News

White Out

A local contractor gets called a fake as the dispute over minority set-aside contracts heats up. The city and some local contractors say he is; the state says he's not.

By Melinda Roth 

Local black contractors and the state transportation department have been on a collision course, culminating in Monday's blockade of Interstate 70 by protesters. Traffic was halted for about an hour and 125 people were taken to jail, but the only real casualty of the controversy may be a businessman named Sam Hutchinson.

The African-American founder and majority owner of Interface Materials Inc. won a bid to do work on the I-70 project. But as minority contractors turned up the heat on the state transportation department in recent weeks, Hutchinson saw his business trashed as a "minority front" — in other words, a white-controlled company set up to exploit set-aside programs.

In making the accusation, widely reported by local media outlets, Missouri Minority Contractors Association (MO-KAN) attorney Eric Vickers relied on a decision by the city of St. Louis that bars Interface Materials, which makes ready-mix concrete, from the city's minority set-aside programs.

But the city's action is being challenged in court; the Missouri Department of Transportation (MoDOT) rejects the city's finding; and Hutchinson finds himself in the untenable position of having to defend his blackness to a group that he concedes is fighting for "a just cause."

"I am not a front. I am not a fraud," Hutchinson tells The Riverfront Times.

"MO-KAN does not need to make allegations against my company to make its point with the state of Missouri that minority participation on state highway contracts should be increased and that more minorities should be employed on the job."

The question of whether Brentwood-based Interface Materials is truly a black-owned enterprise matters because Interface is the only minority firm participating in the latest I-70 expansion project, a $130 million reconstruction of a six-mile stretch of the roadway. If the company is a sham, as the city and MO-KAN allege, that means all the public money for the latest I-70 expansion is flowing only to white-owned firms.

That would make the state transportation department's arguably lackluster performance on minority contracting look even worse.

MO-KAN, which garnered support from the St. Louis Metropolitan Clergy Coalition, the local branch of the NAACP and other minority activists, including the Rev. Al Sharpton of New York City, contends that the state highway department should be farming out at least 25 percent of its project work to minority contractors and subcontractors, especially on projects that run through minority neighborhoods.

Under state and local laws, construction projects funded by the city of St. Louis require at least 25 percent minority participation. The protesters targeted I-70 on Monday morning because even though it's funded in large part by federal funding, which only requires 10 percent minority participation, it runs through areas that are predominantly African-American.

"This is about economic equality," says Vickers, a University City attorney and longtime activist. "When you look at the early history of the civil-rights movement, including the Montgomery bus boycott, it centered on economic issues. Until economic disparities are cleared, we're never going to have any social equality.

"You have a project this size going through North St. Louis," Vickers adds, "and you have no African-American participation of any substance in it."

MoDOT spokeswoman Linda Wilson says her agency has met the 10 percent federal guidelines for minority participation and then some, pointing out that on the I-70 project, 14 percent of the contract work has been awarded to minority companies.

"We follow the federal regulations for disadvantaged business enterprises, which includes female- or minority-owned companies," Wilson says, adding that the personal net worth of the minority or female owner cannot exceed $750,000. "The idea is to help small companies boost themselves up.

"The federal goal Missouri has is 10 percent, and basically what we do is, when we announce a project, the contractors bid on it and we set a goal for that contract," Wilson says. "The whole state has to average out to 10 percent, but in places like St. Louis, we have a lot more disadvantaged business enterprises available to us, so in projects near St. Louis, we usually set the goal at about 14 percent."

For the I-70 project, choosing Interface Materials, owned by an African-American, allowed the state agency to meet its goal. Take Interface Materials out of the picture, and the color of the project is white as bleached cotton.

A different process

Sam Hutchinson, an engineer by trade, already owned Wood River, Ill.-based Interface Construction Corp. when he decided to launch Interface Materials in 1996. Hutchinson owns 51 percent of the company's stock; James Lohse, a white man who has been in the ready-mix-concrete business for about 20 years, owns 49 percent.

That same year, Hutchinson formed a potentially lucrative partnership with white-owned contractor McCarthy Bros. to bid on several large public contracts, including a $100 million-plus city contract for work on the East Terminal at Lambert St. Louis International Airport. McCarthy owns 85 percent of the joint venture, Interface Construction 15 percent.

The joint venture, common among contractors on public projects, is designed to help McCarthy win contracts with minority-participation requirements. And it gave a smaller firm, like Interface Construction, a chance to participate in larger, more profitable projects. But it would also raise questions when the city began its compliance review of minority contractors.

According to documents obtained by the RFT, city compliance investigator Todd Taylor saw at least two troubling issues in the financial records Interface Materials submitted to the city.

Those business records showed that Lohse, the white partner, received a salary in 1997 of $260,000, whereas Hutchinson, the black partner, did not. "He (Lohse) signs contracts, hires and fires employees, enters loan agreements, and estimates and bids projects for the business," Taylor summarized in a letter to the St. Louis Development Corp.'s Certification Review Board.

Taylor also found that Interface Materials owed money to two white-owned companies, McCarthy Bros. and Vee-Jay Cement Contracting Co.

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