- The Washington Times - Sunday, February 18, 2007

A District-based road paving company is challenging the constitutionality of new rules for the city’s set-aside contracting program, saying the changes limit competition and boost contract prices.

Capitol Paving of D.C. Inc. is asking a federal judge to prevent the District from using a rule that gives a wide edge to companies that have been in the District for at least 20 years.

“There is no rational basis for a provision that grants such an enormous preference to a business that has been certified … for 20 or more years,” Capitol Paving attorneys argued in a lawsuit filed last month in U.S. District Court.

D.C. officials have asked for more time to respond to the lawsuit and expect to submit a filing next month.

Capitol Paving also has filed suit in D.C. Superior Court, claiming an unfair loss of a more than $20 million contract. The citywide contract for alley rehabilitation was awarded to Fort Myer Construction Corp., the District’s largest paving company.

Capitol Paving said its bid came in nearly $600,000 lower than Fort Myer’s offer, but the District awarded the contract to Fort Myer because it was deemed a “longtime resident business.”

The city’s set-aside contracting program is based on a point system. A new rule for the bid review process gives a 10 percent edge to contractors doing business in the District for at least 20 years.

For example, a longtime resident business that submits a $1 million bid on a city contract could be chosen over a less-established competitor’s bid of $901,000 because city officials take the 10 percent discount and view the $1 million bid as $900,000 for the purposes of comparing offers.

If the longtime business wins the contract, the District still would pay $1 million.

Capitol Paving said in its lawsuit that such a system results in the District’s “entering into contracts that are not the lowest bidders for the work.”

The D.C. Council has approved an amendment allowing small businesses that have been in the District for 15 years to qualify for the 10 percent preference.

Council member Kwame R. Brown, at-large Democrat, said the provision is a way to reward companies that have stayed in the District through economic uncertainty.

The District overhauled its set-aside contracting program in the early 1990s when a construction company with white ownership successfully challenged the constitutionality of giving preferences to minority-owned businesses.

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