WASHINGTON, DC – A bill was introduced in the Washington, DC Council on November 19 “designed to improve compliance with a District law that requires companies with large public contracts to subcontract some work to small local businesses,” the Washington Post reported.
The DC Council has revised the law over the years concerning subcontracting, “meant to create new jobs, expand the tax base and grow the local economy… to stop contractors from abusing it,” the Post reported adding that “the latest effort comes after a Washington Post investigation showed that the District’s lottery and sports gambling contractor, the Greek company Intralot, subcontracted work to its own subsidiary.”
According to the Post, the bill “would prohibit contractors from subcontracting work to companies in which they have an ownership stake to fulfill the law’s requirements.
It would also require businesses applying to be considered local to certify ‘under penalty of perjury’ that the information they provide is correct. The bill would require more evidence from businesses that they are local, create a tip line for reporting violations, and increase the frequency of site inspections.”
Council member Robert C. White Jr. (D-At Large), the main sponsor of the bill, told the Post in an interview Tuesday that it “was inspired by concerns that arose from Intralot” and that the “the Intralot situation brought to light for the council some issues and loopholes in our law.”
The Post reported that “in July, the council narrowly approved a $215-million no-bid contract to Intralot to bring sports gambling to the nation’s capital and to continue running DC’s lottery. Intralot said more than half the work would go to a firm called Veterans Services Corp. A document signed by a top Intralot executive to show compliance with the local business inclusion law affirmed that Veterans Services would ‘perform the ENTIRE subcontract with its own organization and resources.’”
However, “in other documents and in response to questions from The Post, Intralot officials said the subcontract would be performed by DC09, a company in which Veterans Services owned a 51 percent stake but which was controlled by Intralot.”
“A Post investigation published in August found that Veterans Services had no employees and that its website touted executives who did not work there,” the Post reported, adding that “the small firm’s chief executive was an employee of DC09 and lived in Maryland, records showed.”
When White sent a letter about the findings to Kristi Whitfield, director of the District’s Department of Small and Local Business Development in September, she replied that
“she had told council members that Intralot’s arrangement satisfies requirements,” the Post reported, adding that in response to a question about whether or not her department reviewed DC09’s involvement, she replied via letter, “No… the joint venture DC09 was not included in the subcontracting plan and was not submitted for certification.”
“White asked when the department had last inspected Veterans Services to verify its eligibility as a local business, and Whitfield said in 2012,” the Post reported, adding that “this week’s bill would require site inspections every 18 months.”
White told the Post in an interview on Nov. 19 that “the legislation would ‘impact Intralot’s involvement on the lottery contract’ when it comes up for renewal in five years.”
In White’s introduction of the bill, the Post reported that he told colleagues, “We have an obligation to ensure that we are maximizing the benefit of our public spending by investing in locally owned small businesses. We can’t do that as long as large outside businesses are able to exploit the system by pretending to be [certified local business enterprises], abusing joint ventures, or by refusing to pay subcontractors.”
Council members Kenyan R. McDuffie (D-Ward 5), Mary M. Cheh (D-Ward 3), Anita Bonds (D-At Large), Brandon T. Todd (D-Ward 4), Brianne K. Nadeau (D-Ward 1) and Trayon White Sr. (D-Ward 8) introduced the bill and David Grosso (I-At Large) signed on as a co-sponsor, the Post reported.