Faulty Files at the City's Minority Business Department

Auditor's report: City's SMBR has operated with faulty info

Under a previous agreement, the city's Department of Small and Minority Business Resources was operating with faulty information, at a loss to certify how many businesses in its files are truly minority, women, or disadvantaged businesses, according to a report by the Office of the City Auditor.

"In our audit we found problems in the area of certification, specifically as it relates to the accuracy of data … maintained by the certification agency that processes certification of Minority-Owned Business Enterprise (MBE) and Women-Owned Business Enterprise (WBE) for the City of Austin," says the report, released at last week's meeting of the Audit and Finance Committee. "We also found that SMBR's oversight of the contract with the certification agency was weak."

In 2004, the agency outsourced its MBE, WBE, and disadvantaged business enterprise certification to San Antonio's South Central Texas Regional Certification Agency for $50,000 a year. It's there the auditor's office found problems. SCTRCA was dropped as the city's contractor in January.

Most shockingly, the information in the city's own database was wildly out of sync with its contractor. "As of October 2006, the SCTRCA database showed 761 firms certified as MBE, WBE, or DBE for the City of Austin, and the City vendor database showed 1,401 firms as being certified," reads the report. "SMBR's monitoring of the contract with SCTRCA does not provide sufficient assurance that the desired goals of the certification activity are achieved."

SMBR disagreed with the auditor's assessment of the problem's severity, noting that the city converted to a new reporting system soon after the data was compiled and that many of the problems the report cites would be improved under the city's new system. Still, the report outlined 13 recommendations for SMBR to follow, including that it perform site visits on a small, representative sample of MBE and WBE sites to ensure their continued eligibility and develop a system to track program violations.

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