Loose Lips

Gray Says CBE Reforms Coming Soon, Don’t Get Your Hopes Up

Mayor Vince Gray said today on Newstalk with Bruce DePuyt that he'll soon be announcing "a number of reform efforts" to the Certified Business Enterprise, the troubled contracting system LL chronicled in a recent cover story.

Not that LL is taking credit for said forthcoming reforms. Gray tasked Harold Pettigrew, the director of the Deparment of Small and Local Business Development, to review the CBE program and propose changes earlier this summer. That report has been finished for several weeks, but the mayor's office has not given LL a copy despite repeated requests.

Mayoral spokesman Pedro Ribeiro says it's a "substantive, deliberative document" that needs lots of reviewing before being handed over to a reporter. Most likely, that's code for: "we plan on having a big news conference touting our reform of a long-troubled program and don't want to be scooped."

On TV today and at conference for contractors earlier this week, Gray has been mum on details about what his proposed CBE reforms will look like. The only clue he's given is that some of the reforms will center on beefing up Pettigrew's woefully understaffed office. The DSLBD currently has zero employees dedicated to rooting out fraud in a program that's perceived has having widespread fraud. Fixing that problem is certainly a reasonable goal, but that's the lowest of low-hanging fruit of possible CBE reforms.

Will there be more substantive recommendations? It's hard to be optimistic. As city administrator, Allen Lew will likely have a large say in what the proposed reform efforts are. And as LL's already pointed out, Lew has unanswered questions about his previous oversight of school construction spending that went to questionable CBE-certified joint ventures.

Also, D.C. mayors have a lousy track record of trying to fix the program. Tony Williams ordered up a task force to review the program in 2002. Much of that work centered on ways the city could spend more money with CBEs, and many of its suggestions never went anywhere. Adrian Fenty's efforts to change to the program also didn't offer much in tangible results.

And finally, it's doubtful that a three-month review of the CBE program will produce a rigorous, in-depth look at what the CBE program is all about. The whole bargain between the city and its taxpayers has been that the city pays a little more to local contractors in order to keep city dollars in the city, which in theory leads to more taxes being paid, more jobs for residents, etc. "I’d rather pay a little bit more for service from a D.C.-based company that’s hiring D.C. residents," is how Ward 8 Councilmember Marion Barry put it last year.

But what if the city pays a lot more and gets little in return? In its current set up, the CBE program can give certified companies a massive competitive edge in bidding on city contracts. A CBE contractor who bids $1 million on a project can beat a non-CBE company that bids $890,000 on the same job. Is that a good deal for the city? It would depend on whether that extra amount paid to the CBE resulted in higher tax revenues for the District and more jobs for city residents—metrics that have never been studied, according to several experts LL spoke with.

"I don't know of anybody who has looked at the D.C. program,” says George R. La Noue, director of the Project of Civil Rights and Public Contracting at the University of Maryland Baltimore County. These types of programs in general get scant academic attention: "These are very complicated issues, and for the most part people haven't studied them."

When asked whether the Office of the Chief Financial Officer had ever done any type of in-depth analysis of the CBE program, a CFO spokesman replied: "CBE?" He later told LL to check with the inspector general or the city's auditor. But the auditor mostly does reports on whether city agencies are meeting their required CBE spending goals.

And higher prices for city contracts aren't the only costs. Major developments have to spend 35 percent or more of construction budgets on CBE subcontractors. Finding qualified CBE subcontractors can take serious time and effort, several contractors told LL. Time equals money in construction, and that extra cost is tacked on to the final price of projects. Considering the billions that have been spent on construction in the District during the last decade, that's probably a huge, unstudied extra cost.

"There are not many people in government who look at cost-benefit analysis," says Courtland Cox, a consultant who has helped craft and execute the city's CBE policy. "If you ask me where's such a study, I couldn't point to it."

Maybe such a study would be a good place to start, rather than the small-bore tinkering that's likely about to take place.

Update: Commenter DCGovcorruption rightly notes that LL missed a study the city commissioned in 2002 to measure the effectiveness CBE program (then known as the Local, Small and Disadvantaged Business Enterprises program). The report found that the "benefits of the LSDBE program outweigh the measurable program cost." The report comes in at 25 pages (plus appendices) and its conclusions are based on estimates produced by a "proprietary PC Windows-based" program, not by following the actual money. So LL is gonna stick to the same conclusion: that a rigorous study of the District's CBE program is still waiting to be done.

Photo by Darrow Montgomery

  • Joe

    CBE is a joke in your TOWN!!!

  • DCGovcorruption

    Please note for the record that a study was performed by Mason Tillman Associates in 2002 (LSDBE Program which was abolished by Kwame Brown and given a different agenda, decreasing the number of local companies receiving contracts, now known as the CBE Program) which was during the administration of Anthony Williams. You might try googling for information rather than to rely on Courtland Cox who has been living off the dc taxpayers the past 6 years and bringing nothing of substance to the table.

