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Certified Business Enterprise A fraud-plagued program that everyone knew about and no one fixed

Photograph by Darrow Montgomery

The Certified Business Enterprise program, ostensibly set up to help local businesses win contracts and subcontracts on city projects, is the worst-kept secret scandal in town. As virtually anyone involved in D.C. contracting knows, the program can lead out-of-District companies to set up shell offices to qualify as a “local” company and some CBEs to set up as pass-throughs on city contracts without doing any real work. The department tasked with enforcing the rules has seen its budget slashed and now has no employees dedicated to stopping fraud.

The problems spilled out into public view this year with a messy lawsuit between a large Maryland-based contractor and a smaller Maryland-based contractor who was certified as a local CBE. The smaller contractor alleged in court that the companies had run a scam joint venture to win city contracts worth more than $100 million dollars, including one to manage construction at Anacostia High School. Contracts submitted to the court as exhibits suggest the smaller contractor wasn’t lying. The CBE contractor was by law supposed to manage 51 percent of the Anacostia job, but instead controlled less than 5 percent. Making matters worse: This alleged fraud happened right under the nose of City Administrator Allen Lew, who used to oversee school construction and says he was unaware of any problems. The city’s attorney general is currently investigating what, if any, punishments should be doled to the two contractors.

Mayor Vince Gray has pledged to reform the program and is putting more resources towards enforcement of the rules. Gray joins a long list of D.C. mayors who have tried to make the CBE program work, however. This coming year will determine whether he joins the same list of mayors who failed to fix it.

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