Metro has no reliable records or monitoring system to back up a claim that $73 million worth of subway construction since 1975 has been performed by minority-owned businesses, a study of Metro files shows.
The records show that Metro has depended on contractors' promises, not performance, in assuring its board members and the public that black-owned and other minority businesses have received either 10 percent or 20 percent of the construction dollars, depending on the type of work performed.
For example, when the Blake Construction Co. won a $3.2 million contract for a Metro project in 1975, the company promised that 20 percent of the work would go to Capital Contractors, a black-owned business, according to Metro correspondence files.
Metro discovered later, however, that the black firm had turned all of the work over to white-owned firms, Metro records show. Furthermore, the work amounted to only about 10 percent of the total contract, not 20 percent, according to the records.
Nonetheless, Metro continued to claim that the full 20 percent, $663,940, had actually been earned by minority-owned firms.
The requirements for minority participation are clearly stated in the bid papers, and the contract that Blake signed call for a good faith effort to attain 10 or 20 percent minority participation depending on the type of work.
Officials at Blake Construction did not return several phone calls from reporters.
Metro General Manager Theodore C. Lutz said in a recent interview that "I have come to learn that our management of those (minority contracting) efforts has not been what it should be. That's always sobering."
In addition, there is evidence that some minority contractors who have worked for Metro are nothing more than fronts for majority-owned enterprises.
R&W Construction, a Washington firm certified by the federal Small Business Administration as minority-owned, has done more than $10 million worth of work on various Metro contracts, according to Metro's figures.
R&W's owners were indicted in December by a Baltimore federal grand jury, which charged that R&W was set up "solely for the purpose of obtaining federally funded contracts which required participation of companies controlled by minorities..." The grand jury said that a white-owned company, Excavation Construction Inc., provided the financing and made the important business decisions for R&W. R&W pleaded not guilty to the charges.
Since Metro set up its minority business enterprise program in 1971 and established specific goals for minority business participation in 1974, the Metro board has regularly been given detailed summaries of active contracts and the dollar value of work assigned to minority firms.
From 1975, when Metro began implementing its specific goals, through 1978, a total of $73 million worth of work was performed by minority firms, according to a figure that Metro produced at the request of The Washington Post. Even that figure, which amounts to 9.3 percent of the total construction program in those years, is $6 million short of the most constructive goal Metro set for itself.
That figure, along with the summaries on which it was based, cannot be supported from Metro files.
No one at Metro will claim responsibility for having developed the statistics in the summaries. Members of Metro's minority development staff say that they were produced by Charles A. Dowdy, who ran the minority development office from its inception in 1971 until he resigned from Metro last July.
Dowdy, in a three-hour interview in Atlanta, where he now works, said the statistics were produced by a secretary at Metro. The secretary said she had not worked on them in three years.
A Post reporter, who spent most of a week in Metro's minority development office seeking the supporting information, found files incomplete or often filled with contradictory information.
Some of the files are by contract number; others are filed alphabetically, and still others are in storage. A single file identified by contract number may contain several notations about which minority subcontractors are on the job and how much money they will earn -- or the file may contain only the contractor's initial promises. Information assigning dollar values to the work is often undated, making it difficult to determine which figure is most recent and most accurate.
Stanley Underwood, Metro's director of accounting, has just begun to develop a system for monitoring the eight-year old minority development program. He said he also had been unable to find supporting data for some of the claims that appeared in the reports.
In one instance, Underwood said he discovered that a contract with a minority firm had consistently been under-reported by $10 million.
Given that fact, it is conceivable that minorities have earned more than Metro records indicate. However, the example of what happened on the Blake Construction Co project and the possibility that some minority firms have been fronts suggests that the figure is lower than what Metro has claimed.
Members of Dowdy's staff who worked most closely with the program have described the office's procedures variously as "informal" and "inadequate."
Before awarding a contract, Metro requires the low bidder to list minority firms that will be used as subcontractors and how much they will be paid. In a few cases, minority firms have won entire contracts for themselves as low bidders.
In January 1975, according to an internal Metro memo, Blake Construction Co. "stated its intention to enter into a contract with Capital Contractors Inc., a minority contracting firm..."
At this point, it was Dowdy's responsibility to confirm that the proposed minority subcontractor was genuine.
