Committee Hearing, March 2, 2011

COUNCIL OF THE CITY OF PHILADELPHIA2 COMMITTEE ON LAW AND GOVERNMENT3 Room 400, City Hall6 Philadelphia, Pennsylvania Wednesday, March 2, 20117 10:10 a.m. PRESENT: COUNCILMAN WILLIAM K. GREENLEE, CHAIR10 COUNCILMAN FRANK DiCICCO COUNCILMAN W. WILSON GOODE, JR.11 COUNCILMAN BILL GREEN COUNCILMAN CURTIS JONES, JR.12 COUNCILMAN JACK KELLY COUNCILMAN JAMES KENNEY13 RESOLUTION 100848 - Resolution authorizing15 Council's Committee on Law and Government to hold hearings to compare the benefits and16 drawbacks of outsourcing City construction and professional services contracts...17 - - -19 2

Good2 morning. This is the Committee on Law3 and Government.4 Just for the record, we have a5 quorum with myself, Bill Greenlee,6 Councilman Kelly and Councilman DiCicco.7 Actually, we don't have a quorum yet, but8 we don't have to have a quorum to start.9 And Councilman Jones, who is the sponsor10 of the resolution before us.11 Ms. Marconi, will you please12 read the title of the resolution, please.13

Resolution 100848,14 resolution authorizing Council's15 Committee on Law and Government to hold16 hearings to compare the benefits and17 drawbacks of outsourcing City18 construction and professional services19 contracts and to conduct a comparative20 analysis of proposed contracts in order21 to further the goals of cost efficiency22 and local job creation.23

Thank24 you.25 3/2/11 - LAW & GOV'T - RES. 1008481 Any comments from members of2 the Committee?3 (No response.)4 COUNCILMAN GREENLEE:5 Councilman Jones, I understand you -- I6 guess you might have an opening7 statement.8

I think9 that's appropriate, Mr. Chairman.10

Please11 proceed.12

Thank you13 for the opportunity, Councilman Greenlee14 and members of the Committee, to talk15 about this worthwhile issue.16 In light of the fact that we're17 about to enter into the budget season, I18 think this issue is particularly19 important, the issue of whether it is20 better to outsource services projects and21 programs that the City once had under its22 own guidance, its own employment base,23 its own workforce, and to look at, more24 importantly, the cost-effective nature or25 3/2/11 - LAW & GOV'T - RES. 1008481 not of those outsourcings. And this2 theory must not be something that we had3 old perceptions about, but it must be4 data driven.5 According to a survey in 20076 of the International City/County7 Management Association, 52 percent of8 governments brought back services9 in-house that they used to contract out10 because of reasons that they didn't11 realize the cost savings that they12 thought they were when they privatized,13 outsourced different services.14 In New Orleans, former Mayor15 Negrin had a technological outsourcing16 that cost his city 1 million extra17 dollars and when they discovered that18 they probably could have provided that19 service through in-house employment.20 Further, in New Jersey, closer21 to home, we overpaid -- or they overpaid22 for food services to the tune of about23 $320,000.24 In New York, there was a survey25 5 3/2/11 - LAW & GOV'T - RES. 1008481 done by Waste Management and things of2 that nature and how much they lost in the3 tune of $130 million.4 So what we need to do -- in5 good times, waste is wrong. In bad6 times, financial times like these, waste7 is unacceptable, and we have to take a8 look, sharpen our pencils and take a look9 at what we're doing.10 One of the intended11 consequences that may well come out of12 this analysis is the fact that by holding13 some of the services in-house, by us14 controlling some of the jobs, we may15 create jobs in neighborhoods based on16 temporary jobs to do projects in the rec17 centers that become permanent jobs, but18 only when cost savings data justifies it.19 So we don't expand the workforce just to20 be expanded, but we expand it based on21 savings that we derive by doing the work22 ourselves.23 So I thank you again,24 Mr. Chairman and members of this25 6 3/2/11 - LAW & GOV'T - RES. 1008481 Committee, for allowing us to explore and2 begin the dialogue about this worthwhile3 analysis.4 Thank you, Mr. Chairman.5

Thank6 you, Councilman. It's certainly an7 important issue.8 Please let the record reflect9 Councilman Green and Councilman Goode are10 also present.11 The witness list I have is12 relatively short. We have District13 Council 33, followed by District Council14 47 and then the Administration.15 So, please, would the16 representatives of District Council 3317 that plan to testify please come forward.18 (Witnesses approached witness19 table.)20

Good21 morning, everyone.22 Do you have any copies of your23 testimony?24

Yes.25 7 3/2/11 - LAW & GOV'T - RES. 1008481

Okay.2 Good morning. Please identify3 yourself for the record, whoever would4 like to start, and proceed, please.5

Before I get6 started, I just want to say --7

Speak a8 little bit more in the microphone,9 please.10

First of all, my11 name is Bobby Davis. I'm Vice-President12 of District Council 33 and also President13 of Local 696.14 I just wanted to extend my15 gratitude and thanks to the Committee for16 the work that they helped us with last17 year dealing with the court situation.18 We think that, for the most part,19 everything worked out for the employees.20 There are some who may not think that,21 but when you retain all of your benefits22 as well as salary and everything like23 that, we think that's a good day.24 So I just want to thank the25 8 3/2/11 - LAW & GOV'T - RES. 1008481 Committee for assisting the Union in2 that.3

