City of Philadelphia Debars JHK Inc. After OIG Investigation

First company ever to be involuntarily debarred from contracting with the City.

 

 

Philadelphia, June 24, 2013–  The City of Philadelphia issued a notice of debarment on June 21, 2013 to Jamie Kovacs and her company, JHK. Inc., for falsely representing its role as a women-owned subcontractor in an agreement with Corizon Health Services, Inc., a prime health care contractor with the City’s Prison System.  This is the first involuntary debarment in the City’s history.

 

“Our Administration will continue to seek qualified minority, women and disable-owned businesses to play a significant role in all of its contracts but we will not stand for companies or individuals trying to cheat the system,” said Mayor Michael A. Nutter.  “I am incredibly proud of the work that Amy Kurland and the entire Office of the Inspector General have done to end sham contracting in the City of Philadelphia. Their work is a prime example of the City’s commitment to fair business practices and anti-discrimination policies.”

 

After a lengthy investigation, the Office of the Inspector General found that prime contractor Prison Health Services, now known as Corizon Health, Inc., subcontracted with JHK Inc. to make it appear that JHK — a City-certified, woman-owned business — had provided pharmaceutical supplies to the Philadelphia Prison System when JHK was paid only for the use of its name and its woman-owned business certification.

 

“This debarment sends a strong and definitive message: The City of Philadelphia will not tolerate businesses that circumvent the City’s antidiscrimination policies,” said Inspector General Amy L. Kurland. “We will continue working with Procurement, Finance and the Law Department to ensure that legitimate M/W/DSBEs have a fair shot at the contracting opportunities they deserve.”

 

Catherine Paster, First Deputy Director of Finance stated in the debarment notice that JHK, Inc. had provided no credible evidence to dispute the facts established by the OIG.  Paster noted that in addition to appearing as a sham woman-owned subcontractor, JHK admitted to the City’s Debarment Panel that the company had done nothing to provide services to PHS other than placing its name on paperwork submitted to the City.

 

To comply with the City’s anti-discrimination policies, M/W/DSBEs must perform a commercially acceptable function under any subcontracting agreement. OEO defines a commercially acceptable function as performing, managing or supervising meaningful work or supply efforts that are distinct from other parts of the contract and consistent with the anticipated cost of business.

 

In July 2012, Corizon entered into a $1.85 million settlement with the City and agreed to strengthen its corporate compliance program by reviewing all of its subcontracting agreements to ensure compliance with City anti-discrimination policies.

 

Corizon also appointed an M/W/DSBE Compliance Team Member to ensure that M/W/DSBE requirements are fully understood by Corizon personnel. Corizon has also developed a corporate-level vendor diversity program.

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