CBE Mess: Were Warning Signs Ignored?
A Rockville-based construction company won a $6.8 million school construction contract a month after city officials were alerted that the same company may have abused the city's preference program for local contractors, court and D.C. Council records show.
A panel made up of one city employee and two private consultants picked Forrester Construction on behalf of the Department of General Services to manage renovation work at Nalle Elementary School on Dec. 15, 2011.
The selection came a month after representatives of Forrester's partner in a joint venture at Anacostia Senior High School, EEC of D.C., copied city officials on letters alleging that Forrester was in breach of the city's Certified Business Enterprise program. (For more details on the issues at Anacostia specifically and problems with the CBE program in general, see LL's cover story.)
Scott Foley, an attorney representing EEC of D.C., sent a letter to Forrester on Nov. 11, 2011, alleging that Forrester had taken control of the joint venture on the Anacosita project, despite the fact that EEC of D.C. was required by law to be the majority partner by dint of its CBE status. "Interestingly, EEC is a 51 percent joint venture partner on the joint venture but Forrester is control of all the finances and books for the joint venture," Foley wrote.
EEC of D.C.'s owner, Andre Downey, sent a letter four days later with similar allegations. Both letters were addressed to Forrester, but indicate that they were copied to the Office of Public Education Facilities Modernization, which is a part of DGS, and the Department of Small and Local Business Development, which runs the CBE program.
On Nov. 22, Downey met with Harold Pettigrew, the department head of DSLBD, and discussed "several potential violations" of city laws related to not only the Anacostia joint venture, but two other previous partnerships as well, according to a complaint Downey filed on Feb. 7, 2012, that references the meeting.
But city officials insist they were unaware of any problems involving Forrester prior to awarding it the Nalle job. "The conflict between EEC and Forrester was first brought to the District's attention as a financial dispute in December 2011," City Administrator Allen Lew told LL in a statement.
Brian Hanlon, the director of DGS, says the city first got wind that there were problems in mid-December, and it took two to three months "to investigate the matter and determine that there were, in fact, substantial issues."
"By then, we had already awarded the Nalle contract and [Forrester was] well into that job," Hanlon says. (The contract wasn't sent over for council approval until July 9.)
As for the letters, Hanlon says no one on his staff saw them in November and notes that they weren't addressed to any specific individual. "It is quite possible that a letter addressed in such a manner got misplaced or did not get to the right people," Hanlon says.
He adds that he wasn't at the November meeting between Pettigrew and Downey and didn't "learn about that meeting until well after it happened." (LL has been waiting to hear back from Pettigrew—whose spokesman says he's coordinating with DGS and the city administrator's office on a response—and will update as needed.)
But even if DGS had been aware of EEC's complaints in November, Hanlon suggests that probably wouldn't have prevented Forrester from winning the Nalle job anyway. He writes:
The construction industry is by its nature litigious and we frequently are drawn into disputes between the various contracting parties. When this happens, we meet with both sides, investigate (if appropriate) and then decide what action (if any) to take. Both sides to a dispute are entitled to some level of due process and it would be foolish for us to act rashly and without all the facts.
It's wonderful that DGS respects due process and all, but it seems like it would behoove the city to act aggressively when it gets complaints of potential fraud. After all, Mayor Vince Gray's "One City Action Plan" calls for DGS to "strive to expand and maximize CBE participation even more" than it already is.
There's also the unanswered question of how the city didn't notice problems at Anacostia earlier. In court records, Downey says Forrester has controlled all three joint-ventures he's had with Forrester dating back to 2008. (Lew says the District has discovered "potential improprieties" with all three.) And it's not like problems with joint ventures aren't common knowledge in the city's construction business.
Forrester's newest joint-venture partner is Parkinson Construction. They've teamed up on the construction of a new student center at the University of the District of Columbia. Nigel Parkinson, the company's owner, showed LL a letter he says he wrote to Forrester on Dec. 21, 2011, stressing that the partnership between Parkinson and Forrester will be an above-board enterprise.
"There are those who are tired of bogus joint ventures that attempt to pass 'as the real thing' but in no way approach even a 50-50 relationship," Parkinson wrote. " Ours is a true joint venture and must operate as such."
So why was he motivated to write such a letter before the companies even started working together? Parkinson told LL he wrote the letter to "set the record straight."
"We're not a bullshit company," he says.
Photo by Darrow Montgomery
The Nalle contract: