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Baltimore officials impose rare $40,000 penalty for contractor that failed to meet goal for working with black-owned partners

Robert E. Harrington said that when a project manager for a company that won an $11 million sewer contract with the city of Baltimore used a racial slur in a heated meeting with him, he saw two courses of action.

“It was just best for me to leave and not end up in a jail cell," said Harrington, who is black.

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Harrington, the owner of a heating, plumbing and utilities company, soon withdrew his firm from participating in the contract with AM-Liner of Berryville, Virginia. That began a 4½-year chain of events that led to Baltimore’s mayor and other top officials issuing a rare — if not unprecedented — $40,000 sanction Wednesday against AM-Liner for failing to send enough work to black-owned firms.

The city sets goals for its contractors to send work to subcontracting firms owned by racial minorities and women. If those goals aren’t met, officials can impose a range of sanctions, including holding back money or banning companies from further work with the city.

After R.E. Harrington Plumbing, Heating & Utilities pulled out, AM-Liner did not find a black-owned company to take its place.

Wayne Travell, an attorney for AM-Liner said in an interview that the company first learned this spring from city officials about an allegation of a racial epithet being used in a 2014 meeting, but were not told what specific word was said to have been used.

“AM-Liner deplores any use of racial slurs and would not permit then or now any of its employees to engage in that conduct,” Travell said. “The city’s delay in bringing this to AM-Liner’s attention is unfair because this event is so old that we are unable to effectively investigate what in fact occurred.”

The contract was awarded in 2014 and officials rejected another bidder who offered to do the work for less money because that company didn’t propose to meet the city’s minority contracting goals.

Harrington said the meeting in which the project manager used the racist epithet happened late that year and he withdrew from the project in early 2015.

Harrington has been in business for more than two decades and he said he is established enough that he had the option of walking away, whereas a smaller, newer company couldn’t take such a risk.

“Most of the little guys are scared to say anything because if you get blackballed, where are you going to work?” Harrington said.

The city’s minority business office determined in February that AM-Liner missed its minority contracting goal for the contract, according to an account on Wednesday’s Board of Estimates’ agenda. The company met with officials to discuss a resolution in the spring, but then asked to postpone a May meeting and never held a follow-up conference.

In July, AM-Liner was notified of the penalty recommended by the city’s minority business office. Officials wrote that the amount of the penalty was their estimate of the difference between AM-Liner’s bid for the work and what the city would have paid the lower bidder that was rejected.

Travell, the attorney for AM-Liner, appeared Wednesday before the board to protest the penalty. He asked the board, which is controlled by Democratic Mayor Bernard C. “Jack” Young, to consider the company’s record of working with the city.

“AM-Liner has been a contractor in the city for 20 years that has good performance with respect to both the performance of its contracts and with respect to its utilization of minority- and women-owned businesses,“ Travell said. "I think the board should take into consideration what efforts the contractor has made to comply with the spirit of the program.”

But Tamara Brown, the new chief of the city’s minority contracting office, told the board members that AM-Liner had missed its goals on other contracts.

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Young and Democratic City Council President Brandon Scott, who chairs the board, dismissed Travell’s account of the company’s work on the project in question.

“We appreciate everything you’re saying, but to me, at least, it just rounds up to be a bunch of excuses," Scott said. "Baltimore is a majority African American city and for us to not be able to find anyone African American to work on this contract it seems to be a lack of effort.”

Young said the city takes its goals seriously.

“These laws are put in place to make sure these people get these contracts,” Young said. “Are you telling me there should be no penalty?”

Wayne Frazier, the president of the Maryland Washington Minority Companies Association, said the city had never taken the step of penalizing a contractor.

Frazier, who attended the board meeting, said he was “pleased they got the guts to do that — but the amount was too low.” In the context of the $11 million sewer project with the Department of Public Works, Frazier called the penalty “chump change.”

Harrington credited the city’s new political leadership and Brown for taking the step of sanctioning AM-Liner East. Young became mayor in May and Scott’s City Council colleagues elected him to replace Young as council president.

“After today, I think a lot of people are going to reconsider how they treat small, minority companies," Harrington said. "The stuff they got away with under the previous administration, Ms. Brown put them on notice.”

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