Government & Politics

Top bidder on city tax collections contract may be skirting minority-business rules

The leading bidder to collect delinquent taxes for the city of New Orleans appears to have picked a minority subcontractor that doesn’t satisfy the city’s requirements for independence and has been accused of posing as a disadvantaged business.

Any firm seeking city business must meet — or make a serious effort to do so — the city’s goal of 35 percent participation by a local, minority-owned company.

In the case of tax-collection firm Archon Information Systems, that minority subcontractor is The Law Office of Errol B. Conley.

Conley is African-American, and his firm is certified by the city as a Disadvantaged Business Enterprise, or DBE. But GT Asset Management, which was part of a team that lost out to Archon, has accused The Law Office of Errol B. Conley of being a “classic front DBE situation.”
The response from Blake Jones, who is slated to work with Conley’s firm on legal aspects of the tax collections work: “Please consider the source of your information as I know you will.”

After reviewing Archon’s bid, The Lens found evidence that supports the competitor’s assertion.

Among other things, the address listed on the bid for Conley’s firm is that of Scheuermann & Jones LLC, the politically connected law firm where Errol Conley works. The phone number and email address go to Scheuermann & Jones, too.

The city requires a DBE to be an independently controlled and operated firm.

Archon’s bid says Conley’s firm will be working “in association with the Blake Jones Law Firm, LLC.”

Jones was a member of Mayor Mitch Landrieu’s transition team and serves on the board of First NBC Bank. He is the managing partner of Scheuermann & Jones, the legal services contractor for Strategic Alliance Partners, the company that has collected delinquent taxes for the city since 2005.

Jones founded and was the former executive director of Strategic Alliance Partners. That company’s contract, which has cost more than $3 million annually according to the Office of Inspector General, is set to expire on Sept. 28.

According to Secretary of State records, The Blake Jones Law Firm firm was founded on April 14, two days before the city sent out a request for proposals on the new collections contract.

Archon, the company favored to take over the work, is no newcomer either: It’s the collections subcontractor under the current contract.

The city’s contract selection committee cited Conley’s participation as Disadvantaged Business Enterprise as a reason for picking Archon’s bid.

Landrieu’s administration has made the Disadvantaged Business Enterprise program a priority, aiming to contract 35 percent of city work with local minority and women-owned businesses.

The administration formed the Office of Supplier Diversity, which monitors the program and reviews complaints. In June, the City Council passed a Landrieu-backed ordinance mandating stronger checks on the program.

The city’s application for the Disadvantaged Business Enterprise program requires a firm to be an “independent business in which the ownership and control by a socially and economically disadvantaged person is real, substantial and continuing.” Among other requirements, a city guide to the program says that in order to be certified, the minority-owned firm must be “independently owned and operated.”

In emails obtained by The Lens, Nada Schmidt and Deonne Thomas, the two founders of GT Asset Management told the City Attorney’s Office and the Office of Supplier Diversity that they believed Conley’s firm was acting as a front.

The Lens found other evidence of connections between Conley’s firm and Scheuermann & Jones:

The Lens asked Conley and Jones to respond to each of The Lens’ findings. Jones responded:

Thank you for checking first. I am in Federal Jury trial all week. Mr. Conley is on leave tending to a personal matter at home. The RFP is responded to by Archon and all inquiries should be addressed to them. Please consider the source of your information as I know you will.

He copied Archon CEO Bryan Barrios on his response, but neither Barrios nor Conley responded.

The Lens shared the same information with the city. Communications Director Garnesha Crawford responded:

As a licensed and experienced attorney, this DBE contractor is capable of performing these legal services. The firm is certified by the City of New Orleans as a DBE and holds a current occupational license with the City. In terms [of] enforcement of DBE compliance, the City has the ability to monitor billing to ensure the DBE is performing the work to meet the DBE participation goal.

This summer, the Office of Supplier Diversity investigated GT Asset Management’s complaint that one of Archon’s subcontractors owed it $18,000 for work done under the current contract. After the selection committee’s decision, the Office of Supplier Diversity informed GT Asset Management that the review had been closed.

The office’s reasoning: The Strategic Alliance Partners contract predated more stringent DBE rules, so there was no formal Disadvantaged Business Enterprise agreement with GT Asset Management. Therefore, the office did not have oversight of the contract.

The letter did not address the “front DBE” allegation, which would seem to play into any new contract with Archon. City officials did not respond to The Lens’ questions about whether the Office of Supplier Diversity had looked into that issue, instead citing the city ordinance that defines a Disadvantaged Business Enterprise.

According to Landrieu spokeswoman Siona LaFrance, negotiations with Archon were still ongoing as of Tuesday.

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  • rogerclegg

    Fraud is wrong, but there’s another issue here, too: Why do race, ethnicity, and sex need to be considered at all
    in deciding who gets awarded a contract?
    It’s good to make sure contracting programs are open to all, that
    bidding opportunities are widely publicized beforehand, and that no one gets
    discriminated against because of skin color, national origin, or sex. But that means no preferences because of skin
    color, etc. either–whether it’s labeled a “set-aside,” a
    “quota,” or a “goal,” since they all end up amounting to
    the same thing. Such discrimination is
    unfair and divisive; it breeds corruption and otherwise costs the taxpayers and
    businesses money to award a contract to someone other than the lowest bidder;
    and it’s almost always illegal—indeed, unconstitutional—to boot (see 42 U.S.C.
    section 1981 and this model brief:
    ). Those who insist on engaging in such
    discrimination deserve to be sued, and they will lose.