Denver Mayor Michael Hancock has asked the city auditor to investigate whether work on a $40 million contract granted under the city’s minority-owned business program is actually being done by a minority-owned business.
The contract, for work being done on a hotel and transit hub at Denver International Airport, was awarded to Burgess Services, a black-owned company. The entire $40 million has been credited toward the city’s goal of having at least 30 percent of all work on the $365 million airport project done by minority or women-owned businesses.
But according to the Denver Post, Burgess took a 2 percent management fee and then subcontracted most of the work to another firm, RK Mechanical Inc.
RK Mechanical doesn’t qualify to participate in the city’s minority-business program.
Hancock asked for the investigation in a letter to City Auditor Dennis Gallagher, after the Post’s article about the project ran on Saturday.
Denver City Councilman Chris Nevitt told the paper that Burgess Services is a good company, but if it’s not performing the work, the program through which it was awarded the job must be examined.
“[When] $40 million of value is being attributed to [a minority business owner] only performing a million dollars of work, does that make sense?” he asked. “I don’t think it does.”
The city’s minority-business program was expanded in February, and at the time, union leaders complained that it was poorly monitored to prevent non-minority businesses from benefitting.
“This issue is pretty big,” Nghia Nguyen, of Local 857 International Iron Workers Union, told the Post at the time. “What kind of program does the city want to run? Does the city even care? The city seems to think that if it meets its minority-contracting goals, it can rub itself on the back, but if you peel the layers back, the city actually fails this test of promoting minority contractors.”
The city auditor will examine the entire program, not just the contract given to Burgess Services.
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