Thank4 you.5

I'm here today with6 Business Agent from 394 Jeff Gilliam,7 Business Agent from 403 Stan Shelton, and8 the lovely Business Agent from 696,9 Lillian Randolph.10 Good morning, Councilman11 Greenlee, Law and Government Committee12 members and guests. On behalf of the 1413 locals that represent District Council 3314 and over 12,000 families who rely on us15 to protect their rights and negotiate16 their future, we thank you and the17 members of the Law and Government18 Committee for the opportunity to present19 support for Resolution 100848, sponsored20 by Councilman Greenlee, Councilman Jones21 and Councilman Clarke. In doing so, we22 are confident, if given the accurate23 information and data, our members'24 performance will be more cost efficient25 9 3/2/11 - LAW & GOV'T - RES. 1008481 than that of any outsourced contractor.2 In the news just yesterday,3 there was a topic on exactly how many4 articles in your home was made in5 America. After removing all outsourced6 products not made in America, the house7 was virtually empty. This immediately8 brought to mind the situation we face as9 we sit and watch contractors come in and10 perform jobs that we have been performing11 on a daily basis for years. The only12 difference is that they are being paid a13 much higher wage than our employees.14 However, when they have created havoc15 while doing a job they really did not16 have enough knowledge to successfully17 complete, it is our employees who are18 demanded to rectify their mistakes.19 We're simply saying, given the20 chance, we will show you that we too can21 dance, but we need the chance to dance22 before the song ends. In this case,23 before the song begins, utilizing24 hands-on knowledge and experience gained25 10 3/2/11 - LAW & GOV'T - RES. 1008481 through the many years we have spent at2 these same positions that the City has3 contracted out.4 If the City is truly interested5 in being more efficient and6 cost-effective, there should be more7 concentration and dedication to8 Redesigning Government Initiative9 programs, also known as RGI. It simply10 states that employees will be given a11 chance to perform jobs, minimizing the12 use of contracting out, by making13 government services more efficient and14 economical.15 No less than 30 days' written16 notice must be given to the City -- must17 be given by the City to District Council18 33 before requests for proposal or formal19 bid solicitation packages is made. Over20 the years, the City continued to not fill21 vacancies. They don't replace equipment22 that has failed to perform properly,23 which leaves our employees at a24 disadvantage. Many City workers believe25 11 3/2/11 - LAW & GOV'T - RES. 1008481 that they have been set up to fail.2 Paving the way for contractors to perform3 work that is already assigned and4 salaried to City employees is senseless.5 As I prepared myself for this6 presentation, I was reminded of musical7 lyrics of a song that was originally8 performed by Les McCann. The song was9 entitled "Compared to What." Many10 artists have reproduced these lyrics11 since, Roberta Flack, Mya, John Legend,12 just to name a few. However, my favorite13 rendition of the song was performed by Al14 Jarreau.15 Today I just want to share with16 you one particular verse of that song.17 We lived a lie, deny the love,18 hangin' on with a push and a shove.19 Possession is the motivation, that is20 hangin' up the whole damn nation. Looks21 like we always end up in a rut, trying to22 make it real, compared to what?23 No one does it better than us.24 Philly works because we do. Thank you.25 12 3/2/11 - LAW & GOV'T - RES. 1008481

Thank2 you, Mr. Davis. Bobby, I thought you3 were going to break out in song. We were4 looking forward to that.5 Is anyone else testifying or6 are you just here -- okay. Thank you for7 your testimony. I just have one8 question. I'm sure there are others.9 In the second or, I guess, it's10 your third paragraph actually, you talk11 about oftentimes having to complete jobs12 that were done by private companies. Can13 you think of one example? Could you just14 give me one example of that that might15 stick out in your mind, if you have one16 or anyone there.17 Identify yourself for the18 record, please.19

Jeff Gilliam,20 Business Agent, Local 394, Water21 Department employees.22 Good morning. I can give you23 several examples, but I'll give you one24 that would seem minor in nature and then25 13 3/2/11 - LAW & GOV'T - RES. 1008481 I'll give you one on a large scale.2 For instance, I have 253 installations across the City where Water4 Department employees work. They all have5 green space. So they have to have grass6 maintained and trees cut, so forth and so7 on. At one particular time, this was the8 work of the labor force on the plants,9 and they normally did it after hours,10 maybe a couple of hours after the regular11 shift, or they came in on Saturdays.12 Because of the language in the contract13 that was changed and with the RGI14 language, if a bid is lower than $10,000,15 they don't have to consult us, meaning16 the Union, when they contract that out.17 At our different wastewater18 plants, whether it be the wastewater or19 the fresh water plants, we have these20 different tanks in these areas where21 there's specifications where the grass22 has to be cut to a certain level. They23 bring these contractors in to cut the24 grass and then they have to send our guys25 14 3/2/11 - LAW & GOV'T - RES. 1008481 back out and do it on overtime on a2 Saturday because they haven't cut the3 grass to the specifications. But the4 reason for the contracting out was5 because they didn't have the money to pay6 the labor force the overtime to do the7 grass cutting. So now here it is,8 they're still paying a contractor to come9 in and cut the grass, and then when they10 don't do it right, they still have to go11 out on a Saturday. Instead of making a12 couple hours during the day during the13 week to do it, they come in and make14 eight hours on a Saturday to finish what15 the contractors did.16 Now, that might be small money17 compared to the Water Department's18 primary budget. A big project, water19 mains. We have water mains in the City20 that range from two inches wide to ones21 you can drive a truck through. The22 larger water mains we don't install23 anymore, because they say we don't have24 the manpower -- the Water Department says25 15 3/2/11 - LAW & GOV'T - RES. 1008481 we don't have the manpower to do it. So2 they bring in these big construction3 firms. They tie up the streets for4 months and months. They put the large5 mains in, and no sooner than those mains6 are installed, we got a break on a brand7 new main, and our guys, the Water8 Department employees, have to go back out9 and fix the mains that they spent10 millions of dollars putting in, where11 they could have just used Water12 Department employees to put them in in13 the first place.14

Do you15 know -- and the Administration will be16 coming up -- is there any explanation why17 they do it that way? I mean, are they18 saying it's cost saving originally?19

That is exactly20 what they say. They say it's cost21 effective, it's cost savings. But how is22 it cost savings when you pay these23 contractors thousands or millions of24 dollars and then you still have to send25 16 3/2/11 - LAW & GOV'T - RES. 1008481 your own employees, who have the2 knowledge to do the work from the3 beginning, to go back and finish or4 repair or complete what the contractors5 didn't do? And then on top of that,6 there's hardly no oversight. There's no7 oversight from these departments on what8 the contractors are doing. Now, they'll9 tell you there is, but there isn't.10

Okay.11 All right. I hear you.12 Councilman Green.13

Thank you,14 Mr. Chairman. First of all, I want to15 commend you and Councilman Jones and16 Councilman Clarke for raising this issue17 and asking us to come here. I do --18 because the resolution asked for19 assignment to Law and Government, it is20 here, but I do want to let everybody know21 that the jurisdiction of Labor and Civil22 Service includes, which is the Committee23 I chair and we've worked on a number of24 these issues, includes reinventing25 17 3/2/11 - LAW & GOV'T - RES. 1008481 government, and there are several2 resolutions before that Committee along3 similar lines. We've held a number of4 hearings over the last three years in5 that regard.6 I wanted to specifically ask7 about a privatization matter that I think8 I am only one of two City Council members9 to vote against involving the wastewater10 treatment facility, which was privatized.11 I can't remember the name of the company,12 but perhaps you do. It begins with an S.13 And I'm wondering if you have the details14 that have been shared with me privately15 in terms of the cost to the City prior to16 privatization compared to the cost to the17 City after privatization, especially18 because the City undertook to pay the gas19 bill for the operator. And what they're20 doing is basically taking waste, for lack21 of a better word, and turning it into22 pellets, which takes a tremendous amount23 of heat and energy.24

Correct.25 18 3/2/11 - LAW & GOV'T - RES. 1008481

Have we2 saved money through that privatization or3 has it cost money? And how much has it4 cost us and how many years are we stuck5 in this contract?6

