Uncovering the frauds

June 25, 2006

Baltimore's settlement with a contractor who used a bogus minority firm on city work underscores the need for an audit of the city's Minority Business Enterprise program. The amount of city business contracted to minority firms has increased significantly since Mayor Martin O'Malley took office in 2000, but the numbers are meaningless if the public can't be assured that legitimate minority companies are getting the work.

The city's Board of Estimates last week approved an $800,000 settlement with a Baltimore contractor, Poole and Kent, which admitted that former company executives used a sham female-owned company to meet city minority-enterprise goals and earn $770,696 in municipal work. The plumbing and steam-fitting contractor was implicated last fall in a federal influence-peddling scheme involving a former state senator and his wife, which alerted Baltimore officials to its use of a phony minority firm. Poole and Kent cannot bid on city work until October, and its settlement with the city also requires the contractor to provide minority firms with $1 million worth of work over three years. That's a payback with purpose.

The Poole and Kent settlement follows another instance in which the city's MBE program was compromised. An investigation by The Sun found that Utech, a woman-owned firm that employed the sister of City Council President Sheila Dixon, had subcontracted out more than 10 percent of its work to other firms in violation of city MBE participation rules.

The MBE program has been around for nearly 20 years, so minority contractors should be well versed in its requirements. Last year, MBE/WBE firms won $94.3 million worth of city contracts, more than double the amount in 2000. Since The Sun's investigation of Utech, the city has increased the staff that reviews the qualifications of minority firms that do business with the city. An across-the-board audit of the certification program would enhance city efforts to identify unscrupulous business owners who are scamming the system. The integrity of the program depends on it.

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