Dive Brief:
- The Erie County District Attorney’s Office in New York announced Tuesday that a local contractor has pleaded guilty to submitting documents falsely, stating that it met the minority contracting requirements for a state project.
- Prosecutors said Nichter Construction Inc. of Lancaster, New York, was required to achieve at least 13% minority participation on the $350,000 renovation of a Buffalo, New York, psychiatric facility. However, instead of actually hiring a minority subcontractor, Nichter hired non-minority subs and filed paperwork falsely claiming that an area minority-owned company did enough work to meet the state requirement. The owner of McClendon Asphalt Paving, the minority company, also pleaded guilty to filing false documents certifying its involvement in the project.
- Nichter faces a maximum fine of $10,000 and is scheduled for sentencing in April. Subcontractor William McClendon, who participated in the scheme for a $44,000 fee, has already been sentenced to a conditional discharge.
Dive Insight:
Whether it’s because there is a short supply of qualified minority-owned contractors in the area or simply an unwillingness to comply with government contracting regulations, some construction companies continue to assume the risks of engaging in minority contracting fraud.
Earlier this month, the U.S. Department of Justice announced that two contractors would pay $3.6 million to settle government claims that they defrauded the Small Business Administration (SBA) 8(a) Business Development Program, which helps minority businesses navigate the federal procurement process and secure work.
The DOJ claimed that Michael Vigil, majority owner of Colorado-based 8(a) company VMJ Construction LLC, let non-8(a) contractor Vigil Contracting, of Maryland, make most of the major decisions for his company, bid on and perform work and also supply the necessary bonding, office space, employees, contractors, software, computers and vehicles in violation of the 8(a) program.
For general contractors, finding minority contractors qualified under federal and state programs can be a challenge, particularly given the general shortage of subs and labor, but it’s not impossible.
Most agencies that certify contractors maintain a list of qualified companies and will provide contact information. Some even offer opportunities for minority contractors to network with the general construction community. The Colorado Office of Economic Development & International Trade’s Minority Business Office, for example, not only provides free certification help for women- and minority-owned businesses but holds events to help them connect with contractors who need their services.
The SBA also maintains a searchable database that allows contractors to find an 8(a)-certified company or check the status of a construction company that presents itself as a minority contractor.
