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Community Development
Closing the LSDBE reporting gap
(Published October 17, 2005)

By MALCOLM L. BARNES

As the new fiscal year starts in the District of Columbia, a new age of transparent disclosure for LSDBE participation in local government contracting activity may potentially dawn if Councilman Kwame Brown gets his way.

Shortly after joining the D.C. City Council as an at-large member in January of this year, Brown introduced a series of bold new legislative initiatives to make the District comply with existing law, which calls for government agencies to meet or exceed 50 percent utilization goals for local business spending.

What resulted was the passage of the D.C. Small Business Act of 2005, which calls for the elevation of the Office of Local Business Development to a cabinet-level department, and the deployment of additional resources to require D.C. agencies to provide more accurate and transparent data on local procurement activity involving local, small and disadvantaged business enterprises, also known as LSDBEs.

Brown also chairs a new Special Committee on a Comprehensive Policy for LSDBEs that includes Vincent Orange from Ward 5, Vincent Gray from Ward 7, Marion Barry from Ward 8 and Sharon Ambrose from Ward 6 – representatives from the areas of the District where the greatest inequities exist between economic development, business and employment involvement by local residents and businesses.

At a Sept. 30 hearing of this committee, Brown chastised City Administrator Robert Bobb for the misinformation that has been reported by the Office of Local Business Development (OLDB) that reported $481 million in LSDBE activity. Brown informed Bobb that the Office of the Chief Financial Officer actually documented only $74 million out of a total of $2.2 billion in District procurement activity during fiscal 2005 actually being expended on LSDBEs, and he called the information "quite alarming."

What makes the 3 percent performance level so alarming to Brown is his professional history and experience as a minority business advocate, having served as executive director of the D.C.-Maryland-Virginia Minority Supplier Development Council prior to successfully running for public office. Brown, along with newly elected council members Barry and Gray, lead the new vanguard of public officials who have vowed to not tolerate the District’s lack of accountability in leveling the procurement playing field for LSDBEs.

They have teamed with council members Orange, Adrian Fenty and Kathy Patterson to also participate on the Special Committee on Vocational Education to ensure that D.C. residents get their fair share of construction and blue-collar jobs that will result in the building of the new baseball stadium, the "Great Streets" and "New Communities" initiatives that will spend billions of tax dollars on current and future public works projects.

Bobb reassured Brown that "the Mayor and I consider LSDBE utilization a high priority, one that hinges on fairness. One of the roles of government is to correct inefficiencies in the marketplace, and to sustain the District’s local economy, we must fully engage the LSDBE community." Bobb cited the $50 million commitment that the District negotiated for the redevelopment of the old convention center site, which will include 35 percent LSDBE participation and a $20 million equity stake for such LSDBEs as Bundy Development, the Jarvis Co. and the Neighborhood Development Corp.

Herbert Tillery, the interim director of the Office of Contracts and Procurement (OCP), also provided testimony that an aggressive four-pronged effort will be led by OCP to ensure greater transparency, increased set-asides and the elevation of LSDBEs as a "first source" for consideration in future D.C. government procurement activity. OCP’s implementation strategy calls for (1) changing existing contract clauses and procedures; (2) developing internal staff training; (3) reviewing contract administration procedures to implement new technology, more efficient contract templates and business process procedures, and finally (4) rolling out an aggressive outreach campaign to the LSDBE community.

Tillery projects that it will take the entire first quarter of fiscal 2006 to implement the new procurement procedures and business process changes. He promises that OCP will host business roundtable events in partnership with the District’s Department of Transportation to ensure that the "Great Streets" and "New Communities" initiatives will maximize LSDBE participation.

However, D.C. Board of Education member William Lockridge feels that the gap between what’s reported as being awarded and what LSDBEs actually receive is directly related to the barriers of bonding and access to working capital that construction contractors face. Lockridge also feels that the city’s LSDBE certification process is not "business friendly" and often places the burden of proof on the LSDBE applicant, to help a government office that has been chronically under-staffed.

The school board now requires a 35 percent LSDBE participation policy for all capital improvement projects, but there has been push back from Tom Brady, the school system’s chief operating officer, in implementing the board’s policy that encourages open and competitive pre-bid conferences and a pro-active outreach initiative to maximize LSDBE participation.

The next step in the outreach program is an Oct. 24 public hearing by Brown’s special committee to hear from local businesses on their experience in gaining access to the District’s procurement process. And the D.C. Minority Business Development Center will host a "D.C. Ballpark Business Conference" in cooperation with the D.C. Sports and Entertainment Commission and the development team of Clark/Hunt/Smoot, the designated ballpark construction manager, to explore economic opportunities for the new stadium.

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Barnes is former director of the D.C. Small Business Development Center at Howard University. Contact him at MalcolmMBRI@aol.com.

Copyright 2005 The Common Denominator