In an exclusive interview with the New Pittsburgh Courier, Dec. 13, Allegheny County Controller Chelsa Wagner shared the results of her office’s recent performance audit of the county’s MWDBE office for the 2017 calendar year. Her findings raise some issues about how county purchasing is conducted and how much of it has to comply with MWDBE participation goals.
The audit notes that the total reported MWDBE expenditures for the year 2017 were $13,359,584.
But the portion of the county spending not mandated by county, state or federal obligations was $531 million, which puts the MWDBE percentage well below the program’s stated goal of 15 percent.
“The levels (of minority contracting participation) reported out are superficial and only look at a small subset of the $531 million the office should be looking at,” said Wagner. “Within that universe, it’s, at best, 2 percent—and some of that may be inflated because we can’t verify it.”
Fifteen percent of the $531 million amounts to nearly $80 million—thus, the $13.3 million spent with MWDBEs is a far financial cry from what should be spent.
Wagner was quick to point out that these numbers do not indicate a failing on the part of MWDBE Director Ruth Byrd-Smith. They indicate a failing of the county’s purchasing practices on a number of fronts which result in Byrd-Smith’s office only monitoring a portion of the county’s expenditures.
“Ruth was probably the most open and transparent director I’ve dealt with during an audit,” Wagner told the Courier. “She took all of our conclusion constructively. The onus isn’t on her, it’s on the county executive and county council to change the way some of this business is done.”
In its 2017 final report, the MWDBE office notes it does not monitor contracts valued at less than $30,000 where an RFQ, request for quotes, is used instead of a solicitation for bids. Another broad area that the office does not oversee is that of professional service contracts, such as legal or accounting services. Those contracts are evaluated by an entirely separate review committee.
One particular procurement method that Byrd-Smith’s office exercises no oversight on involves what are called “piggyback” contracts—where the county agrees to the terms of a contract negotiated by another municipality for services, supplies or equipment. But as the controller’s Counsel Brad Korinski explained, that doesn’t mean another local municipality, or even a regional one.
“It could be from any municipality anywhere,” he said. “That’s how we ended up with roofers from Tennessee doing work on county buildings—that was a piggyback from a contract out of Texas.”
Piggybacking also yielded a bridge painting contract for a firm from Georgia, Korinski said. According to the audit, the county issued 285 piggyback contracts in 2017 for a total of $23,303,921. Those 285 contracts had a total of three MWDBE participants that were collectively paid $112,700. That’s less than 0.5 percent.
Another purchasing method highlighted in the audit is “sole source.” These no-bid procurements occur when purchasing determines there is only one vendor for a particular product or service—such as task-specific software. The county issued 60 of those in 2017, with zero MWDBE participation.
“With CMU and Pitt spinning off all these tech start-ups, I think that argument is increasingly spurious,” said Wagner. “And so is the idea that there aren’t roofers here who would at least hire minority subcontractors for less than a firm from Tennessee.
“What are the aims of this office—to create one or two millionaires or to support and build local minority businesses, build the Black middle class? Because if it’s that, then we’re missing the ball on that.”
Wagner’s audit recommends that the MWDBE department work with the county executive and county manager to revise the administrative code, so the department monitors all purchasing other than emergency procurements, and that the county’s procurement structure be modified so the MWDBE department can review piggyback and sole source contracts prior to execution so MWDBEs have a greater chance to participate.
The audit also noted that the department’s 2017 Annual Report significantly overstated Public Works MWDBE participation due to a typo. And that figures reported as “contract expenditures” were actually just commitments to use MWDBEs made at the beginning of contracts.
In her response—which is appended to the audit, Byrd-Smith agreed with Wagner’s findings, noting that while it is unclear if the “Estimated Expenditures Available for MWDBE Participation” is really $531 million, her office doesn’t review all contracts.
“We believe that it is safe to say that the MWDBE Department does not monitor all procurements,” she wrote. “We will discuss this recommendation with the county manager and the appropriate staff.”
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