Loose Lips

CBE Problems: Where’s Lew?

If you haven't seen it already, LL wrote this week's cover story about the District's broken Certified Business Enterprise program. Much of the story centers on the recent $62 million renovation at Anacostia High School, where the owner of a CBE-certified company, EEC of DC, says he was essentially used as a front by a larger, Rockville-based company, Forrester Construction, in a joint-venture partnership. As the CBE, EEC of DC was supposed to be the majority partner, but a secondary contract the two companies signed shows that Forrester managed about 95 percent of the work while EEC of DC managed the rest.

That's now the second screwy joint-venture on a large school construction project that LL's written about. In May, LL wrote about the problems with the joint-venture between Arlington-based Sigal Construction and GCS, a local CBE that just happens to be owned by the same guy who owns Sigal. A city commission found that GCS should have been decertified as a CBE but allowed the company to stay certified anyway. GCS-Sigal joint ventures have worked on a number of school projects, including the Wilson High School renovation.

The set up for both GCS-Sigal and the Anacostia joint venture certainly violates the spirit of the city's CBE law. The city mandates that the CBE partners in joint ventures maintain 51 percent control as a way of helping local companies get work on projects they wouldn't be big enough to perform on their own. The idea is to help local companies grow, not to help out-of-town companies be more competitive when bidding on city jobs. (CBEs can have up to 12 points added to their proposals, which are scored out of 100.)

So where was the city in monitoring all this? City Administrator Allen Lew was in charge of the Office of Public Education Facilities Modernization that awarded school contracts to both GCS-Sigal and the Anacostia joint venture when those contracts were awarded. He also was the driving force behind the creation of the Department of General Services, which now oversees school construction (and which Lew keeps close tabs on). But when LL asked him last week about problems with CBE joint ventures at the ribbon cutting for Anacostia last week, Lew said LL was asking the wrong guy.

"You know we don't certify whether they are CBEs or not," Lew said, referencing the Department of Small and Local Business Development office, which certifies CBEs. His spokesman later added via email that while Lew was head of procurement for school projects, he left the CBE details to the small business department. "Given that the certification of CBEs, including joint ventures, was designed to be managed by an agency separate from the procuring agency, [Lew's] focus was on technical capacity, past performance and costs," says spokesman Tony Robinson.

OK, fair enough. Lew was managing hundreds of millions of dollars in school construction projects and couldn't be expected to second-guess another agency's certification decisions. But there are three issues with that.

1) LL noted in the cover story that the DSLBD has virtually no resources dedicated to rooting out potentially fraudulent CBEs, which the agency's director says is the "worst kept secret" in city government. The agency has been plagued with problems for years. Presumably Lew would have been in on that secret as well, so why would he have put any faith in the DSLBD's certifications?

2) The problems extend beyond just certification issues. It's difficult to imagine how city officials didn't notice that Forrester was managing almost all the work at the Anacostia job (purchase order records show that that city sent checks to the joint venture to Forrester's Rockville address). But in a statement sent by his spokesman, Lew says the city wasn't aware of problems with the joint venture until EEC of DC and Forrester became embroiled in a dispute over money at the end of last year. Also hard to imagine: that city officials wouldn't have noticed that GCS and Sigal shared an owner and top executive. The world of big-ticket school construction in D.C., after all, is pretty cozy.

3) Lew thinks he knows the solution. Several contractors and city officials say the city's mandate that CBEs run 51 percent of joint ventures is what invites potential fraud. Most CBEs don't have the capacity to obtain the needed bonding (which is like insurance) for large construction projects, which means the non-CBE minority partner has to assume most of the risk on projects. If they put up the risk, then they are going to want the reward, the thinking goes. "People who put up the money are going to act in their interest," says Courtland Cox, a consultant who has helped craft and execute the city's CBE laws.

When I asked Lew about the perception that problems with joint ventures extend far beyond the Anacostia project, he denied that was the case. But then he explained the reason behind the problem he had just said wasn't there. "I think there's a way to neutralize a lot of this," Lew said, saying city law should be amended to allow joint ventures where the CBEs don't have 51 percent control, but a lower percentage based on their actual capacity. "Maybe the way the law is set up, it almost encourages some of this."

If Lew's made those concerns public before—like while he was awarding hundreds of millions of contracts to joint-ventures during several years—LL's not been aware of them.

At last week's ribbon cutting, Philip Artin, a close friend of Lew and private consultant who evaluates bids for the city on school projects (including the Anacostia renovation), gave LL a hard time for focusing on the wrong issues. "Is this building beautiful inside and out?" Artin asked.

