On June 21, 2013, the City of Philadelphia debarred a subcontractor (and its owner) for violation of the City’s minority contracting rules. The subcontractor, JHK, Inc., a subcontractor to prison health contractor Corizon Health Services, Inc., was debarred for two years for falsely representing its role as a woman-owned subcontractor in an agreement with Corizon. JHK was supposed to provide first-aid services to prison inmates as a subcontractor to Corizon. In fact, JHK provided no services.
Philadelphia Inspector General Amy L. Kurland had this to say about the debarment:
“This debarment sends a strong and definitive message: The City of Philadelphia will not tolerate businesses that circumvent the City’s antidiscrimination policies. We will continue working with Procurement, Finance and the Law Department to ensure that legitimate M/W/DSBEs have a fair shot at the contracting opportunities they deserve.”
Corizon itself previously entered into a $1.85 million settlement with the City and agreed to strengthen its corporate compliance program by reviewing all of its subcontracting agreements to ensure compliance with City anti-discrimination policies. My post on that action can be found here. The Inspector General’s executive summary of its investigation into Corizon and JHK can be found here.
In its press release, the Inspector General claims that this is the first involuntary debarment in the City’s history. However, based on my own personal experience with the City’s Law Department, this claim is probably mistaken as I believe that, during the tenure of the late Procurement Commissioner Louis Applebaum, the City officially debarred a City prime contractor for falsifying invoices on a number of City contracts.
The lesson here? At the risk of beating a dead horse, don’t lie or cheat on public contracts, not to mention on any contract. The risk is too great and the reward too little.