Stop picking on small businesses
The District is reviving its reputation as an unfriendly place to do business. Don’t take my word for it— talk to the members of the National Business League of Greater Washington, who, during a recent meeting, lamented egregious violations of smallbusiness contracting rules.
Other business owners have decried regulatory enforcement regimens such as the Zip Code Project. An initiative of the Department of Employment Services (DOES), the Zip Code Project sounds harmless. DOES officials visit businesses to provide notification about requirements and penalties in the new Wage Theft Prevention Amendment Act.
Those visits may have gone too far, said some owners. They complain that DOES demanded entry into private offices. Employers who refused allegedly have been threatened with return visits.
The Venable law firm challenged the inspections. In an April 29 memo, it asserted the inspections are “subject to warrant requirements of the Fourth Amendment,” and the agency “may not place objecting employers on a list that will subject them to a higher scrutiny.”
Deborah A. Carroll, DOES’s director, said no threats were made. “We essentially heard concerns from employees because they didn’t have authority to allow anyone into the business.” Appointments were scheduled. She insisted the agency has the right to inspect employer records without reports of a violation. “I really dispel the notion that we have to wait for someone to be violated in order to do an inspection.”
The D.C. Bar Association’s Pro Bono Program, concerned about the implementation of the Zip Code Project and the “lack of clarity around implementation,” held a two-hour training session this week. “We want to make sure really small businesses without large staffs know how important this is and how crippling the fines could be,” said Darryl Maxwell of the Pro Bono Program.
At-large Council member Vincent B. Orange (D), chairman of the Committee on Business, Consumer and Regulatory Affairs, said DOES may be pushing the envelope, but “things will be more efficient and more effective and everyone should have the highest quality of life.”
Help. Where is the attorney general? Karl A. Racine told me he recently learned of the problem and is “doing a legal analysis.”
Carroll admitted that “employers have been hit with so many different laws over the last fewyears.” She doesn’t help the problem. Small businesses are the wellspring of the economy. District officials talk about the importance of such companies but frequently undermine their growth and success.
Consider that Inspector General Daniel W. Lucas recently reported that in fiscal 2014 dozens of agency directors violated a law mandating they spend 50 percent of their expendable budget with local businesses. Those local companies were denied a share of $1.2 billion — a substantial portion of which could have been recycled in the local economy.
Orange declared that the problem has been fixed: Before Oct. 1, each agency must identify its expendable budget and offer a plan for spending it with local businesses. “We will monitor what they are doing.” A public roundtable is scheduled for July 10.
Wait, wait. The government hassles businesses to follow the law. But District mangers get a talk fest.
Is that the elixir for a program that requires contractors set aside 35 percent for local, certified businesses?
Orange said a law will require the main contractor to identify the local subcontractors and specify exactly what those groups will get, supposedly ensuring they meet the set-aside requirements and aren’t gaming the system.
Waivers are permitted, however. “The flood gates have opened in the last quarter or two for prime contractors to bypass the 35 percent requirement,” said business owner Malcolm Lewis Barnes.
Unity Health Care, part of the city’s Health Care Alliance program has held the health-care contract at the city jail since 2006. It has never met the 35 percent set-aside goal, Unity President and Chief Operating Officer Vincent A. Keane told me. Unity received a partial waiver for a 20 percent set-aside, and it met that using a Unity-created business. But that company closed, said Keane, who made $387,744 in 2012.
Unity is poised to have its contract renewed. Keane admitted that Unity has had “a hard time” finding qualified subcontractors. “We are considering establishing our own [certified business] as an option.” That certainly doesn’t reflect the spirit of the law.
At the National Business League’s breakfast, Racine promised to convene a meeting with business leaders, the newdirector of the Department of Small and Local Business Development and others to examine the problems associated with the set-aside programs, including waivers. He will pull the group together within the next “four weeks.”
It’s surprising to me that local businesses haven’t sued the government for systematically failing to follow its own law. We know what would happen if the shoe were on the other foot.