    Excerp from report by Mason Tillman

    Washington D.C.’s Office of Local Business Development (OLBD) commissioned Mason Tillman
    Associates to perform an evaluation of its Local, Small, and Disadvantaged Business Enterprises
    (LSDBE) program. As required under D.C. Law 12-268, also known as the “Equal Opportunity
    for Local, Small, and Disadvantaged Business Enterprises Act of 1998" (the Act), the LSDBE
    program must be independently evaluated every three years.
    The evaluation has three main purposes: (1) to assess and quantify the differential costs of awards
    to LSDBEs; (2) to assess and quantify the economic outcomes of the program on the District of
    Columbia’s (District’s) tax base, local employment, and other economic indicators; and (3) to
    determine the LSDBE program’s strengths and weaknesses and recommend improvements. This
    report studied the period October 1, 1999 through September 30, 2001.
    The evaluation methodology included both qualitative and quantitative analyses. An economic
    analysis model was used to calculate the quantitative public costs and benefits resulting from the
    program. The analysis traced spending through the marketplace and measured the cumulative
    effects of that spending on the District’s economy.
    The qualitative analysis evaluated the range of the OLBD’s business development services and
    identified factors that would contribute to business growth. Staff and managers of the OLBD and
    the Office of Contracting and Procurement were interviewed and surveyed. The purpose of this
    research was to develop an understanding of the operation of the LSDBE program and to solicit
    feedback and recommendations for program improvement. A focus group was held with LSDBEs
    to identify the program’s success areas, where improvements are needed, and to determine the
    effect LSDBEs perceive the program has had on their businesses.

    C. Summary
    This report shows that the LSDBE Program as mandated by the Equal Opportunity for Local,
    Small, and Disadvantaged Business Enterprises Act of 1998, D.C. Law 12-268 is having
    significant success in achieving its goal of providing opportunities for LSDBEs to participate in
    District contracts. Since the last assessment the number of reporting agencies reporting LSDBE
    utilization has increased notably. There are 27 agencies did not spend 50 percent of their
    expendable budget during the reporting period. However, several of those agencies that did not
    meet their LSDBE goal in fiscal year 2000 did meet their LSDBE goal in fiscal year 2001.
    Some agencies made notable awards to LSDBEs but did not report the awards funded by their
    expendable budget separate from those funded with other dollars. Thus it is not possible to assess
    compliance with the 50 percent goal. It is also not possible to assess the cost incurred through bid
    discounts because neither the contracts that received a discount nor the value of those discounts
    Mason Tillman Associates, Ltd. December 2002
    LSDBE Cost Effectiveness and Financial Impact Analysis 25
    was reported. Consequently, the only measurable cost was the LSDBE program operating budget.
    This data was insufficient to measure the total LSDBE program cost.

    Although the District may have paid more for construction, and goods and services contracts with
    LSDBEs by granting bid discounts, the economic benefits of those expenditures translated into
    local jobs, revenue for businesses and income for residents as well as tax revenue for the District.
    The benefits of the LSDBE program outweigh the measurable program cost. The impact analysis
    indicated that for every dollar expended under a LSDBE contract, about 55 cents of gross sales
    output of goods and services was generated in the District. The LSDBEs contract awards
    generated an estimated $19.4 million in tax revenue to the District government. Finally, this report
    recommends improved reporting standards, to generate that data needed to perform a cost
    analysis. It also recommends program enhancements such as contract participation monitoring
    procedures and subcontracting substitution criteria to ensure the continued success of the LSDBE

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  • from my thumb to your eyes

    The fact that you are still listening to Courtland Cox who is a theif is comical. His dude works for the city and the companies who have to comply with these rules at the same time. Further he sets up organizations and tries to get companies own by folks of Caribbean legacy to donate to or they can't get work. Just ask any small company who does things like drywall. He is full of shit and a joke.

  • City Dude

    All I know is that these Joint Ventures are all fraud..and DBE program within CBE program is mostly the culprit in all corruption cases.
    CFO should go after all these J/V's for DC Tax audit. He will finally figure it out how money is finagled where DC does not even get taxes on its own jobs!! That is a shame.

  • Pete

    "Not that LL is taking credit for said forthcoming reforms."

    Victory Lap!

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  • Pete

    CFO: "CBE?" -money quote

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  • Mousetrapper

    Rayful Edmonds would be a great choice to clean-up with his preceion,operate expertly and 'rid' the crooks from the CBE's. The word on the street he has been released so I will ask him if I see him to apply for the administration job of steering the CBE for the citee.

  • nowaitadaminit

    #7: Go trap some RATS if you're big enough. Rayful Edmonds is a gullible weakling who preyed on his own, was led by a flock of fickle women, protected by sociopathic men and brought down by a White woman with the same name who had been around the block a time or two or three and never did a day in jail though she was slinging dope for the big time White gangsters long before Edmonds was born.

    If you do see him, you'd better run in the opposite direction because the real word on the street is that there is a trunk full of money topped with a sign on a velvet cushion that says: "Bring me the heads of Bootsy Perry and her son Rayful Edmonds and all of this is yours. No questions asked."

    The word also says they'll give half of the contents of the trunk for one of those heads. Also heard that those sociopathic psychopaths who formerly protected him are the main bounty hunters. Don't forget to tell him that if you see him as you run like Hell in the opposite direction so you won't get caught in a rat trap yourself.

  • nowaitadaminit

    Hats off & Cheers to MM. You Rock!!
    #8 is sad, but the truth of what was related by some whom I believe know of what they speak.

    I won't be surprised if Edmonds is out of jail. His New York counterpart, Nicky Barnes (though RE was no where near the stature of NB in the drug world), was released by Giuliani after setting up some of his lieutenants for stings. Giuliani said NB was responsible for more drug busts than the entire NYPD with that situation. Lets hope RE is still somewhere in the witness protection program within the walls of confinement he put himself behind with such callous disregard for the lives he and his gang were ruining during his reign as one of DC's top Pins. His momma is out because he set up some real bad dudes. He also ratted out some even badder Columbian peeps. Wouldn't want to be in their shoes for all the money both Drug Kingpins squandered through their lives.
    There is no way it could have been worth it.
    You can't make this stuff up. There will probably be a movie. Break out the popcorn.