At a time when 3 in 4 New Mexicans with disabilities don’t have jobs, hundreds of workers at the Adelante Development Center in Albuquerque are the exception. They get paid to recycle paper, package products and scan documents — work that gives them a pathway to opportunity and independence.
Many of the Adelante workers benefit from a little-known 2005 law that steers taxpayer money to private contractors that hire disabled workers. The Legislature’s plan — seemingly so simple and good that it passed without opposition — was to create jobs for disabled workers, promoting self-reliance while reducing public assistance.
By the end of 2012, the program had grown to $7 million a year, involving some 100 contractors. But questions also began to crop up about how New Mexico runs the program.
Recently, most of the money for a state Game and Fish Department book contract worth $68,000 went to an out-of-state company whose workers weren’t disabled, according to an investigation by The New Mexican. Relying largely on documents obtained under the state Inspection of Public Records Act, the investigation revealed how a disabled business owner won the contract through the nonprofit that administers the state law — Horizons of New Mexico — but sent the printing project to Denver, where a third party with no disabled workers did the bulk of the work.
“It leaves us open to a gaming of the system,” state purchasing agent Larry Maxwell said of the Game and Fish deal. Maxwell characterized that purchase as a brokered contract, a deal in which a middle man profits and taxpayers overpay. State procurement rules generally don’t honor brokered contracts.
Despite acknowledging mistakes in that case, the state council that oversees the preference for people with disabilities was slow to correct those mistakes, the investigation found.
Then, the director of Horizons of New Mexico stepped down. Nancy Bearse’s resignation came Thursday, just three days before The New Mexican was due to publish the results of its investigation.
The investigation also found a failure by state purchasing agents to monitor the awarding of contracts and a lack of state funds to manage the program. In response to the disclosures, the Council for Purchasing from Persons with Disabilities, the board that serves as the state’s oversight arm, ordered a review of current contracts and scheduled a discussion for later this month.
Meanwhile, insiders say that even though errors were made in some recent contracts, the disabled persons preference has made a noticeable increase in employment of workers with disabilities. They promise procedural reforms that will focus the state and the nonprofit on the objective of helping people.
“There has been very much that stereotype that people with disabilities only can handle food or garbage or things like that, and we really want to break through that,” Bearse said in January. “This is the 21st century, and people with disabilities should be a part of state government and local public bodies.”
The framework for preferential contracts is the State Use Act of 2005. The law says the state and its political subdivisions must offer a first right of refusal to qualifying disabled individuals and community programs that hire the disabled. The amount of contracts filled under the law grew to $7 million last year. That is a small percentage of the estimated $5 billion in government contracts ratified every year in New Mexico.
The State Use Act calls for a central nonprofit agency to serve as matchmaker between state agencies seeking services and private contractors supplying those services. That lead agency is Horizons of New Mexico, a division of a well-heeled Texas nonprofit called TIBH Industries. Horizons took over the New Mexico program in late 2012 after a Pennsylvania agency, NM Abilities, struggled with deficits.
The private, nonprofit Horizons is the major player in awarding State Use contracts for state agencies. Meanwhile, the Legislature provided no money or direction for the state Purchasing Division to implement the law or monitor contracts.
The nonprofit covers its own administrative costs by taking 5 percent of each state contract. After bringing private contractors and public agencies together in deals, the nonprofit pays the contractor with its own funds, then bills the state and collects the payments.
To Horizons, the biggest challenges are that not all state agencies are complying and that few cities and counties have even tried. Some government agencies react with resistance when they learn of the preference for people with disabilities.
In 2010, Bernalillo County balked when the State Use council asserted its right to take on a scanning and indexing project. A letter from the Attorney General’s Office backed the council. State Use contracts also have been issued for security services, private investigations, information technology projects and other white-collar jobs.
“We don’t want every single contract, but we do want to break down some barriers for people with disabilities,” Bearse said in January.
Marcie Davis, chairwoman of the purchasing council, said she knows it can be difficult to compete for government contracts. A former administrator for the Santa Fe public schools, Davis is paraplegic and uses a wheelchair and a service dog. Her consulting business, Davis Innovations, does research and project management.
“I was working on state contracts, and I saw how difficult it was to get contracts as a business owner, and so this was a huge opportunity that could open the doors and change that,” she said. “And it has done that for me and for others.”
Printing deal in question
While many contracts provide disabled individuals with jobs, in other cases, The New Mexican found that money has landed in the pockets of companies not qualified under the state law.
Critics questioned whether the Game and Fish Department’s printing deal qualified. Horizons contracted for the job with Ron Edwards, the owner of Focus Advertising of Santa Fe.
In its educational materials, Horizons makes Edwards the face of success among business owners with disabilities. Homeless for a time in the 1980s after service in the U.S. Marine Corps left him disabled, Edwards, 59, became a motivational speaker, songwriter and advocate for other veterans. Diagnosed later with multiple sclerosis, he also suffered a brain injury in an accident.
