Loose Lips

District Sues Contractor for CBE Program Fraud

A D.C. company scammed the District government by abusing its status as a business based in the city on three separate projects, according to a lawsuit filed by the District last week.

Contractor EEC of D.C. abused the city's Certified Business Enterprise program and a mechanism for joint ventures intended to help local companies win bigger contracts, according to lawsuit filed last Wednesday. Instead of performing the work it promised on city contracts, EEC allegedly used its CBE status to collect payoffs from a larger company willing to bring it on for a chance at winning.

EEC's partner in the joint ventures, Rockville, Md.-based Forrester Construction, settled with the District a year ago for $1 million and agreed to not seek CBE bidding advantages for two and a half years. The companies' joint venture for the renovation of Anacostia High School was one of the worst examples in Washington City Paper's investigation abuses of D.C.'s Certified Business Enterprise program.

EEC owner Andre Downey didn't respond to a request for comment.

According to the District's lawsuit, EEC and Forrester ran two more fraudulent joint ventures together. The first started in 2008, when the two applied together for a contract on the Department of Employment Service's new headquarters. On documents submitted to District regulators, EEC agreed to receive 51 percent of the profits and do 50 percent of the work, as required by CBE rules. Helped by the EEC's CBE status, their joint venture won the project.

But the District claims that secret documents between the companies told a different story. Two months after their DOES joint venture was certified, Forrester and EEC allegedly agreed to new terms that cut EEC's profits to just 5 percent of the profits without telling CBE program administrators in the Department of Small and Local Business Development. In exchange for its much bigger cut of the profits, Forrester would do nearly all the work on the project. DSLBD would never have certified the joint venture if it knew EEC was working for such disadvantageous terms, according to the lawsuit.

The companies allegedly pulled a similar post-certification agreement change in 2009 for a joint venture for a contract on Ward 1's Senior Wellness Center.

Photo by Darrow Montgomery

  • Wrack

    Bet you the District keeps contracting with Forrester, though. "Please, scam us, we love you for it! Here's more money!"

  • SMH

    Wrong... This is why blogs should leave reporting of serious issues to media professionals. At what point is this slander for not having all the facts?

  • Clawback

    If the District is really serious it could file lawsuits against the majority of the joint ventures as most behave in the manner that Forrestor has with impunity. What is more egregious is that the very people who are required to monitor turn a blind eye and rather than severely punish the known "BAD ACTORS" they try and tinker with the regs.

  • Snod

    FINALLY! in spite of ALLEN LEW's protection of his close knit inner circle of contractors which include Forrester whom LEW has given/awarded most if not all of the contracts and his ABSOLUTE control of the DGS who he has GIVEN/AWARDED MOST IF NOT ALL of the contracts the District was forced to confront confront this issue of fraud. It took the minority partner ADMITTING that he was a FRONT which LEW tried to squash and ignore for some time. Lew ruined careers of people who had the temerity to enforce the CBE regs. Hopefully this will prompt the office of the Inspector General and the alphabet agencies to look into ALLEN LEW'S influence in awarding contracts to examine his inner circle who do not follow the City requirements.

  • CBE

    This is why the CBE program is a complete waste, that costs the District taxpayers a fortune, and gets no results in return.

    Ever wonder why public projects in the District cost 20-30% more than they do right across the river in Arlington? Because we have this ridiculous program which mandates DC registered CBE's get a portion of the work. They charge more, knowing it has to be paid, and to make matters worse, a large percetnage of the CBE's are MD or VA residents who rent a house in the District for a mailing drop.

    The CBE's are typically completely unqualified for the work, so they get the contract, then let the larger GC who "has" to have them by law do all the work. Its a sham that makes the Tony Soprano's of the world look legit.

    DC has an entire cottage industry around the CBE program, costing developers hundreds of millions a year in "special" certifications, and "special" inspections, and requirements, all "managed" by one of the two "certified" CBE companies to do it.

    And how many jobs has it saved in DC? How many employabl;e DC residents have benefitied? Zero.

  • citydude

    If you live in town pay rent here, hire district residents, pay dc taxes and pay dc insurance costs then yes if you are a DC based contractor, you will be spending 20% more to get the same job completed than the guy coming out of Waldorf. Irony is that Forrester was only fined $1 million. It should have been $20 million on $100 Million dollar contracts. There are many more combinations of these joint ventures that went through the same process that Forrester and EEC did. BTW EEC Of DC is actually a MD company and was certified on fraudulent basis.
    Now how about Feds get involved and throw criminal charges at them! EEC of DC will probably go bancorrupt after this filing and DC will not collect anything....

  • sickandtireddc

    DC's DSLBD claim that it
    had no knowledge of the EEC mess results from that office's lack of experience and business acumen in executing internal controls. The office does not know how to execute a compliance program. Had it performed the level of oversight required for government, Joint venture arrangements, this fraud would not have occurred. DSLBD is a fraudulent operation itself.