Vince Gray: CBE Reforms Are Here!
Look out, violators of the city's Certified Business Enterprise program rules: Mayor Vince Gray says he's determined to fix the much-maligned contracting preference program and make fraudsters and cheaters pay.
Gray says he wants companies caught gaming the CBE system to face fines big enough "to get people's attention" and deter other would-be wrongdoers.
The tough talk came during a news conference this morning outside of the $1 billion CityCenter project downtown where Gray proclaimed a new era for the program. No longer, the mayor said, will the agency tasked with policing CBEs be outgunned and undermanned. Gray wants to beef up the Department of Small and Local Business Development with 10 full-time employees dedicated to making sure the city's CBE laws are being followed. Other changes include new "spot checks" of current CBEs to make sure they're actually local companies doing work in the city.
As LL has pointed out previously, beefing up enforcement of the current CBE laws is the low-hanging fruit in reforming the program. It's an important step, but only an early one. The big questions of what exactly is the city trying to achieve with the CBE program (which started as an effort to help minority-owned businesses, but is now open to anyone with an office in the District) and whether those goals are being met weren't discussed with any vigor at today's news conference.
Gray told LL that if all of the rules of the CBE program were followed, the program would be a net benefit for the city. "The backbone of the city's economy right now is small businesses," said Gray. "This is a way of giving a boost to small businesses."
But that's a fundamental misunderstanding of what the CBE program, in its current form, is about. Any company, not matter how large, can qualify as a CBE and enjoy its benefits. Miller & Long, the behemoth Bethesda-based concrete company that's done more than $5 billion worth of work, just opened a company in D.C. called Miller & Long D.C., which was certified as a CBE two months ago. And that's just one example among many of the CBE program potentially helping companies that the city's taxpayers probably don't benefit much from helping.
The other issue to watch is whether Gray's professed commitment to reforming the CBE program translates to any action beyond the DSLBD. The real department to watch is the Department of General Services which controls hundreds of millions of construction spending each year.
DGS Director Brian Hanlon says he takes having meaningful CBE participation seriously on DGS projects, but his recent actions suggest otherwise. Take the case of the renovations at Anacostia Senior High School, where city officials determined in March (after a two-to-three-month investigation) that there were significant problems with the CBE-certified joint venture managing the project. City Administrator Allen Lew said the city sought to punish both contractors involved by prohibiting them from working on joint ventures for two years, but those efforts froze when the contractors sued each other in July. Today Hanlon said he didn't refer the matter to the Office of the Attorney General until a "few weeks ago" (which happens to be when LL first started making a stink about Anacostia). Why did the referral take a half a year after the city knew of problems and tried to enforce some sort of punishment? Hanlon had no answer, but he chaffed at LL's line of questioning.
"There is a thing called due process," Hanlon said.
There sure is, but that brings up a whole new issue that might make Hanlon more uncomfortable. At a meet-and-greet for developers DGS threw a few weeks ago, a contractor asked Thomas Bridenbaugh, a private attorney who is DGS' de facto procurement boss, what DGS was doing to stop CBE fraud. Bridenbaugh said DGS has project managers who survey work sights to make sure that CBE contractors are doing the work themselves and aren't being used as fronts. If a company is caught as a front, Bridenbaugh said, it's effectively blacklisted from future DGS work. 'We do our best to police that," Bridenbaugh said.
LL asked for a list of those bad actors, but Bridenbaugh says such a list doesn't exist; it's just known who the bad actors are. "It's a very small world," he said.
Gulp. So DGS has effectively outsourced its CBE enforcement to private consultants who have the power to act as judge, jury, and executioners against alleged CBE fraudsters. That sure doesn't sound like due process.
Maybe if the mayor really is serious about tackling CBE reform, he'll take a crack at this problem, too.
Photo by Darrow Montgomery