For the first time, the City of Philadelphia last week brought the hammer down on a company accused of circumventing the historically toothless laws meant to promote minority-owned firms' share of public contracts.
Ernest J. Bock & Sons Inc., an established company that has won $224 million in city contracts since 1996, signed an agreement that barred it from new city contracts through April 2012, a 20-month suspension that dates from August 2010.
The settlement put to rest a dispute over a $35.9 million construction contract awarded in December 2007 as part of the expansion of Terminals D and E at Philadelphia International Airport.
In August, City Controller Alan Butkovitz accused the Philadelphia builder of what is regarded as a common trick of the trade - submitting a bid for work that features minority participation, then failing to use those contractors on the project. In other instances, minority-owned companies get a smaller sum without doing any meaningful work.
Butkovitz and the city pushed for a three-year suspension from bidding on municipal contracts. Bock fought back, denying the charges with extensive documentation. To avoid a lawsuit, Bock agreed not to seek city projects from last August, when it first said it would remove itself from public bids, to April 1, 2012. Bock also agreed to provide training for minority contractors to help them compete.
Bock "wanted to be part of the solution to these issues," said George Pallas, a lawyer for the company.
In a news release, Mayor Nutter hailed the agreement as a shot across the bow of companies that evade the requirements. "This agreement with [Bock] is unprecedented with regard to the city procurement process," Nutter said.
He claimed the city "has turned a corner" in enforcement, putting contractors on notice that "we mean what we say."
He was joined by some key players who share his goals.
"Now the message is sent loud and clear that the administration is in the enforcement business, and Council fully supports those efforts," City Councilman W. Wilson Goode Jr. said.
"They've been getting away with it because no one's been watching," said John Macklin, Northeast regional president of the National Association of Minority Contractors.
It's an old, old problem, with roots in the post-Civil War influx of freedmen into Philadelphia. In 1899, W.E.B. DuBois chronicled some of the challenges for unskilled black workers competing with skilled white workers who also had racial-exclusion policies on their side.
Administration after administration has failed to resolve the difficulty. As of the fiscal year ended July 1, 2010, minority-owned businesses received 14.6 percent of contracts for municipal, federally funded, and quasi-governmental agencies in Philadelphia. About a third of those companies are based outside the city. Female-owned businesses received 7.7 percent of the contracts. The total for all minority and female-owned businesses was 22.4 percent.
City law requires companies submitting bids of $250,000 or more to offer plans that include companies owned by minorities, women, or disabled individuals, and then to implement them.
Some contractors have regularly avoided, abused, or scorned the process, and the cash-starved city has never devoted enough resources to make anyone pay for it.
Although Nutter was touting the Bock case as evidence of a "new day," it was Butkovitz's office, not the city Office of Economic Opportunity, that documented the alleged problems with Bock on the airport project.
A. Bruce Crawley of Millennium 3 Management, a member of the 18-member Mayor's Advisory Commission on Construction Industry Diversity in 2008-09 and a longtime agitator for increased minority participation in the city's construction industry, called the absence of a fine and the retroactive, voluntary suspension, "a disgrace."
"I would take that any day," Crawley said of the penalty, adding that the controller's report was a "case study" in how contractors approach the city's rules on minority-owned contracting.
Angela Dowd-Burton, executive director of the Office of Economic Opportunity, said a software system should be in place within the next year to track payments from prime contractors to subcontractors - a big step forward in following the promises to hire minority subcontractors. In addition, staffers in each department have been designated to oversee contractor compliance on minority participation.
Macklin said Nutter was on the right path.
"We seem to be getting action," Macklin said. "Precedents are being set, mind-sets are being changed, and he's making a difference."