Governments Struggle to Root Out Fake Minority Contractors

Margie Sollinger knew something wasn’t right about the companies doing business with Portland, Ore. As the city’s ombudsman, Sollinger had for some time been hearing from business owners about fraud in the city’s minority- and women-owned contracting program. But it wasn’t until she received a specific complaint in 2013 — about a certified minority-owned construction firm doing work for Portland’s housing authority — that she decided to take action. According to the complaint, the firm was merely acting as a pass-through, winning valuable city contracts and then subcontracting the work out to nonminority companies.

Like many cities and states, Portland has a program allowing it to give special consideration to women- and minority-owned companies when handing out government contracts. The goal, of course, is to help support traditionally disadvantaged companies by giving them a leg up. But as Sollinger began to discover, the city wasn’t necessarily helping the firms it thought it was.

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