Feds investigate MARTA minority contracting complaint

A contracting dispute involving MARTA’s paratransit service for the elderly and disabled has prompted a federal investigation. (JOEY IVANSCO/ AJC staff)

A contracting dispute involving MARTA’s paratransit service for the elderly and disabled has prompted a federal investigation. (JOEY IVANSCO/ AJC staff)

The Federal Transit Administration is investigating whether MARTA has violated rules designed to ensure that businesses owned by minorities and women get a share of government contracts.

The investigation stems from a complaint that MARTA allowed the company that operates its paratransit service for elderly and disabled people to wiggle out of a subcontract with a minority-owned business. The FTA is investigating that claim and has opened a wider review of MARTA’s use of minority- and women-owned contractors, or “disadvantaged business enterprises” as they are called by the federal government.

VIDEO: Previous MARTA coverage

Taxpayers have agreed to give MARTA at least $2.5 billion to expand transit over 40 years, but audits obtained by Channel 2 Action News and our partners at the Atlanta Journal-Constitution raise questions about the transit authority’s competence to manage such projects.

MARTA’s contract with its paratransit contractor, MV Transportation, includes a goal that disadvantaged businesses receive 20 percent of the work. Under a subcontract, Gresham Transportation Services of Atlanta was supposed to get most of that work, but that never happened.

MV Transportation said Gresham failed to maintain the necessary insurance to do the work. Gresham said that’s because MV Transportation failed to provide the work – and the revenue – it needed to pay for the insurance.

MV Transportation has found another minority business to handle some of the service, MARTA said.

“MARTA is in full compliance with current Federal Transit Administration regulations and welcomes the agency’s upcoming review of our Disadvantaged Business Enterprise Program,” the agency said in a statement to The Atlanta Journal-Constitution.

But U.S. Rep. Hank Johnson, D-Lithonia, said federal funding for MARTA could be in jeopardy if the FTA finds the agency acted improperly.

"We're expanding our transit system," Johnson told Channel 2 Action News Tuesday. "It's very important for Georgia's economic future, and it should not be jeopardized by failure to comply with federal law."

The federal investigation is the latest fallout from MARTA’s decision to outsource its paratransit service to MV Transportation in 2016.

Last year, an arbitrator ruled MARTA had violated the terms of its labor contract when it outsourced the work, but that ruling was overturned by a Fulton County judge. Paratransit drivers later staged a one-day strike to protest what they say are unfair labor practices and safety concerns.

In May, Gresham filed a civil rights complaint with the FTA, saying MARTA turned a blind eye when MV Transportation refused to follow through on its subcontract with the company.

Last year, an arbitrator ruled in Gresham’s favor, awarding the company nearly $560,000 to cover lost profits and costs it had incurred in anticipation of providing paratransit service. A federal court later upheld the ruling.

In the FTA complaint, owner Stefan Gresham says MARTA should have forced MV Transportation to let his company do the work. By failing to do so, the complaint says, MARTA violated federal rules and its contract with MV Transportation.

In its response to the complaint, MARTA says it met with both companies to try to mediate a solution, though unsuccessfully. And it says it warned MV Transportation that it must comply with disadvantaged business requirements – and the company did so by finding another minority contractor to do the work.

MARTA said Gresham won the arbitration case against MV Transportation and was made whole by the settlement. The agency noted the federal court found no law supporting Gresham’s effort to seek additional work through its contract with MV Transportation.

Channel 2 Action News reporter Dave Huddleston contributed to this report.