GDOT audit finds flaws in disadvantaged business certification process

An audit completed amid concerns about airport contracts found flaws in the Georgia Department of Transportation’s process to certify businesses with “disadvantaged” status for government contracts. The internal audit discovered calculation errors in more than two-thirds of the sampling of applications it reviewed.

The findings of the audit raise questions about the disadvantaged business certification process GDOT had been using, but it’s not clear how many of the applicants reviewed went on to win contracts.

The “disadvantaged business enterprise” certifications give firms special consideration, since agencies set goals to award a certain percentage of contracts to disadvantaged firms.

The performance review completed earlier this year found GDOT’s Office of Equal Employment Opportunity did not accurately calculate business owners’ personal net worth in 27 of the 40 applications reviewed for the audit. The errors included omissions of ownership interest in other companies or the fair market value of stocks and bonds, according to the audit. In some cases, more information would be needed to make a determination.

What’s more, GDOT increased its cap on personal net worth from $750,000 to $1.32 million for airport concessions disadvantaged business enterprise certifications, even before the federal government issued its final rule making the change. The federal change has since been finalized.

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The audit also said GDOT’s certification program lacks written policies and procedures, files were missing documentation and the staff should consider having an accounting firm review tax returns, among other issues.

The GDOT review was completed after the Federal Aviation Administration sent memos earlier this year saying four airport concessionaires awarded contracts as disadvantaged businesses in Hartsfield-Jackson International Airport’s restaurant contracting should not have qualified or lacked adequate documentation. Disadvantaged business certification is one factor for contract awards but is not the sole factor.

The four firms have gone through decertification hearings, but final decisions are pending. The city of Atlanta said it “remains committed” to complying with airport concessions disadvantaged business participation goals.

One of the firms, Mack II, is headed by Mack Wilbourn, who has hosted President Barack Obama at his home for a fundraiser, according to a White House press pool report. The FAA said it has cause to believe Mack II is not eligible for disadvantaged status because too many of Wilbourn’s assets were excluded in the calculation. And, the FAA said it believes Wilbourn could not have qualified under the higher $1.32 million cap either.

In the case of another firm, Hojeij Branded Foods, the FAA raised questions about whether firm owner Carol Hojeij’s personal net worth was below the cap, questioning the exclusion of certain assets.

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