jonetta rose barras: Is DC contracting marked by disparities or deliberate violations of the law?

When Mayor Muriel Bowser announced earlier this month the kickoff of a “citywide disparity study to examine the availability and utilization of minority- and women-owned business under DC procurement and contracting,” cheering could be heard in the bleachers across the District. DC Council Chair Pro Tempore Kenyan McDuffie seemed especially satisfied: Last year, he persuaded his colleagues to approve spending $750,000 on the initiative.

“As we build back and recover from this pandemic, we have before us a once-in-a-lifetime opportunity to rethink how we build more equitable and inclusive communities,” Bowser said in a prepared statement.

“With this study, we can learn more about what’s working and what isn’t, and in doing so, create better opportunities for women and people of color who do business in DC,” she added.

“This is a significant step along the path to re-establishing a Minority and Women Business Enterprise (MWBE) program, an essential ingredient to help grow District-based small businesses and strengthen our Black middle class,” said McDuffie, who is fast earning the distinction of being the legislature’s “Race Man.” 

It’s commendable that officials are concerned about the survival of local small businesses in DC’s post-pandemic reality. It’s also admirable that they want to ensure equity in the system. 

However, calling the survey a “disparity study” suggests a biased approach and a forgone conclusion of discrimination. Most importantly, the decision to conduct this type of an assessment ignores the indisputable fact that the District’s contracting and procurement system is severely dysfunctional — without regard to race or gender. 

Each year the city spends billions of dollars on contracted goods and services. That process often is marked by incompetence and willful violation of local laws, rules and regulations. Taxpayers are left footing the bill when lawsuits are filed or when additional procurement is required to rectify mistakes or mismanagement.

The disparity study itself serves as evidence of this. The one announced by Bowser, slated to be implemented by a joint venture comprised of BBC Research and Consulting, Pantera Management Group and Tiber Hudson, will be the second in the past two years.

The first was conducted by CRP Inc., a local firm headed by Carolyn Rudd. According to budget documents, the council approved $200,000 for the CRP report. 

On Jan. 13, 2020, then-interim Deputy Mayor for Planning and Economic Development John Falcicchio sent an “oops” letter to McDuffie, chair of the Committee on Business and Economic Development. “The contractor helped the District determine that we do not currently have the data to complete a disparity study,” wrote Falcicchio, adding that CRP had helped identify “what would be needed to complete this important undertaking.”

Now the public will pay $750,000 for a do-over. 

However, CRP has already prepared a Minority and Women-Owned Assessment Report, an October 2019 analysis that reviewed data collected by the Department of Small and Local Business Development (DSLBD). Among the firm’s findings in this document is that from 2016 through 2018, DC spent $10.89 billion on contracting and procurement with small businesses. Of that amount, 51% ($5.51 billion) went to certified business enterprises (CBEs), which are mostly minority- and women-owned companies; 49% ($5.38 billion) went to companies lacking the designation. 

Looking specifically at race during that same period, a total of 341 minority business enterprises (MBEs) were awarded 955 contracts in the amount of $4.84 billion. Black-owned and -operated companies received 777 contracts (81%) worth $3.98 billion, according to the CRP report. Asian American firms received 118 contracts (12%) worth a total of $605.21 million; Native Americans received five contracts (1%) worth $9.65 million; and Hispanics received 55 contracts (6%) for a total of $247.64 million.

Is that really what disparity looks like?

Neither the minority assessment nor the initial failed disparity report received much public attention. McDuffie has called the findings of both “troubling.”

This week, responding to my questions about whether a disparity report is even necessary given the minority assessment, McDuffie argued that the DSLBD findings are based on “incomplete self-reported demographic data, which prevents us from credibly measuring inequities in DC’s procurement process.”

“District businesses need a statistically and legally sound disparity study to ensure that fair and meaningful opportunities to participate in the District’s nearly $1B procurement portfolio are not out of reach for our local women- and minority-owned small businesses,” he added.

Reforming the entire procurement system first would lend greater credibility, in my view, to any disparity study. Minority-owned firms certainly would be best served by an honest and well-managed system. 

I have written multiple times about the Medicaid managed care fiasco, including a proposed legislative change Bowser has asked council members to approve. It ignores an order by the DC Contract Appeals Board to remedy violations and flaws involving at least two procurements affecting minority-owned or -operated companies.

As further evidence of blatant disregard for the law, there was an email exchange between Jennifer Arnic, then-deputy program administrator for the Public Sector Workers’ Compensation Program at the DC Office of Risk Management, and Angie Cyrus-Nickey, vice president for national sales at EVOnational. I obtained a copy of that written conversation.

