The City of Chicago's minority and women-owned businesses contracting programs have come under the microscope once again as city Inspector General Joseph Ferguson's office released reports this month alleging "widespread fraud and abuse" in such efforts.
A June 9 report about the city's Minority and Women Business Enterprise program, or MWBE, criticized ex-Mayor Daley's administration for measuring the participation of firms rather than actual payments made to those companies.
Ferguson's second report, released June 15, details problems at the Public Building Commission, a critical group that manages construction projects for local public agencies, including the Chicago Transit Authority, park district, library system and others; Mayor Rahm Emanuel is now its chair.
In the second report, Ferguson's office examined 15 of the commission's projects from 2009 and found that minority and women contractors' participation was "far less" than what the commission reported -- 43 percent less for minority contractors and nearly 10 percent less for women-owned firms. That means $40 million fewer dollars went toward those firms than what the commission had reported.
City code sets a goal that at least 25 percent of all city contracts each year goes to firms owned by minorities; 5 percent to companies owned by women. The commission's MWBE contracting rules mirror the city's, Ferguson's office said.
Ferguson's office says the discrepancy between the commission's numbers and his own can be explained by instances like this one:
"[O]n one project, the prime contractor was a joint venture involving a non-MWBE certified company and an MWBE company. The PBC credited the MWBE portion of the joint venture with $1,430,219. However, the lien waivers show that company paid $914,372 to non- MWBE 2nd tier subcontractors, meaning only $515,847 should have counted toward MWBE participation."
As of last Thursday, a spokeswoman for the commission said the agency was still reviewing the report's findings.
There's been some push back about Ferguson's reports, however, from some minority contractors. HACIA, an organization representing Latino construction contractors, said the first, June 9 report went too far, according to the Chicago Sun-Times.
The group also took issue with Ferguson's call to end the city's Target Market program, which sets aside a percentage of the city's contracts for minority- and women-run firms. (In a 2007 investigation, The Chicago Reporter found the city reached half its annual goal under the target market program.)
Ferguson said the trade group challenged only the rhetoric of the June 9 report, not its substance. He said Target Market would not pass muster in the courts.
"We have to drain the swamp and put the program on solid footing," Ferguson said when asked about rolling back programs like Target Market and granting more firms waivers to MWBE contracting rules. "We have to work from actual facts, from solid footing and proper administration and oversight, so we're not actually encouraging the less honorable and illegal entities to operate in this realm and delegitimize the entire mission, so that the public has confidence in it and the minority community has confidence in it."
Over in the City Council, meanwhile, 14 council members have signed onto support an ordinance (PDF) that calls for creating a "Procurement Oversight Committee." The body would review city contracts worth $500,000 or more, signing off or denying them.
Four members of the committee would be appointed by the city's mayor, with the remaining three offered by council members. The race and gender of each executive official of firms recommended for contracts this size or higher would be disclosed.
-- Micah Maidenberg