Minority businesses tell panel of being shortchanged on jobs

Some report being used by prime contractors

October 23, 2003|By Andrea K. Walker | Andrea K. Walker,SUN STAFF

Madge Matteo's company, Environmental Plus Contractors Inc., performed lead and asbestos abatement work on a local school, but was shorted $58,000 by the prime contractor she partnered with on the job.

Matteo complained to the state, who told her it was an issue between her company and the contractor. She tried to recoup the money from the contractor's surety bond. The contractor disputed the charge, and now the two parties are going to arbitration.

In the meantime, Matteo is worried that her small Baltimore company, worth about $300,000, could go out of business because she can't afford to take on other jobs without the $58,000 payment.

Matteo was one of about 40 minority businesses owners who testified yesterday at Morgan State University before a commission that Gov. Robert L. Ehrlich created in June to examine widespread problems with Maryland's minority business program.

The state falls far short of its goal to award 25 percent of its business to minority firms. While the state reported that 16.2 percent of business went to minority firms in 2002, the Maryland Office of Minority Affairs estimated that the minority share is probably closer to 10 percent.

A legislative audit conducted in 2001 concluded that many state agencies had overstated minority participation in contracts. For example, the payments to minority businesses by the Maryland Port Administration were often less than half the amount of the original contracts, the audit found.

Yesterday, minority businessmen told the commission about the obstacles they face.

Some said prime contractors often don't pay them for their work, or include them in contract proposals but never call them once they win the job.

"Once they win the bid, some call back, some honor their agreement. Most don't," Erroll Taylor, the owner of Charm City Caterers, told the 17-member panel chaired by Lt. Gov. Michael S. Steele

Others complained that the process to be certified as a minority contractor is too complicated and said many minority companies are too small to compete for state jobs.

But the biggest problem, the business owners testified, is the state's lax enforcement. Once a prime contractor wins a bid, there is no back-checking to see if the agreement with the minority partner is followed, they said.

"The contractor will still go on and still get other jobs - he never has to own up to anything," Matteo told the commission.

Adrian Harpool, co-owner of Baltimore-based Twenty First Century Group, a public relations and marketing firm, said contractors often resist using minority contractors and try to win waivers from state requirements. "Prime contractors come into this process kicking and screaming," Harpool told the commission. " He said he, too, has had companies pay him less than originally promised.

The commission wasn't surprised by many of the complaints. "We're hearing a lot of what we expected," said Sharon Pinder, chairman of the commission. "It is our validation, hearing directly from the public as they tell what their experience is doing business with the state."

Commission members pushed many of the business owners to offer solutions to improve the program.

Harpool suggested the state offer financial incentives to companies to increase their use of minority subcontractors.

While the commission is considering the imposition of penalties against companies that break the rules, some of the owners said they shouldn't be in the form of fines, which don't cost big companies much.

Yesterday's hearing was the second of four to be held around the state. About 20 people testified at the first program, held at the University of Maryland Eastern Shore in September. A third hearing will be held Nov. 6 at Montgomery College in Rockville and the final hearing is scheduled for Nov. 17 at Prince George's Community College in Largo.

The commission has until Dec. 31 to have a final proposal ready for the governor's approval.

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