Emanuel wants 5-year extension of construction set-aside program

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Mayor Rahm Emanuel wants to extend the city’s contract set-asides program through 2020. | Brian Jackson/ For the Chicago Sun-Times

Ten years after Chicago’s construction set-aside program was overhauled to satisfy the demands of a federal judge, Mayor Rahm Emanuel wants to extend the set-asides until December 2020.

After surviving Chicago’s first-ever mayoral runoff with 57.3 percent of the black vote and 39 percent among Hispanics and promising to be more sensitive to both groups in a second term, the last thing Emanuel wants to do is to eliminate a program that has given both groups a leg up on city contracts.

The mayor quietly introduced an ordinance Wednesday to extend the program, which is set to end Dec. 31. The ordinance justifies extending the contract set-asides based on studies and consultations with Dartmouth College economics professor Dr. David Blanchflower; the National Opinion Research Center at the University of Chicago; attorney Don O’Bannon; and the law firm of Pugh Jones & Johnson.

Chief Procurement Officer Jamie Rhee could not be reached for comment. Jose Perez, executive director of the Hispanic American Construction Industry Association, and Carol Williams, who holds the same job at Black Contractors United, could not be reached for comment.

In 2003, U.S. District Judge James Moran responded to a lawsuit filed by theBuilders Association of Greater Chicago by outlining a series of legal deficiencies in the existing set-aside law and gave the city six months to correct the problems.

The City Council followed Moran’s legal roadmap to the letter. The revamped ordinance included lower set-aside levels and stripped Asian-Americans of preferred status. No longer were they automatically in a “presumptively socially disadvantaged” group that includes African-Americans, Hispanics and women. Asian-Americans would have to apply individually and document past discrimination in order to qualify for the set-aside program.

Asian-American contractors reacted angrily to the changes. Three years later, after a study by Blanchflower, the protected status was restored for Asian-American contractors.

The redrawn ordinance also included a five-year sunset provision; an economic cap that amounted to a personal net worth of $750,000 — not counting the owner’s equity in a personal residence or the business seeking certification; and revised set-aside levels of 24 percent for minority contractors and 4 percent for women, down from 25 percent and 5 percent, respectively.

A groundbreaking “Target Market” program that had allowed minorities to compete against each other for the more lucrative role of prime contractor was revised to include all small businesses.

Minority contracting fraud was a chronic problem during Mayor Richard M. Daley’s tenure.

In 2005, James Duff pleaded guilty to masterminding a scheme to defraud the city of $100 million in contracts earmarked for minorities and women.

A string of revelation by the Chicago Sun-Times provided further proof that Daley’s minority set-aside program had been manipulated by the politically connected at the expense of minorities.

In 2012, the Emanuel administration outlined an $11 million plan to try to clean up the tainted program — two weeks after a major contractor was accused of using front companies to meet such requirements on about $200 million in city projects.

The $11 million came from Allied Waste Transportation, a company with ties to Bridgeport trucking magnate Fred Barbara, a close friend of Daley and the now-defunct Hispanic Democratic Organization at the center of the city hiring scandal.

Allied agreed to the penalty to cover its “substantial shortfalls” in meeting set-aside guidelines on city contracts awarded over the previous decade to transport city trash from transfer stations to landfills.

The Allied cash was used to hire more compliance officers to make unannounced visits to job sites to make certain that contractors owned by women and minorities are actually doing the work they were hired to do.

The settlement was also used to strengthen certification; train prime contractors, subcontractors and city staffers; and enhance software programs used to track payrolls and payments to subcontractors to make certain that prime contractors were meeting their obligations.

In 2001, Daley told reporters he would like nothing better but did not foresee a day when minority contractors would get to the point when a set-aside ordinance will no longer be necessary in Chicago.

Pressed on why he believed the program must be permanent, Daley said, “It’s called greed [of white contractors who say], ‘I just want to keep all my business. . . . I don’t want to give . . . someone an opportunity.’ Those general contractors bring you in and they hug you (saying), ‘Isn’t it great.’ And when the first payment comes out, they delay it for two weeks, and you’re holding your breath because you have 15 people working and you have to pay them. They delay it for 20 days and another one for 30 days. . . . It’s a cutthroat business.”

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