Flaws found in minority program

Isis is one firm listed in state audit of business initiative

Sun follow-up

May 13, 2007|By Lynn Anderson | Lynn Anderson,Sun reporter

State Transportation Secretary John D. Porcari said that an audit has uncovered serious flaws in the state's Minority Business Enterprise program, including a "cynical manipulation" that allowed a company headed by Republican strategist Carol L. Hirschburg to wrongly obtain certification under the program.

Hirschburg's firm, Isis Technology Consulting LLC, and five other businesses were cited in an audit of 39 minority firms whose applications for certification were expedited, or "fast-tracked," between 2001 and 2006.

The audit was conducted by Porcari's agency after a Sun investigation revealed that under the Ehrlich administration, Hirschburg's firm's application for minority certification was fast-tracked with the help of another influential Republican, former Howard County Councilman Christopher J. Merdon.

After a problem arose with Isis' initial application, the firm was allowed to resubmit it sooner than MBE rules permit, according to the audit. The certification was also processed faster than normal, the audit said.

Hirschburg, whose firm was seeking a piece of a $110 million technology contract with the Department of Human Resources, said she did everything "by the book" and disputed Porcari's portrayal that she and other members of her firm manipulated the fast-track process.

"He has the right to conclude whatever he wants to conclude, but that was not the conclusion of the people who were there [at the state transportation agency] at the time," she said.

The audit, however, quoted a key review official as saying he made a mistake during the certification process for Isis.

As a result of the audit, Porcari has ordered a review of the entire MBE certification process and has asked his staff to create a written policy to ensure that firms are fast-tracked for legitimate reasons and that those reasons are recorded for later review. Porcari also asked that staff review the original certification of all 370 firms that were fast-tracked between 2001 and 2006. Businesses that were mistakenly certified will be referred to the MBE's director for further action.

`We're not done'

"We're not done with this process," said Porcari, an appointee of Democratic Gov. Martin O'Malley, who defeated Republican Gov. Robert L. Ehrlich Jr. in November. "But we have some measures that we want to take immediately. ... There are clearly some areas for improvement."

Porcari's agency manages the minority business program because when the program was initiated in 1978, the department had the largest number of state contracts that could be bid upon by minority firms. It also had adequate staff to handle the certification process, Porcari said. The minority business program is broadly defined to cover racial minorities, women and financially disadvantaged individuals.

Companies can request to be fast-tracked if they want to bid on a project that has a deadline looming. A fast-tracked certification takes about 103 days, compared with 142 days otherwise.

In addition to Isis, auditors identified five other firms, including Airport 2000 Concessions, or A2K, out of the 39 selected for review that had "conditions that cause concern as to whether or not they meet the standards for certification." In one case, an investigator failed to visit a company's offices, which is required for certification. In another, it was unclear whether a member of the firm exceeded the program's limit on personal net worth.

"We have identified some deficiencies here, and this gives us the opportunity to correct them," Porcari said.

Also planned is an audit of the financial performance of the concessions manager at BWI Marshall Airport. The concessions firm, BAA Maryland Inc., shares rent that it collects from shops and restaurants with the airport; A2K has operated stores for BAA since 2004.

Porcari said he is eager to correct perceived problems with the MBE program and infuse it with new vitality and integrity.

Lack of accountability

"The overall structure and review process simply don't have the level of accountability and transparency that we need," the secretary said.

The state declined to name the other four firms because officials are still investigating the details of their certifications.

Porcari said that Kevin Rucker, the chairman of the MBE review committee, interviewed Hirschburg and another Isis officer, Verna Willes, on Oct. 12, 2005. Hirschburg and Willes were representing themselves as minority partners, but two other women involved with Isis were not. As a result, Isis did not have the level of minority control required by MBE rules. It's unclear why the other two women did not represent themselves as eligible minorities.

Rucker told auditors that he was wrong when he approved the firm's minority certification after the meeting because he "mistakenly viewed all members of the firm" as minority partners.

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