PHILADELPHIA, PA — The City of Philadelphia has recently announced the debarment of two local firms, General Asphalt Paving (GAP) and Empire Supplies and Services (Empire), from participating in City contract opportunities for three years. The decision follows an administrative hearing that exposed GAP’s use of Empire as a shell company to bypass the City’s anti-discrimination rules. The hearing was the result of a joint investigation by the Office of the Inspector General and the Office of the Controller, which recommended enforcement action.
The administrative panel, composed of representatives from the City’s Procurement, Commerce, and Managing Director’s offices, focused on two City contracts from 2018-2019 involving Empire, a minority-owned material supply subcontractor. The investigation revealed that despite GAP’s claims to the City, Empire performed no “commercially useful function” for either contract. Instead, all substantive work was transferred to GAP. Interestingly, Empire’s primary owner was a full-time GAP employee, and Empire repeatedly used GAP’s equipment, administrative support, and labor force – at no cost – to perform all the work.
To create an illusion of legitimate business transactions, Empire would invoice GAP for services, and GAP would pay Empire accordingly. However, the investigative findings disclosed that these payments were regularly returned to GAP, allegedly to repay an undocumented no-interest loan. Evidence showed that Empire channeled more than $4 million back to GAP in this manner, enabling GAP to gain substantial profit from its counterfeit minority subsidiary.
Inspector General Alexander DeSantis commented on the issue, “The City’s anti-discrimination in contracting rules are intended to support economic growth for those who have been historically disadvantaged. These firms manipulated this program into an instrument of further discrimination.” He added, “Rather than make a real and honest investment in our underserved community, GAP and its ownership enriched themselves.”
Following the hearing, both GAP and Empire will be added to the City’s official debarment list and will be ineligible to bid or participate in any City contract work until 2026.
DeSantis concluded, “This case sends a strong message that these practices will not be tolerated in Philadelphia – we expect all of our business partners to share our staunch commitment to diversity, equity, and inclusion.” This case highlights the need for vigilance against such discriminatory practices in the city.
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