Business Regulation and Consumer Protection:

Some Restructuring Needed in District's Contracting Program To Serve Minority Businesses

GGD-81-68: Published: Jun 24, 1981. Publicly Released: Jun 24, 1981.

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The Minority Contracting Program, established in March 1977, is designed to expose qualified minority firms to increased business opportunities and to aid them in overcoming barriers in their attainment of professional and financial independence. The Minority Business Opportunity Commission is responsible for implementing, administering, and monitoring the program.

The program has had some positive benefits for a few firms, but the majority of the recipients report to GAO little or no business development, increased minority employment, or expansion of the District's tax base. Over half of the money from contracts that GAO reviewed went to a small number of firms least in need of help. Other firms receiving contracts acted as middlemen to nonminority firms which did all the work. Amendments to D.C. law were meant to ensure at least 50 percent participation in the contract work by minority business. However, several months after enactment, the practice of minority firms acting as middlemen was still continuing. Agency procuring officials believe certification should cover both minority status and business capability, whereas the Commission intended certification to cover only minority status and relied upon the firm's statement as to its business capability. Most certified firms submitted incomplete data. The files generally showed neither data verification nor chain of Commission review responsibility. The Commission has recently set up a new certification process to overcome these problems. Although the program affects nearly every District operating agency, neither general acceptance nor understanding of it had occurred at the time of the GAO review. Also, untimely regulations, lack of Commission guidelines, and unclear legislative provisions have resulted in differences among operating officials. GAO compared features of the District's program with those of other cities to provide workable alternatives available to the District.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Mayor of the District of Columbia should explore attributes of other programs and consult with the business community, majority and minority, on ways to improve the District program.

    Agency Affected: District of Columbia

  2. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Mayor of the District of Columbia should strengthen management and administration of the program by: (1) clarifying program goals, designing standards to reach these goals, and measuring progress towards their accomplishment; (2) checking to see if the new certification review procedures are working; (3) establishing criteria for what is an acceptable price increase for setting aside contracts for minority firms; and (4) clarifying the differences over how the program is supposed to operate and the roles of the Commission, its staff, and the procurement agencies.

    Agency Affected: District of Columbia

  3. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Inspector General's Office should review procurement agency compliance with the 1980 amendments to ensure that minority firms are actually participating in the contract work and not merely acting as conduits.

    Agency Affected: District of Columbia: Office of the Inspector General

 

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