Well, Councilman,7 I'm glad you asked that question. The8 company's name is Synagro. I'm quite9 sure we're all aware of that name.10 Again, it's kind of like taboo now if you11 mention it in these halls.12 To be honest with you, the last13 time we met with you and spoke with you14 about this, we told you once the15 privatization went through, we were told16 by the Mayor and the Administration that17 we will be kept in the loop and we were18 supposed to get an update six months19 after the privatization took effect.20 Well, we're still waiting for that21 update.22 True cost analysis of what23 we're paying and what it's costing us for24 them to do it now, for the first five25 19 3/2/11 - LAW & GOV'T - RES. 1008481 years until the pelletizer was built,2 they were already obligated to pay the3 company $24.5 million a year to dispose4 of our biosolids, the waste for the whole5 City. We submitted the budget. By the6 time our employees left BRC, or the7 sludge plant which we called it, the8 operating budget for the Water Department9 employees to stay at BRC and continue the10 waste disposal for the City's biosolids11 would have been below $15 million, but12 they chose to privatize the plant, and to13 this day -- and I believe Synagro has14 gotten a raise.15 Now, one thing they didn't also16 tell you about was the gas bill that the17 City is on the hook for. We installed18 the new 12-inch main out to the biosolids19 plant so they could have extra water,20 their own water specifically for the21 plant. Now, 12 inches doesn't sound like22 a lot, but when you talk about the water23 that needs to be used in the operations24 and the dewatering operations out there,25 20 3/2/11 - LAW & GOV'T - RES. 1008481 that's a lot of water that Synagro2 doesn't pay for, not to mention the3 building and the equipment. We have4 front-end loaders out there that cost us5 hundreds of thousands of dollars that we6 sold to the company for a dollar, you7 know. They pay no rent on the space and8 not to mention electricity.9 Until this day, they have not10 completed the towers that they said they11 were going to have completed within the12 first three years, and to what I13 understand, the dryers are just now being14 built.15 So instead of us spending $1516 million a year to dispose of the City's17 waste, we're still paying this company18 24.5 million, and we haven't produced a19 pellet yet.20

Right. I'll21 be asking the Administration to submit to22 the Chair after they testify the actual23 costs involved of the City and the24 progress on that as compared to the costs25 21 3/2/11 - LAW & GOV'T - RES. 1008481 when it was run by the City itself and2 your members were doing the work.3 So thank you.4

Thank you.5

Thank6 you, Councilman.7 Any questions from the8 Committee at this point?9 (No response.)10

I saw you11 over there, Councilman Jones.12 Councilman Jones.13

Thank you14 again.15 Mr. Davis, I like Al Jarreau,16 too. Some of the titles I like are17 "Where is the Love" and "Where is the18 Love" to -- "We're in This Love19 Together." "Tell Me" is another title20 and "Through It All" and "Could You21 Believe." Those are titles that are22 appropriate for this hearing today.23 Because "We're in This Love Together"24 means that we got one pot of money and we25 22 3/2/11 - LAW & GOV'T - RES. 1008481 have to spend it wisely, and whether we2 outsource or keep it internal should be3 data driven, and that's the purpose of4 the resolution.5 "Tell Me" will be addressed to6 the Administration, because we need to7 quantify why we do it one way versus the8 other. And then "Could You Believe" is9 what I'm hearing today when we start10 talking about water mains that we put in11 and then have to replace or grass being12 cut and then we have to recut it, because13 we can ill afford it today.14 Ten years ago, 20 years ago,15 Councilman, we could afford these kind of16 overlaps and duplications of services.17 We're looking for revenues in every place18 that we can find it, and efficiencies,19 Councilman Green, is one way that we can20 do that by reinventing government. The21 quantitative analysis of why we do what22 we do versus keeping it in-house or23 contracting it out is essential.24 So I guess other examples of25 23 3/2/11 - LAW & GOV'T - RES. 1008481 this -- and I will ask you this and I'll2 ask the Administration this as well --3 snow removal. It is my understanding4 that this year we spent $12 million in5 snow removal, and last year we spent 186 million in snow removal. And was there a7 difference in that savings just based on8 inches that fell or was it because some9 of the work was done internally, more of10 the work was contracted out? Which is11 true, and was there a correlating effect?12

You have13 to speak into the microphone and please14 just identify yourself for the record15 first, please.16

Stan Shelton.17 I'm Business Agent of 403. We represent18 the highway workers, street lighting,19 traffic.20 Basically what you're asking,21 Councilman, is basically it went this22 year by the amounts of inches that we23 had. Now, basically it could have been24 cheaper beyond the fact that sometime25 24 3/2/11 - LAW & GOV'T - RES. 1008481 there was some snow days, like, for2 instance, that last know we had, we3 didn't necessarily need contractors for4 that, because it was over in a matter of5 12 o'clock. It came on at 8 o'clock and6 was over at 12:00. Well, at that7 particular time, what the Administration8 does is, they guarantee the contractors9 they bring in eight or 12 hours, right,10 when they bring them in. So, therefore,11 it cost us more that last snow than it12 would have if we would have handled it13 in-house.14 Also what happens is that when15 we do have snow events like that, what16 happens is that basically the contractors17 that go out, it would take three persons18 to handle a contractor's truck, which19 would be -- they would need the driver, a20 navigator, also a spotter. In the event21 it would only take us one, a man in the22 truck. So, therefore, we paying about23 three times as more. It costs us sum to24 an average of $800 to $1,000, man and25 25 3/2/11 - LAW & GOV'T - RES. 1008481 truck when the contractor comes in,2 versus our salaries with a man and a3 truck.4

Quantify5 what that would be same amount of labor,6 same amount of equipment. Is there an7 analysis that you can point to that says8 based on our membership, here's what it9 will cost you, City of Philadelphia10 taxpayer, versus on your side of the11 issue? Have you paid attention to those12 costs versus what the City will later13 probably testify to?14

Well, what it is15 is the Administration always tell us16 afterwards they will give us the data on17 the costs and the breakdown, but every18 time we ask for the information, we never19 seem to get it, you know. So that's the20 game that we've been playing for a while21 now.22

