How to Fix D.C.’s CBE Program
Mayor Vince Gray and Councilmember Vincent Orange are headed for a showdown today over the fate of a bill designed to increase the amount of city and construction funds being awarded to Certified Business Enterprises.
Gray proposed reforming the much-maligned program, which is supposed to increase the share of District-based businesses get of city contracts and private construction work, last fall. At the end of last year, the D.C. Council passed a bill that contained many of the mayor's suggested fixes (including provisions to boost the city's ability to punish CBE fraudsters) as well as Orange and the Council's proposed changes to the CBE program. At the urging of the business community, Gray vetoed the bill last month, saying the Council's provisions made the bill unworkable. Orange says he's willing to tweak an aspect of the bill (which currently would require half of all work done on each phase of a city-assisted construction project to be done by a CBE) that Gray found particularly objectionable and has asked his colleagues to override the mayor's veto at today's legislative session. Gray sent a letter to the D.C. Council yesterday asking lawmakers not to override it.
A senior Gray official says the administration is confident Orange won't have the nine out of 13 votes needed for a veto override. And D.C. Council Chairman Phil Mendelson said he's siding with the mayor. So don't hold your breath that Orange will get very far.
But neither Gray nor the business community can afford to look like they are happy with the broken status quo. Gray says he'll introduce a CBE-reform bill in the next 60 days and the business community has called for a "working group" to study the issue. Orange says that in addition to overriding the mayor's veto, the Council should consider establishing a "task force" to look at ways to improve the CBE program.
LL has spent a fair amount of time exposing flaws within the CBE program. Since LL refuses to join any working group or task force (not that he'd be invited), here's a few suggestions to improve the program.
1) Limit the size of companies eligible to be CBEs. One of the common misconceptions lawmakers have about the CBE program is that it's designed to help small businesses grow. Wrong. In its current form, the CBE program is open to companies of any size. Consider Fort Myer Construction, the road paving behemoth that not only enjoys huge support from several councilmembers (and also, Councilmember Anita Bonds works for them), but is a longtime CBE that gets 12 preference points when bidding on city contracts. A real evaluation of the CBE program will mean asking whether a massive, successful company needs help winning city contracts and whether the current help they are getting is shutting out competition from smaller players.
2) Limit the time a company can be a CBE. The CBE program should be a temporary boost, not a permanent crutch. Consider Jeff Thompson's Chartered Health Plan, whose CBE status practically ensured it would always beat out-of-District competitors when bidding on the city's Medicaid contracts. What did Thompson do with this decade of advantage? Did he grow it beyond the District and build a strong company that wasn't reliant on any single District contract? No, Thompson milked Chartered for millions and ran the company into the ground, to the point where the city had to take over the company and find a willing buyer. Over the weekend, Post columnist Robert McCartney asked how someone the Gray administration calls a "rotten businessman" was able to win one of the city's "fattest" contracts over and over again. A large part of the answer is the CBE program.
3) End the middleman CBEs. According to ex-Fenty administration officials, there used to be a group of CBEs who would simply buy offices supplies from Staples for government agencies at a markup so the city could say it was spending its money with CBE-certified companies. LL doesn't know if that's still happening, but would anybody be shocked if it was? Several construction contractors tell LL there are plenty of CBEs willing to do similar little-to-no-work roles on construction projects. A well-functioning CBE program would ensure that CBEs who win city business are adding some sort of value to city contracts other than simply being a CBE.
LL could go on, but that should be enough for any working group to get started.
Photo by Darrow Montgomery