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JUST PASSING THROUGH

AFTER A FLURRY OF ALLEGED ABUSES, TIME MAY BE RUNNING OUT ON THE CITY'S MINORITY CONTRACTING PROGRAM.

Another of the audit's findings was that a dozen of the 65 companies sampled had been certified as construction "suppliers" by the city even though they were primarily engaged in other kinds of work. Haji Adnan's company, for instance, was approved as a supplier even though it is really a civil engineering firm. Capitol Hill Blueprint, a Hispanic-owned company specializing in blueprints and other "reprographics," also was certified as a supplier of office products. Neosource, a woman-owned business that makes custom light fixtures, had made it onto the city's list of suppliers of electrical products and had won almost $6 million worth of work.

Crider's audit doesn't specifically accuse any of those companies of wrongdoing. But it says that, under the city MBE/WBE ordinance, a company can be properly certified as a supplier only if it is a "regular dealer" of the product in question and engages in supply as its "principal business."

The reason for that rule, those familiar with the affirmative action program say, is to prevent minorities and women from setting themselves up as brokers or conduits for material and equipment that in reality is being supplied by a white-male-owned firm. If such safeguards aren't enforced, there is nothing to prevent a company doing construction for the city from meeting minority hiring goals by running supplies through brokers working with nothing more than a desk and a telephone.

Critics say such pass-through schemes have two nefarious effects. One, they drive up costs to taxpayers, since the minority broker gets paid for performing an essentially valueless task. Two, they shut the door to legitimate minority- and woman-owned companies by allowing white-owned general contractors to unfairly inflate their MBE/ WBE numbers.

"It's not what the affirmative action program was intended to be," says Bonnie Riley, owner of Colorado Wire & Cable Company. "Most of these [minority brokers] started up when the program went into effect--not before. And they have made no attempt in the last ten years of ever becoming legitimate suppliers."

Riley says she's been approached several times by general contractors who've asked her to act as a conduit. One wanted her wire-and-cable firm to "rent" forklifts for a job; the forklifts, she says, would really have been supplied by another, majority-owned firm. "The rental company would just run the bills through me," Riley adds.

Riley says she turned down the offer, even though it promised easy money. "I just don't feel comfortable" with the idea, she says.

Wayne Cauthen, the Webb appointee who runs the Mayor's Office of Contract Compliance and oversees the MBE/WBE program, says he doubts minority brokers are operating in the city on a large scale. If they were, he says, he'd be hearing about them, and he simply doesn't get many complaints. "I don't think it's happening a lot," Cauthen says.

Cauthen derides Crider's audit as nothing more than pre-election grandstanding. Many of the firms that Crider alleged were wrongly approved for the program were in fact properly certified, he insists. Crider's office, Cauthen complains, gave MOCC only a few days to go over its findings before releasing the audit to the media. "I feel that I was ambushed," Cauthen says.

Cauthen and his staff also challenge Crider's finding that minority suppliers shouldn't also be allowed to do nonsupply work such as construction and design. "Our interpretation is, it's okay" to get government contracts in more than one area, says Lupita Gusman, MOCC's certification supervisor.

The city code isn't crystal clear on whether companies who work chiefly in other areas should also be allowed to serve as suppliers. But it does say that a supply firm must "engage in as its principal business... the purchase and sale of the products in question." The dealer, furthermore, must own a store or warehouse in which its supplies "are bought, kept in stock and regularly sold to the public."

Complaints that AA Engineers was violating the spirit of Denver's ordinance have been coming into the city for years. Indeed, one large manufacturer of concrete pipe, Hydro Conduit Corporation, has conducted a veritable campaign to disqualify the company as a supplier on city projects.

Hydro Conduit began protesting AA's certification as a supplier back in the 1980s, after AA teamed up with Hydro's primary local competitor, Carder Concrete Products of Littleton, and began to compete with Hydro Conduit for city business. In a series of letters to the city, Hydro Conduit complained that AA was working as a broker on city projects and served "no useful purpose except to satisfy minority goals."

In a 1992 letter to the Department of Public Works, Hydro Conduit district manager David Fordyce pointed out that AA maintained no active sales force in the Denver market. The company's tiny supply yard, adjacent to its headquarters at 888 South Lipan Street, wasn't sufficient to store significant amounts of concrete pipe. And AA didn't appear to have forklifts, trucks or other equipment necessary to unload deliveries, Fordyce alleged. Carder, meanwhile, maintained a full sales staff and was perfectly capable of dealing with customers itself, without AA's help. "I fail to see any commercially useful function performed by AA Engineers in their sale of reinforced concrete pipe," Fordyce wrote. Fordyce today declines comment.

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1 comments
michaelnicholas57
michaelnicholas57

Having worked in an online sphere of electrical supplies and wholesalers, I think that such misreporting by businesses has become more common in all parts of the world. More people buy electrical products online than how many of them buy these products from their local markets. That's what poses new challenges to the local sellers and they are getting involved into such crimes. On behalf of http://schnap.com.au/ which is one of the leading electrical suppliers of Sydney, Melbourne and Brisbane, Perth, etc. I would never say these practices are good from any angle. 

 
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