“Hi Angie, So I am having a world of trouble getting this service set up over here due to the contracting process that normally has to be followed,” Arnic wrote to Cyrus-Nickey on Dec. 13, 2018 — the same year the council approved spending $200,000 on DC’s first disparity study. 

“I’m trying to figure out a way to get it done. I have a question for you. Is there any way to use your services to set up an AME but have you bill us for your administrative work and have us pay the AME directly for the AME?” asked Arnic. (Translating the jargon, it appears she wanted to hire a medical evaluator or doctor under the cover of administrative work.) 

“I know that is not the normal process,” continues Arnic, “but I wanted to see if you thought it might be possible?”

Cyrus-Nickey essentially said the plan was fine with her. She wanted to check with operations on her end, however.

On Feb. 11, 2019, Arnic followed up: “I just got legal to finish this today. I know it reads much more like a contract than a working agreement, but it is intended to be a working agreement. I hope nothing in it concerns EVO.

“If it’s fine with you, please have someone sign and scan over to me. I’ll sign and provide an executed copy and we’re in business!” added Arnic.

Office of Risk Management employees aware of the matter — as well as others with whom I have spoken over the past several months — told me they subsequently filed a complaint with the DC Office of the Inspector General. A spokesperson for the agency said she “could not confirm or deny” the receipt of any complaints. Those employees and their allies, who are working to reform the agency, allege contract steering and a potential conflict of interest involving Chief Risk Officer Jed Ross; they also cite poor delivery of services to District government employees under the workers’ compensation program. 

Despite numerous entreaties from me, Ross has yet to agree to an in-person interview. George Schutter, DC’s chief procurement officer, did not respond to my emails requesting an interview. 

Over the years, the independent OIG has attempted to examine the practices of the Office of Contracting and Procurement, most recently during this public health pandemic. Its audits and reports suggest a troubled and opaque agency.

In 2017, the OIG hired KPMG LLP to conduct a procurement risk assessment. Those auditors raised myriad concerns: There were no standard definitions in use by DC’s procurement officials, hindering the ability to “conduct a meaningful portfolio analysis”; there was wild spending at the end of the year, “increasing risk that resources are not being prudently expended”; there was inconsistent document management, “increasing the likelihood of noncompliance with established procurement procedures,” which could result in an “inability to validate decisions including sole source and emergency awards”; and there were (and are) multiple procurement governance structures, a problem also identified in 2019 by CRP during its disparity study. Equally important, there was no “meaningful oversight of District vendors and their delivery of goods and services.”

Last year, when IG Daniel Lucas sought to review contracting conducted during the pandemic, Schutter, the procurement chief, did everything but slam the door in his face. Lucas documented the problem in his recent “Close Out Letter: Audit of District Procurements During the COVID-19 Public Health Emergency,” dated May 12, 2021 

He said he couldn’t “gather sufficient and appropriate evidence” to determine whether DC “received the goods and services in accordance with agreed-to terms and conditions” or whether “supplies and services were procured at fair market value”; he also was unable to determine whether “procurements had proper approvals and were adequately managed.” That’s because Schutter denied him access to his agency’s records and database.

“Since the OIG announced the audit on September 16, 2020, OCP raised concerns regarding the timing of the audit, OCP staff availability, and granting the OIG team access to systems, which adversely impacted the audit timeline,” continued Lucas, noting that Schutter requested and received two postponements. 

The OIG ultimately delayed the audit entrance conference to Jan. 11, 2021.

Once again Schutter tried to prevent access and seemed to deliberately misdirect Lucas’ team. “OCP initially indicated that access to QuickBase and BarCloud, two of its systems ‘will not be provided as the systems contain confidential, deliberative and procurement sensitive information well beyond the scope of the current audit,’” the IG wrote, noting that he learned only later about yet “another system — not previously disclosed — with which OCP tracked and monitored outstanding orders from suppliers.” 

“The OIG had several meetings with OCP officials to overcome its objections to providing the OIG access to these systems. To date, the OIG has been unable to access the entirety of information OCP maintained in the BarCloud and Smartsheet systems,” added Lucas.

What is Schutter hiding? 

Why is the District’s inspector general being denied access to critical information? Why are council members so focused on a disparity report, when there seems to be no evidence of significant disparity?

Equally important, why aren’t legislators raising serious questions about how billions of dollars of taxpayers’ money are being spent behind closed doors and locked systems?

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jonetta rose barras is an author and freelance journalist, covering national and local issues including politics, childhood trauma, public education, economic development and urban public policies. She can be reached at thebarrasreport@gmail.com.