PBC Board Announces Agreement with F.H. Paschen, S.N. Nielsen to Lead to Greater, More Meaningful M/WBE Participation, Create Mentoring Program at Westinghouse High School to Increase Pipeline of CPS Youth into Construction Industry

Agreement Strengthens PBC's Existing Protocols to Ensure Strong Compliance on M/WBE Work

Molly Sullivan, Public Building Commission, (312) 744-9277

The Public Building Commission today announced a settlement agreement with F.H. Paschen, S.N.Nielsen & Associates, LLC (Paschen) that is designed to serve as a model for the construction industry and lead to greater minority and women-owned business (M/WBE) participation on Paschen’s PBC public construction contracts. The agreement will also create an innovative mentoring/protege program aimed at increasing M/WBE participation on PBC projects, and have Paschen serve as a corporate partner at Chicago Public Schools’ Westinghouse College Prep High School to teach job skills and provide training and internships to prepare students for jobs in the construction industry.

Paschen agrees to work with the PBC to develop, implement and participate in a mentor/protege program that will build M/WBE capacity in the construction community. In addition, Paschen agrees to serve as a corporate partner with Chicago Public Schools. The company will participate starting in the 2015 – 2016 school year as a Westinghouse High School Industry Partner to provide expertise and input into technical skills and training – including internships – needed for jobs in the construction industry. Paschen also agrees to use good faith efforts to enter into contracts with M/WBE firms for professional services such as accounting, architectural, engineering, legal and financial services, and to hold quarterly outreach meetings to identify and form relationships with certified M/WBE firms.

“This agreement will not only serve as a model for the construction industry leading to greater minority and women-owned business participation on PBC construction contracts, it will also create a first-ever mentoring program to prepare students for well-paying jobs in field of construction,” said Mayor Rahm Emanuel.

“Paschen has been privileged to partner with the PBC to build some of Chicago’s most celebrated projects,” said Company officials. “The company has a long track record of successfully retaining M/WBE subcontractors in connection with those projects, and has often exceeded the PBC’s M/WBE goals.  The company recognizes the importance of M/WBE programs in the construction industry, and shares the PBC’s commitment to enhancing opportunities for M/WBE participation on PBC projects.  Paschen believes that the measures in the agreement with the PBC will help achieve our mutual goals.”

“We are pleased to have reached this agreement with Paschen and are confident that it can serve as a model for building capacity on Paschen’s public and private construction projects,” said PBC Audit Committee Chairman Martin Cabrera. “This is a positive step that will yield good outcomes.”

“This agreement sets the stage for increased participation by minority and women-owned businesses while also providing training and internships for Chicago Public Schools students that will lead to better paying jobs in the construction industry,” said PBC Board Member Dr. Byron T. Brazier: “These are important steps toward providing economic opportunities for the residents of our communities and we are pleased to be involved in this partnership.”

The agreement comes after a PBC Inspector General investigation into the company’s minority and women-owned business (M/WBE) participation on two PBC projects.  Paschen denies any wrongdoing.  The company agrees to pay the PBC $1 million, a portion of which is to be used to further the goals of the PBC’s M/WBE Program.

The PBC is committed to the rigorous enforcement of compliance with the PBC’s M/WBE program and ensuring commitments under the program are met. The PBC has taken significant steps to ensure that all contractors and subcontractors comply with PBC contract requirements while providing transparency in the contracting processes, strong stewardship of public resources and participation in the M/WBE program.

Since 2012 the PBC has put in place enhanced measures to ensure the integrity and strength of its M/WBE program. These include:

  • Intergovernmental Agreement with the City of Chicago Inspector General to provide oversight on compliance with M/WBE program, including the utilization of the Office of Inspector General Complaint Hotline to report suspicion of corruption, fraud, waste or dishonest practices.
  • Continued collaboration with sister and assist agencies, including active participation in the City of Chicago’s Government Procurement & Compliance forum as a means to develop best practices and common processes among sister agencies.
  • Providing details in writing and verbally to contractors via the contractors’ “welcome packets” that articulate the subcontractors’ rights and responsibilities. PBC also has instituted pre- award meetings inviting M/WBE subcontractors to meet with the GC.
  • Greater communication with both general contractors and subcontractors regarding improving processes and promoting greater understanding of the rules related to M/WBE compliance.  These efforts include required M/WBE participation in pre-construction meetings to promote greater understanding of subcontractor roles, payments and required duties.
  • Updating the PBC Standard Terms and Conditions in relation to M/WBE participation on all contracts.  This included limiting acceptable M/WBE certifications to the City of Chicago and the County of Cook and implementing more stringent requirements for supplier credit.  This included limiting supplier credit to 60% of the contract value and eliminating any credit for brokers.
  • Enhanced Monitoring and Compliance protocols implemented including:
    • New compliance brochure for distribution in the contracting community
    • Issuance of a Subcontractor’s Rights and Responsibilities Letter to all contractors and subcontractors at the start of a project highlighting the features of the PBC contract with the general contractor that serve to protect minority and women owned subcontractors by making them aware of their rights and responsibilities under contracts between PBC and general contractors.
    • Increased emphasis on project site visits as a means to ensure contract compliance, which includes visits to supply offices and warehouse, product delivery etc.

About PBC: The Public Building Commission of Chicago manages construction and renovation projects for the City of Chicago and its sister agencies. Mayor Rahm Emanuel serves as the PBC’s chairman. Erin Lavin Cabonargi serves as the Executive Director of the PBC.  Additional information about the PBC and its projects can be found at www.pbcchicago.com.  You can also follow the Public Building Commission of Chicago on TwitterFacebook, Flickr and Pinterest.