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The Mechanics
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Good Government/Reform Fri Jun 10 2011

Inspector General: Minority Contracting Program "Beset By Fraud and Abuse"

Chicago's Inspector General's Office (IGO) has released a scathing study of the city's minority- and women-owned business program, calling it "beset by fraud and abuse," and cataloging the fundamental problems with the program. The MWB program has popped up in a variety of different scandals, with organized crime and corrupt politicians abusing technocratic discretion and inherently faulty oversight for personal gain in subversion of the program's purpose.

Among the recommendations for correcting the program:

  • Shifting the City's focus away from MWBE certification to monitoring MWBE compliance
  • Accurately tracking and reporting actual payments to MWBEs
  • Establishing meaningful contract-specific goal setting for program participation
  • Granting waivers from MWBE goals for construction contracts where appropriate to allow for honesty in contractor bidding and ensure better MWBE compliance
  • Collecting penalties from firms that do not satisfy MWBE requirements

You can sniff which recommendation most addresses the corruption problem: certification versus monitoring. Certification means a firm is certified as minority or woman owned in an obscure bureaucratic process, which essentially grants certain contractors a privilege they carry with them. This makes that certification extremely valuable and low-risk: once you have it you are most likely to keep it, and you just have that one hurdle, certification, to cross. A lack of on-going monitoring of compliance makes the creation of phony minority- or woman-owned businesses extremely attractive, and makes "smoothing the process" of actually getting it much easier.

The full report is after the jump.

MWBE Update Release

 
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Roger Clegg, Ctr for Equal Opportunity / June 13, 2011 9:18 AM

Why do race, ethnicity, and sex need to be considered in deciding who gets awarded a contract in the first place? It's good to make sure contracting programs are open to all, that bidding opportunities are widely publicized beforehand, and that no one gets discriminated against because of skin color, national origin, or sex. But that means no preferences because of skin color, etc. either--whether it's labeled a "set-aside," a "quota," or a "goal," since they all end up amounting to the same thing. Such discrimination is unfair and divisive; it breeds corruption and otherwise costs the taxpayers money to award a contract to someone other than the lowest bidder; and it's almost always illegal—indeed, unconstitutional—to boot (see 42 U.S.C. section 1981 and this model brief: http://www.pacificlegal.org/page.aspx?pid=1342 ). Those who insist on engaging in such discrimination deserve to be sued, and they will lose.

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