Okay.23 Thank you, Mr. Chairman.24

Thank25 26 3/2/11 - LAW & GOV'T - RES. 1008481 you, Councilman.2 Mr. Gilliam.3

Councilman, to4 add on, excuse me, to what Brother5 Shelton just said about snow removal,6 when we have a snow event in the City of7 Philadelphia, if we're expecting two to8 four inches of snow to fall, that9 automatically triggers a snow event, what10 we call a snow event in the department.11 Now, I represent the Water Department12 employees, but my department has just as13 many heavy-equipment operators as Brother14 Shelton's department and Local 427, which15 is our Sanitation Division. So we16 augment the Streets Department when we do17 snow removal.18 Now, my primary function for19 the employees in the Water Department is20 essentially water operations. What they21 do is, they have the contractors come in,22 which they're guaranteed eight or 1223 hours, whatever their contract calls for,24 but what they do is, they wait to call25 27 3/2/11 - LAW & GOV'T - RES. 1008481 our employees in. If the snow event2 triggers maybe a 12 o'clock report time,3 the contractors come in at 12:004 midnight, and they're on the clock5 whether they hit the street or not. They6 wait until about 3:00 or 4:00 in the7 morning, call our employees in. Their8 regular start time is at 7:00 in the9 morning. And what they'll do is, the10 contractors are making all of this kind11 of money the whole time they're on the12 clock, but they wait to call the City13 employees in, and then have us go behind14 the contractors and then they'll have us15 doing it on straight time, and this is16 twofold. Now I got half of my operations17 in water out plowing snow and no water18 operations are getting done, and to get19 the work done for the Water Department20 that you have to get done during that21 straight time, now they have to pay the22 Water Department employees overtime to23 get the work done because they had them24 plowing snow during straight time.25 28 3/2/11 - LAW & GOV'T - RES. 1008481

Just so2 I'm clear, you're saying the contractors3 don't start -- in your example, start at4 12 o'clock, but they don't actually start5 getting on the streets until later. Is6 that what you're saying?7

Well, what it is,8 they have to wait until the accumulation.9

I see.10

If they're11 expecting two to four inches, when they12 get called in, that doesn't mean the two13 to four inches have fallen, but they've14 come in. And what you'll see on any15 given day when we have a major snow16 event, you'll see three or four or five17 private contractors' dump trucks and18 plows going down the street, and then19 they'll have our guys following them in20 our trucks, which are the same, that do21 the same thing, when it could just be22 City workers doing it.23

Well,24 when you follow them, what are you doing?25 29 3/2/11 - LAW & GOV'T - RES. 1008481

We don't follow2 them. I'm saying as they're plowing the3 street.4

Go ahead.5

Basically what6 happens, what we do is, after the7 contractors -- after we called in after8 the contractors, we do clean-up9 afterwards, meaning that any area that10 they didn't get or missed, we have to11 come back and do it again anyway. So12 that's what happens with the snow13 removal.14

Okay.15 Thank you. Thank you.16

Mr. Chair?17 COUNCILMAN GREENLEE:18 Councilman Jones.19

I guess it's20 a follow-up. Is there -- and I know it's21 probably not uniform by department, but22 is there generally a dialogue between23 management, whether it's a Commissioner24 or department head, to say at what point25 30 3/2/11 - LAW & GOV'T - RES. 1008481 is it too much for you to do and we need2 outside help, contracting out? Is there3 that kind of dialogue, demarcation4 points, thresholds that you say, Look,5 okay, you need to bring in the6 reinforcements, or We can do this7 ourselves? Is that kind of exchange8 ever --9

No. That's what we10 asking for. We believe that if we were11 to get the proper data prior to them12 contracting out, we will be able to --13 because a lot of times a lot of these14 Commissioners are new. They haven't even15 performed the work before, you know.16 Some of them are from out of town, and17 they just rely on the people that's been18 doing the work for 20, 30 years.19 We will be saving a lot of20 money. That's why we ask for the data.21 I mean, part of what we have in our22 contract talks about it. If they were to23 give us this data prior to contracting24 the work out, then we all could sit down25 31 3/2/11 - LAW & GOV'T - RES. 1008481 to the table and let's take a look at the2 numbers, you know, because that's the3 important part about all of this, if we4 had the data to be able to show how cost5 effective that District Council 33 can do6 the work prior to them bringing someone7 in.8 Now, if we can't show that9 based on the data, then we understand the10 City want to contract the work out. We11 understand cost effectiveness, but just12 give us the opportunity to show it,13 because it's kind of embarrassing for you14 to look around and see people performing15 your duties. It almost make it seem like16 you're not efficient enough. And then17 what happens is, when they're finished18 and the work is left there, now we have19 to clean the work up, and that's really a20 bad situation to put employees in.21

Thank you,22 Mr. Chairman.23 COUNCILMAN GREENLEE:24 Councilman Kelly has a question.25 32 3/2/11 - LAW & GOV'T - RES. 1008481

Councilman Jones,2 ten or 12 years ago, the Water Department3 didn't do snow duty at all.4

Didn't do5 what? I'm sorry.6

Ten or 12 years7 ago, the Water Department didn't do snow8 duty at all. We were approached by the9 Chief Engineer from the Streets10 Department.11 Now, in our Streets Department,12 as you know, we have two divisions. We13 have the Highway Division and the14 Sanitation Division. They were15 traditionally always responsible for snow16 removal in the City. They approached the17 Water Department because, as I stated18 earlier, we have just as many19 heavy-equipment operators in the City as20 our brothers and sisters in the Highway21 and Street Division. We were tasked with22 snow detail or asked to do it to augment23 the Street Department so you wouldn't24 have to bring the contractors in. So, in25 33 3/2/11 - LAW & GOV'T - RES. 1008481 other words, we were then to back them2 up.3 So we're there now, and I got4 200 folks out there and trucks in the5 street helping Street Department plow6 snow. Why do we still need the7 contractors to come in to back us up? It8 makes no sense. It makes no sense.9

Also, in answer10 to your question, Councilman Jones, it11 used to be -- Kevin Koch is our Chief12 Engineer, Highway Engineer. He used to13 call us in and we used to have meetings14 with him prior to the snow season. We15 used to go over data like this. That has16 stopped when others have tooken over. We17 had a new Commissioner since then and18 also some other administrative people who19 came in with the new Mayor and stuff like20 that. Well, right now what's happening21 is, they're controlling all of this, and22 they don't invite us in no more to23 discuss these things with them. So that24 way, we don't have no prior knowledge to25 34 3/2/11 - LAW & GOV'T - RES. 1008481 what we need to know to see if we can do2 this work, you know, efficiently.3

I know4 Councilman Kelly has a question.5 Mr. Shelton, it just came to me as6 Mr. Davis was saying about Commissioners7 and how long they've been here and all.8 Obviously the Streets Commissioner, she's9 been around a while. Without trying to10 get into a dispute here, has there been11 this conversation? Because it would seem12 she certainly knows how the Streets13 Department works.14 Am I putting you on the spot15 here? I'm sorry.16

No, sir. No,17 sir. I think our Commissioner now, you18 know, does have knowledge to how this19 snow removal is done now, and I grant20 that to her, but our main person who is21 dealing with this is Mr. Kevin Koch, our22 Chief Engineer. This guy has over 2023 years in the snow removal, you know, and24 it's the person that we always confide in25 35 3/2/11 - LAW & GOV'T - RES. 1008481 when it comes to the season.2

