Disappointed Bidder Lacks Standing To Challenge P3 Contract Award By Non-Commonwealth Entity

In a recent case of first impression, the Commonwealth Court of Pennsylvania has affirmed a lower court ruling that a disappointed bidder lacked standing to challenge a contract awarded by a non-Commonwealth entity under the Public-Private Transportation Partnership Act (P3 Act). In Read more

City Of Allentown Permitted To Use RFP Process For Waste Services Contract

In a decision issued on July 20, 2017, the Commonwealth Court of Pennsylvania upheld the City of Allentown's use of the Request for Proposals (RFP) process in a contract award. In 2015, Allentown issued an RFP for the award of a Read more

Are RFQs Immune From Protest Under The Procurement Code?

If you respond to a Request for Quotes (RFQ) issued by a Commonwealth department or agency, can you protest if the resulting purchase order is awarded to another bidder? According to the Commonwealth's Office of Administration, the answer is no. Read more

Pennsylvania Initiates Disparity Study For Small Diverse Business Program

In June 2017, the Commonwealth of Pennsylvania initiated a disparity study that will provide information to help the Department of General Services (DGS) implement the Pennsylvania's Small Diverse Business Program. The expected completion date for the disparity study is Read more

Commonwealth Court: Laches Requires Reversal Of Injunction Issued For Violation Of Separations Act

A recent decision by the Commonwealth Court of Pennsylvania illustrates the extreme perils of waiting too long to challenge a violation of the public bidding laws. In December 2015, the West Jefferson Hill School District solicited bids for a new Read more

Com. of Pa.

Pennsylvania Initiates Disparity Study For Small Diverse Business Program

Linkedin Facebook Twitter Plusone Email

In June 2017, the Commonwealth of Pennsylvania initiated a disparity study that will provide information to help the Department of General Services (DGS) implement the Pennsylvania’s Small Diverse Business Program. The expected completion date for the disparity study is September 2018.

The study will include analyses of the participation of minority-, women-, disabled-, veteran-, and LGBT-owned businesses in prime contracts and subcontracts awarded by DGS during the period from July 1, 2011, through June 30, 2016.

DGS has created a webpage highlighting the disparity study, with materials and a description of study team members.

The materials presented at the disparity study’s kickoff meeting can be found here.

An FAQ on the disparity study can be found here.

Linkedin Facebook Twitter Plusone Email
Posted on by Christopher I. McCabe, Esq. in Com. of Pa., DBE/MBE/WBE, DGS Leave a comment

The U.S. DOT Disadvantaged Business Enterprise (DBE) Program

Linkedin Facebook Twitter Plusone Email

I have posted on numerous occasions about the U.S. Department of Transportation’s disadvantaged business enterprise (DBE) program.  The DBE program is especially relevant to public contractors and subcontractors performing work for PennDOT, SEPTA, the Philadelphia International Airport, the Philadelphia Streets Department, the Port Authority of Allegheny County, and other public entities in Pennsylvania that are managing projects funded with federal transportation dollars.

In this post, I’ll provide some limited background information and links about the DBE program and how the program operates and what rules and regulations apply.

Read more

Linkedin Facebook Twitter Plusone Email
Posted on by Christopher I. McCabe, Esq. in DBE/MBE/WBE Leave a comment

DBE Pass-Through Scheme Alleged On PennDOT Platt Bridge Project In Phila.

Linkedin Facebook Twitter Plusone Email

According to a criminal information filed in the U.S. District Court for the Eastern District of Pennsylvania, still another fraud scheme involving the U.S. Department of Transportation’s disadvantaged business enterprise (DBE) Program has been uncovered, this time on the federally-funded George C. Platt Memorial Bridge project in Philadelphia.

