- By Sean Collins Walsh American-Statesman Staff
In 2015, Heavy Roadway Construction Services, a local Latino-owned company, contacted the Austin school district about bidding on construction projects.
The firm inquired about the work through a program that is designed to boost the number of minority- and women-owned companies working for the district and that is handled by a group of consultants led by D.M. Dukes & Associates, a firm owned by state Rep. Dawnna Dukes, D-Austin.
The experience left David Garza, a co-owner of the construction company, with the impression that the district was more interested in pretending to reach out to minority-owned firms than in actually hiring them.
“As long as they do the effort in letting minorities and other contractors know that they have (a bidding opportunity), they’ve done everything they need to do, and they can check that off and go about their business,” Garza said. “All this is just a gimmick or a front, and that’s why we just stopped trying to go to any of those gatherings or meetings. It was just a waste of our time.”
Dukes’ company and her subcontractors, which include her sister and a candidate for Travis County commissioner, made more than $1 million over four years working for the district and are set to make an additional $500,000 in the next two years. So far, the district has little to show for their work.
“Our team, including the consultants, could have been doing a lot more,” said Austin school Trustee Paul Saldaña, who has pushed for a more aggressive program to promote such so-called historically underutilized businesses, or HUBs. “The criticism that we received from community members — minority- and women-owned contractors — is that we had pretty much as a district developed a reputation about not being serious about HUB participation.”
An October 2015 study commissioned by the school district found that it was a “passive participant” in discrimination against minority- and women-owned businesses. Associations for minority contractors have complained that the district doesn’t live up to its stated goal of diversifying contracts, typically for construction projects related to voter-approved bond spending. Since Dukes began work four years ago, the percentage of minority- and women-owned businesses working for the district has barely budged.
In a 2012 report, just before Dukes’ contract began, the district reported that 24.9 percent of the money for projects funded by the 2004 and 2008 bond elections went to minority- and women-owned firms. In May 2016, the district reported that 22.6 percent of the money from the 2013 bond package went to minority- and women-owned businesses.
Dukes’ $253,000 a year contract was set to expire this summer as the district reshapes its minority contracting program. District officials, however, in June renewed the contract for an additional two years. The extension, signed by the district’s then-executive director of construction management, Robert Hengst, didn’t need approval from the board of trustees because it was a renewal of an existing contract.
Saldaña said he was unaware of the renewal until he was informed by the American-Statesman. The extension is unnecessary, he said, because the district is building its own minority contracting department and has already hired a new director for it.
“I did not know about that contract extension, nor do I support it,” he said. “I made it clear that I did not want that contract extended, so that’s new to me.”
Meanwhile, Dukes is facing a criminal investigation over her alleged misuse of state resources for nongovernmental purposes, including directing her legislative staffers to do personal errands for her and work on a nonprofit event she co-founded. The investigation also looked into her use of campaign funds. She recently announced plans to leave her House seat in January, citing medical concerns, even if she wins re-election on Nov. 8 against Republican Gabriel Nila, Libertarian Kevin Ludlow and Green Party candidate Michael Greeley.
Dukes’ business isn’t known to be a subject of the criminal investigation that was led by the Texas Rangers and is being reviewed by the Travis County district attorney’s office. The event that was at the center of the probe, however, does appear in a trove of emails between Dukes and district officials that were obtained by the Statesman through the Texas Public Information Act.
In February emails, Dukes encouraged district officials to buy a booth at the African American Community Heritage Festival, the nonprofit event that she co-founded 17 years ago. It was a complaint from one of her legislative staffers whom Dukes directed to work on the event that led authorities to launch the investigation.
Neither Dukes nor her sister, Stacy Dukes-Rhone, responded to interview requests, but others said her firm’s work shouldn’t be blamed for the district’s lackluster efforts in boosting minority contracting. The district’s program was voluntary and couldn’t set quotas for minority participation or force firms it hired to use minority subcontractors. The harsh language in the study, they said, was necessary to provide the legal basis for a formal program that will have specific goals and enforcement mechanisms.
“The work she’s done for AISD has been excellent. I’ve been real satisfied,” said Peck Young, an Austin political consultant who heads the district’s Community Bond Oversight Committee. “Dawnna oversaw and she put together a first-rate team. Dawnna didn’t come and do everything, but she put together a team.”
Dukes’ contract contains a list of tasks centered around one goal: “Implementation of a program to encourage the participation of historically underutilized, small, and local businesses.” They include: “Support AISD in the development, maintenance and management of an AISD HUB, small and local business database” and “Provide procurement notices to HUB, small and local firms for bond projects.”
While the emails show that Dukes’ team performed many of the tasks outlined in the contract, including sending out bid notices and holding events to recruit minority firms, the contract doesn’t include measurable standards for determining whether Dukes’ team met its obligations.
District officials “believe the services and functions provided met contract expectations,” according to a statement from the district’s Department of Communications and Community Engagement.
