District government agency directors apparently violate some laws and regulations with impunity. Investigations and audit reports regularly document noncompliance and violations. Still, no one gets fined. No one gets fired.
Consider the Sept. 3 report from acting D.C. Auditor Lawrence Perry regarding compliance with the Small, Local, and Disadvantaged Business Enterprise Development and Assistance Act of 2005. That law mandates that agencies must spend 50 percent of select portions of their annual allocations with local small business enterprises (SBEs).
In fiscal 2014, 82 agencies were to spend a total of $775 million with SBEs. By the second quarter, however, the Department of Small and Local Business Development had permitted agencies to reduce that amount to about $495 million. Now, in the third quarter, they are not meeting even that goal. Thus far, according to the auditor, agencies have spent only $84 million.
Don’t think the rest of that money is sitting in some bank account. It’s “being spent in violation of the law,” asserted D.C. Council member Vincent B. Orange (D-At-Large), adding that many agencies aren’t even completing the quarterly expenditure report required by the law. “It’s very telling when the executive office of the mayor is out of compliance,” Orange said. “This administration has not held folks accountable. It’s unacceptable.”
Robert Summers, head of the Department of Small and Local Business Development, which is responsible for ensuring compliance, said in an earlier letter to the auditor that he has been “working to address deficiencies,” providing additional training and notifications of noncompliance.
What’s the big deal? you might ask. Why not focus on the quality of the product, rather than the location of the business?
Spending public dollars with District businesses translates to more jobs for District residents and more money for District tax coffers. Further, those local small businesses already “are paying property taxes and taxes for their businesses,” said council member Kenyan R. McDuffie (D-Ward 5). “We should be supporting them first and foremost.”
When companies outside the city receive contracts, that multiplier effect often doesn’t happen. Those businesses may not hire District residents and don’t pay local taxes.
That reality motivated me for years to shop only within city limits. Back in the 1980s and 1990s, when the District was a near-wasteland, my declaring I would not spend my money in the suburbs drove my family and friends crazy. Holding to that rule is much easier now; the city is bustling with quality small and large companies. If residents can find them, why can’t government bureaucrats?
“The agencies don’t see any stiff consequences” for noncompliance, McDuffie said. “Everybody has diagnosed the problem. We need to work on better solutions.”
Small business leaders such as Mike Smith agree. A member of Fort Myer Construction Corp.’s Small Business Roundtable, which can include as many as 100 individuals from the small business community, he said, “The issue repeatedly comes up.” By the roundtable’s calculation, during the past three years small-business owners have missed out on as much as $1 billion in business.
“If the mayor is not putting an emphasis on spending the money, it’s not going to happen,” said Smith, who owns the construction business Smith and Sons . He, roundtable members and representatives from Asian and Hispanic businesses plan to hold a rally Tuesday morning in front of the John A. Wilson Building to bring attention to their plight.
Will a bunch of folks holding signs and delivering speeches infuse accountability into the bureaucracy? Don’t count on it.
Agency directors have treated spending goals as if they are aspirational, not required. In 2011, agencies spent 45 percent of their expendable budgets with SBEs; in 2012, that dropped to 20 percent. This year it’s at 17 percent, according to the audit.
McDuffie said the city’s small and local business department has authority to “direct that a portion of an agency’s budget be set aside for [SBEs]. I don’t think they’ve used that authority.” Before proposing any legislative changes, he said, “I want to make sure the current law on the book is being utilized.”
Orange has promised to introduce legislation Tuesday at the council’s first legislative session since returning from summer recess. His bill would mandate that agencies spend at least 25 percent of their annual goal each quarter. “We have to do something about this.”
He’s right. But his “something” sounds like more of the same. Whatever happened to firing people when they don’t follow the law? Is that too radical?