The City of Philadelphia has once again taken enforcement action in connection with its M/W/DSBE contracting requirements.
Under a no-fault settlement agreement signed with the City on December 13, 2012, two City contractors, Aramark Correctional Services and Strother Enterprises, Inc., have agreed to pay a total of $400,000 to settle the City’s claim that the companies circumvented the City’s minority-business requirements and anti-discrimination policies by submitting inaccurate invoices to the City for payment under food services contracts with the Philadelphia Prisons.
The City’s investigation confirmed that Strother was a City-certified MBE and performed actual work in connection with the Prison food services contracts, and that the arrangement between Aramark and Strother did not increase the amounts paid by the City under the Prison food services contracts. Nonetheless, the City found that Aramark overreported the participation of Strother on the food services contracts. The City alleged that, instead of paying at least 20% of the contract value to Strother, as specified in the contract, Aramark, through the use of a circular billing arrangement, in effect paid Strother approximately 4% of the contract value, an overstatement of more than $2 million.
This is the fourth enforcement action taken by the City this year. My posts on the City’s earlier enforcement actions can be found here, here and here.
If you are a City contractor and you think you can evade the City’s M/W/DSBE contracting requirements, think again! The City’s Inspector General is deadly serious about enforcing the City’s M/W/DSBE contracting rules. If you violate them, you will eventually get caught. When that happens, you will pay a hefty price. Don’t make that mistake! Get sound legal advice before you proceed down a path of no return and potential debarment and significant fines and penalties.
The executive summary of the settlement can be found here. The settlement agreement can be found here.
Christopher I. McCabe, Esq.
