Governments Struggle to Root Out Fake Minority Contractors

Source: Mattie Quinn, Governing, April 2016

It’s a problem that’s shown up all over the place. In Louisville, Ky., the metro sewer district banned two minority businesses from receiving future contracts after it was discovered that they were subcontracting with nonminority-owned businesses. An audit in Pittsburgh found the city didn’t even have a way to track how much work was going to DBEs. The city of Denver has also been dealt a blow by contracting scandals in recent years. … Nationwide data on DBE contracting programs is spotty. The National Association of State Procurement Officials doesn’t monitor them, and relies on state offices to track fraud and abuse. But states’ efforts vary widely. A report from the U.S. Government Accountability Office (GAO) in 2011 found that the Federal Highway Administration did not have the right tools to properly monitor states’ DBE programs for transportation construction. The GAO has published a smattering of reports over the past 25 years on women- and minority-owned contracting programs with two main conclusions: More information was needed, and the contracting world in general lacks women and minorities. … Overhauls like the ones in New Orleans and Minnesota are cause for optimism, says the National Association of Minority Contractors’ Stemley. And while he says there’s plenty of room for improvement in DBE programs across the country, he believes the high-profile cases of fraud and noncompliance are the exception to the rule. Still, he says, the onus is on states and cities to step up their efforts to attract more minority- and women-owned businesses.