In April 2011, PennDOT awarded a $42.7M contract to perform structural steel painting and repairs on the Platt Bridge to a joint venture consisting of Hercules Painting Company, Inc., of New Castle, Pa., and Vimas Painting Company, Inc., of Lowellville, Ohio.  During the bid process, the Hercules-Vimas JV allegedly committed to subcontract $3.1M in DBE work to Vertech International, Inc., to supply paint materials for the project.  Instead, the Hercules-Vimas JV allegedly negotiated contracts and ordered materials for the Platt Bridge project directly with non-DBE suppliers, with Vertech allegedly acting as a pass-through to give the appearance that DBE requirements had been satisfied.  PennDOT awarded approximately $1.97M in DBE credit to the Hercules-Vimas JV.  Vertech was allegedly paid 1.75% of the face value of the invoices it processed to act as a pass-through.

Read more

Linkedin Facebook Twitter Plusone Email
Posted on by Christopher I. McCabe, Esq. in DBE/MBE/WBE, PennDOT Leave a comment

DBE Pass-Through Scheme Alleged On Two PennDOT Bridge Projects In Phila.

Linkedin Facebook Twitter Plusone Email

According to a criminal information filed in the U.S. District Court for the Eastern District of Pennsylvania, still another fraud scheme involving the U.S. Department of Transportation’s disadvantaged business enterprise (DBE) Program has been uncovered on two different federally-funded projects in Philadelphia.

In September 2009, PennDOT awarded a $70.3M contract to a tri-venture consisting of a Philadelphia-based highway contractor, Alpha Painting & Construction Co., Inc., of Baltimore, and Liberty Maintenance, Inc., of Campbell, Ohio, to perform structural steel painting and repairs, and concrete repairs, on the I-95 Girard Point Bridge in Philadelphia. As part of the contract, the tri-venture committed to subcontract $4.7M of work to Markias, a now-defunct certified DBE, to supply materials for use on the the contract.  Alpha and Liberty formed a joint venture and allegedly ordered the needed materials directly from non-DBE suppliers, and allegedly used Markias as a pass-through to give the appearance that the DBE requirements had been satisfied.  PennDOT awarded approximately $3.26M in DBE credit to the tri-venture based on the DBE work allegedly performed by Markias.

Read more

Linkedin Facebook Twitter Plusone Email
Posted on by Christopher I. McCabe, Esq. in DBE/MBE/WBE, PennDOT Leave a comment

Pennsylvania Steel Erector Indicted In DBE Pass-Through Scheme And Suspended On Federally Funded Contracts

Linkedin Facebook Twitter Plusone Email

If you are a prime contractor working on federally-funded transportation projects, beware of fraud involving the U.S. Department of Transportation’s disadvantaged business enterprise (DBE) program. A recently exposed “pass-through” scheme involving $27 million in federally-funded contracts scheme was engineered together by subcontractor Century Steel Erectors Co., and WMCC, Inc., a certified DBE.

Read more

Linkedin Facebook Twitter Plusone Email
Posted on by Christopher I. McCabe, Esq. in DBE/MBE/WBE, PennDOT Leave a comment

DBE Fraud Guilty Pleas Result In Sentences Of Probation And Restitution Of $1.3 Million

Linkedin Facebook Twitter Plusone Email

In my post from yesterday, found here, I reported on the DBE “pass-through” fraud scheme engineered by Carl M. Weber Steel Service, Inc., and Karen Construction, Inc.

On January 11, 2016, Dennis and Dale Weber, the owners of Weber Steel, were each sentenced to six months’ home confinement and five years’ probation, and Weber Steel was placed on three years’ probation. All three were also ordered to jointly pay $1 million in restitution to the Federal Highway Administration (FHWA).

On February 3, 2016, Judy Noll, the owner of Karen, was sentenced to three years’ probation and ordered to separately pay $336,219 in restitution to FHWA.  

The U.S. Department of Transportation’s Office of Inspector General press release on the sentencing can be found here.

