQ-owned firms.

City Journal profiled Mary Ann Horton, a transgender business owner whose cybersecurity company, Red Ace, received both woman- and LGBT-owned certifications. Horton insisted the program required extensive documentation and that the designations helped the company obtain a cybersecurity contract with utility provider San Diego Gas & Electric.

“If I was a straight, white male, I might be concerned I don’t have the same opportunity,” Horton said. “It worked out great for me.”

City Journal also detailed how, in 2022, San Diego Gas & Electric spent $8.6 million, or 0.36 percent of procurement, on LGBT businesses. The more than $8 million spent included a training video on supplier diversity. “Never fear when your Ambassador for Excellence is here,” an animated character says in the video. “I can show you exactly how to source diverse vendors.”

In California, City Journal notes that preferential public contracting is illegal under Prop. 209, which banned the state from giving preferential treatment based on race, sex, and ethnicity in both public employment and contracting. Voters rejected an effort to repeal the anti-discrimination law in 2020.

City Journal emphasized that CPUC violates the spirit of the law. The commission lists several specific goals for utilities contracting rates: 15 percent to minority-owned firms; 5 percent to women-owned firms; 1.5 percent to disabled-veteran-owned firms; and, most recently, 1.5 percent to LGBT-owned firms.

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