Indeed it is.

Photo by Darrow Montgomery

  • la_niña

    As far as I'm concerned Mr. Lew is in the business of giving away the city to the highest bidder. He basically gave the State Department millions of dollars in free parking and land rights around the State Department probably looking forward to getting employment there in the not too distant future. His staff tried to get a better deal for the City and he decided to ignore them. He does not care for DC.

  • Ward5Dude

    Is there a compnay within the district that can handle 51% of the load on a project as large as one of the high schools? Seems odd to me...

  • Bebop

    If I could figure out what Lew does and why he gets a paycheck from the District government, I'd feel like I was Sherlock Holmes. This guy can't explain anything at Council hearings and seems to have no reason for existence. Would the government do any worse if he wasn't there?

  • DCGovcorruption

    Mr. City Administrator,
    What in the heck are you all talking about. The CBE rules
    in DCMR Chapter 8 already allow for CBEs to be part of a Joint Venture with percentages from 20% to 50% of the JV.

    FYI

    BID AND PROPOSAL PREFERENCES FOR JOINT VENTURE

    813.1 Bid and proposal preferences shall be assigned by the Department upon certification of a joint venture as follows:

    (a) For joint ventures in which all venturers are CBEs, the joint venture shall be assigned: the points allotted to the majority CBE; or if there is no majority CBE, then the managing CBE; plus up to four (4) points for any CBE whose percentage of ownership in the joint venture is greater than thirty-five percent (35%) and less than or equal to fifty percent (50%); plus two (2) points for any CBE whose percentage of ownership in the
    joint venture is greater than twenty percent (20%) and less than or equal to thirty-five percent (35%). The total number of points allotted to the joint venture shall not exceed twelve (12).

  • cutthecrap

    @Bebop...what you should be asking is why have two administrations kept him on the payroll?

  • Drez

    Lew would have had his head handed to him if he didn't play along with the farce that is DC's contracting system.
    The fact that it is simultaneously broken and impenetrable is not a bug. It's a feature.
    I thought everyone knew that?
    Keep at it, LL.

  • REALDC

    Nothing new here, Lew is the biggest crook in town.

  • Drez

    Lew and Fenty are the reasons our schools and recs aren't literally falling down around our kids ears.

  • DC Antics

    Drez, no disrespect here. It is a fact that most of the schools and recs do look better but the learning and teaching within those renovated walls has not improved.

  • Drez

    Things have improved. Though not as much as we would want.
    That's not Lew's fault though. (staying topical).
    I still like the centralized control model better than the old one, which allowed the Council and Mayor, and School Board to point fingers at each other.

  • REALDC

    The graduation rate is 53% for DCPS and dropping. The lowest it has ever been. So, how are the schools getting better? Enrollment is still declining. The Fenty-Rhee-Lew school reform was a failure!! The current chancellor, Big Mama, is not an educator. She is rolling around town delivering 5 year marketing plans to the community. Meanwhile,recent high school graduates cannot add fractions. SAD and TRUE!!

    Yes, we got new buildings but Fenty-Lew did not put money in the budget for upkeep of these facilities. In 3 years, they will start to crumble. Some are already having issues.

  • southeast lady

    DC is a cesspool! We all know that. What to do, what to about it is the question?

  • Drez

    The "graduation rate" declined because they changed the method of measuring it.
    Enrollment at DCPS has stabilized for first time in 30-40 years, and has even increased.
    Test scores are higher than they were 5 years ago.
    If newly renovated buildings are in disrepair it's for the same reason that streets and alleys and parks are dirtier than they were 3 years ago- the Gray Administration has lower standards.

  • Insider

    This guy has shown a blatant disregrd for procurement rules, since coming to the District. Check his track record. Bottom line, he gets projects done....Pols need him,small contractors fear him, and large contractors pay his network well. It was just construction, now with DCRA under his purview, he's gaming the entire procurement system. He's just smart enough to insulate himself with outside law firms, whom get paid big bucks on the taxpayer dime. Good luck getting anyone significant to talk, though. Those that dare have either been fired or black listed. Williams knew it. Fenty knew it. Grey knows it, too. One of the only early appointments, that has gone unscathed,thus far. He actually dares the Mayor to challenge him; and, he'll tell you so.This guy's ethical practices make Ghandi look like Willy Wonka.

