The High Cost of Low Bids

The county needs contractors to do its construction work. The contractors need minority subcontractors to satisfy county regulations. And taxpayers need an explanation.

Wayman Adkins, a black businessman, is quite popular these days. As president and owner of Consolidated Techniques, Inc., a small construction firm in Hialeah, Adkins has been wooed by some white-owned firms eager to have him join them in their bids for county government contracts. Rivalry over his services, though, grew so intense recently that it sparked bitter feuding among contractors -- and ultimately led the county to award an extra two million dollars to the firm that secured the lucky Adkins's participation. Unfortunately, the biggest loser in the saga of the Courtship of Wayman Adkins may turn out to be taxpayers themselves.

Like many black contractors, Adkins has won contracts from a county-run program that earmarks an average of ten percent of all construction spending for black-owned firms. County officials are convinced that racial discrimination in Dade's construction industry is so pervasive and far- reaching that black firms need preferential treatment -- a "head start," as one county official puts it -- to help them win county funding. Those funds, in turn, can promote the growth of black-owned businesses.

Proponents say the program enables black firms to compete for a fair share of public construction dollars. Critics say the program is plagued by the use of minority "front" companies, is inadequately monitored, and wastes taxpayer money. But for Adkins, the program has proved to be a boon: His involvement in the Miami-Dade Water and Sewer Department's contract S-403 A awarded for the building of the "grit chamber" and odor-control building at the South Dade Waste Water Treatment Plant A is turning into a million-dollar bonanza. (The grit chamber catches the solid effluent -- grit -- from raw sewage; the material is then treated in the odor-control building to reduce the foul smell.)

The story of contract S-403 began like any of the hundreds of county-funded construction projects launched in Dade each year. County officials appropriated funds for a project and solicited bids from private construction firms. But as with some cases involving minority contractors, something seemed to go wrong, and veteran (white) contractors complained that the contracting process had been abused and that Dade taxpayers now have to spend millions of dollars in unnecessary construction costs.

Adkins's Consolidated Techniques is a twelve-person general construction firm that participates in Metro-Dade County's Black Business Enterprise (BBE) Program. (As a "general" construction firm, the company is capable of anything from laying a concrete foundation to raising a roof.) The program that has helped Consolidated began in 1982, in the aftermath of the 1980 Miami race riots, as a way to provide a carrot to black entrepreneurs. In 1992 a new county ordinance strengthened the initiative by providing incentives to white firms to hire black firms as subcontractors. As one of 200 or so firms (the number fluctuates) certified by the county as "black owned and operated," Consolidated is a valuable commodity. It is important not only because of its experience and expertise, but also because its employment as a subcontractor in publicly funded projects can satisfy black participation requirements set by the county as part of the Black Business Enterprise Program. That program requires almost all county construction projects to include black businesses. Without black subcontractors, white-owned firms would stand little chance of winning large contracts.

The stakes are high. In 1991 the county authorized $85 million in construction spending to certified black firms, or an average of about ten percent of total construction funding. (Each separate project can have varying percentage requirements.) The Dade County School Board set spending targets of another $137 million, representing 37 percent of overall construction outlays. But county officials say these figures are only "goals." Amazingly enough, they don't know the actual payouts to black-owned firms.

Since virtually every county construction project now includes a mandated goal for black participation, the large, predominantly white-owned construction firms often create alliances with smaller black-owned firms that can be hired as subcontractors. It was this mandate that brought Adkins together last July with Bill Shendell, president of Pro-Built Construction, a white-owned general contracting firm based in West Palm Beach. Shendell, who was introduced to Adkins by a mutual acquaintance, said he was interested in working with Consolidated on upcoming Dade County projects that required participation from black subcontractors. For example, if Pro-Built were to bid on a one-million-dollar county project that specified ten percent black participation, Shendell might hire Adkins's firm to perform at least $100,000 of the work. It was the perfect match: Shendell had the manpower and could provide "bonding," the insurance guarantee that a job would be completed. Adkins, for his part, could help Shendell's firm meet county goals for black participation. Adkins agreed in principle to the arrangement, but the two did not work out plans for bidding on specific projects during their preliminary meetings. Because there is little written documentation of what Shendell and Adkins discussed, the two men's stories about what happened before, during, and after the controversial grit-chamber bid recall the classic Japanese film Rashomon, in which each character offers a conflicting version of the same incident.

Later in July two large white-owned general contractors A Baltimore-based Poole and Kent (P&K) Co. and Jacksonville's Harry Pepper & Associates A were preparing to bid on a project that could involve both Pro-Built and Consolidated. It was the Miami-Dade Water and Sewer Department (WASD) "grit chamber" and odor-control building located in South Dade. Both firms asked Pro-Built to submit a bid to work as a subcontractor on the project. There was nothing unusual about that: Smaller firms commonly put in bids to larger firms to do portions of the overall work. The large firm then submits a total bid to the county. And it is neither uncommon nor unethical for smaller companies to submit bids to more than one firm for the same job.

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