Contractor Alleges CBE Fraud
When a giant construction company from out of town wants to be considered for a city contract, it usually pairs with a local Certified Business Enterprise to form a joint venture to make the actual bid. In an ideal world, this partnership would be win-win-win. The local CBE would get the experience of partnering with a large, established firm. The out-of-towners would be more competitive in bidding on city projects because the joint venture would enjoy the CBE's preference points when bidding on city projects. And taxpayers would benefit from seeing city money spent on a local business that hires District residents and pays District taxes.
But, as anyone involved in city construction projects knows, this isn't always the case. At a recent meeting for CBE business owners organized by Councilmember Michael Brown, Brown's aide, Drew Hubbard, acknowledged that there are plenty of front CBEs that help out-of-towners game the system.
Now LL has obtained, through a Freedom of Information Act request, a letter containing some pretty serious allegations from a CBE involved in one of highest paid joint ventures in the city. Maryland-based Forrester Construction has formed joint ventures with EEC of DC on at least three city projects, including the Department of Employment Services headquarters, a Ward 1 senior wellness center, and the renovations to Anacostia High School. Last year, the city paid joint ventures between the two companies almost $100 million.
Andre Downey, who owns the CBE-certified EEC of DC, sent a letter to city officials saying Forrester has used him as a "minority partner to obtain the benefit of a District of Columbia procurement and then [found] any excuse to manipulate the situation" to Forrester's benefit. Forrester, Downey adds, "has been making all major decisions regarding the [joint ventures] without EEC's input since the inception of the joint ventures.
"In fact, [Forrester's] actions are nothing short of theft and fraud," Downey says.
In a letter to Forrester from May 14 that was sent to top city officials, Downey alleges that Forrester has broken several provisions of the city's CBE laws, including:
- Not giving EEC of DC access to the joint venture's bank accounts, as required by law
- Having the joint venture sub-contract most, if not all, of the work out to Forrester Construction proper.
- "Purposely and systematically" keeping EEC of DC out of management decisions.
- Withholding payments in order to force EEC to sign contract modifications.
- Failing to submit required quarterly reports to the District
Downey did not immediately return calls seeking comment. Downey sent his letter to Forrester and top city officials on May 14. The letter appears to be part of a feud between the two companies. Downey says his letter is a rebuttal to "default letters" Forrester sent to city contracting officials that are "wrong and purposely misleading."
Several years ago, the laborer's union filed a complaint against EEC of DC, saying it shouldn't be a CBE because it only has a small office on H Street while its equipment and the main office of its sister company, EEC, Inc, are based in Landover, Md. Also, the complaint said, Downey was improperly receiving credit as a District resident though he lived in Maryland. The complaint was dismissed.
A spokeswoman for Forrester did not immediately return requests for comment.
A spokesman for the Department of General Services says the city is aware of the dispute between Forrester and EEC of DC and is working with both companies to ensure that the renovations of Anacostia High are finished on time in August. A spokesman for the Department of Small and Local Business Development, which oversees the CBE program, says the agency is aware of EEC's allegations and is "working with other District agencies to take appropriate action."