Mayor Richard Daley’s administration has awarded more than $1 billion in contracts in recent years that were based on false claims of compliance with a program designed to boost businesses owned by minorities and women, a watchdog report released Thursday concluded.
Inspector General Joseph Ferguson’s study also said that minority- and women-owned construction firms got paid nearly $20 million less than the city reported in 2008. That amounts to about 16 percent. The city kept inadequate records to determine how much went to the minority- and women-owned firms for other types of work that make up the bulk of city contracts, Ferguson’s report concluded.
“Our investigations and analysis have revealed that the (minority- and women-owned business) program is poorly administered and the administration cannot determine whether or not it is achieving its goals,” the report states. “One official aptly summed up the program as ‘a lot of paperwork and pushing paper.’
“The result of this substandard administration is that the program has been beset by fraud and brokers, and . . . participation is likely far less than the publicly reported statistics.”
The $1 billion figure involves firms that had sustained or “soon-to-be-sustained” allegations of fraud, abuse or mismanagement lodged against them since 2003, Ferguson found. The related contracts involved minority fronts really owned by white men — or disallowed pass-through firms or brokers that did little to no work, it states.
The city’s top attorney quickly blasted the findings. “The report issued today by the inspector general . . . would lead you to believe that the city lacks commitment to the minority- and women-owned business program,” Corporation Counsel Mara Georges said. “We do not.”
The Daley administration views the report “as largely a rehashing of old bad news that relies on the wholesale acceptance that the IG’s office is the expert on all topics in city government,” Georges said.
She noted that the administration fought in court to justify and maintain the program, established in 1985 under Mayor Harold Washington, when its constitutionality was challenged in 2003.
Without the program — which calls for 25 percent of contract payments to go to minorities and 5 percent to women — the amount of city money flowing to minority- and women-owned firms would be lower, Georges said.
The Daley administration has been beset by a series of scandals involving phony front companies awarded contracts intended for minority- and women-owned firms.
In the most notorious case, James Duff, a member of a mob-connected family with close ties to Daley, was sentenced to 10 years in federal prison for a fraud involving more than $100 million in city contracts.
Ald. Ed Smith, 28th, the City Council’s longest-serving African-American, said he was disappointed by the report but not surprised.
“We’ve been yelling about this for years,” Smith said. “Every year, we talk about getting the manpower or whatever it takes to administer this program properly and actually make sure it’s doing what it’s supposed to.”
Georges said it is possible that the inspector general would get to oversee the program now run by the Office of Compliance.
— By Hal Dardick and John Byrne, Tribune Reporters – Copyright © 2010, Chicago Tribune – 8:45 PM CDT, May 20, 2010 – www.chicagotribune.com/news/local/ct-met-chicago-minority-contracts-20100520,0,4192165.story