8104: Black Businesses Backsliding.

From The Chicago Sun-Times…

Black companies missing city business
City says it’s reaching out, but they’re not bidding

By Fran Spielman

Despite unprecedented community outreach, African-American businesses got a seven percent sliver of Chicago’s $1 billion spending pie through Aug.31, down from eight percent a year ago, re-igniting a perennial political controversy.

“Why do we keep backsliding? …It really gets tiresome singing the same song every year. … We have to do better,” said Ald. Anthony Beale (9th), chairman of the City Council’s Police Committee.

With Chief Procurement Officer Jamie Rhee on the hot seat at City Council budget hearings, Beale asked her on Tuesday to identify the biggest hurdle to boosting black contracting.

“The issue is, they’re not bidding,” she said.

Ald. Leslie Hairston (5th) agreed—and she thinks she knows why. To weed out white-owned “fronts” in the wake of the minority contracting scandal, City Hall went overboard with a level of scrutiny that drove black contractors away, she said.

“It became very problematic for people to do business with the city. The city challenged everything. … It was the most mind-numbing experience that people just quit,” Hairston said.

“You have a perception problem. That’s why you don’t see as many people applying. It was such a hassle. …The city was the one that discouraged them.

We’ve got all these programs. But once you get in it, they beat you to a pulp.”

Rhee noted that the city has held “outreach workshops” and distributed “buying plans” that alert companies to a full year of bid opportunities in an unprecedented effort to encourage greater participation from black contractors.

“It takes time to realize those result. … Next year, hopefully, we’ll see an increase based on our targeted outreach,” she said.

Every year, the Department of Procurement Services gets hammered during budget hearings by African-American aldermen furious about the dismal black contracting numbers.

No matter who the chief procurement officer is—and it’s been a revolving door—the numbers never seem to climb out of the single-digits.

The story is the same this year, only worse.

Of the $1 billion in contracts awarded during the first eight months of this year, African-Americans got seven percent, or $73.6 million, compared to eight percent, or $83 million, for Asian-Americans and 14 percent or $142.2 million for Hispanics.

Minority contracting fraud has also been a chronic problem during Mayor Daley’s nearly 22-year reign.

In 2005, James Duff pleaded guilty to masterminding a scheme to defraud the city of $100 million in contracts earmarked for minorities and women. A few days later, the Chicago Sun-Times revealed that a Duff-run company was continuing to perform a pivotal truck dispatching role on the city’s $4.9 million winter salt contract.

A string of revelations by the Sun-Times provided further proof that Daley’s minority set-aside program had been manipulated by the politically connected at the expense of minorities.

They included: a company brokering plumbing supplies owned by the sister of former Hispanic Democratic Organization chieftain Victor Reyes; a minority telecommunications company partially owned by Richard J. Daley’s longtime patronage chief Tom Donovan; and an O’Hare Airport restaurant owned by Billy Goat tavern owner Sam Sianis that was placed in the name of Sianis’ wife, apparently at the city’s direction.

Earlier this year, an internal audit conducted by Inspector General Joe Ferguson concluded that blacks, Hispanics, women and Asians were deprived of at least $19 million worth of construction contracts in 2008 alone because of “widespread” fraud, abuse and mismanagement of Chicago’s minority contracting program

Ferguson compared actual participation in the city’s minority contracting program to statistics reported to the City Council. What he found was a program “beset by fraud and unlawful brokers” that has fallen far short of the city’s claims.