Capital Contractors listed as its president John Duncan, a black who had been commissioner of the District of Columbia from 1961 to 1967, a time when the city was governed by three presidentially appointed commissioners.
According to Dowdy, Duncan came to a meeting at Metro with one of the owners of Blake. "I'd be the first person to admit that when you get an excommissioner who comes in with (an owner of Blake) and sits down and says he is what he says he is -- who questions an ex-commissioner of the District of Columbia?" Dowdy said. "I mean, I didn't."
"I guess in that particular instance the best way to put it is I was lulled to sleep because of the importance of the individual," Dowdy said.
Dowdy said he then approved the contract for Blake because, in his view, Blake met the Metro goal of assigning 20 percent of the work on that type of contract to a minority firm. At the time there were no written procedures in Metro's office defining a minority contractor or requiring the kind of financial disclosure that minority contractors must make today to prove their claim.
Once the contract was awarded, there was little follow-up to see if Blake actually used minority-owned subcontractors as promised.
Somebody from Metro's engineering staff later discovered that Capital Contractors, the minority subcontractor, was doing no work on the Blake contract, Dowdy recalled.
"We called (Blake) in and sat them down and talked to them about it and they said, 'Yeah, what's wrong with that?', and we said, 'It's not what we intended,'" Dowdy said.
Duncan, interviewed last week, said Capital Contractors is no longer in business. When it was, he said, 60 percent of the stock was owned by blacks. "No black firms," Duncan said, "could have done the jobs" that were available from Blake for subcontracting.
What Capital did, he said, was act as a broker. "We were a general contractor in the sense that we acted as the broker," Duncan said. "We got about 3 percent..."
During its four-year existence, Capital had only two jobs including the one for Metro, Duncan said. Capital's business address listed in Metro's records is the same as Blake's.
"We never grew big enough to get into the business of setting up a big firm," Duncan said. "We had hoped to, but we didn't."
"Blake was a hard nut to crack," said Dowdy. "They got us on that one. I'd be the first to admit that."
According to a March 1978 internal Metro memo which Dowdy wrote to Roy T. Dodge, then Metro's assistant general manager for design and construction, Blake's level of minority contractor participation on three contracts "is zero. I talked to (Blake) in early March to ascertain what work could be or had been awarded to minority firms.
Metro records show that by the spring of 1978 Blake had a total of $9.3 million in Metro contracts, but with almost no minority participation.
"The only thing Blake has to comment about is their efforts," Dowdy wrote.
Just last month, Blake was the successful low bidder on a $3.8 million Metro contract. Dowdy was gone, his replacement had not been hired and senior Metro officials say they were taking a new look at the minority participation program. The contract award was delayed several times as Metro officials negotiated with Blake to get some minority firms as subcontractors.
In a tough letter from Metro to Blake, Metro had threatened to declare Blake's bid nonresponsive. Blake then produced a minority package Metro found acceptable. Blake claimed that a minority-owned electrical subcontractor, Metro Electric, will receive $1 million worth of work -- more than one-fourth of the total.
Lutz said that he began to suspect the problems in the minority development program and Metro's failure to monitor it only after Dowdy's departure forced Lutz to pay attention. Dowdy resigned from Metro, he said, after he was not promoted by Lutz to another job. Dowdy's performance as minority development director was not an issue at the time he left Metro, Lutz and Dowdy say.
Dowdy is now the general manager of Gulf Coast Steel, a black-owned Atlanta firm that specializes in placing reinforcing steel before concrete is poured. Gulf Coast Steel, Dowdy said, is attempting to work as a subcontractor for Blake, among other firms.
The Metro subway has been seen from the beginning by District of Columbia politicians as an opportunity not only to improve the mobility of inner-city residents and attract development back to the core city, but also as an opportunity to bring significant numbrs of public works jobs to the city's residents.
Before the goals were implemented in 1975, actual minority participation in Metro work had amounted to less than 2 percent of the $1.7 billion Metro had spent on construction. Since then, the percentage has increased substantially to the 9.3 percent -- $73 million out of the total of $788 million spent on construction in that period.
Two weeks ago, the Metro staff released to its board the first minority development report that has been produced since Dowdy left. It made much of a new procedure established by Lutz to assure that minority development programs are monitored as closely as Metro's other construction work.