Tucked beneath St. Louis-Lambert International Airport is the front line of defense for Minority and Women Business Enterprises, the city’s Disadvantaged Business Enterprise Office.
While this office and its employees are well protected, the same does not apply to fraud prevention for the most important aspect of the City’s Disadvantaged Business Enterprise (DBE) Program, Contract Compliance. This office has sole responsibility to ensure that minority and women business enterprises get their fair share of the redevelopment and public works projects in the city of St. Louis, which was $3.5 billion over the past 10 years.
With goals of 25 percent for minority business enterprises (MBE) and 5 percent for women business enterprises (WBE), the past 10 years either represented an infusion of over $1 billion for their businesses – or a loss if the goals were not met.
The DBE Office has one Contract Compliance Officer to ensure proper and legal execution of the goals associated with those projects required to meet the city’s goals. The Contract Compliance Officer acts as the city’s participation czar, conducting reviews, documenting problems with vendors, and monitoring all contractors for compliance with M/WBE goals, including expenditures for emergency authorization projects.
The heart of any participation program is the effectiveness of its monitoring and compliance activities.
A general or prime contractor is required to submit to the Contract Compliance Officer a list of subcontractors and/or suppliers intended for usage on the project. The Contract Compliance Officer reviews the list and conducts an analysis to ensure compliance and prevent vendors from trying to game the system (commit fraud).
After the Compliance Officer’s review, an approval or disapproval is granted, and in some cases “Exclusions” of certain contracts or subcontracts may occur in order for a project to proceed. If a contract is “excluded” and the Compliance Officer suspects fraud, the officer has the right to refer the matter to the Mayor’s Office or the City Attorney for further action.
According to the DBE office they have never referred any matter associated with “Exclusions” to the Mayor’s Office nor the City Attorney for further action. The DBE Office has a policy in which a first offense triggers a warning; a repeat offense would trigger further action.
In a meeting with the Director for the DBE Office, when asked why they have never referred a matter to the Mayor’s Office or the City Attorney, they responded, “Because we have not had a repeat offense.” However, the office’s screening process for a repeat offense relies solely on the Compliance Officer’s memory of the “Exclusions” in previous project. The Director of the DBE Office stated that the Compliance Officer knows all the players from years of experience in processing project files and knows which vendors have tried to game the system.
According to the DBE Office, from June 2011 to June 2012 (in one year) the total number of project files is approximately 240. Thus to put the Compliance Officer’s memory to test, the DBE Office estimated that it would take the Compliance Officer one week per file to research all the “Exclusions” and approximately three years to complete the task.
Vendors are required to get approval from the Compliance Officer to proceed, thus the officer’s memory or lack thereof becomes a very valuable commodity – a commodity that was worth over $1 billion in potential business for the M/WBE community.
There are at least 2,400 project files covering the past 10 years, coupled with the fact that it would take a decade or longer to review them to see if the Compliance Officer has had a lapse in memory. Now that’s what I would call job security for the Compliance Officer – and a windfall for those seeking to game the system.
Pruitt is president of the St. Louis city branch of the NAACP.
