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Efforts by the city of Portland to achieve construction equity goals have been undercut by 鈥渕ismanagement, waste and gamesmanship,鈥� according to a report released Wednesday.

Auditor Mary Hull Caballero found some contractors cheated the system. For example, certified woman-owned firms were observed by city staff without their owners ever present, or with a man 鈥� usually the owner’s husband 鈥� in the manager’s role. In other cases, white-owned contractors created smaller companies and registered them as 鈥渆merging small businesses,鈥� and then subcontracted to themselves. Also, city staff found instances where a certified firm was not doing the actual work, but another contractor’s equipment was on site.

Caballero’s report comes amid a national reckoning on racism. In the building industry, some Black executives such as Andrew Colas of Colas Construction have called on public agencies to do more to support Black-owned firms, saying existing contracting preferences aren’t working.

Caballero, in an interview, said Portland’s Procurement Services never had clear direction and consistent resources from city leaders.

鈥淭hey set in motion something that was in contradiction from the beginning,鈥� she said. 鈥淐ouncil needs to get clear on what it is trying to achieve and how it can do that legally with the level of resources it’s willing to provide to these programs.鈥�

Advocacy groups called on the city to take action to shore up the equity programs.

鈥淭he report gives the opportunity to improve the program,鈥� said Nate McCoy, executive director of the National Association of Minority Contractors‘ Oregon chapter.

The 29-page report focused on a group of programs that were started in 2012 to reduce disparities in contracting and boost opportunities for woman-owned, minority-owned and emerging small businesses. Large public contracts often go to major firms that have been around for decades and are typically led by white owners and executives. The audit found that while the programs succeeded in reducing some disparities, they are 鈥渦npopular with many key constituents.鈥�

Widespread dissatisfaction stems from mismanagement and legal constraints that give city officials few opportunities to choose contractors based on race, the audit found.

The audit was especially critical of the city’s Prime Contractor Development Program, which is meant to help small contractors grow. The program 鈥渂enefited few participants and suffered from mismanagement and waste,鈥� the audit found. 鈥淎dditionally, white-owned firms won most of the contract dollars awarded via the program. The program’s training and technical assistance programs were generally unsuccessful, disorganized and wasteful.鈥�

The Prime Contractor Development Program’s original focus on minority-owned contractors was diluted, in part because of legal concerns, McCoy said.

鈥淭he program was always intended to serve minority contractors,鈥� he said. 鈥淧olitics and risk and legal authority kinds of things come up, so a program that’s intended to help small minority businesses ends up having to lump everything else in.鈥�

Caballero’s office made 16 recommendations for improving the equity programs. Among them were to take steps to prevent bundling, ensure equal access among contractors to project information, and to centralize and formalize outreach to contractors.

The programs stem from a 2011 disparity study that found stark differences in opportunities for minority contractors.

Then in June 2019, in an audit by Caballero’s office of the Portland Building rehabilitation project, the city was criticized for failing to distribute nearly $1 million in funding set aside for minority contractors.

Advocacy groups joined in the auditor’s finding that there’s a perception certain contractors have an advantage via existing relationships with city staff.

鈥淲e call for an end to backroom dealings that undermine the words 鈥榓ccess’ and 鈥榚quity,’鈥� Professional Business Development Group Executive Director Kenechi Onyeagusi stated in a news release. 鈥淲e call for public officials and city employees to be unafraid to uphold established processes, abide by its own laws and equity commitments to regain public trust.鈥�

The report focused much of its criticism on the city’s Procurement Services 鈥� part of the Office of Management and Finance. Others also bear responsibility for making the programs work, McCoy said.

鈥淭here has to be a lot more shared responsibility from our electeds, from bureaus, from (project managers),鈥� he said.

NAMC-Oregon supports the Prime Contractor Development Program, but recognizes changes must be made, McCoy said. The group will issue a full-bodied statement in the coming days, he added.

Caballero said the city now has to make up for lost time.

鈥淐ouncil had good intentions,鈥� she said. 鈥淭hey seemed to want to repair historical inequities and didn’t get the job done. There are consequences for people who are in this industry in terms of wealth creation and advancement and opportunity.鈥�

Caballero will present her findings to the City Council, likely at a Sept. 30 meeting. She expects a 鈥渞ambunctious conversation鈥� regarding the report and its recommendations, she said.