California Utility Program Under Fire After Christopher Rufo Report Details LGBT-Certified Contractor Preference Totaling $633 Million
A City Journal report by Christopher Rufo has drawn renewed attention to a California utility contracting program that encourages companies to allocate procurement dollars to businesses certified as LGBT-owned, prompting criticism from a federal civil rights official and conservative commentators.
The California Public Utilities Commission (CPUC) oversees the Supplier Diversity Program, which sets contracting goals for large utilities and encourages companies to direct a portion of procurement spending toward businesses owned by groups the state designates as underrepresented, including LGBT-owned firms.
City Journal reported that the framework applies across California’s utility sector, which accounts for more than $43 billion in annual procurement activity.
The report said that if utilities fully met the LGBT procurement targets set under the program, it would translate to roughly $633 million in contracts directed toward certified firms.
Those targets have increased over time, rising from 0.5 percent in 2022 to 1 percent in 2023 and reaching 1.5 percent in 2024.
At current spending levels, full participation would represent hundreds of millions of dollars in contracts directed toward certified firms.
The initiative has drawn scrutiny over its legal basis and its relationship to California’s Proposition 209, a voter-approved measure that prohibits preferential treatment based on race, sex, color, ethnicity, or national origin in public employment, education, and contracting.
Critics argue the supplier diversity framework conflicts with the spirit of that law, while state regulators maintain the benchmarks are voluntary goals rather than quotas.
Attention intensified after Assistant Attorney General Harmeet Dhillon of the Justice Department’s Civil Rights Division addressed the program during an interview with Glenn Beck, questioning whether it complies with federal law.
“I agree that it’s illegal. I don’t know how who somebody sleeps with is relevant to their provision of utility-related support services,” Dhillon said. “It’s nonsense and it needs to stop.”
Dhillon also reiterated her concerns on X, writing that the CPUC’s Supplier Diversity Program had “gone off the rails,” arguing that race and sex discrimination violate federal law and indicating the Civil Rights Division “will take any appropriate action.”
Rufo also highlighted the program during a Fox News appearance, describing it as a system that incorporates demographic classifications into public contracting decisions and arguing that government-related contracts should be awarded based on merit, cost, and performance rather than identity-based categories.
According to Rufo’s report in City Journal, the supplier diversity framework dates back to 1986, when then-Gov. George Deukmejian (R) signed legislation requiring utilities to develop procurement plans aimed at increasing contracting with minority- and women-owned businesses.
The CPUC later formalized those requirements under its Supplier Diversity Program.
The program expanded in 2014 under then-Gov. Jerry Brown (D), who signed legislation requiring the commission to recognize LGBT-owned businesses as eligible participants, and was further broadened in 2019 when Gov. Gavin Newsom (D) encouraged expanded participation within California’s energy procurement system.
Advocates for stronger implementation have also pushed for expanded participation.
LGBT advocacy organizations and members of California’s legislative LGBT caucus have previously urged regulators to strengthen procurement goals and increase representation within utility contracting programs.
Businesses seeking certification must apply through Supplier Clearinghouse, which reviews documentation to verify eligibility for LGBT-owned designation.
Applicants may be required to submit materials such as letters from LGBT organizations or other supporting records under program guidelines.
One case highlighted involves Mary Ann Horton, an internet pioneer whose company, Red Ace, received both woman-owned and LGBT-owned certifications.
Horton told City Journal the process required extensive documentation and said the designations helped the company secure contracting opportunities.
“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.”
The CPUC did not respond to a request for comment.
The program continues to face debate, with supporters arguing it expands access to contracting opportunities for underrepresented business owners, while critics contend procurement decisions should be based strictly on merit, cost, and performance.
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