As for the two-year contract extension, the statement said, “As we ramp up and build internal capacity to support our formal, districtwide program over the next few years, there will be a need for continued external support in this area to assist in filling resource gaps.”
Team of consultants
Dukes employed three subconsultants for her work with the district: Stacy Dukes-Rhone, the executive director of the nonprofit BiG Austin; Jeff Travillion, a city of Austin employee who is the Democratic nominee for Travis County Precinct 1 commissioner; and Bobbie Garza-Hernandez, who owns San Marcos-based Pink Consulting.
Travillion is a division manager in the city’s Code Department and previously ran the city’s Small and Minority Business Resources department from 2004 to 2007. Toward the end of his tenure in that earlier role, the city issued a scathing audit of the department.
Travillion said his role on Dukes’ team is advising the district on how to craft its policy on hiring minority- and women-owned businesses, not doing contractor outreach.
Although he has worked full time at the city while also working with Dukes, Travillion said his roles don’t overlap. “It is contract work, so whenever I was doing the work, I officially took leave” from the city, he said.
Dukes-Rhone, Dukes’ sister, also has had a full-time job while she has worked on the district contract as the director of BiG Austin, a publicly funded nonprofit that aids small businesses. The organization’s website touts “three main services” that don’t include minority contracting: “comprehensive entrepreneurship training, one-on-one specialized business counseling, and access to capital in the form of flexible loans.”
Dukes-Rhone’s roles with BiG Austin and D.M. Dukes have created confusion for the district. An appendix to her contract lists BiG Austin as the subcontractor and Dukes-Rhone as the owner of the subcontractor.
In October 2015, Hengst, who at the time had recently started as the district’s manager of construction, asked Dukes to define her sister’s role in an email: “I’ve been confused and want to check something with you: I’ve heard Big Austin is a part of AISD services and that they aren’t. Is Stacy’s involvement apart from Big Austin? I’ve had people speak passionately on both sides of this issue here, among HUBs, and at least one association.”
Dukes responded: “Our proposal includes BigAustin for technical assistance programs that are not required to have any fee to the contractor and separately the subject matter expertise that Stacy brings in the event that she ever leaves BigAustin,” citing Dukes-Rhone’s degrees in civil engineering and economics. “We make and she makes sure to delineate the difference when she is on or off the clock,” Dukes wrote.
Dukes added: “I will remind you of some things when we talk about background that may drive some of that passionate discussion. LOL! Unfortunately, we know these folks and their discussions all too well. Haha! I prefer to not put this in a record that can be subject to Open Record. ;)”
In 2015, Heavy Roadway Construction Services filed a complaint with the district, saying that company officials were told they would get training and assistance from BiG Austin on how to succeed with minority contracting but never did. Company officials also said they weren’t receiving notices of bidding opportunities and the district’s minority contracting team didn’t return their phone calls.
The complaint, filed by Garza’s business partner Mario Cano, set off a flurry of activity by Dukes’ team. Team members tracked down a series of emails with bid notices that were in fact sent to Cano and documented district events for minority contractors that he had attended.
Hengst, who was overseeing Dukes’ team at the time, was satisfied.
Dukes, in an October 2015 email, explained why the complaint sparked such alarm: When certifying the nonprofit as a federal loan administrator, the U.S. Small Business Administration closely monitors BiG Austin and complaints against it. Additionally, BiG Austin is a vendor for the Texas Department of Transportation, and the state agency requires its vendors to notify it if they ever receive complaints about “access to work.”
“Stacy said you are welcome to inform Mr. Cano that she would be happy to inform TxDOT on his behalf if he wishes to further his complaint,” Dukes wrote Hengst.
In an interview, Garza said that his firm’s frustration with the district had more to do with what he perceived of as a lack of real opportunity to win contracts than it did with receiving notification emails and attending meetings with consultants.
“They just make an effort just so it can be written down. They need to do the paperwork,” he said.
Although the district’s minority business program and others like it are meant to counteract discrimination in the private sector, Garza said his firm has found it easier to work on nongovernmental projects: “We got into the private sector, and it started working out better than trying to do a lot of that government work.”
Juan Oyervides, executive director of U.S. Hispanic Contractors Association’s Austin chapter, echoed Garza’s criticism, saying he has received plenty of bid notices from the district but has seen few success stories of minority-owned firms getting district business.
“We get emails about projects. That’s about the extent of it,” he said. “We just don’t have a lot of history with AISD projects, and maybe that in itself is a statement.”
Hengst, who now works for the University of Texas, said he has “huge respect” for BiG Austin and believes the organization did adequate outreach to Garza’s firm.
Hengst said he had a rocky start in working with Dukes and her team when he started in the job but ended up valuing their work on outreach. It’s unfair, he said, to criticize the consultants for the district’s poor record of hiring minority- and women-owned contractors because the new program with enforceable goals hadn’t been put in place.
“Until we have a formal program in place, there’s not a lot of teeth to the program, so to hold Dukes responsible for (minority hiring shortcomings) is really shortsighted,” Hengst said.