  • ToTheContrary

    @Drez, to the contrary, streets and alleys and "District owned" parks are not any dirtier today than they were during the Fenty Administration. If one were to only look at the budget and annual report from the District's Department of Transportation and Parks and Recreation you would be able to separate fact from fiction. The city is spending more now on roadway maintenance than it ever has. Plus, you must recall that much of roadway maintenance under the Fenty Administration was paid for from the Federal Stimulus. Since dried up.

    If we all recall, Alan Lew was appointed by then Mayor Adrian Fenty to oversee school construction when these projects were launched. If the process was corrupted, if maintainence was not built into those projects from allocated dollars, that would land in Lew's lap while under the governance of then-Mayor Adrian Fenty, not Mayor Vincent Gray. Now that he is City Administrator he is in the perfect seat to perfect a process he well would know was flawed and needed reform where it pertains to fraudulent CBE's. Did he make those reforms? No, he makes excuses.

  • seDCdude

    tsk tsk at Drez!!

    still up to your MANICURED opinions presented to dress up, support and/or "PROP UP" your argument (EMOTIONAL DRIVEL), agenda, and/OR who you deem favorable.....you are more pathetic TODAY than 4 years ago my man!!

    lies!!

  • drez

    They are a hella lot dirtier, and the illegal dumping sits for longer. Roadway maintenance goes to road repair, not cleaning.
    Plus, if you will recall, DDOT had it's own funds seperate from the general funds during Fenty. Those were provided by parking revenue. Gray nixed that. To the effect that not only are the streets dirtier, but DDOT is less nimble.
    As to building maintenance, each new FY (in these past years Gray's team) sets the budget for each year. You're incredibly ignorant if you don't know that.
    seDCdude- you're still fact-free and stuck on stupid.

  • ToTheContrary

    Petty insults aside, DDOT has/is doing monumental roadway improvements. The 11th Street Bridge project is on schedule to be completed by Summer 2013, Pennsylvania Avenue SE Great Street Project was completed early this year, they have begun the massive New York Avenue Bridge project, the H Street NE Streetscape project was completed last June. The 14th Street bridge rehabilitation project was completed in 2011. There has been a great deal of shifting and transfers of funding between DDOT and DPW. Your statement that streets are dirtier is your opinion not backed by any verifiable evidence. So we will agree to disagree there. I live east of the river and my neighborhood is just fine. Keeping streets clean is a duel responsibility of citizens and the government. You are the first I have heard complain about the street cleaing services of DPW, led by Bill Holland whom, I'll add, was hired originally by former Mayor Tony Williams served through the administration of Adrian Fenty and now Mayor Vincent Gray. I have never had an incident where I have called 311 to report a need for city services and they go unanswered.

    What is for certain changes in District budgetary structure has to be approved by the D.C. Council. Neither Gray, nor any Mayor, has the power to do that in a vacume. When the city was facing it's fairy tale budgetary deficit, as forcasted by the incompetant Natwar Ghani, changes in priorities became a mandate not an option. Our emergency fund was dried up by outgoing Mayor Adrian Fenty.

    Allen Lew was the architect of public school relovation who has now been elevated to become City Administrator. He is thus in a position to ensure that the requisite building maintenance is being carried out. As I understand it, this is now a responsibility of GSA, an agency he personally reorganized.

  • SEis4ME

    TTC, don't tell DREZ that. He's apparently pissed that illegal trash idles for longer periods of time while the rest of us are marveling at the on-time completion of the 11st street and other project city-wide.

    Ok, let me stop. DREZ hasn't seen any real evidence that things have become laxed. The difference now is that he's "looking" for things to bolster his position that they have. No real-time facts to provide. Just..well

  • Real talk

    ToTheContrary,

    DGS* not GSA.

    Allen has approved millions of dollars in contracts to re-model schools and the District taxpayer has paid upwards of 25-50% more for it because of his "design build" that has steered projects to the larger contractors who can guarantee a school will get done on time (and never on budget) for fear that they will never receive another District contract ever again.

    It's a joke - and it's only a matter of time until Gray is gone and Lew will slither out the door behind him

  • Drez

    It's silly and unrealistic to expect me to point out all the specific locations where trash remains on streets sidewalks and alleys.
    I think it's very clear to anyone who gets out and about that the city is dirtier than it was 3-4 years ago. And I don't blame Howland. He is a competent manager and a survivor and just following orders. These sorts of issues- like budgeting and planning for maintenance fall squarely on the EOM.
    At the end of the day, Gray compromises his own standards away.
    He may be a hard worker but all that hard work isn't yielding high quality results. It's just providing some level of political coverage for his failures.

