The panel charged with overseeing the state’s multi-billion school construction program is pushing for more diverse business contractor participation on local projects and in the process rankling a lawmaker and school administrator.

The Ohio School Facilities Commission met Tuesday with a contractor on a Shelby County school district construction project after the commission raised questions last week over the contractor’s failure to meet a 5% Encouraging Diversity, Growth and Equity quota to hire small, socially and economically disadvantaged Ohio companies.

When Hardin-Houston Local School District Superintendent John Scheu heard from OSFC a week ago that his school building construction project was in question because Ferguson Construction, one of the contractors, allocated only 0.25% of their contract to EDGE companies, he said he was concerned the move might have been punishment for his overt questioning of the governor’s Evidence-Based Model for school funding.

Although Hardin-Houston’s project was the first to be scrutinized by the OSFC, it raised red flags only because of the project size – $23 million – and the low EDGE participation, commission spokeswoman Sue Meyer said.

The commission is putting forth an increased effort to ensure EDGE goals are met because of a provision in the biennial budget (HB 1) that enhanced oversight of the program, Ms. Meyer said.

Internal staff with OSFC had granted Ferguson Construction an EDGE waiver, but when the waiver went before the commission for approval it caught the attention of members, said Cheryl Lyman, OSFC chief of public affairs.

There has been some confusion among parties as to whether the EDGE participation goal is a requirement or just a goal.

“There is a statutory requirement to participate in the EDGE program, but basically contractors either have to meet or exceed that goal on the contract or have to demonstrate a good faith effort,” Ms. Lyman said. “For this contract it was a discussion of demonstrating a good faith effort.”

In its meeting with Ferguson, OSFC staff discovered the contractor had already made improvements to its EDGE participation, increasing it to 1.5%, Ms. Meyer said. Ferguson will continue to work on the project.

“OSFC has spoken with the contractor to help broaden his understanding of the EDGE process,” she said, and efforts to locate other EDGE vendors will be ongoing.

Superintendent Scheu said Ferguson Construction has made a good faith effort. The company hired the lowest responsible bidders as required in state statute. For Ferguson to select enough EDGE contractors to meet the quota, it, and thus the school district, would have to pay an additional $232,000 for work performed by EDGE companies.

Mr. Scheu said he took away from the meeting an understanding that OSFC still wants Ferguson to achieve the 5% participation rate. “Whether or not Ferguson is going to be able to make that 5% goal, I don’t know.”

He also said part of the conversation was about how late into the process this issue was raised. Ferguson has worked on the construction since March without being paid.

Mr. Scheu said during the meeting he requested OSFC provide the district with a letter indicating that Ferguson would be paid as soon as possible and the district would not be liable for any delay claims if the project is stopped because of the EDGE controversy, both of which were primary concerns when the district learned of the OSFC objection last week.

Ferguson Construction could potentially stop work because it has yet to be paid and without OSFC approval it would not be. OSFC scheduled the construction to be complete and the school ready to open in August 2011, Mr. Scheu said.

Ms. Lyman said OSFC has not developed a plan should Ferguson fail to meet EDGE expectations on this project.

“We just don’t see that we’re at the point of having to think of what Plan B would be,” she said, noting the commission does not have an established response for contractors that do not cooperate. “Because of timing on a number of different points, it would be very difficult to see where we would have these same set of circumstances happening again.”

And as far as Mr. Scheu’s concern that his outspokenness about the EBM might be the underlying reason for perceived roadblocks, that concern was not raised at the meeting.

“We were totally unaware of Mr. Scheu’s comments on that,” Ms. Lyman said. “That’s something that we don’t even track.”

Superintendent Scheu, said his suspicions were not fully quelled by the meeting. “I still feel that there are unresolved issues.”

Senator Keith Faber (R-Celina) said last week he was suspicious of OSFC motives given Mr. Scheu is the one superintendent on the School Funding Advisory Council who has raised questions about the EBM and is also the superintendent of the district whose project had been questioned over EDGE.

“To me that’s just more than odd,” he said, adding the commission’s action seemed to be about “political meddling.”

Rick Savors, spokesman for OSFC, denied the allegation. “We don’t operate like that,” he said.

The commission will meet June 22 to further consider Ferguson Construction’s participation, Mr. Scheu said.

The project to construct the new K-12, 126,000-square-foot school building, is funded through a 60-40% split with the state footing the majority of the bill. The school share is funded by a levy that passed after seven attempts by the district, Mr. Scheu said.