The numbers that general contractor S.M. Wilson provided to City of St. Louis officials, regarding the cost to build the O’Fallon Recreation Center, are in dispute.
According to S.M. Wilson, it cost taxpayers an additional $2.174 million to employ 15 percent more minority businesses and 12 percent more minority workers on the Northside’s new recreation center.
In dollar amounts, the point of contention is more obvious. To award $2.5 million (15 percent more) in contracts to minority businesses, it cost $2.174 million.
Several city of St. Louis and community leaders adamantly disagree with the dollar-for-dollar mark up.
“It does not and should not take additional money to have minorities and women involved in publicly-funded projects in significant numbers,” said Alderman Terry Kennedy, chairman of the Aldermanic Black Caucus. “When it gets beyond a certain point, it has to do with how well the majority company has managed the affair.”
Last Thursday, The St. Louis American published its investigation into S.M. Wilson’s request for $2.174 million for increasing the O’Fallon project’s minority participation from 25 percent to 40 percent, along with women business and workforce goals.
Now Comptroller Darlene Green says she will not approve any requests to give S.M. Wilson further funding for achieving the minority goals.
When the city accepted S.M. Wilson’s $16.7-million bid in December 2009, the minority participation goals were set at 25 percent minority business enterprises (MBE) and 5 percent women business enterprises (WBE) – along with 25 percent minority and 5 percent women workforce goals. But before the contract was signed, the Board of Aldermen urged the Board of Public Service (BPS) to require higher goals. After negotiations, S.M. Wilson agreed to meet participation goals of 40 percent MBE, 8 percent WBE and 32 percent minority workforce.
The city agreed to pay S.M. Wilson $650,000 to meet these higher goals in June 2010.
But then in March 2011, S.M. Wilson asked for another $1,163,065 to meet the same minority requirements. The city only awarded them an additional $523,888. Recently, S.M. Wilson asked for another $361,091 “in additional costs we have incurred to meet the goal,” states S.M. Wilson VP Fred Jaeckle in a Feb. 9, 2012 letter to BPS.
In total, the city owes the company an additional $1,000,229 to achieve the minority goal, according to Jaeckle’s February letter.
After BPS approves any changes to the contract (called change orders), BPS forwards them to the comptroller’s office for further approval and payment. Green signed off on the two change orders totaling $1.174 million (the checks for $650,000 and $523,888).
As comptroller, Green has authority to decide whether certain bills are legitimate or not, according to several court rulings. The comptroller is also the only person who can be sued for mismanagement of city funds. Ultimately the weight of the decision lies on Green’s office.
Green said BPS has not submitted a change order for the $1 million that Jaeckle stated the city owes S.M. Wilson for meeting the minority participation goal in his February letter.
However Green clearly stated in a letter to The American that she does not agree that S.M. Wilson should receive a “further premium” for reaching the city’s minority participation goals.
“Should such a request be submitted, it cannot be approved,” Green said.
‘We plan to fight’
The St. Louis city NAACP has promised to take action if the BPS makes a habit out of awarding contractors millions of dollars extra to employ minorities on public projects.
“The notion that diversity increases cost is a precedent that neither the City of St. Louis, nor the minority business community can afford,” Adolphus Pruitt, president of the St. Louis city NAACP, wrote in a May 10 letter to BPS President Rich Bradley after reading The American’s investigation. “Any efforts to create such a precedent we plan to fight vigorously.”
The city has already awarded S.M. Wilson with $1.174 million to meet these goals. The decision to award the extra money fell largely on Bradley, who is appointed by Mayor Francis G. Slay. Since 2007, S.M. Wilson has contributed almost $30,000 to Slay’s campaign.
Tom Shepard, chief of staff for Board of Alderman President Lewis Reed, said, “While I’m glad the aldermen and the contractor made sure the participation goals were met, I’m sure the percentages could have been attained without the mayor’s administration supporting and giving into the age-old and unfounded excuse that minority participation is a huge financial burden and that it should cost taxpayers this much more.”
