The board of the Metropolitan Sewer District on Monday suspended its relationship with two local businesses, after an internal audit found that it’s likely the two private companies abused the district’s program to hire minority-owned businesses for construction work.
MSD has a Supplier Diversity Program, which requires that a certain percentage of the contracts on major construction projects go to certified minority-owned businesses.
Advance Ready Mix Concrete isn’t a minority-owned business. But Bancroft Group LLC is. MSD’s audit found evidence that Bancroft has no experience with construction or concrete, and the company acted as a shell for Advance. Bancroft was awarded contracts, and then supposedly passed the work on to Advance Ready Mix.
Allegations about the improper relationship between Bancroft and Advance Ready Mix were raised earlier this year by Insider Louisville. The story contends Bancroft served as a pass-through for Advance contracts multiple times since 2010 for subcontracts totaling more than $6 million. In March, the story said MSD approved another $4 million subcontract for Bancroft.
In a board meeting Monday, board members moved to suspend both Bancroft and Advance Ready Mix from receiving MSD contracts for three years. MSD will also temporarily suspend its Supplier Diversity Program for construction contracts until it identifies necessary changes that need to be made. The actions were based on the audit’s preliminary findings; the full audit is expected to be completed in September.
Calls to Eric Winston of Bancroft and Camilla Shroeder of Advance Ready Mix Concrete weren’t returned Monday afternoon. MSD spokesman Steve Tedder said the board’s temporary suspension of the two companies is appealable, but there’s no indication whether either company will appeal the decision.
Tedder said Advance has enough competition in the area to fulfill MSD’s construction needs while the suspension is in effect.