Black activists in Miami-Dade County are asking the Miami-Dade County School Board (MDCSB) to review audited findings of a disparity study that reveal the possibility of fraud among contractors and could mean a difference of more than $34 million previously reported as being awarded to black and other minority-owned businesses.
The point of contention in a report titled, “Leveling the Playing Field: Final Report on the 38 African-American Subcontractors and their Contract Awards,” is that the information concerning these subcontractors continues to be flawed due to inaccurate record keeping. The Committee for Fair and Equitable Distribution of Public Contracts, the group responsible for the report, said that although the disparity study cites 38 subcontractors who were awarded contracts, there were only 33.
They blame the discrepancy on an insufficient data collection system to track the subcontractors as well as the contract award amounts given to all minority/women business enterprises, commonly called M/WBE. So, committee members want to know exactly how the school board verified that the businesses were actually M/WBE, as well as how the school board kept track of all the completed work during the time period covered by the disparity period.
“The measurement is not clear enough,” said Rev. Joaquin Willis, pastor of the Church of the Open Door in Miami and a committee member. “We need to be sure that we are getting every opportunity for gainful employment that we can.”
According to the school board, the Office of Economic Opportunity (OEO) did not exist during the disparity study period, fiscal years 2006-2012. Prior to its creation, management of the implementation of the Business Development and Assistance Program was charged to the Division of Business Development and Assistance under the direct supervision of Dr. Rose Barefield-Cox. The Division of Business Development and Assistance received quarterly reports of payments to M/WBE subcontractors/consultants from prime contractors commissioned by the school board.
Now, Economic Development Officer Brian Williams, in the Office of Economic Development, said “payment information is currently captured in SAP, the district’s enterprise software system. The district is currently implementing the B2GNow Diversity Management Software Program to address additional compliance verification and has two dedicated staff with significant compliance experience to assist in this process along with the audit department and a dedicated diversity attorney. Full implementation of the B2GNow system is expected this summer.”
Even though the school board has mechanisms in place to confirm compliance on the part of contractors and subcontractors, the committee is still concerned about front and pass-through companies that claim to be minority-owned but are not.
“This report still points out the fact that the disparity study was flawed and includes firms that have compliance issues that may result in fronts and pass through companies. The committee expects M-DCPS staff to provide documentation that substantiates that all firms, both general contractors and subcontractors, listed in this report are in compliance with board policies and procedures at the time of the disparity study period in order to be counted towards the participation goals,” said Ron Frazier, CEO of BAC Funding Group.
Originally, subcontracting goals were typically 18 percent African-American, 6 percent non-minority women. However, the M/WBE programs that were in place were repealed in 2011 when the school board contracted with Northeast Ohio Learning Associates, Inc. (NEOLA) to revise and update school board rules. The M/WBE program was not reinstated until after September, 2014 when the committee made more than a dozen recommendations to the school board to resolve negative findings in the disparity study.
Meanwhile, the newly-released report states that in order for contractors to belong to the minority status, 51 percent of the work must be self-performed, even when the contractor assigns work to subcontractors. The school board says the 51 percent is not the federal policy.
“The federal policy requires 30 percent self-performance for credit. The 51 percent recommendation is not the industry standard,” said Williams.
Furthermore, the report finds that 10 subcontractors listed in the disparity study have non-compliance issues such as not having a business presence in the tri-county area.
Williams said the school board has policies in place to address this as well.
“The Office of Economic Opportunity handles certification for small, micro and M/WBE firms. Applicants submit several documents for verification including local business tax receipts, verification through the Department of State SunBiz portal, lease agreements, purchase agreements or copies of a warranty deed to show ownership of property,” said Williams.
This newly-released report follows one that was released in June, 2014 seeking answers as to how the $1.2 billion in General Obligation construction program monies were being spent.
“The Bond is a wonderful opportunity, not only for our students who will be studying and learning in updated schools, but for our business community, who can participate and benefit financially in the process. We have been proactive in promoting the opportunities that are available to traditionally underserved segments of our community, and we are eager to include them as we move forward,” said Alberto M. Carvalho, superintendent Miami-Dade County Public Schools.
In addition to the 38 subcontractors in question, the study showed an over-utilization of African-American subcontractors as well, something the committee called “highly improbable” and prompted the ensuing investigations by the committee.
“What is at stake for the black community is that without a credible and sound disparity study to use as the foundation to establish a new M/WBE program there will be minimum black participation, for both Architecture/Engineering and construction, in the $1.2 billion dollar GOB as promised by Superintendent Alberto Carvalho, in the promotion of the bond referendum. In addition, the GOB is in its third year of implementation and superintendent and the school board have not made public any expenditure report. This is public money and the public has a right to know.” said Frazier.