Okay. So3 that's your direct contact?4

Yes.5

Okay.6 Councilman Kelly.7

Yes. Thank8 you, Mr. Chairman.9 I just want to follow up on10 Councilman Jones' line of questioning11 regarding snow removal. He has requested12 an analysis of the cost of contractors13 doing the work as well as the City14 employees doing it, but one of the things15 I think that should be in an analysis is16 the time involved. In other words, it's17 easy to say that the City can do the18 entire snow removal job, but how long19 would it take. In other words, would it20 take two days versus if you use21 contractors and the City, would it be22 reduced to one day. Because that's very23 important, to see the City is running and24 running on time.25 36 3/2/11 - LAW & GOV'T - RES. 1008481

I think Stan spoke2 of that earlier when he mentioned that3 they used to have these meetings prior4 to, you know, actually going out in the5 streets to remove the snow, and I think6 those meetings should take place again.7 I mean, if you're going -- it may cost8 you a little money and time to have those9 meetings in the front end of it, but if10 it's going to save you money on the back11 end of it, then those meetings are very12 important.13

In other14 words, this is a very large city and I15 don't know if we have the manpower or the16 equipment to do it in a timely fashion.17 That's my question.18

That's what --19

Maybe the20 Streets Commissioner could be able to21 provide the answer to that. I don't22 know.23

Right. Right.24 Well, it used to be we had more manpower25 37 3/2/11 - LAW & GOV'T - RES. 1008481 and equipment to where we could handle a2 large part of this ourselves. Also we3 had the help of our -- the other4 departments, like Water and Recreation,5 you know, and Sanitation and stuff like6 that, who also chimed in and helped with7 the snow removal.8 Now, to try to answer your9 question about whether or not it will be10 faster if we did have the contractors, in11 some areas we could use the contractors.12 In some areas I think we could, but not13 all areas and not on a large scale as we14 been doing lately, because we've been15 having to do the work ourselves again16 anyway, you know. And I think like he17 said, if we start having these meetings18 again or some of the information to start19 being provided to us, it's possible that20 we can cut the cost of the snow removal21 down a lot, greatly.22

By reducing23 the amount of contractors and increasing24 the workforce of your local?25 38 3/2/11 - LAW & GOV'T - RES. 1008481

Yes. Yes.2

Okay. Thank3 you, Mr. Chairman.4

I don't know5 exactly how you meant that. I just6 wanted some clarity on that.7

Mr.8 Davis, talk a little bit more in the9 microphone.10

You don't11 necessarily have to increase the12 workforce. What Stan was saying is that13 all of us participate. I mean, all the14 departments have vehicles as well. So15 you don't have to increase the workforce.16 All you have to do is utilize the17 workforce that you have. That's what18 we're saying here today.19

So you can20 do it with the present workforce?21

That's exactly what22 we're saying here today.23

With the24 possibility of --25 39 3/2/11 - LAW & GOV'T - RES. 1008481

Just utilize what2 you have. I mean, even if it means3 departments working together in other4 areas, because you have customer service5 in the Water Department as well as you6 have in the Revenue Department. When7 major projects come up, just like, for8 instance, you had that project with the9 amnesty program and you had all of these10 people that could have performed that11 work, but then you decided that you12 wanted to outsource it. Well, what13 should have happened is, we should have14 all came to the table, utilized that15 information as to what that contract16 costs for them to contract that work out,17 because you have people already here in18 the City of Philadelphia performing that19 work. So all you had to do was utilize20 the customer services from the Water21 Department as well as the Revenue22 Department and any other customer service23 representative, like the Law Department,24 see what you have, and then you may not25 40 3/2/11 - LAW & GOV'T - RES. 1008481 have needed as many people.2

Good point.3

Can I make it a4 little bit clearer, Councilman?5

Sure.6

Maybe I might say7 the wrong thing there.8 It's not so much increasing the9 workforce, but need to stop decreasing10 the workforce, and then we'll have the11 manpower, you know, to take care of the12 situation.13

And I14 guess that's what Mr. Davis was talking15 about when he said about not filling16 vacancies.17

Absolutely.18

All right.19 Thank you.20 Thank you, Mr. Chairman.21

Okay.22 Thank you.23 Any other questions or comments24 for this panel?25 41 3/2/11 - LAW & GOV'T - RES. 1008481 Councilman Jones.2

Just one3 other quick question, which is something4 that I'll bring up a little later, but5 something for you to ponder.6 Do you remember the CEDA7 program?8

Yes.9

Do you have10 any statistics as to -- and for the11 record, the CEDA program was a12 job-training program where workers were13 brought in temporarily to fulfill14 training needs for the public, but --15

They were16 paid federally, right?17

Yeah, they18 were paid federally, and as the money ran19 out, people actually were matriculated20 into the workforce.21 Do you know how many people in22 your various departments actually had23 their origin from the CEDA program?24

I don't have that25 42 3/2/11 - LAW & GOV'T - RES. 1008481 number, but I know there was a good2 number, because I came in just when CEDA3 was on its tail end.4

I would ask5 that you research that and get that back6 to the Committee and the Chairman,7 because a part of the solution of this8 may well be some rendition of that to9 deal with temporary needs, whether it's a10 temporary gear-up for snow removal and11 then over a period of time, have that12 training matriculate into a permanent13 workforce, and as funding is available14 and as opportunities are available, we15 constantly replenish that workforce. And16 just as a footnote, that maybe at the end17 of the hearing we might talk about it.18

Yeah.19 Sure. I would guess most of those20 workers, though, probably are retired by21 now.22

They may23 well be.24

I think25 43 3/2/11 - LAW & GOV'T - RES. 1008481 so. That was a while ago. We're showing2 our age, Councilman.3

The CEDA was from4 the late '60s.5

That was6 probably the Nixon Administration, right?7

Stop8 snickering.9

I wasn't10 voting yet, I don't think. Okay.11

Thank you,12 Mr. Chairman.13

Thank14 you.15 Any other comments or16 questions?17 (No response.)18 COUNCILMAN GREENLEE:19 Gentlemen, thank you. Thank you very20 much. Thank you for all you do with the21 City.22 Our next witness or witnesses23 is our District Council 47.24 Mr. Coyle, I see you coming up25 44 3/2/11 - LAW & GOV'T - RES. 1008481 here. They were giving song lyrics. I2 know on the corners of Fairmount you sang3 once or twice, so if you have anything4 you want to offer here.5 (Witnesses approached witness6 table.)7

Ms.8 Scott, good morning. Good morning,9 everyone. Please identify yourself for10 the record and proceed. And we have your11 testimony.12

