Baltimore City is levying rare sanctions against a major contractor who showed “utter disregard” for small and minority-owned business regulations.
The Board of Estimates, the city’s spending arm, unanimously voted to ban Metra Industries from contracting with the city for the next two years. It also canceled an $8.4 million water infrastructure contract with the Little Falls, New Jersey-based company.
A yearlong investigation led by the city’s Minority and Women’s Business Opportunity Office revealed Metra was failing to make timely payments to Economic International Construction Company Inc., a Black-owned commercial construction company located in West Baltimore.
“I think it sends a message of enforcement and compliance,” said Christopher Lundy, chief of the Minority and Women’s Business Opportunity Office. “We're not going to tolerate prime contractors abusing and mistreating our minority and women's business community.”
The minority and women-owned business office officials described the recommendation to levy sanctions against the business, approved by the Board of Estimates, as some of the most significant penalties in the department’s history. Baltimore City’s minority and women-owned business program which dates back to 1976 has an annual goal of 27% for minority owned companies and 10% for women-owned businesses.
Lundy testified to the board that there was a string of subcontractor payments either late or simply unpaid to the West Baltimore-based business. Metra Industries failed to pay one invoice for two years, Lundy said. As a general contractor, Metra is required to pay any subcontractors within seven days of being paid by the city for work completed.
Lundy described it as a “pattern” of “utter disregard” for the minority and small business contracting requirements.
It was not immediately clear how much money Metra Industries still owes Economic International Construction as the general contractor and city officials disagree but it’s estimated to be between $38,000 and $41,000, leaders said on Wednesday.
Eventually, the subcontractor stopped doing any work due to lack of payment. But city officials claim that Metra Industries misrepresented the situation.
Lundy, who leads the minority and women-owned business office, claims that the general contractor didn’t consider the late payments to a subcontractor as a serious issue until the city threatened its future contract funds. The investigation began in March 2022 but it wasn’t until December 2022 when payments started trickling in.
Metra Industries didn’t dispute that some payments were late but its attorney argued that the city shouldn’t hand down such a severe penalty because sometimes late payments to subcontractors are simply accounting errors.
“Keep in mind that this was during COVID when a lot of us were scrambling to get things right,” explained Venroy July, attorney for Metra Industries. He then went on to argue that the late payments only equaled 7% of the total amount Metra paid to EICCI on the contract and that the company hadn’t acted in “bad faith”.
“We just think that this is an excessive punishment for this particular wrong,” said July.
“I know you’re not trying to minimize $41,000,” retorted Acting City Solicitor Ebony Thompson. “But it is a big deal to our WMBE and MBEs when we're trying to…right some of the many wrongs from years ago, it is a big deal.”
Metra’s attorney attempted to smooth over the situation by touting the company’s contracting record dating back two decades with the Baltimore City Department of Public Works. Over the past eight years, the company has handled $152 million in contracts.
“When Baltimore’s aging water pipes break late at night, it is Metra and its subcontractors (including W/MBEs) that fix them,” July, the corporate attorney, wrote in prepared remarks.
That argument didn’t fly among the five-person board - which includes the city council president, comptroller, mayor and two of the mayor’s appointees. Nor did it satisfy the leader of the city’s minority and women-owned business program.
During the testimony, city leaders admitted that there have long been “whispers” that Metra had a history of missing payments.
“In the past, a lot of minority and women owned businesses have not felt comfortable bringing forth some of these allegations of utilization and a lack of payment,” said Lundy. When EICCI came forward last spring, it allowed his office to actually open an investigation during an ongoing controversy. “This was an active contract, where we were able to look into all the records, identify all of the payment history, have extended conversations with Metro and get information from EICCI.”
City Council President Nick Mosby is hopeful that the decision will encourage those businesses to do work with the city. “It's a new game in town,” he said.
Lundy said that there were more subcontractors with complaints about Metra Industries but the board only dug into claims by the West Baltimore business.
All the other complaints by subcontractors are still under investigation, Lundy said.
