Philly Inspector General cracks down on sham minority contractors

Philadelphia’s Inspector General has found another case of multiple companies using a sham minority partner in city contracting.

Eleven contractors used JHS and Sons Supply for its name and minority owned business certificate in order to fulfill a Philadelphia requirement that calls for minority participation in city contracts. 

“When we do these kind of cases, and they become public, then companies learn that they are not going to get away with it,” said Inspector General Amy Kurland. “We’re hoping that deterrent effect will stop what is going on right now.

“On the other hand, we need to continue to educate the small contractors, most of who are mom-and-pop businesses who don’t fully understand the city regulations.”

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City Councilman Wilson Goode says there are plenty of qualified minority contractors who can do the work and need the business.

“We are trying to create an honest system where people use qualified disadvantaged firms and when there are existing firms who can’t get work with the city because people decide to fake it rather than use qualified firms, they deserve to be caught,” said Goode.

JHS and Sons Supply has been removed from the qualified minority contractor list.

 

Kurland says people who participate in city contracts need to understand the rules.

“That subcontracted work to the minority company has to be a commercially useful function,” she said. “It can’t be just someone who makes a call to get a supply and then passes it on, it has to be commercially useful, and those terms are all defined in the city regulations.

“It’s not all that complicated, if you contract with somebody, that person that you contract with has to do some work.” 

William Betz Jr. Inc., the company who referred the other contractors to JHS, has made a cash settlement with the city and, as part of the deal, is disqualified from any city contracts for two years.