The U.S. attorney's office in the District and a grand jury are investigating a fuel supplier suspected of violating its $7.9 million contract with Metro by not sharing the business with a minority-owned firm, transit agency officials confirmed yesterday.
Metro officials said they did not know the scope or focus of the investigations or which court convened the grand jury.
The U.S. attorney's office would not comment.
The investigations began after Metro contacted the U.S. attorney's office earlier this year. Metro General Counsel Sara E. Lister said that an internal transit agency investigation had raised questions about whether Petron Oil Corp. of Lionville, Pa., was complying with the terms of its contract to provide diesel fuel for Metrobuses during the fiscal year that ends June 30.
Petron, which buys and sells oil products, had promised in the contract to buy almost 35 percent of the fuel it sold Metro from Ventco Distributors Ltd., a black-owned firm based in Philadelphia, said Edward T. Rhodes, director of Metro's office of procurement.
Although Petron provided Metro's diesel fuel as contracted, it did not buy any from Ventco because of disputes between the two companies, according to both Metro's Rhodes and Petron's attorney, Erik Videlock. Ventco officials could not be reached for comment.
"We believe we fully complied with the requirements of the contract," Videlock said.
Metro is an interstate agency created by a federal law and the recipient of federal subsidies.
It is subject to federal rules that it seek to spend at least 20 percent of its service and equipment funds and 10 percent of its construction funds with minority contractors. The Metro board has set its own goal of awarding to minorities at least 35 percent of its service and equipment spending and 20 percent of construction spending.
Metro established its goals in 1975 after finding that minority participation had amounted to less than 2 percent of the $1.7 billion it had spent on subway construction. In 1979, the agency established special procedures for monitoring minority participation after finding that it could not verify that minorities were actually performing the work described in contracts.
Metro now requires monthly reports on the work performed by minority firms on its contracts and conducts audits to ensure that the reports are accurate, Rhodes said.
In addition to holding the current diesel fuel contract at Metro, Petron has submitted the lowest bid, $8.1 million, for the same contract for the fiscal year that starts July 1. As required by Metro, Petron's bid includes a list of minority firms that would serve as subcontractors.
The Metro board postponed the award of the new contract Thursday and granted a 31-day, $705,831 contract to Petron. Rhodes said the delay would allow him time to "gather more information" about Petron's ability to fulfil the terms of the contract.
Metro learned last fall that Petron was not buying fuel from Ventco, Rhodes said.
Petron refused to do business with Ventco because of a dispute over the price of fuel for the contract, and because of a $107,000 debt owed by Ventco to Petron, Videlock said.
Petron asked Metro's permission to substitute another black-owned firm for Ventco, but Metro decided that a switch was not justified, Rhodes said.
"We became concerned, so we asked our auditors to go up and take a look," Rhodes said. As a result of that look, the U.S. attorney's office was contacted, Lister said. "We don't know what else turned up, but obviously it was something sufficient to pique the U.S. attorney's interest," Rhodes said.
Metro's auditors had no authority to look beyond the specific contract involved, Lister said.