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"The City of Philadelphia announced earlier this month that it has entered into a no-fault settlement agreement with Aramark Correctional Services and Strother Enterprises Inc. to resolve allegations that the companies circumvented the city&rsquo;s minority-business requirements and anti-discrimination policies by submitting inaccurate invoices relating to food services contracts with Philadelphia&rsquo;s prison system.<br /><br />According to the settlement, the two companies will pay the city $400,000 and create new policies to ensure their future compliance with the city&rsquo;s anti-discrimination policies.<br /><br />&ldquo;We take our anti-discrimination policies very seriously because it is our mission to ensure fairness and equality for all who do business with the city,&rdquo; Philadelphia&rsquo;s Inspector General, Amy Kurland, said in a statement. &ldquo;Everyone deserves a fair shot to compete for contracts in Philadelphia, and ACS&rsquo;s scheme denied opportunities to legitimate M/W/DBEs. We will continue to pursue companies that circumvent the city&rsquo;s anti-discrimination policies.&rdquo;<br /><br />The abbreviation M/W/DBEs is short for minority, women and disabled-owned business entities.<br /><br />Their prison food services contract required Aramark to meet a M/W/DBE participation range of 20 to 25 percent, according to the city.<br /><br />The range was established by the city&rsquo;s Office of Economic Opportunity pursuant to a mayoral executive order.<br /><br />If Aramark had made a good faith effort to fulfill the requirement, but could not do so, the city would have granted a reduction in the participation range, according to a city news release.<br /><br />But an Office of Inspector General investigation revealed that Aramark did not attempt to demonstrate such a good faith effort, nor did the food services contractor apply for a participation reduction.<br /><br />&ldquo;Instead, the OIG found, ACS used a circular billing arrangement to create the appearance of compliance,&rdquo; the city&rsquo;s news release states.<br /><br />The City Controller&rsquo;s Office first discovered the circular billing arrangement between ACS and Strother, which prompted the investigation by the OIG.<br /><br />The companies&rsquo; billing arrangement didn&rsquo;t increase the amount of money the city paid to ACS because Strother&rsquo;s purportedly larger participation didn&rsquo;t affect how much ACS charged the prison system for food.<br /><br />Instead of paying Strother at least 20 percent of the contract proceeds, the city announced, ACS passed on only 4 percent of the total contract value to Strother, overstating Strother&rsquo;s revenue by more than $2 million.<br /><br />Both of the companies denied wrongdoing as part of the settlement agreement.<br /><br />Aramark contends that the method by which it calculated its payments to Strother was consistent with its legal and contractual obligations.<br /><br />As part of the agreement with the city, Aramark has agreed to change its minority participation-reporting procedures to more clearly explain its financial relationship with Strother to city officials.<br /><br />The company has also created a comprehensive compliance program relating to the identification, retention and payment of M/W/DBEs.<br /><br />Angela Dowd-Burton, executive director of the city&rsquo;s Office of Economic Opportunity, praised in a prepared statement the findings of the Inspector General&rsquo;s Office investigation.<br /><br />&ldquo;M/W/DBEs should represent arms-length relations with prime contractors on city contracts,&rdquo; she said. &ldquo;OEO will work with the Philadelphia Prison System and ACS to insure good faith efforts are used to meet their M/W/DBE goals.&rdquo;"^^<http://www.w3.org/2001/XMLSchema#string>
<http://pennrecord.com/stories/510552731-city-of-phila-and-food-services-co-s-enter-into-400k-settlement-agreement>