Ted Simons: Good evening and welcome to "Horizon." I'm Ted Simons. The city of Phoenix settles a lawsuit with the family of Carol Gotbaum, the New York woman who died while in police custody at Sky Harbor. The city's insurance company said it was cheaper to settle for $250,000 than to continue to litigate the case. Gotbaum's family originally filed an $8 million lawsuit. Phoenix police released a statement saying their officers acted appropriately in the case. They say that Gotbaum accidentally strangled herself after being detained for unruly behavior at the airport. The Goldwater Institute, a conservative think tank, has released a new investigative report claiming that a hiring program for minorities is being misused by well-connected politicians. The airport's disadvantaged business enterprise program sets guidelines for participation of women and minorities in airport concession contracting. A report by Goldwater Institute investigative reporter Mark Flatten, showed the program is being used by some who have a net worth of more than a million dollars. And some of the businesses in the program are owned by people active in politics. Here to tell us more about his report is Mark Flatten. Good to see you again. Thanks for joining us.
Mark Flatten: Thank you for having me.
Ted Simons: Disadvantaged business enterprise program. Explain what this is and the guidelines the program is looking for.
Mark Flatten: What it's billed as is a way to help disadvantaged business owners who suffered discrimination in the past and sets guidelines for minimum participation level. So if you're doing $100 in business at the airport, a certain percentage has to be attributable to small minority-owned business firms. What we found at Sky Harbor over a three-month period, a lot of these leases are going to people who are politically connected. Quintessential insiders. Give a lot of money to political campaigns. If you look at total sales at the airport attributed to these disadvantaged businesses, over a fourth are attributed to five business owners who have extensive political ties.
Ted Simons: You mentioned that county supervisor Mary Rose Willcox and her husband gamed the system.
Mark Flatten: The federal requirements say you can't just be a name on the lease. You've got to perform what they call a commercially useful function. But if you look at years of city documents what you find is there's no reason for Mary Rose Willcox to be involved in this partnership, to run a Chili's in terminal four. She was literally a name on the lease despite what federal regulations say that require a true meaningful participation in running that company.
Ted Simons: You can't just have your name because you are a woman or you are a minority put onto a lease. You've got to have some kind of financial input or run of the day-to-day operations.
Mark Flatten: Yes, the reason for that is these programs are supposed to actually help struggling businesses gain expertise, gain sort of a foothold, but in reality, what happens is to even bid on a contract, you've got to have this minimum participation level by minority and women-owned businesses so what these companies are doing, just to meet the requirements of the bidding, they're bringing in disadvantaged business enterprises and if you look at Mary Rose Willcox's contract with HMS Host, which does the food and beverage sales in terminal 4, it specifies she has no role in running the day-to-day operations and doesn't have to spend time at the business she deems appropriate. You ask, what does she bring to the table? What is her contribution to the business enterprise? And beyond meeting the minimum qualifications for bidding in the closed system, she didn't bring much to the table.
Ted Simons: And yet she told the "The Arizona Republic" she was used -- or participated, I think she would rather use that word -- because of her history, her family's history of running minority-owned businesses, restaurants in this case, through long hard years in central Phoenix. Response?
Mark Flatten: If you look at the city's email, the city's email exchanges, their enforcement actions, they struggled for two years to quantify what it is she does do in running the company and they're saying her role is negligible. It's a Chili's menu. And one of the problems is the city was trying to force her to become more active in running the company that they encountered that it has fixed rules on who can control their franchise. In this case, it was Host. And not an opportunity for her to take a more active role. For over two years, the city tried to define what it is she did to run the company.
Ted Simons: I know the Goldwater Institute had recommendations in running the program. Tell us about them.
Mark Flatten: The simplest recommendations are included in the law itself. You have an open and competitive bidding process without the restrictions that limit who can bid and participate. Those were encompassed in the law itself and what they say -- and if you look at the court rulings on these types of programs, what the courts have said, you shouldn't have to report to these preference programs. You can break these big contracts into smaller contracts and relax bonding requirements and do any number of things to make it easier for any small business to participate and compete without having to resort to preferences.
Ted Simons: And there are those who say the goal is to level the playing field. To get disadvantaged minority-owned businesses who have been struggling, an opportunity, when a plumb gig at the airport rolls around.
Mark Flatten: That may be a laudable goal. The problem is we can't compete with these big national companies and we can't get the financing to make the improvements. But if you look at the reasons for -- to justify the DBE program, they're the same challenges that any small businesses faces. Any small business is going to have trouble raising the kind of revenue and when you look at the court decisions and the law and the regulations themselves, there's any number of things you dock to make it more competitive for everyone.
Ted Simons: Bottom line, get rid of DBE altogether?
Mark Flatten: Certainly, the way it's being run is not the way it was intended to be run.
Ted Simons: All right. Mark, thanks for joining us. We appreciate it. You can get information on past, present and future "Horizon" shows by visiting our website.