Staff Reports
The City Journal investigation by Christopher F. Rufo and colleagues has blown the whistle on a part of California government that most people never knew existed: a Utility Supplier Diversity Program that treats “LGBT-owned” firms as a formal procurement category. The piece says the California Public Utilities Commission’s (CPUC) aspirational goal of 1.5% for LGBT Business Enterprises could translate into about $633 million in utility contracts — and that alone should make every taxpayer sit up and ask a few basic questions.
What the City Journal reported — and what it means
The short version: City Journal lays out how the CPUC, under General Order 156, folded LGBT Business Enterprises (LGBTBE) into its supplier‑diversity regime and relies on a Supplier Clearinghouse and the National LGBT Chamber of Commerce (NGLCC) to certify firms. The investigation shows the paperwork the clearinghouse accepts, names example firms, and does the math on the 1.5% aspirational goal to arrive at roughly $633 million in potential contracts. That number is a headline-grabber, and rightly so — aspirational goal or not, this is public money and should be handled with full transparency.
How certification works — and why critics smell trouble
Certification isn’t done by asking about anyone’s private life. The clearinghouse and NGLCC require documents that show majority ownership and control — tax forms, formation papers, resumes, proof of residency, sometimes site visits. Those rules mirror how other supplier‑diversity programs operate. But that very paperwork system is the point critics are making: when status is proven by forms alone, incentives exist for “performative” certifications and creative bookkeeping. If you think fraud has never happened in set‑aside programs, think again — that’s why audits and spot checks are supposed to exist.
Politics, priorities, and Governor Gavin Newsom
Here’s the political rub. California’s bureaucracy has created a pipeline that channels taxpayer dollars toward a designated category. Conservative outlets have amplified the City Journal piece and urged reviews; some have suggested the Department of Justice under Assistant Attorney General for Civil Rights Harmeet K. Dhillon should look into it. To be clear, no formal DOJ announcement opening a federal probe was found in mainstream DOJ channels at the time of reporting — so demand the receipts before declaring a federal raid. Still, Governor Gavin Newsom and CPUC officials can’t shrug this off as “gotcha” journalism. If your government is going to compartmentalize procurement by private characteristic, the public deserves strict oversight.
What should happen next — common-sense fixes
Start with transparency. The CPUC should publish the raw procurement tables that feed the $633 million figure and explain how many contracts were awarded and to whom. The Supplier Clearinghouse and NGLCC should detail their audit and site‑visit rates, and CPUC should open an immediate internal review and make the findings public. If loopholes exist, tighten the verification process, increase random audits, and restore penalties for false claims. Lawmakers who favor set‑asides should welcome tougher rules — a program that invites fraud is bad for everyone, including the groups it claims to help.
Bottom line: this isn’t about picking on people for who they are. It’s about making sure public money is spent honestly and openly. If California’s supplier‑diversity program is going to direct hundreds of millions in contracts based on identity categories, then oversight and accountability must follow. Otherwise taxpayers will be paying for paperwork and performative status while real needs go unmet — and that’s a story no one should accept quietly.
