The D.C. government, citing financial losses and unreliable fuel supplies, has changed the way it awards more than $30 million in city contracts for motor fuels and heating oil, an action that minority involvement in the program.
The contract was formerly let in parts, in an effort to guarantee maximum minority participation in accord with the city's 1977 statute that requires city agencies to spend at least 25 percent of their contracting dollars with minority firms.
That provision led to some of the largest minority contracts ever awarded. But city officials complained that set-aside provisions for minority contractors cost the city about $500,000 last year and that minority suppliers were not able to guarantee adequate supplies.
Now city officals are requiring that one supplier be responsible for all the city's fuel needs and be required to negotiate with minority-owned firms who would then subcontract for parts of the work.
That should mean substantial savings for the city and a guaranteed supply, according to Courtland Cox, executive director of the D.C. Minority Business Opportunities Commission.
But owners of minority businesses, who are attempting to stop the new contracting procedures, said it would mean less money for them and that overly restrictive bidding requirements would freeze them out of the competition to get the main contract.
Officials of one minority-owned firm, Atlantic Petroleum Corp., yesterday unsuccessfully sought to stop the city from starting to review bids today. Lawyers for the company told Superior Court Judge George H. Revercomb that the city was illegally altering regulations that for the last four years have set aside about $10 million of the nearly $20 million in yearly heating oil business exclusively for minority firms.
Atlantic Petroleum claimed in its suit that the city, by changing the bidding process, was effectively ensuring that only one local firm could possibly meet "excessive" requirements that bidders have such things as their own storage capacities and their own trucks. Legal sources familiar with the suit identified this firm as Steuart Petroleum Inc., which is white-owned.
Lawyers for the city argued that they expect at least six firms, including Amoco, to bid for the contract, which the city can renew for each of the next four years. As a result, the winning bidder eventually could wind up with an estimated $150-million contract.
The city needs to begin reviewing bids immediately, lawyers for the city argued, because several fuel oil contracts will expire soon.
Revercomb rejected Atlantic's request, saying that he feared the consequences of delaying the bidding process "four weeks before the oil runs out." Revercomb advised Atlantic that it can still try to stop the city from awarding the contract itself in the next few weeks.
Atlantic lawyer Michael Geenberger said the company will file a protest over the new procedures with the federal General Accounting Office, which was the power to stop the city of awarding the contracts.
The Green Fuel Oil Co., one of the largest minority-owned fuel oil companies with 1979 contracts totaling more than $8 million, has also filed a protest withe the GAO, for essentially the same reasons.
Both minority firms claimed that the city was not only excluding them from the bidding but also from acting in any way as a fuel supplier, since the new bidding requrirements apparently would allow them only to earn money from delivering the fuels, not from buying and selling.
A white-owned firm, Roarda Inc., which has supplied gasoline to the city for the last 10 years, also filed a protest yesterday with GAO, saying that the new procedures would be anti-competitive since the firm could not supply certain of the fuels the city needs and could not therefore compete solely for the gasoline supplies.
Cox insisted that the city was obliged to change the minority setaside program.
"We have got to be fiscally responsible, we have to protect the taxpayers' interest and get the best prices we can," Cox said. "If anyone in the city is for minorities, it's me."