Audit: Office of Minority Business Development is ineffective, needs overhaul

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RICHMOND, Va. (WTVR) - A new audit finds Richmond's Office of Minority Business Development (OMBD) needs improvement -- and essentially has no way to make sure awarded contracts go to minority businesses.

In fact, the report found the office's procedures do not require enough information to make sure the businesses are actually eligible -- or have applied for Minority Business Enterprise (MBE) or Emerging Small Business (ESB) certification programs. As a result, this may allow a business to be to be falsely registered with OMBD.

However, the auditor's report did find that the agency has been successful in improving the amount of contracts to minority business. [BONUS: Read city auditor's complete report on Office of Minority Business Development]

On the other hand, a small group of subcontractors are receiving those contracts. The audit said one percent of the total registered minority firms received 49 percent of the city's contracts.

Auditors also found that OMBD staff awarded the minimum amount of points required to prequalify to bid on contracts -- as long as the contractors pledged minority participation. Contractors were disqualified only when they refused to pledge any minority participation.

That meant some contractors, who failed to perform good faith and past good faith efforts, were allowed to compete for -- and in some receive -- city contracts.

The report said some businesses were also continually pledging minority participation, but failed to demonstrate good faith efforts – and still managed to get city contracts.

The city has been reluctant to enforce the requirements, so the auditor's report said several contractors may be taking advantage of the city’s reluctance to litigate.

Watch CBS 6 News starting at 5 p.m. for Sandra Jones' complete report -- and the latest on this developing story.