Linkedin Facebook Twitter Plusone Email
Posted on by Christopher I. McCabe, Esq. in DBE/MBE/WBE Leave a comment

Four Plead Guilty In Fraud Scheme To Obtain $18.7 Million In DBE Subcontracts On PennDOT Projects

Linkedin Facebook Twitter Plusone Email

Still another “pass-through” fraud scheme involving the U.S. Department of Transportation’s disadvantaged business enterprise (DBE) program has been exposed, with criminal penalties for all involved.

On October 8, 2015, Dennis Weber, Dale Weber, Carl M. Weber Steel Service, Inc., and Judy Noll pleaded guilty to federal conspiracy charges related to a complex DBE fraud scheme that, incredibly, lasted for more than 16 years, totaled almost $19 million, and involved 224 bridge projects throughout Pennsylvania.

Read more

Linkedin Facebook Twitter Plusone Email
Posted on by Christopher I. McCabe, Esq. in DBE/MBE/WBE, PennDOT Leave a comment

Gov. Tom Wolf Signs Executive Order To Improve Participation Of Small & Diverse Businesses

Linkedin Facebook Twitter Plusone Email

On September 23, 2015, Pennsylvania Governor Tom Wolf signed an Executive Order solidifying his commitment to improving the participation of minority-owned, women-owned, LGBT-owned, veteran-owned, and disabled-owned businesses in state government contracting.

According to the official press release, Executive Order 2015-11, entitled “Diversity, Inclusion, and Small Business Opportunities in State Contracting and Pennsylvania’s Economy,”

directs a consistent and coordinated effort to ensure diversity and inclusion in all contracting opportunities for small and diverse businesses throughout agencies under the governor’s jurisdiction and promotes the creation of programs to better prepare those businesses to compete and succeed in Pennsylvania’s economy.

Read more

Linkedin Facebook Twitter Plusone Email
Posted on by Christopher I. McCabe, Esq. in DBE/MBE/WBE, DGS Leave a comment

Schuylkill Products Officers Sentenced To Prison And Ordered To Pay Restitution Of $119 Million For DBE Fraud

Linkedin Facebook Twitter Plusone Email

In the criminal fraud case involving Schuylkill Products, Inc., and the U.S. Department of Transportation’s Disadvantaged Business Enterprise (DBE) program (see my earlier post here about this case), the former Schuylkill Products vice presidents in charge of sales and marketing and field operations received lengthy prison sentences and were ordered to pay restitution of $119 million.

The official press release on the sentencing can be found here.  This is from the press release:

“The sentences handed down today, in what is the largest reported DBE fraud case in USDOT history, serve as clear signals that severe penalties await those who would attempt to subvert USDOT laws and regulations,” said Doug Shoemaker, OIG Regional Special Agent in Charge. “Preventing and detecting DBE fraud are priorities for the Secretary of Transportation and the USDOT Office of Inspector General. Prime contractors and subcontractors are cautioned not to engage in fraudulent DBE activity and are encouraged to report any suspected DBE fraud to the USDOT-OIG. Our agents will continue to work with the Secretary of Transportation; the administrators of the Federal Highway, Transit, and Aviation Administrations; and our law enforcement and prosecutorial colleagues to expose and shut down DBE fraud schemes throughout Pennsylvania and the United States.”

According to U.S. Attorney Peter J. Smith, the DBE fraud lasted for over 15 years and involved over $136 million in government contracts in Pennsylvania alone. SPI, using Marikina as a front, operated in several other states in the Mid-Atlantic and New England regions. Although Marikina received the contracts on paper, all the work was really performed by SPI personnel, and SPI received all the profits. In exchange for letting SPI use its name and DBE status, Marikina was paid a small fixed-fee set by SPI.

This latest news is just more proof, if any was ever needed, that DBE fraud does not pay.  Contractors working on federally-funded highway projects should be especially wary of trying to sidestep the strict DBE rules that govern such projects.  Doing so, as shown by these sentences, can have serious and life-altering consequences.

If you are a contractor working on a federally-funded highway project, and have questions concenrning the US DOT DBE program, feel free to contact me.  I’ll be happy to answer any questions you have.

