How much state money has gone to minority-owned businesses? The Journal investigates.

PROVIDENCE – The statement was damning: "RI Excludes Minority-Owned Businesses From State Contracting."

Had this sweeping indictment by the Rhode Island Black Business Association been 100% true, Rhode Island would be in a world of trouble, legally and politically, for blatantly violating the minority set-aside requirements in state and federal law.

Turns out it's not true, at least not as a blanket statement. But that does not mean every dollar paid to a certified minority- or woman-owned business went where the champions of contract set-aside programs might have hoped.

The Providence Journal made a weeks-long inquiry into how much state money was flowing to minority- and women-owned businesses through contracts and who it was going to. Here's what we found.

How much state money went to minority and women businesses enterprises?

• The administration of Gov. Dan McKee paid $43.9 million in state contracts to 128 certified "minority business enterprises" (MBEs) and "women business enterprises" (WBEs) in fiscal year 2023, in amounts ranging from the $650 paid to All Time (Janitorial) Services all the way up to the $5.4 million paid to Eastwind Corporation, a Holbrook, Massachusetts, construction company.

• The state exceeded the 10% goal spelled out in state law by paying 12.3% of an overall $358 million in state contract money to firms owned by Black, Hispanic, American Indian, Asian American, Portuguese individuals or those owned by women, including white women. (The total does not include the federally funded contract dollars doled out by the Department of Transportation. More on that later.)

• More than 40% of state contract dollars – $18.9 million – went to companies owned by white women, according to a report by the state's Minority Business Enterprise Compliance Office.

• At least 43 of the 128 companies had out-of-state addresses, with some as far away as Cedar Park, Texas.

Companies seeking state contract money set aside for minorities no longer vetted in public

For reasons no one currently in government seems able to reconstruct, the committee that once held public meetings to approve – or aggressively challenge – the eligibility of companies seeking the millions of state contract dollars intended for minorities was reduced to an appeals panel. It has not posted minutes since December 2019.

That means the applications that have come in since then have not been approved or rejected in public by the state's "MBE Certification Review Committee" since Gina Raimondo – the current U.S. commerce secretary – was Rhode Island's governor.

And the McKee administration refuses to make the applications public.

Asked last week why the decision-making was removed from public view, Michael DiBiase, the Department of Administration director when the certification-review panel was neutralized, told The Journal:

"You are asking about something that took place several years ago, but my best recollection is that we decided to make MBE certification a regulatory function of the MBE office."

Why? "At the time, we were trying to streamline the process of gaining certification, which was (and likely still is) subject to a fairly onerous application process."

"We were more concerned about removing obstacles to certification and less concerned with the MBE office improperly approving MBEs," said DiBiase, the current president and CEO of the Rhode Island Public Expenditure Council.

Companies getting set-aside money include excavation company led by 83-year-old woman

Some Rhode Island contractors on the state's current MBE/WBE list are better known than others. Some have been around for decades. Some are only a year or two old. Only one has been threatened with sanctions in recent history.

The company owners in good graces with the state include: a former legislator, a campaign operative with a two-year-old "carpentry and masonry" company and an 83-year-old woman who runs an "excavation, demolition, construction [and] environmental clean-up" company from the same Cranston address where her son registered a wrecking company.

Marie Ann Parrillo is the 83-year-old president of Sitecon Corp. at 1430 Cranston St. in Cranston, which banked at least $621,820 in state contract dollars in FY23 as a classified "WBE," according to state records.

She could not be reached for comment, but the company's registered agent, lawyer Girard Visconti, said Marie Parrillo is still running the company. Her son, Ronald Parrillo, is listed as the company's vice president and secretary. As recently as this year, he was listed on corporate filings as the president of his own company – Rhode Island Building Wrecking Co. – at the same address, though Visconti says the company is dormant.

The $621,820 that Sitecon banked last year was as a subcontractor to Tower Construction, KWV Construction, Maron Construction and Ahlborg Construction on renovations to the state medical examiner's office and various school renovation projects, including at the Community College of Rhode Island's Knight Campus.

Former Rep. Jared Nunes said his company – R.T. Nunes & Sons – was an MBE doing state contract work long before he purchased it from his father. Its portfolio includes excavation, road building, water service, sewers, storm drainage, underground utilities, landscape construction and asphalt paving.

According to the Department of Administration, Nunes' company was also an MBE subcontractor to Ahlborg Construction on upgrades to the CCRI Knight Campus, and as the "prime" on a Beavertail waterline replacement.

Gabrielle "Abby" Godino – a campaign operative who did a year-and-a-half stint as a legislative and policy advisor in the office of the state's post-secondary commissioner – has had a career change since COVID.

Two years ago, she created the Angel Building Company to do "masonry, concrete water control, including waterproofing, damp-proofing, and what I would call high-performance finishes."

Her role – estimating the costs, bidding, running payroll – "I'm the whole office and executive branch."

Godino and her four-person team were paid $19,077 last year for repainting a building exterior for the Rhode Island National Guard as a subcontractor for Sole Source Construction.

Equality Construction Works, at first glance, is a head scratcher.

Corporate filings list Kiara Capaldi, a chiropractor, as the president of Equality Construction Works.

The company, which describes itself as a site and utility contractor, made $3.4 million last year as a WBE-certified subcontractor on a number of projects, including Narragansett Bay Commission upgrades to the Bucklin Point wastewater treatment plant.