  • tony

    Drez, I heard you and David Duke go way back.

  • drez

    Yeah, we used to party with yo mama.

  • tony

    @drez, lol!

    There's nothing like a old white man showing a little machismo one minute and sucking dicks the next!

  • tony

    On a more serious note, the CBE program was developed as a means to ensure that black businesses would be given an opportunity to compete for some the city's contracts.

    However, some of our “educated” brothers and sisters took the position that we are one people in this city and that the "set-aside" component which really defined the said program should be eased.

    Thus, major corporations who traditionally received most of the city contracts devised a clever tactic which entailed joining or partnering with qualified black businesses to secure access to the very same contracts that were really earmarked for black businesses.

    Again, the problem with the CBE program is not one of logistics and/or practice. Rather it’s a problem rooted in a people would are so damn gullible and possesses a need to “fit in”.

    In my judgment, black people have no one to blame but themselves when it comes to the manipulation of this program and other programs that were devised to specifically help them. In most cases, it were our well to do brothers and sisters would did all they could to ensure that such programs were more "inclusive". And in the end, we are again the biggest losers.

    Again, black folks in this city are in serious trouble. And to be quite frank, the train may have left the station.

  • ToTheContrary

    @Drez, you ARE blaming Howland because street sweeping, debris and bulk trash removal fall squarely under in his lap as director of DPW and he ISN'T a lap dog. He has a strategy in place to carry out these functions that hasn't changed much over the years. However, his staffing levels have been reduced thanks to the Reduction In Force under Mayor Adrian Fenty due to "budget pressures". Trash removal is serious business in the city. ANC's don't generally tolerate trash setting around for very long. Anyone who doesn't have a hidden agenda knows that. That you cannot present verifiable evidence of your assertions doesn't make you wrong in your own mind, it just makes it an opinion of yours. You know what they say about those.

  • drez

    @Tony
    And it's nice to see you augmenting your traditional race-based commentary by also making gay jokes.
    I guess for you that qualifies as personal growth.
    @tothecontrary
    Yeah. It is my opinion that he's lowering the bar.
    But it wasnt Fenty that tried to cut SWEEP last year. It was Gray.

  • ToTheContrary

    @drez, poor thing, moving on.

  • drez

    Ok.
    See you at the next party.

  • ToTheContrary

    BTW, Vincent Gray has never proposed cutting street sweeping. It was a program he highly supported as Council Chair. As Mayor, constituents in his own ward wouldn't tolerate it. It is a highly popular program. When you say these things you ought to quote your source. If not, it is now and always will be YOUR opinion. Kinda like a false political ad for a past failed politician.

  • historyisprologue

    Suderman - you are a very good writer. I like your research. I like your spirit. I enjoy your stories. CBE HAS lost it's way. I hope someone can bring it back to its true purpose. DC is regressing to pre-home rule management. Some are happy with that, others not. I hope we find someone who can build more than buildings and their friends' bank accounts going forward. A fan of your's from southeast, the BEST view of the city.

    P.S. here is an article Suderman wrote earlier on this subject matter http://www.washingtoncitypaper.com/blogs/looselips/2011/11/30/lews-crew/

  • historyisprologue

    One final note...the dc city paper could stand to focus on its own minority hiring practices before outing others. Have you all hired ANY black writers yet? Come on. It's 2012 and DC has lots of great writers who would love to be part of the team. You can do better. You should do better.

  • Drez

    Street sweeping is not SWEEP.
    SWEEP is Solid Waste Enforcement and Education Program- DPW's inspection force.
    And Grays budget tried to (did) cut it. Look it up in these very pages.

  • Drez
  • DC Antics

    I will believe test scores went up once the cheating scandal is looked into thoroughly. There was major cheating, that is a fact.

  • ToTheContrary

    Fast Forward to FY13 proposed budget:

    http://cfo.dc.gov/cfo/frames.asp?doc=/cfo/lib/cfo/budget/fy2013/chapter/public_works/kt_dpw_chapter.pdf

    DPW Solid Waste Enforcement sees a budgetary INCREASE.

    For those forward thinking types.

  • Drez

    Great to hear.
    Let's hope they manage to use that money to produce cleaner streets and alleys.
    It would also be nice if they could restore the hazmat hours at Ft Totten.
    But given a choice between the two, I'd pick restoring library hours.
    It's never nice to cut services.

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