PORTLAND, Ore. (AP) — The city of Portland said Wednesday it will fine the owners of a painting contractor $20,000, saying they created a “front company” in order to qualify as a woman-owned business.

The city is accusing the business, Portland Coatings, of receiving over $1 million in contracts while falsely claiming to be owned by a woman.

Portland began investigating Terezia Nyland and her husband, Michael, in 2017 after an unspecified tip to the city’s ombudsman office, The Oregonian/OregonLive reported.

The city said Portland Coatings’ address is actually the loading dock for a business Michael Nyland owns, Williamsen & Bleid. In addition to the $20,000 fine, the city suspended the Nylands’ eligibility to do business for the city for three years.

The Nylands’ lawyer said Tuesday they plan to challenge the city’s findings.

“Terezia Nyland is, and has always been, Portland Coatings’ majority shareholder and chief executive,” attorney Matthew Colley wrote in an email. “She and her husband have done nothing wrong, and they will be vindicated in the appeals process.”

This is the first time Portland enforced a 2015 state law that gives the city the authority to investigate whether businesses qualify for public contracts that give preference to “disadvantaged businesses.”

That category includes businesses owned by people who are Blacks, Hispanic, Native American, women and others who have historically had less access to lucrative government contracts.

Last month, a city audit that found Portland’s efforts to reduce disparities in city construction contracting had some effect, “but they also suffered from design flaws and mismanagement, and were vulnerable to gamesmanship.”

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What if there was a way to smoothly connect local prime contractors with qualified minority subcontractors?

In the Portland metro area, where both the public and private sectors are often involved in projects that mandate the hiring of companies owned by minorities and women, this is no small issue. Building a smooth-functioning team organized under a prime contractor is critical. That’s where Penny Perez  is focusing as the new director of technical assistance with the Metropolitan Contractor Improvement Partnership.

Perez took over that role earlier this spring, and she already is full of ideas for furthering the group’s mission.

“At this point there’s no system in place to track minority contractor participation,” Perez said. “We’ve talked about some different ideas for doing that, maybe doing an MCIP certification where we verify the ethnicity of the owner of a small contracting company that is pursuing projects and performing on projects other than public works.”

Originally hailing from Las Vegas, where she worked in commercial contracting for 25 years, Perez taps her own experience running a certified disadvantaged business enterprise when helping those in a similar position.

“I have a thorough understanding of the business and workforce equity policies and the expectations from the agencies,” she said.

In Oregon, the state’s Certification Office for Business Inclusion and Diversity, or COBID, runs a certification system that allows minority- and women-owned firms to compete for public-sector contracts. The system also gives prime contractors a ready-made source for complying with public work requirements mandating the hiring of certain percentages of minority- and women-owned business enterprises. But Perez says the COBID process still has shortcomings that allow skilled minority- and women-owned businesses to fall through the cracks.

“There’s quite a bit of underwriting with the certification process you go through with COBID and that portion is great,” she said. “However, some of the work is being performed by minority contractors who aren’t certified for one reason or another, mainly because they’re not pursuing public work, but they are participating in these projects. So it would be really cool to be able to monitor and gauge the non-public worksconstruction that is occurring and being performed by minority contractors.”

Some prime contractors try to track this type of information themselves, but that’s no substitute for an industry-wide database.

“There’s no system in place to track minority contractor participation,” she said, “regardless of whether or not that contractor is certified; so that’s kind of the big picture of the problem.”

To help start improving the situation, MCIP recently introduced a new contractor assessment program that takes stock of each company’s capabilities, experience, personnel, accounting systems and more. Perez likened it to a sort of pre-qualification application.

“Really, the analogy is like going to the doctor,” she said. “The doctor is going to assess, diagnose and treat. And so with a CAP, we assess. We have a 50-question assessment … and we take that information and we diagnose. We look at it and say this particular company is in an excellent position to pursue this type of work at this level of contract valuation in this market, so we could talk small commercial, we could talk large commercial, we could talk multi-family residential, several different areas.”

A company’s assessment also looks at potential deficiencies and training needs. In all, the CAP is intended to ensure that prime contractors looking for qualified subs will be able to find exactly what they’re seeking.

“So, we are here to support them to ensure they are set up for success,” Perez said. “And part of that is having frank conversations with them about what they are truly ready to pursue in the contracting world. So once we have that information around our contractors, when we are contacted by a prime contractor, we can make the connections.”

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The Oregon Department of Transportation released its last week. People interested in submitting feedback have until April 30.

The study is intended to help ODOT run its federal Disadvantaged Business Enterprise program. One resulting recommendation of the study performed by Keen Independent Research is to include all certified DBE businesses in the group eligible to work on federal construction contracts. Currently, only specific ones may work on such projects.

O’Neill Electric’s Maurice Rahming, an advocate for minority participation in public contracting, has looked at the study and plans to submit comments to ODOT, as he has done previously for similar studies. He said it’s concerning that this one shows gradually declining utilization of minorities in DBE awards from 2011 to 2015, from 15 percent to 6 percent.

“It shows we’re going in the wrong direction,” he said. “We’re actually going backwards and getting worse.”

Rahming added that it’s concerning that phone bank surveys were used by Keen Independent Research to compile work availability data. One flaw with that method is that personnel at large firms can be spooked by the use of an out-of-state phone number

Upcoming public meetings will take place in La Grande, Bend, Medford and Eugene. Portland’s meeting will be held April 11 from 3 to 5 p.m. at Oregon Association of Minority Entrepreneurs’ office, at 731 N. Hayden Drive.

Comments will also be received online at ODOTDBEstudy.org, via emails to info@ODOTDBEstudy.org or by phone at 503-660-8865.

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