A special District government team is investigating at least 13 firms suspected of attempting to take advantage of the city's lucrative minority contracting program.
The unit, organized by the District's oversight panel on minority contracting, already has conducted spot checks on various firms. At the same time, owners of minority firms are being questioned to determine whether their businesses actually are owned and controlled by minorities as required by the program, according to sources from the D.C. Minority Business Opportunity Commission (MBOC).
Government officials suspects that some firms may be little more than fronts for non-minority companies that are eager to cash in on District government rules that allow minority firms to charge as much as 10 percent more for a job than normally acceptable.
At the same time, the investigators are studying the possibility that some wholly or largely minority-owned firms may be winning District government contracts only to turn around and broker them to non-minority firms, pocketing the 10 percent difference without performing any of the work.
One of the firms now being investigated, Metro Electric Inc. of Alexandria, has been awarded more than $2 million in Metro and Maryland Department of Transportation contracts as a minority firm, and is now seeking certification in the District as a minority.
When D.C. investigators recently visited Metro Eletric, they found that the black president of the firm, Leon A. Glascoe, a retired librarian at the U.S. Bureau of Standards, had a small desk near the receptionist while the white vice president of the company, James A. Travis, worked out of a paneled office in the rear.
When questioned by investigators, Glascoe, the only fulltime minority employe in the firm, said Travis earns the largest salary in the company ($30,000 a year) and handles all bidding on contracts.
Glascoe said that he earns far less even though he works fulltime because he would lose part of his federal pension otherwise.
Travis told a reporter yesterday that he and Glascoe's twin brother, Leo, started Metro Electric shortly after Travis' own electrical contracting firm went out of business.
"We realized there were all those minority laws on the books concerning minority ownership . . . So we kicked it around for a couple of months and decided to start Metro Electric."
"All these regulations on the books to help the minority is a bunch of horse - and anyone can get around them," Travis said.
However, Travis said the company is 53.3 percent owned by minorities and that shareholders "can fire me at any time." The firm already has been investigated by Maryland officials suspicious of its minority status. That investigation failed to turn up any reason why the firm's minority certification should be withdrawn, an official said.
D.C. investigators said they are awaiting additional company records from Metro Electric before they decide whether to certify the firm. A decision could come as soon as June 4, when the MBOC formally meets, they said.
There has been growing local and national concern that legitimate minorities are not benefitting from the special bidding procedures set up to help them get a bigger share of the government contract dollar.
Just recently the CBS television program "60 Minutes" pinpointed what it claimed were a number of minority front operations taking advantage of federal minority programs. And locally, WRC-TV (Channel 4) this week reported that as many as 50 percent of the contracts awarded by Metro to minority construction firms may have gone to front operations.
In the District, through surprise spot checks of minority firms and investigation, the special unit has found that:
A phony minority firm has been certified in the District. Investigators made a surprise check of the company address and found no trace of the minority firm at that location.
One minority janitorial firm gave a white firm its invitation to bid on the District's special minority set-aside contracts. The owner of the white firm then allegedly scratched off the minority address, inserted his own, entered a bid and won the contract. An MBOC source said this case will be sent to the Corporation Counsel's office for prosecution soon.
The owners of another firm certified by the District government for minority bidding, R & W Construction Co., were convicted this month in Baltimore for illegally funneling portions of the contracts they won to a large white-owned firm.
The special set-aside bid programs, both nationally and locally, were created to help disadvantaged minorities who because of their lack of experience or other reasons, have not been able to complete in the open market with established white firms in the past.
Certified minority firms are invited to bid on selected contract offerings from which non-minority firms are excluded. The District is empowered to accept bids offered by minority firms on these projects even though the bids may range as high as 10 percent more than estimated by District planners.
Under a 1976 D.C. law, the city must award 25 percent of all monies it spends on contracts to certified minority firms.
In the year the law went into effect here, former mayoral aide Joseph Yeldell estimated that $50 million in construction and $25 million in goods and services contracts would be awarded to minority firms. But minority firms won fewer than 5 percent of the $138 million worth of contract offerings that year. CAPTION: Picture, James A. Travis, vice president of Metro Electric, a firm seeking District certification as a minority-owned business, is the highest-paid person in the firm. By Ellsworth Davis - The Washington Post