Good morning,13 Chairman Greenlee and other Committee and14 Councilmembers. My name is Catherine15 Scott and I am President of AFSCME16 District Council 47. With me today are17 David Mora, Vice-President of Local 2187,18 and Bob Coyle, an Executive Board Member19 of Local 2187. Thank you for the20 opportunity to present testimony to the21 Committee today on the issue of22 contracting out by the City of23 Philadelphia. I will confine my comments24 to the purchase of professional services25 45 3/2/11 - LAW & GOV'T - RES. 2 First, I would like to address3 the purchase of service contracts in the4 Department of Public Health. I would5 like to preface my comments by saying6 that the Union had great difficulty7 obtaining this information from the City8 and the information we received was9 dated, some of it dating back to 2004,10 with yearly addendums added. Our Union11 did two comparisons. District Council 4712 Exhibit-1 shows a comparison between13 contract employees and all civil service14 classifications. District Council 4715 Exhibit-2 shows a comparison between16 contract employees and District Council17 47-represented classes only. 20 The Exhibit-2 spreadsheet21 contains the contract number, the22 division in public health, the contract23 position title and the salary based on24 the hourly rate and numbers of hours25 46 3/2/11 - LAW & GOV'T - RES. 1008481 called for in the contract. The2 comparative is the equivalent civil3 service title, the City salary at Step 34 of the pay range, based on the hourly5 rate. 14 The comparable civil service15 positions were identified by reviewing16 the job descriptions in the contracts and17 matching them with similar or identical18 civil service positions. I would like to19 point out that the fringe benefits at 3620 percent for civil service positions is21 slightly inflated, because many of these22 positions are less than 30 hours per week23 and the City would not be paying health24 benefits, which would reduce the fringe25 47 3/2/11 - LAW & GOV'T - RES. 2 I would like to focus on an3 example of this wasteful spending. On4 of Exhibit-2, even though the5 contract is from 2004, it is being6 renewed on an annual basis. In 2004, a7 contract pharmacist was paid $109,2008 annually. It is likely that those costs9 are higher today. A civil service10 pharmacist starts at $63,926 and reaches11 maximum pay at $82,194 annually. 18 There are three civil service19 pharmacists. 25 48 3/2/11 - LAW & GOV'T - RES. 1008481 In one division in the Health2 Department, the City is paying $180,7203 annually more for just five employees4 because it is not authorized to hire City5 employees. 11 As you can see from our12 Exhibit-2, certain professional positions13 are routinely contracted out - physician,14 registered nurse, pharmacist, medical15 specialist, dentist and nurse16 practitioners. I have included a17 comparison of the hourly rate of these18 contract professional positions as19 opposed to the exact same civil service20 titles, which is Exhibit-4. 23 Our Union has raised these24 issues with the Department of Public25 49 3/2/11 - LAW & GOV'T - RES. 1008481 Health in a series of meetings, beginning2 in 2008 and continuing into 2009. The3 Department attempted to justify these4 contracts with a variety of explanations,5 which included they had difficulty6 recruiting because the salaries were too7 low and, therefore, not competitive. The8 residency requirement was an impediment9 to hiring. 12 Our Union pointed out that13 raising salaries was within the control14 of the Department, which would make the15 jobs competitive. 21 When those attempts failed, the22 Department officials stated that the23 Finance Department was the driving force24 behind the contracting out, because many25 50 3/2/11 - LAW & GOV'T - RES. 4 We attempted to arrange a5 meeting with the Finance Department and6 Public Health officials to discuss the7 issue. The meeting was scheduled and8 then cancelled by the City.

10 Another example of wasteful11 spending was brought to the City's12 attention by our Union. See District13 Council 47 Exhibit-3. 17 When our Union pointed out that the18 services should be done by City19 employees, eventually the Procurement20 Department agreed to delete the bundled21 services as an automatic addition to each22 computer purchase and view those services23 as options, saving the City up to $16024 per computer. According to Allan Frank,25 51 3/2/11 - LAW & GOV'T - RES. 1008481 the City has approximately 18,0002 computers which need to have the hardware3 updated every four years. 13 The adopted budget for Fiscal Year 201114 called for 1,027 full-time positions, but15 as of the report, only 864 positions are16 filled. 18 Conversely, Fiscal Year 201019 purchase of service analysis in on Table20 0-4 in the same report shows actual21 spending was $64,756,624. The Fiscal22 Year 2011 adopted budget authorized23 $69,267,458. Actual spending as of24 December 31, 2010 was $63,825,091, which25 52 3/2/11 - LAW & GOV'T - RES. 2 The City increased the purchase of3 services budget $4,510,834 in Fiscal Year4 2011 in Public Health. 15 Further, it would appear from a cursory16 reading of the Charter concerning17 contracts that competitive bids are not18 required for professional services19 contracts. 21 We believe that City departments have22 become comfortable contracting out work,23 comfortable with the vendors who provide24 the services, comfortable with the25 53 3/2/11 - LAW & GOV'T - RES. 5 What is also clear is that City6 Council must assume oversight7 responsibilities for the purchase of8 service process. This resolution calls9 for this Committee to conduct a10 comparative analysis of proposed11 contracts in order to further the goals12 of cost efficiency and local job13 creation. 25 54 3/2/11 - LAW & GOV'T - RES. 2 million6 annually based on limited information7 available at the time. 23 Thank you for the opportunity24 to testify, and I'm happy to answer any25 55 3/2/11 - LAW & GOV'T - RES. 2

Thank3 you, Ms. Scott.4 Councilman Green.5

Thank you6 for your testimony. Basically it is the7 least -- what you're describing is the8 least transparent aspect of City spending9 and is something that my office, we've10 been focused over the last few years on11 trying to find efficiencies within12 government, as you know, pay attention at13 budget hearings. This year we intend to14 try to look through the contracting15 provisions in the proposed budget to try16 to understand whether or not those17 contracts are more or less expensive than18 the City employees they replace, because19 I think what we look at in the budget are20 inputs and we look at how much this21 costs, how much this service costs, how22 much is this contract going to be, how23 much is this employee going to cost, but24 we don't look at outputs. And so we have25 56 3/2/11 - LAW & GOV'T - RES. 1008481 a lot of professional service contracts2 and other contracts, and I can't remember3 the total off the top of my head, but I4 think it's over $650 million out of $3.85 billion that are money that we pay, which6 is a huge portion of our General Fund,7 that are money that we pay to people who8 we don't ever really call here and hold9 accountable. We don't know what those10 services are provided. We don't know11 what we get in return for the money that12 we pay out. And I just wondered sort of13 if you had any general comment about14 that, but also what specific things can15 we do as a Council that they may do in16 other cities or other places to make sure17 that there is accountability with respect18 to outside contract spending.19 I mean, you mentioned a20 cost-benefit analysis. I'm not sure we21 really did one before we had the Synagro22 contract, which is a DC 33 issue. I'm23 not sure we do a cost-benefit analysis24 when we hire an outside law firm versus25 57 3/2/11 - LAW & GOV'T - RES. 1008481 deciding to have additional lawyers in2 the Law Department on specific issues or3 specific matters, et cetera. But I will4 be shocked to learn -- and we'll find out5 from the City when they testify -- that6 they don't do a cost-benefit analysis7 before putting out an RFP. It is the --8 I mean, John Kennedy brought cost-benefit9 analysis to government for the first time10 in the early 1960s when government11 spending was sort of -- for the first12 time, departments had to present those to13 do spending and for their budgets.14 And so I don't know if you're15 aware of models around the country or16 other places where municipalities have17 dealt with this issue in a way that you18 think is meaningful that we should be19 considering. That's my question.20

