Control test for Disadvantaged Business Enterprise

Powerhouse minority contractor ousted from government program

Grady Excavating gained DBE (Disadvantaged Business Enterprise) status because the dump-trucking company was run by a woman, Kim Grady. Some of the qualifications for the program are that businesses must be small and owned by a minority or a woman. The goals of the program are to remedy past and current discrimination against disadvantaged groups by giving DBE’s an advantage in landing work on large government jobs. A certain percentage of DBE’s must be hired to work on any highway project funded with federal dollars.

Now the small state agency that certifies DBE’s, the Office of Minority and Women’s Business Enterprises (OMWBE), has removed Grady Excavating from the program. According to the agency’s new director, Chris Liu, OMWBE’s Certification Committee ruled Kim Grady cannot be considered economically disadvantaged and does not meet the standards of the program as per the federal regulation known as 49 CFR 26.71 (f). That regulation states a DBE owner must “actually exercise control over the firm’s operations, management, and policy.” In other words, Kim Grady is not the person who is actually in charge.

In the continuing investigation "Fraud on the Job," the KING 5 Investigators exposed in May that the original paperwork submitted to the state by Grady Excavating for DBE certification looked suspicious. Kim Grady was listed as the owner in charge of it all: operations, bidding, and purchasing multi-million dollar trucks. Yet her resume featured no trucking or construction experience. Another requirement to be a certified DBE is that the woman or minority owner must have enough experience and expertise in the field to make critical business decisions and to control the day-to-day operations and management of the company.

Kim Grady’s resume listed working at Nordstrom, LA Sun and Ski Tours and Pacific Food Service.

But Kim’s husband, Joe Grady, has years of experience in the industry. He’s an engineer and seasoned project manager for Mukilteo-based KLB Construction, which is a multi-million dollar general contracting company.

Upon applying in 2008, the OMWBE investigator assigned to the case advised that Grady Excavating was not eligible for DBE certification.

“It was clearly an attempt by a married couple trying to subvert the system," said former OMWBE employee Jenais Radabaugh. “(Kim's resume) was laughable. I thought it was obvious that this person was starting a dump trucking business because her husband had expertise in contracting business in the state."

Despite her recommendation, her supervisor, former OMWBE manager Juan Huey-Ray, allowed the company to be certified. Since that time Grady Excavating has been awarded $40 million in government contracts.

Grady Excavating has the opportunity to appeal the decision to the U.S. Department of Transportation.