Evan Vitale Consulting: Feds rip Dallas-area agency for refusing to certify business as disadvantaged

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The federal government has sternly rebuked a North Texas agency that certifies businesses owned by minorities and women for denying certification to a temporary staffing firm after making numerous unfair demands for information from the company.

The U.S. Department of Transportation’s office of civil rights overturned the North Central Texas Regional Certification Agency’s decision and strongly criticized it in a letter for not knowing the law and for using a process “more akin to a legal summons followed by adversarial questioning.” It ordered the agency last month to certify Chartwell Staffing Solutions “without delay.”

Chartwell, a Pennsylvania company with an office in Dallas, sought NCTRCA certification under a federal law designed to make it easier for a business already certified in one state to get certified elsewhere.

The agency denied Chartwell’s application to be certified as a “disadvantaged business enterprise” last year, and the company appealed that decision. The government said the agency “ignored the interstate certification rule — which is not optional — in its entirety.”

The federal government’s letter echoed the frustration of some local contractors who have criticized the agency’s handling of cases. The agency has been under fire for over a year and was the subject of a Dallas Morning News investigation that found evidence of questionable practices.

The News published a series of articles earlier this year detailing problems with the agency’s oversight and operations. Some applicants have complained that the agency, directed for most of its existence by a father and daughter, has been sluggish and unhelpful. Many said they had given up trying to get certified.

Despite those problems, the agency has resisted calls for change, including recent recommendations from the Dallas city manager for improved oversight.

The agency asked Chartwell for about 40 documents that weren’t required and requested information that the government called “intrusive or offensive,” such as proof of ethnicity for five employees.

“The purpose of the exercise is to ascertain eligibility under the applicable rules, not invent requirements that cannot reasonably be satisfied,” wrote Samuel F. Brooks, an official in the Transportation Department’s civil rights office. He added that the regional agency’s processes seemed designed “to increase the likelihood of failure, regardless of merit.”

The agency’s lawyer said he was not involved in the matter and declined to comment.

Staffing questions

For more than a decade, All Temps 1 Personnel, a private workforce supplier, has provided the certification agency’s entire staff, from the executive director to the receptionist, at its Arlington office, The News has reported. All Temps staffers repeatedly have approved their own company as a minority-owned business and passed judgment on its rivals and potential rivals.

Chartwell is a potential competitor of All Temps for local government contracts and was in a heated business dispute with an All Temps subcontractor at the time of the certification denial in June 2013.

Asked about the Chartwell case, All Temps said that it had “no prior knowledge” of it and that it “provides staffing to the NCTRCA and does not get involved in agency business.”

The Transportation Department’s disadvantaged-business certification is given to small firms and those owned by women and minorities. Getting certified gives minority businesses an edge in competing for government contracts worth millions of dollars. Dallas County government accepts certifications only from the NCTRCA.

All Temps previously has defended its work and said its longstanding ties to the certification agency pose no conflict of interest.

After The News’ articles were published, the agency rebid its staffing contract. All Temps and four other firms submitted bids. The agency board is expected to award the three-year contract to a New Jersey company, according to that company. A vote could come this week.

A change in the contract says the agency’s new staffing provider will no longer be able to obtain certification or recertification from the agency, records show.

An attorney for the agency said the contract change was made to avoid any perception of impropriety. He said no other changes were being considered.

The North Central Texas Regional Certification Agency was created more than 20 years ago by the city of Dallas and other local governments to handle minority business certifications that once had been their responsibility. Local governments have considerable influence over the agency. They created it, finance it and select nearly all of its board members.

Traditionally, much of the agency’s supervision has been left to an executive director, who is employed by All Temps and who can make certification decisions without board approval. Local government officials said they do not get involved in the day-to-day operations.

The Chartwell case

Chartwell sought North Texas certification last year when it opened an office in the Dallas area and took steps to acquire a company that had been an All Temps subcontractor on a large city of Dallas job.

But the deal fell apart soon after the merger agreement was signed in 2013, and each company sued the other for breach of contract.

