In January, the City of Philadelphia’s Office of Economic Opportunity revoked the 25-year-old certification of a minority-owned supply firm and announced that it would seek to bar another contractor from receiving City contracts for three years. The OEO’s action was reported in The Philadelphia Inquirer. The OEO’s revocation was the second time in 12 months that the OEO took enforcement action stemming from abuses in the City’s minority-contracting efforts.
The OEO alleges that the MBE supply firm acted essentially as a “pass-through” entity – contending that a prime contractor agreed to use the MBE supply firm for materials, but instead bought materials from a second firm and paid a 3% fee to the MBE supply firm. The Inquirer further reported that City investigators found that the prime contractor and the non-DBE firm had generated false invoices to cover their tracks. The City alleges that the non-DBE firm had used the MBE supply firm as a sham minority contractor on at least fourteen other city contracts.
Last year, in May 2011, the OEO had announced the voluntary 20-month debarment of a significant locally-based general contractor for failure to comply with the City’s contracting requirements. The Philadelphia Inquirer article on this suspension can be found here. The suspension in May 2011 was the first time the City had suspended a contractor, but it certainly won’t be the last.
The City’s enforcement actions mean that City contractors can no longer evade the OEO requirements on City contracts. The OEO will closely monitor contractors for compliance, and serious sanctions may be imposed on contractors for non-compliance.