The daughter of the late Vincent Capaldi, co-owner of V.F. Capaldi Construction, Kiara Capaldi told The Journal she is easing out of Capaldi Chiropractic and taking on more responsibility for the family-run construction business that her 60-something mother has run for the last two decades.

"I do both," Capaldi, 40, said. "I do chiropractic on the side ... but I'm kind of phasing out of chiropractic completely."

"My main business is construction," she said. "I've been in the business for 20 years with my mother, who started the business ... My mom is the vice president and we run the business together."

"I run the office with my mom internally, and we have a crew of guys outside that do the actual hard labor ... sewer, water site work."

Asked if her company most often gets work as a "prime" contractor or a "sub," she said: "We do both, but generally we are a sub because, as a minority, you have bigger contracts and they need to meet their protocol. So as a minority, that's what we do."

At least 25 minority-owned companies awarded RIDOT contracts

Stepping back, state law says:

"Minority business enterprises shall be included in all procurements and construction projects ... and shall be awarded a minimum of 10% of the dollar value of the entire procurement or project." (The goal went up this year to 15%.)

There are potential sanctions and financial penalties in the law for non-compliance, including: "Suspension of payments; termination of the contract; recovery by the state of ten percent (10%) of the contract award price as liquidated damages and the denial of right to participate in future projects for up to three years."

Only one company, Insituform Technologies, has been threatened with sanctions in recent history for failing to "put forth a good faith effort to comply with [the state's] Minority Business Enterprise goals" on a state-funded Warwick sewer project. The company challenged the finding, but agreed to pay a $10,000 settlement.

It is worth noting that the 12.3% that McKee administration trumpets for FY23 does not include the millions of federal contract dollars paid to minority-owned firms, directly or indirectly, by Rhode Island's Department of Transportation.

The department reports $37 million in payments in FY23, with some overlapping, to minority-owned firms working as subcontractors to some of the state's biggest road and bridge building and repaving companies, including the Cardi Corporation, J.H. Lynch, D'Ambra Construction and others.

It is not clear because of the way the information was provided to The Journal whether DOT's own 6.65% minority-contracting goal was achieved, though it appears at least 25 companies owned by certified minorities got contracts ranging from $8,680 to $3.5 million.

Who qualifies as a minority has been controversial

Debates have erupted from time to time over who qualifies as a minority and/or a "socially and economically disadvantaged individual" in Rhode Island.

Those classified as Black or African American make up 9.1% of Rhode Island's population; American Indians, 1.2%; Asians, 3.7%; Native Hawaiian and other Pacific Islanders, 0.2%; Hispanic or Latino, 17.6%.

Some categories overlap, but 6.47% of Rhode Islanders have reported Portuguese ancestry, according to the U.S. Census Bureau's 2022 American Community Survey.

Women, by contrast, make up 50.9% of the population while still being seen as members of an economically disadvantaged group. As such, they were awarded 43% of the contracts given MBEs and WBEs in FY23.

With some overlap, firms owned by Asian men were paid $692,865; Black men, $7,448,937; Hispanic men, $3,175,952; Native American men, $23,295; Portuguese men, $8,924,534; Asian women, $1,840,178; Black women, $1,753,000; Hispanic women, $1,096,436; and white women, $18,947,310.

Asked about the large proportion of dollars and contracts going to companies owned by women, Tomas Avila, the director of the Rhode Island Office of Equity, Diversity & Inclusion said: "Women, while they outnumber men in the population, are nevertheless underrepresented as business owners, which is why women-owned businesses are called out in both federal and RI state procurement goals."

He said the 2021 diversity study, commissioned by Raimondo, confirmed this.

There have been cases of companies duping the system to get contracts

Not all of the companies seeking the millions of dollars set aside for minorities have been legit.

In one well-publicized 2007 case, the daughters in the Rosciti construction family applied to become certified "minority'' contractors eligible for millions of state and federal contract dollars earmarked for "socially and economically disadvantaged individuals."

Facing tough questions at a public hearing called by the state's Minority Business Enterprise Certification Review Committee about their "reliance" on a network of non-minority companies owned by their families, cousins Christina and Jennifer Rosciti withdrew their application.

The story did not end there.

In 2016, Rosciti Construction, four company executives, including Christina Rosciti, and an associated company agreed to pay the U.S. Treasury $1 million to settle claims that they falsely took federal money that was intended for legitimate businesses owned by women and minorities.

That same year, the state's MBE Certification Review Committee stopped voting on applications in public.

Attorney general wades into the discussion

So what prompted the Rhode Island Black Business Association and the Boston-based Lawyers for Civil Rights in September to accuse the state of the "systematic exclusion of minority-owned businesses" from contracts?

Their letter was hinged, in large part, on the findings of a 2021 "disparity study" that compared the number of minority-owned businesses in Rhode Island to the number getting state contracts, or even a slice of the state's contract dollars, from 2014-2017.

Among the key findings: there are many more minority-owned companies than minority contractors getting state work.

The business association requested – and got – a meeting with Attorney General Peter Neronha to discuss the state's alleged violations of federal anti-discriminations law.

The upshot? Neronha spokesman Brian Hodge told The Journal last week that the attorney general sees the importance in holding Rhode Island and its business community "to their promises to create opportunities for women- and minority-owned businesses."

"We are looking at additional avenues in which we can engage on this issue," Hodge said.

This article originally appeared on The Providence Journal: RI sets aside contracts for minority owned businesses. Who is getting them?