Company once accused of being minority front gets $407M more

Mayor Rahm Emanuel’s administration has awarded $407 million in water main construction and sewer-lining contracts to a company once certified as minority-owned at a time when its African-American president had acknowledged his white business partner ran the company’s day-to-day operations.

The four water main construction contracts — for Districts 3, 4, 5, and 6 — were awarded to Benchmark Construction on June 13 and 14. On May 23, Benchmark was also awarded a $29.2 million sewer-lining contract.

That once again makes Benchmark the largest beneficiary of Emanuel’s plan to double water and sewer fees over a four-year period and impose annual rate hikes tied to the inflation rate to replace Chicago’s crumbling water mains, 900 miles of them a century old.

The Department of Procurement Services had no immediate comment when asked why one company once accused of masquerading as minority-owned to get a leg up on city set-aside contracts was such a big beneficiary of the gravy train of contracts tied to the rebuilding of Chicago’s aging water and sewer system or why City Hall has not made a greater effort to spread the largesse around.

Three years ago, the Chicago Sun-Times raised similar questions after the Emanuel administration awarded $250 million in water main construction contracts to Benchmark.

At that time, the mayor’s office argued that the city was carved into six districts for water main replacement purposes to maximize the number of contractors, but when the bids were opened, Benchmark was the “lowest responsive and responsible bidder” in three of the six districts.

“The City of Chicago is legally required to award all competitively bid contracting opportunities to the lowest responsive and responsible bidder,” an Emanuel spokesperson said at the time.

Twelve years ago, the Sun-Times reported that Benchmark Construction got more than $25 million in city contracts earmarked for minorities, even though then-company president Michael Smith, who is African-American, had acknowledged in a court deposition that a white partner oversaw operations.

In the same document, Smith appeared confused about the meaning of the term “below-grade,” though the company does underground construction.

At the time, Smith was listed as the president of Benchmark. But then-Mayor Richard M. Daley accepted a campaign contribution from Benchmark and listed the company’s president as Michael Vondra, a construction and asphalt magnate who is white.

Pressed to explain the discrepancy between the city’s certification records and his own campaign finance report, Daley said, “I don’t know. He submitted $1,500 and . . . they put their name down. That’s all we do. We just take it. There’s nothing wrong with that. I wouldn’t know that. I have no idea.”

Daley said at the time that he did not believe Benchmark was an example of minority business fraud.

“He’s African-American. He’s black. He went to the interview with the Sun-Times. He talked about it. He has people working for him. He’s black and he owns the company,” he said.

Then-chief procurement officer Eric Griggs said he had determined that Smith was the “majority owner” of Benchmark, with 70 employees under his control.

Smith is no longer president of Benchmark. He was replaced in 2008 by a longtime company employee who is white. Benchmark has made more than $193,000 in political contributions in recent years, a healthy chunk of that money to a handful of powerful Chicago aldermen.

In 2004, the alleged subterfuge by Benchmark became a cause célèbre among African-American aldermen, who demanded that Daley do a better job weeding out “fronts” that deprive companies legitimately controlled by minorities of their fair share of city contracts.

Then Ald. Ed Smith (28th) went so far as to declare the company that African-American contractor Michael Smith claimed to own a “sham” controlled by white power brokers.

“All of the stuff he did not have and did not know makes him a phony contractor,” Ed Smith said then.

“An owner is a person who runs the company. He hires his employees. He gets the contract and does the services. That’s what an owner does.”

The Daley administration claimed at the time to have stepped up audits and site visits in an effort to police minority fronts ever since the $100 million minority contracting scandal involving members of the mob-connected Duff family.

But Ed Smith said then it was obvious those efforts had fallen short. He noted that Benchmark got away with owning no dump trucks of its own, but leasing them from perennial city trucking contractor Michael Tadin.

“I want them to be much more vigilant. . . . It’s not right for us to put in all of this work and these contracts are not getting to the people who are supposed to get them. If blacks and Hispanics and women can’t get contracts, they can’t pay anybody from the community,” Ed Smith said.

Ald. Walter Burnett (27th) said then that it was “unfortunate” that aldermen were “the last ones to know that something like that is going on.”

“We’re trying to keep minority contractors [working] and, at the same time, not make it so hard that minorities can’t even qualify [because of rigid certification standards]. It puts us in a quagmire,” Burnett said then.

Contributing: Tim Novak