Chartwell’s bid for certification around that time did not go well. The regional agency asked Chartwell for a site visit and interview, which is not required since the Pennsylvania transportation department had already done so when it certified the firm, Brooks, the Transportation Department civil rights official, said in his letter. “Interstate certification is not intended as a series of do-overs by subsequent jurisdictions,” he said.

Some of the requested documents had nothing to do with certification eligibility. For example, the regional agency asked Chartwell for proof of office lease payments even though a firm doesn’t have to be current on lease payments to be certified, Brooks said.

And the agency questioned who ran Chartwell’s Texas operations while its owner, a woman, was living in Pennsylvania. However, there is no requirement that Chartwell’s owner have exclusive authority to sign contracts, Brooks said in his letter, and the owner cannot be in two offices at the same time. The certification agency, he said, overlooked the interstate certification rule’s intent of helping minority firms gain access to new markets.

In its appeal letter, Chartwell alleged “undue burden, unprofessionalism, abuse of process, intimidation/adversarial tactics, irrelevance of certain information requests and an apparent lack of impartiality.”

Brooks said the record “substantially supports the allegations.”

He said the regional agency had deprived Chartwell of due process by, among other things, failing to give it notice of its right to respond to the certification denial. The agency also improperly refused to give Chartwell the materials on which it based its decision, Brooks said.

Resisting change

Despite its problems, the agency has resisted change — even from within.

To help reduce a certification backlog, previous boards discussed increasing certification periods to two or three years instead of requiring annual recertifications. But no changes were made to the schedule. The board did eventually approve a committee recommendation to stop processing new certifications for 20 days so the agency could get caught up.

After The News reported in March that other contractors had concerns about the agency’s oversight, Dallas City Manager A.C. Gonzalez said he had similar concerns. He said the city had recommended last year that the agency have an executive director who would report only to the board and that it recertify businesses every other year instead of every year.

“It’s imperative that NCTRCA hires a full-time director,” Gonzalez told The News. “The director should not have relationships with any businesses seeking certification that cause ethical concerns.”

Gonzalez said Dallas wants to work with other local governments to “make sure this happens as soon as possible.”

However, Marcos Ronquillo, an attorney for the agency, told The News this summer that the board believed there was “no need” to make any changes to the executive director position.

Ronquillo also said at the time that no agency board members had placed any such matters on the board agenda for discussion and a vote or “raised an issue regarding government structure.”

Complaints of delays

Some companies continue to complain of long delays in obtaining their certification.

The owner of a Lancaster flooring business, for example, protested in a 2013 letter to the agency that she had decided not to get recertified “based on multiple failures by your office to complete tasks in a timely manner.” The letter was released by a local government agency.

And Nena LaLumia, president of Atlas Contact Center Staffing & Consulting in Addison, said her application for certification from the agency dragged on for a year and a half. She said the agency kept telling her that her file was pending.

“And then nothing happens,” she said several weeks ago.

Until recently, when she learned that her application had been rejected. She said she then applied to the Women’s Business Council — Southwest and was certified in less than 30 days.

LaLumia said she is concerned because the NCTRCA and All Temps employees have all of her business and personal financial information. She said that she has been in the staffing business more than 20 years and that her current firm was incorporated in 2012. She said she is the majority owner.

Other complaints against the certification agency were detailed in a 2010 racial-disparity study commissioned by the North Central Texas Council of Governments on behalf of six local public agencies, including Dallas/Fort Worth International Airport.

A minority female business owner said the agency took six months to certify her. “Twice they lost our addendums to our application,” she said.

A minority male business owner said the delays are due to all the paperwork the agency requires.

“If you put the amount of hours together as a business owner, it doesn’t seem like it’s even worth it,” he said.

It’s difficult to know the extent of the delays. That’s because of the agency’s outdated record-keeping systems, which were exposed when The News asked for copies of complaints. Attorneys for the agency have said that some of its records are kept in a “month-to-month rent” storage facility.

The agency’s attorneys told the Texas attorney general last December that the NCTRCA “does not maintain electronic records of complaints, if any, that it may receive.” Therefore, the attorneys said, any search for complaints would have to be performed manually.

kkrause@dallasnews.com; etimms@dallasnews.com

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