Well, it's a21 multi-point question. Let me first say22 that if your office is able to get the23 contracts that the City lets on24 professional services from the City, then25 58 3/2/11 - LAW & GOV'T - RES. 16 I think that the other part of17 the problem, though, is that there are18 not RFPs done for the kinds of contracts19 that I'm talking about. At least I've20 never seen them. I think that the City21 has continuing contracts with -- let's22 take Public Health, for example. They23 have continuing contracts with either24 pharmacy service providers or hospitals,25 59 3/2/11 - LAW & GOV'T - RES. 4 I would be very interested in5 also finding out if there is any6 cost-benefit analysis, because as the7 specific example that I gave you on8 pharmacists, the Health Department's9 position is they are spending 180 -- a10 minimum of $180,000 a year more on11 contract pharmacists than they are on12 civil service pharmacists because, they13 say, they cannot get financed to14 authorize additional civil service15 positions. 19 And, yes, I am aware of the20 type of cost-benefit analysis that is21 done. Our Union was very instrumental in22 pushing the Redesigning Government23 language that was negotiated in the 199624 contract. We did have a limited number25 60 3/2/11 - LAW & GOV'T - RES. 1008481 of Redesigning Government Initiatives2 back in late '90s and some of them3 continued into the early 2000's. 7 There has not been a Redesigning8 Government Initiative meeting with the9 Nutter Administration in any department10 over any issue having to do with contract11 services. 24 In addition, just as was25 61 3/2/11 - LAW & GOV'T - RES. 1008481 testified by Bobby Davis earlier, we are2 not receiving any notification of3 contracts prior to them being let. There4 is no 30-day notification that's5 happening. There is no meeting before6 the contracts are let. 13 I'm a contract worker. 15 So we would be very interested16 in engaging and making this process more17 transparent. 25 62 3/2/11 - LAW & GOV'T - RES. 1008481 So it's a very significant amount of2 money. Now, I'm not representing that3 all of that is City work. 10

So are you11 aware of, in any other jurisdiction, a12 requirement to -- it sounds like there is13 a requirement to give you notice and that14 currently that law is being violated.15

Well, it's a16 contract provision. I don't believe17 there's anything in -- as I testified, I18 think the City Charter does not require19 competitive bidding for professional20 services.21

Right.22

But we have a23 contract provision that is being24 completely ignored.25 63 3/2/11 - LAW & GOV'T - RES. 1008481

Okay. Yeah.2 I have 1.14 billion is going to be the3 actual spend, which is over 25 percent of4 our budget, and we do very little5 oversight or accountability on that. I6 certainly will ask the Administration to7 provide the Chair with a full response to8 your Right to Know Request to this9 Committee, and maybe if we get it first,10 we can share it with you.11

Thank you.12

Thank you.13

Just one14 question, and I know Councilman Jones has15 questions. On that Right to Know16 Request, did you get an answer at all,17 like we'll get back to you?18

Yes. We got --19 well, we did get some information, which20 actually was the basis for doing Exhibits21 1 and 2. We did get some information22 from the City. The explanation that we23 gave was that there is no central24 repository for contracts, that they rely25 64 3/2/11 - LAW & GOV'T - RES. 1008481 on the individual departments to provide2 them with the information. And so that3 requires them to go to 56 or 58 different4 departments, have those departments5 cooperate in providing the information on6 contracts. And, you know, it's a very7 laborious process to even try and get the8 information.9 So we did get a partial10 response to our Right to Know Request,11 but it was only partial. It was partial.12

Okay.13 Thank you.14 Councilman Jones.15

Thank you,16 Mr. Chairman.17 In the first testimony, we got18 some really good anecdotal evidence about19 commonsense ways to approach things like20 grass cutting, snow removal, water mains,21 but in this, this cost analysis that22 you've done in the Water Department gives23 us at least some litmus by which other24 analysis should occur, and when we start25 65 3/2/11 - LAW & GOV'T - RES. 1008481 talking about issues of transparency and2 Right to Know, how important budgetarily3 it is to have these savings.4 One of the suggestions that5 might come out, Mr. Chairman, is that6 there is a Private Sector Task Force that7 is supposed to be working with government8 to analyze how we can do things more cost9 effectively and better, which might be a10 juxtaposition to what the labor11 movement's position is. But to look at12 and help come together and start to talk13 about, well, what came first, the chicken14 or the egg, what's more valuable,15 contracting out or doing it in, in an16 objective manner so that we can really17 get this information and make some hard18 decisions about which way to go. And so19 I'm hoping that the Private Sector Task20 Force may include some of this type of21 analysis.22 Cathy, I think it's also23 important for us to constantly have this24 monitored so that we know where the25 66 3/2/11 - LAW & GOV'T - RES. 1008481 needle is and which way it's going and at2 least get a first right of refusal, if3 you would, to do things internally, and4 I'm hoping that as a result of these5 hearings, we start to look at this as we6 approach the budget process and try to7 make as many savings as possible, that we8 get input from all sides, all sides, so9 that we can make good decisions on behalf10 of the City.11 At the end of the day, we have12 to have the dialogue, and I'm hoping that13 when the Administration gets a chance to14 testify, some of these issues that have15 been raised by you, they can give some at16 least accountable answer for, and I'm17 hoping that.18 But thank you for the analysis19 that you've done. During the budget20 process, you mentioned this. I heard it21 then, which prompted us as a Committee22 and Council to further look into this,23 and I want to thank you for that kind of24 notification, particularly in the Health25 67 3/2/11 - LAW & GOV'T - RES. 1008481 Department and other areas within 47.2

Thank you,3 Councilman. We would be happy to be a4 part of any of that process. This is --5 you know, as you mentioned earlier, these6 are really tough times for everybody, and7 our members take very seriously that they8 have a professional job to do, and they9 also want to make sure that the City is10 not spending more money than it should be11 spending. So we do hear from our members12 concerns about contracting out, and I13 think we can give you an anecdotal14 example. Bob Coyle, for example,15 understands the pharmacist issue well,16 and maybe Bob could talk a little about17 even the contract employees, the18 challenges when they are doing the work.19