Linkedin Facebook Twitter Plusone Email
Posted on by Christopher I. McCabe, Esq. in DBE/MBE/WBE Leave a comment

Federal Indictment Charges Massive DBE Fraud In North Carolina

Linkedin Facebook Twitter Plusone Email

Well, the proverbial shoe has dropped, and once again the U.S. Department of Transportation’s Disadvantaged Business Enterprise (DBE) program is in the news, with still another warning for contractors who have to comply with the DBE rules applicable to federally funded contracts.

This time, the locus is North Carolina.  The crime is conspiracy, money laundering, mail fraud, and wire fraud.  The companies charged are a paving contractor and the sham DBE it used.

On July 24, 2013, the U.S. Attorney’s Office for the Western District of North Carolina announced charges against Boggs Paving, Inc., and some of its executives, as well as Styx Cuthbertson Trucking Company Inc., the DBE firm used by Boggs.  This is from the official FBI press release:

According to allegations contained in the indictment, beginning in 2003 and through the present, Boggs Paving Inc. (“Boggs Paving”) fraudulently obtained federally and state funded construction contracts by falsely certifying that a disadvantaged business enterprise (“DBE”) or a small business enterprise (“SBE”) would perform and be paid for portion of the work on such contracts. USDOT’s DBE program provides a vehicle for increasing the participation of disadvantaged business enterprises in federally funded transportation-related projects. The indictment alleges that Styx Cuthbertson Trucking Company Inc. (“Styx”), a road construction hauler based in Monroe, North Carolina, owned by Styx Cuthbertson, was a certified DBE and SBE used by the defendants as a “pass through” entity to obtain such contracts.

To create the illusion that Styx was doing and being paid for the necessary work, the indictment alleges that, among other things, the conspirators ran payments through a nominee bank account in Styx’s name but funneled checks back to Boggs Paving and its affiliates, which were not DBEs or SBEs but were doing the actual work. The indictment further alleges that each time a deposit was made into the nominee account as supposed payment for construction work performed by Styx, a Boggs Paving employee would immediately cut a check from that Styx nominee account to the Boggs entity or another firm that had actually performed the work. In return, according to allegations contained in the indictment, Styx Cuthbertson received a kickback for allowing his name and DBE status to be used by Boggs Paving.

The seriousness of the charges can be found in the potential sentences.  This is also from the official FBI press release:

The conspiracy charge carries a maximum of five years in prison. Each wire and mail fraud count carries a maximum of 20 years in prison. The money laundering conspiracy charge carries a maximum of 20 years in prison. The money laundering charge carries a maximum of 10 years in prison. Each of the charges also carries a $250,000 fine

Needless to say, this is another wake-up call for contractors working on federally funded state highway projects.  Dot your i’s and cross your t’s!  Look before you leap!  And don’t even think about scamming the DBE program by using sham DBEs or “pass-throughs.”  If the DBE can’t perform, don’t use it. If the DBE doesn’t have equipment to perform, don’t use it. If the DBE doesn’t have the financial resources to get the job done, don’t use it. If you have any doubts about the DBE, do your due diligence.

If you can’t meet the DBE goal set for the federally funded contract because you cannot find any bona fide and capable DBEs available to perform the work, document and show your good faith efforts to meet the DBE goal, and then fight like hell for the contract award if you are the low bidder but are denied the contract.  Under the DBE regulations, a contractor cannot be denied the contract merely because it did not meet the DBE goal.  But a contractor can be charged with a crime if it meets the goal by knowingly using sham DBEs.  What’s worse? Losing the contract, but staying out of jail, or winning the contract, but going to jail?  Sounds like a no brainer to me.

The full FBI press release can be found here.  An article in the Charlotte Observer newspaper reporting on the federal charges against Boggs and its executives can be found here.

Linkedin Facebook Twitter Plusone Email
Posted on by Christopher I. McCabe, Esq. in DBE/MBE/WBE Leave a comment