The Baltimore County, Md. Inspector General issued a damning report last week detailing brazenly fraudulent activities by a roofing contractor engaged in two major county projects. 

IG Kelly Madigan's findings exposed a pattern of abuse of the County’s Minority Business Enterprise requirements, an initiative launched in 2017 to promote diversity in public contracts.

How Did This Happen?

The contractor, whose name was not publicly disclosed in the report but was later identified by WBAL-TV as SGK Contracting, Inc., of Baltimore, was awarded two roofing contracts valued at nearly $2.7 million. 

One contract was awarded in 2018 for the Public Safety Building in Towson, 15 miles north of Baltimore, and another in 2023 for the Woodlawn Police Precinct, roughly the same distance west of the city. Both contracts required that some of the work be subcontracted to MBE-certified businesses.

The report showed that, in each instance, the contractor allegedly misrepresented its compliance with MBE policies. 

For instance, the contractor claimed that nearly $500,000 of the work for the Towson project would go to an MBE subcontractor. Yet investigators found the subcontractor received only $40,900 of the promised amount. 

Similar violations occurred during the Woodlawn project, where the contractor reportedly funneled the majority of the $70,320 designated for an MBE subcontractor to a non-certified company while paying the MBE a “management fee” of less than $5,000. 

“This report demonstrates a blatant disregard for rules designed to promote equity and fair competition,” Madigan said. “The findings call for immediate action to ensure integrity in public contracting.”

A Repeated Offender

The report highlights the dubious practices previously known about SKG that were seemingly ignored. 

In February 2023, the city of Baltimore’s Inspector General Isabel Cummings referred allegations of inflated MBE payments by the contractor on an unrelated city project to Baltimore County authorities. 

Despite the warning and an investigation launched by Madigan’s office, the SKG was awarded the Woodlawn project in March 2023 anyway, raising questions about the county administration's oversight.

"The individuals in the chain of awarding the contracts were aware that the office was doing an investigation, and we did one, and we found fraud, and we made them aware," Madigan told WBAL.

Madigan’s report criticized the County for awarding the second contract while the contractor was under investigation: “After we found fraud with the first contract, that company had no business getting the second contract,” she stated in the Jan. 8 report, adding that the case should serve as a lesson in tightening administrative oversight.

Baltimore County announced it would withhold approximately $40,000 from the contractor, who faces suspension from future County contracts.

In response to the report, D’Andrea Walker, Baltimore County’s Administrative Officer, released a statement that read, in part, “Please note that there is no active contract with the company, and we are taking necessary steps to address these violations.”

The Minority Business Enterprise that signed off on the fraudulent payments also risks losing its certification from the Maryland Department of Transportation and the Baltimore City Minority and Women’s Business Opportunity Office. 

“That’s a big punishment for them,” Madigan noted. “Without certification, their ability to compete for future contracts will be severely limited.”

It was revealed that SKG never cooperated with the investigations by the inspectors general nor complied with a subpoena from Madigan’s office.

The IG report urges Baltimore County to consider debarment and financial penalties for the contractor and a comprehensive review of MBE compliance processes to prevent future violations.

“This report is a lesson-learned opportunity to rethink business processes and strengthen checks and balances,” Madigan said. "The report certainly shows …[measures] set up to prevent this type of fraud didn't work.”