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IG: Minority, female share of city contracts ‘grossly overstated’

Updated: October 16, 2011 12:17AM

Chicago’s Public Building Commission was accused Wednesday of shortchanging minority contractors by “grossly overstating” participation, inadequately policing the set-aside program and stonewalling the city inspector general’s requests for documentation.

Inspector General Joe Ferguson took aim at the PBC — chaired by new Mayor Rahm Emanuel — one day after Hispanic contractors accused the inspector general of making “unfounded” allegations of massive fraud in Chicago’s set-aside program.

“The PBC has significant shortcomings in its monitoring and reporting of M/WBE [minority and women-led business enterprises’] participation on PBC projects. … Posted statistics portray to its clients and the public a picture of a program that is exceeding its M/WBE goals, when actual participation is grossly overstated,” Ferguson wrote in a report issued Wednesday that also noted that the commission manages “hundreds of millions of dollars” in construction contracts.

“This not only undermines public trust in the administration of city-funded contracts. It hurts legitimate M/WBE firms looking to participate in this important program.”

Mimi Simon, a spokesperson for the Public Building Commission, would not comment on the report.

Ferguson examined 15 PBC projects completed in 2009 and found that actual minority business enterprise participation on those projects was 39 percent less than the $82.3 million that the commission reported.

For companies owned by women, actual participation was 3 percent less than the $15.1 million the PBC reported, the IG claimed.

The PBC claimed that it exceeded its set-aside goals — 25 percent of contracts to minorities, 5 percent to women — by awarding 33.8 percent of the 15 contracts to minorities and 6.2 percent to women. But the actual amount awarded was 20.7 percent for minorities and 6 percent for females, Ferguson claimed.

Equally troubling was the commission’s failure to comply with the inspector general’s requests for information about the projects, he said.

The PBC “only partially complied” with Ferguson’s request for documents related to the 15 projects, claiming that the ordinance empowering the inspector general “does not extend” to 10 projects developed for the Chicago Park District and the Chicago Public Schools.

That’s even though the school projects used city funds generated by so-called Tax Increment Financing (TIF) districts.

Emanuel runs the Public Building Commission and chaired his first meeting on Tuesday. Now, Ferguson is urging the mayor to resolve the dispute.

“If a project receives city tax revenue, the IGO [inspector general’s office] has a right to scrutinize that project. The mayor should direct the PBC to cooperate with the IGO in any audit, review or investigation into PBC activities involving city funds, including those in which the city is not the client,” Ferguson wrote.

Last week, the inspector general released a follow-up audit claiming that Chicago’s minority-business program remains “dysfunctional” and “beset by fraud and abuse” because former Mayor Richard M. Daley lacked a commitment to clean it up.

Hispanic contractors subsequently accused Ferguson of threatening the very existence of Chicago’s minority set-aside program — and unfairly tainting its 2,500 participants — with an audit that made “heavy-handed, divisive” and “unfounded” allegations of massive fraud.

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