Audit Report

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Minority/Women and/or Disadvantaged Business Program

Objectives: The Denver Auditor’s Office requested BerryDunn audit the City’s DSBO M/WBE/DBE program for:

  1. Sufficiency of policies and systems to achieve program goals and objectives
  2. Amount of City projects achieving project-specific goals
  3. Sufficiency of policies and systems to certify, recertify, and verify certified businesses
  4. Validity of system for setting project goals and ratios
  5. Ability of the City’s certified businesses to meet individual project and cumulative citywide project goals and ratios
  6. Validity of program procedures for changing project goals and ratios

The Denver Auditor’s Office engaged BerryDunn to conduct an audit of Denver Economic Development and Opportunity’s (DEDO’s) Division of Small Business Opportunity (DSBO) Minority/Women and/or Disadvantaged Business (M/WBE/DBE) program.

DEDO advances economic prosperity and mobility for the City’s businesses, neighborhoods, and residents by working to broaden the tax base; stimulate the growth of companies across the spectrum, from start-ups to the City’s largest employers; increase the availability and affordability of housing; and develop a skilled workforce for the region’s employers.1

DSBO was created to develop and enforce programs for enhancing minority-owned, woman- owned, and Small Business Enterprise utilization in City construction, professional design, and Denver International Airport (the airport) concession contracting. DSBO is also responsible for monitoring and promoting economic development of such minority, women, and small businesses.2 DSBO became part of DEDO in 2004 in recognition of the fact that helping certified firms conduct business with the City must be part of the City’s economic development strategy.

1.1 Update procedures to be in alignment with the ordinance and the rules and regulations – BerryDunn recommends DSBO work to ensure that practices within the division are in alignment with the adopted ordinance and its accompanying rules and regulations. Furthermore, BerryDunn recommends DSBO work with elected officials to update the adopted ordinance as needed.

1.2 Further develop written policies to govern the use of compliance plans – BerryDunn recommends DSBO develop and adopt written policies regarding the requirement of compliance plans for projects that do not meet the conditions, in order to uniformly apply a requirement for compliance plans.

1.3 Develop policies and procedures to enable practical usage of the granted sanctioning authorities – BerryDunn recommends DSBO develop written policies and procedures to provide for uniform utilization of the granted sanctioning authority.

1.4 Develop policies and procedures to enforce letters of intent – BerryDunn recommends DSBO create consistent documented policies and procedures aligned with the ordinance to prevent substitution or termination of a certified business without adherence to the modified good faith effort provisions.

1.5 Develop policies and procedures to establish allowable time frames for the certification process – BerryDunn recommends DSBO develop and implement policies and procedures that help ensure process uniformity by documenting the permissible time frames for the certification and recertification process.

1.6 Develop and implement procedures to track expiration of certifications – BerryDunn recommends DSBO develop and implement procedures to track the expiration of DBE certifications throughout the term of a contract. Additionally, BerryDunn recommends that DSBO work to ensure that certification and contract compliance staff are trained in the functionality of the B2G system that performs this task.

2.1 Increase controls around payment input – BerryDunn recommends DSBO utilize enforcement mechanisms, such as holding pay, requiring payment support, or imposing a sanction of prime contractor and subcontractors if payment information is not accurately and consistently reported.

2.2 Work to ensure that tier 2 and 3 subcontractors are captured in B2G – BerryDunn recommends that DSBO require subcontractors to have the same responsibility as prime contractors to report payments to subcontractors, to help ensure that M/WBE/DBE goal percentages are properly calculated. Any additional controls implemented should be required of both prime contractors and subcontractors.

2.3 Automate the Workday to B2G data-transfer activities – BerryDunn recommends that DSBO continue to research alternate and automated solutions to improve tracking Workday payment data in B2G.

2.4 Increase the controls regarding payment verification of Workday data – BerryDunn recommends a regular, such as quarterly, comparison of data in Workday to data in B2G as a monitoring activity.

2.5 Increase the controls in B2G for approved payments– BerryDunn recommends working with B2G to add another layer of controls over changes to previously confirmed payment information.

2.6 Work to ensure that good faith efforts are enforced and that DSBOs project goal calculation is understood as the official tabulation – BerryDunn recommends that DSBO develop policies and procedures to uniformly enforce good faith effort documentation. Additionally, BerryDunn recommends DSBO work with elected officials to change the ordinance to require approval prior to prime contractors removing or adding certified businesses after the contract has initiated. Lastly, BerryDunn recommends that DSBO work with City departments to help all parties understand that DSBO’s calculation of the project goal is the official record.

2.7 Work to ensure that DSBO staff who use B2G are provided training resources – BerryDunn recommends that DSBO staff who use B2G be provided system training, especially the reporting functionalities within B2G. DSBO should consider sending members overseeing the use of B2G to the in-person training, if feasible.

3.1 Improve monitoring of goal performance and increase outreach – BerryDunn recommends DSBO evaluate the goal-monitoring process and improve its controls related to tracking goal performance and outreach to contractors that are active and appear to not be meeting their goals.

3.2 Documentation of monitoring activity controls – BerryDunn recommends that, after DSBO identifies the most effective use of letters of intent and good faith efforts, DSBO document the procedures and train staff.

3.3 Evaluate staffing needs and workload of monitoring activities – BerryDunn recommends DSBO evaluate and reduce the number of contracts assigned to each compliance staff member to allow effective monitoring.

3.4 Improve monitoring activity controls – BerryDunn recommends DSBO work to ensure letters of intent are executed as written and submitted. DSBO should monitor contracts to assess whether the proposed certified firms are utilized. When DSBO identifies a subcontractor that is receiving payments and was not previously included in the contract, BerryDunn recommends DSBO work with the contractor to obtain a documented good faith effort, so the certified firm’s work can be counted toward the goal percentage.

3.5 Improve documentation of monitoring activities – BerryDunn recommends DSBO document monitoring activities performed and develop a consistent document management mechanism that allows verification and confirmation of completed tasks.

4.1 Establish and enforce a deadline for processing certification applications – BerryDunn recommends that DSBO continue to use an automated and proactive approach when reaching out to businesses that need to recertify. BerryDunn also recommends training of staff to enforce a faster and more-uniform decision timeline for responding to applications.

4.2 Remove the option to provide certification extensions – BerryDunn recommends that DSBO follow the established renewal process for all subcontractors and not grant extensions upon request.

5.1 Improve goal assignment controls – BerryDunn recommends DSBO utilize a consistent goal-setting process and document goal-determination procedures to promote consistency among staff.

5.2 Improve consistency of goal assignment methodologies – BerryDunn recommends DSBO utilize the goal established by the goal analyst or stay within a range established by DSBO in order to prevent inconsistent goal setting.

6.1 Cooperate with other City agencies to improve City purchasing controls – BerryDunn recommends DSBO work with City officials and procurement to implement a method or control that would help prevent qualified projects from being procured without a goal established.

Follow-up report

A follow-up report is forthcoming. 

Audit Team: Katja E.V. Freeman, Vilma Balynte, BerryDunn (Vanessa Cayer, Bill Brown, Zebediah Letourneau, Elliott Simpson)