Despite those challenges, he and his wife own the advertising business, which has won $100,000 in State Use contracts since 2009 to print pamphlets, banners and books. Edwards said Friday that he feels he is being “targeted.”
“We are in compliance with the law. We are not brokers and we are not subcontractors. We are distributors,” he said. “We are advertising specialty distributors, and we do printing. We do everything as distributors. We didn’t start doing this with the State Use Act — we have been doing this ever since we started our business.”
Edwards said he never made false representations to the state or Horizons — and was told that his business model fit within State Use — but now officials are accusing him of trying to pull a fast one.
“I am so shocked at the vitriol we are experiencing,” he said.
Davis admitted concerns about the Focus Advertising contracts, particularly the Game and Fish printing job. “We rely on the [nonprofit] for information and to guide us,” she said. “There were quite a few miscommunications about the Focus contracts.”
In early January, Bearse told The New Mexican that the business “works with another contract printer and they have a relationship, but all of that labor is 75 percent done by people with disabilities” in compliance with state law. She later wrote in an email that Focus didn’t use a subcontractor.
By the end of the month, however, Bearse said she had misspoken and that Focus “has a distributor relationship” with printers. An attorney for the nonprofit said his interpretation of the law found it acceptable for a qualified individual to secure a contract through State Use and pay another entity to complete any portion of the work.
Then, at an emergency meeting Feb. 5, Davis said a records review showed the council had not approved the $68,000 contract with Focus, as required by state law.
Despite that oversight, the finished book — considered a must-read for hunters — was delivered to the state Jan. 20 by Publication Printers Corp. of Denver. Horizons paid Focus for the work, and on Wednesday, Game and Fish paid Horizons.
“I don’t think it was the intent of the legislation to do this, and I’ve got concerns,” said Maxwell, the state purchasing agent.
The state law and administrative rules are clear about who is supposed to do the actual work on the contract. The rules stipulate that at least 75 percent of the workers who provide “direct labor” on a project must be persons with disabilities.
Maxwell said there is another complication in the way the law was implemented. The State Use Act applies to service contracts, not the provision of goods — two distinct areas of procurement, Maxwell said.
Mike Kivitz, chief executive of the Adelante Development Center in Albuquerque, has been on the procurement council since its inception. The community rehabilitation program, which accepts state funding to serve clients classified as severely disabled, has been able to secure more work for its clients.
“For this program to survive, it has to be defensible,” he said. “The integrity of this program is near and dear to all of our hearts. … As a new program, you work the kinks out, and people have to learn. There is a responsible group making adjustments and listening to people.”
Of the $7 million a year in contracts through the State Use Act, nearly $3 million worth predate the 8-year-old statute. For example, for more than 20 years, the state Department of Transportation has hired Tresco, a company based in Las Cruces, for rest area maintenance. That’s a $2.5 million contract. Adelante’s document-handling operation had old contracts that now fall under the State Use law.
Kivitz and Maxwell are among members of the council pushing to resolve issues raised by the Focus Advertising printing contract, specifically whether contractors like Focus gain a lasting preference and a right to no-bid contracts.
The Game and Fish Department alone spends about $293,000 on printing its publications every year and has told other potential bidders on printing jobs that all future work is likely to go to Focus through the State Use Act. If all state agencies were required to use Focus, and Focus sent all its printing out of state, the costs to New Mexico business and the negative perception of State Use would be substantial.
Al Waldron, who runs the commercial printing business for The New Mexican, said he was troubled to learn that printing services weren’t being offered for competitive bidding among printers in the state and that printing was being performed by out-of-state companies. He acknowledged that he has a business interest because The New Mexican has bid on contracts offered by Game and Fish and other government agencies.
“I’m more concerned about what is happening across the state,” Waldron said. “They are not following the state statute. It goes up to a bigger level, where it could affect all these other services.”
New Mexico’s law differs from preference laws in more than 30 other states in that it allows not only contracts with community programs, but also contracts with individuals and companies owned by disabled individuals, said Andy , which was secured by Focus Advertising of Santa Fe. The business is owned by disabled Marine Crops veteran Ron Edwards. But the bulk of the work was sent to Publications Printers Corp., a firm in Denver that does not meet the hiring quota of disabled workers required in the State Use Act. Focus has won $100,000 in State Use contracts since 2009 for printing services., who served on the state council for several years, until shortly after his retirement from the Division of Vocational Rehabilitation in 2010.
Any attempt to manipulate the law isn’t what policymakers contemplated, he said.
“The whole idea of preferential programs is that you are increasing the number of people with disabilities who are employed. … If you are working under a preference contract,” he said, “you have to find people with disabilities to do the job.”
The law that he lobbied for, Winnegar said, is intended to broaden opportunities for people who often face discrimination.
“This law is an incentive program for hiring somebody with a disability,” he said. “It’s a blind person who is an attorney getting a chance to get a job or a quadriplegic who has had a car accident and is a writer having a chance to get a job just like anybody else.
“But they need a break to get a job.”
Contact Julie Ann Grimm at 986-3017 or firstname.lastname@example.org. Follow her on Twitter @julieanngrimm.