Just imagine after years of design, developing, and building a public project and the federal government decides to audit your company. The purpose for the audit becomes simply a matter of how tax dollars were spent when including MWDBE’s according to 49 CFR Part 26.

It’s really unfortunate that many contractors, both large and small, fail to realize that taxpayers’ dollars are used to develop public projects and just because they do not receive these taxpayers’ dollars directly from the federal government, these tax dollars are not regulated by the same 49CFR part 26. In almost every case on every public project, taxpayer dollars are included, whether they come directly from the federal source are through a state or local source.

The real truth is that the vast majority of contractors, when dealing with taxpayer dollars, are guilty of not applying the proper formula for goal credits when including certified and qualified MWDBE’s. The proper formula seems to never be the goal when most contractors are considering developing their minority participation plans. Whether the development of the plans is falsified intentionally or the contractor does not understand the formula, the bottom line in almost all cases, the MWDBE gets the short end of the stick.

For too long the standard practice has been to choose a firm listed from the directory (qualified or not) match that chosen firm up with a NAISC code and "Voilà" we have a match. We have met our MWDBE goals. WRONG!!!!!!


In reality, it is really simple, but you must understand the formula according to 49 CFR Part 26. I do understand that when you have elected officials, appointed government personnel, and hired employees who are charged to monitor the program who really don’t understand how the program should work, then the program has never and will never work. So, for as long as the powers that be are not willing to address the problem, whether lack of understanding or whatever the reason may be, the MWDBE program will never work as it was intended to work.

The sad truth is the practices have gone on for decades and nothing has appeared to have been done to change the practice. One has to believe that the federal, state, and local governments are looking into the practice and soon changes are coming. The truth is most contractors are aware that they are in violation of 49 CFR Part 26, but if there is no regulation then why not continue to violate the rule or the law?

When you quiz the contractors about this issue the most common answer is “everybody does it!” Just because someone else does the wrong thing, does it mean that you do the wrong thing? The act of knowingly doing wrong and continuing to do wrong because others are doing the same wrong things, doesn’t exempt you from being charged for committing a crime.

The practice is like playing Russian Roulette, who’s going to have to die before the rest of the players realize that submitting fraudulent documents to a government entity is a crime. The question remains, why doesn’t someone begin to enforce the rule? After a decade of research and studies, I am convinced that these fraudulent acts are not being enforced, because at the end of the day, the project gets completed and no one is held accountable. STOP! There is a victim!! And that victim is the certified, qualified minority contractors who are really working hard to do the right thing. The right thing is to provide a commercially useful function, and not just act as a conduit for a prime contractor for a few dollars. Please stay tuned! I will write an article on commercially useful function and I won’t hold back on the real facts of how certain minority business owners are abusing the system. Again, stay tuned!

Now, back to what I call fraudulent acts. For a crime to happen more times than not you need a victim(s). The victims, as I stated, is the MWDBE and, you guessed it, the everyday taxpayers. Unfortunately, most taxpayers have no clue to this area of the law. Furthermore, neither do many of our duly elected officials nor those who they appoint and employ.

The owners of the project at the end of the day is the taxpayer. We elect those to protect our interests (Tax Dollars), but do they really protect our interests are do they sell out to "special" interest. That’s another article to be written later. As to those elected officials who do not understand the rule, I give you a pass. For those who understand the rule and continue to look the other way, you are playing roulette and eventually you will get caught.

To the contractors, the game you have played is coming to an end. How would you feel if you were at the Poker Table and every hand dealt to you was Three Kings and Two Queens, and your opponents are getting Three Aces and Two Deuces every hand? Seems to me that the deck has been stacked against you. The time is now to open a new deck of cards and maybe change the dealer. Maybe then, just maybe, every player will get a shot at a winning hand.

If you have any comments, good or bad, negative or positive bring them on!