Before he20 does that, one of the things that you21 talked about before is that a lot of them22 live outside of the City, don't have to23 comply with residency laws. A lot of24 them don't have to be involved -- they25 68 3/2/11 - LAW & GOV'T - RES. 1008481 can be involved in politics, where Union2 members can't be.3

That's correct.4

And the fact5 that they bypass other issues germane to6 civil service workers and get to do their7 thing, if you would. And I remember that8 from your testimony and questioned why we9 allow that to happen.10 Thank you, Mr. Chairman.11

Just12 identify yourself for the record, please.13

Bob Coyle,14 Executive Board Member, Local 2187.15 In the Health Department, there16 are eight health centers. There's a17 pharmacist at every health center. Our18 civil service pharmacists fill on the19 average of anywhere between 350 and 40020 prescriptions a day. When a contract21 pharmacist comes in, because they are not22 familiar with the system, they are23 consistently filling anywhere between 10024 and 150 fewer prescriptions per day. So25 69 3/2/11 - LAW & GOV'T - RES. 1008481 as you can imagine, not only is there a2 significant savings with more civil3 service pharmacists, but it also becomes4 a public health issue when John Doe, the5 patient, comes in and usually if he's6 seeing a civil service pharmacist, more7 than likely he will get his prescription8 filled by the end of the day. When we9 make these people come back afterwards,10 it becomes a public health issue also.11

And what12 is the reason why they --13

They're not14 familiar with the system. It's anything15 like -- you're at a particular work16 station. You're familiar with the17 layout. You know how things are done.18 Because of the shortage of the number of19 civil service staff; for instance, if the20 pharmacist at Health Center No. 5 at 20th21 and Berks calls out sick today because22 we're short staffed, they will call an23 agency, and an agency pharmacist would24 show up today and maybe the first time25 70 3/2/11 - LAW & GOV'T - RES. 1008481 they've ever been at that health center2 and they're not familiar with the system3 at all, and that's one of the reasons4 they may not be as efficient as someone5 who is permanently assigned to an6 assignment.7

And I8 would think that was -- when I said why,9 the answer is there's not enough10 people -- they haven't filled enough of11 the positions.12

There are only13 three civil service pharmacists. That14 means --15

Three?16

That is correct.17 Each pharmacist -- again, there's eight18 health centers. By state law, there's a19 pharmacy manager at every pharmacy.20 That's a civil service-represented21 position. There should be a pharmacist22 also at every health center. We only23 have three. We're short five. That24 means every day at at least five25 71 3/2/11 - LAW & GOV'T - RES. 1008481 pharmacies we are using a contract2 pharmacist, which is making -- and the3 contract that I have is dated several4 years. Back then, they were making $5755 per day. Not the pharmacist; obviously6 the agency who is sending the pharmacist7 out. But the agency is making $575 a day8 they're charging the City to have a9 contract pharmacist there.10 When I met with the HR manager11 just last week with the Health12 Department, I brought this to her13 attention. She had told me that they14 have approval to hire two more15 pharmacists, but that's it. Even if16 those pharmacists get hired, we are still17 short three pharmacists, and this is18 going to continue ongoing, and there's no19 plans to hire any additional at this20 time.21

Now, was22 there any -- in that discussion, was23 there any reason given why they can't24 fill it? I mean, if they're paying the25 72 3/2/11 - LAW & GOV'T - RES. 1008481 private contractor --2

It was a3 straightforward conversation. I mean, I4 said, Listen, you're paying so much more.5 She acknowledged it was an issue, but she6 also said that it was an issue out of her7 control. And she agreed with the8 frustration. It just doesn't make sense.9

Right.10 Right.11 Councilman DiCicco.12 COUNCILMAN DiCICCO: Salary13 range with the pharmacist in private14 sector versus the public sector, could15 that be a reason why some of those16 positions aren't being filled? Maybe17 people are not applying?18

It is, sir. There19 is a disparity between the salaries of20 nurses and pharmacists, but there's also21 trade-offs. For instance, nurses like to22 come to the City because they're working23 Monday through Friday. They're not24 working nights. They're not working25 73 3/2/11 - LAW & GOV'T - RES. 1008481 weekends, and along with the benefit2 package. So there is a trade-off.3 But, yeah, pharmacists, when4 they're just graduating from school,5 they're making six figures a year at a6 CVS.7 COUNCILMAN DiCICCO: I thought8 they were. That's why -- I think that9 obviously poses a problem even if we --10

Well, you're11 correct, and we have raised that with the12 Department. As a matter of fact, the13 Union has been successful at getting14 several pay increases for the pharmacist15 classification.16 The other benefit that the17 Health Department has is, they have the18 capability of hiring people into higher19 steps. They do not have to hire people20 at the lowest step. So if someone comes21 in with the qualifications, they could22 actually hire that person at the top23 step, Step 5. And frequently they are24 doing that, they are hiring them at Step25 74 3/2/11 - LAW & GOV'T - RES. 1008481 4 or Step 5.2 Even if we were to3 significantly raise the salary of the4 pharmacist, it would be still cheaper for5 the City to have its own pharmacist,6 because the discrepancy that we are7 talking about here is so great that even8 if you raise the salary $10,000 or9 $15,000 a year, the City would still save10 significant money.11 COUNCILMAN DiCICCO: Do you12 think in your experience, though, if you13 raised it 10,000 or 15,000 that you would14 be able to fill those positions? Because15 it still seems to be significantly less16 than in the private sector.17

We did not -- at18 one time we had no difficulty having19 pharmacists for the City. All of the20 pharmacy positions -- pharmacist21 positions in the City were filled.22 COUNCILMAN DiCICCO: How long23 ago?24

Well, when they had25 75 3/2/11 - LAW & GOV'T - RES. 1008481 enough for all of the positions.2 I went on the City's website3 yesterday looking to see if they are4 recruiting pharmacists for the two5 authorized positions they have. It lists6 no job openings. They're not attempting7 to hire pharmacists.8 COUNCILMAN DiCICCO: Well,9 that's a different issue, then.10

But that's the11 basic issue. Even if they have12 authorized positions, if you don't13 attempt to recruit, you'll never find out14 whether you can fill the positions or15 not.16 COUNCILMAN DiCICCO: I'll agree17 with you there. I just was curious.18 Again, I have a family member who is a19 pharmacist and they came out of college20 and they pay some significant dollars.21

Absolutely.22 COUNCILMAN DiCICCO: All right.23 Thank you.24

And what25 76 3/2/11 - LAW & GOV'T - RES. 1008481 is the highest level for a pharmacist2 now, a City?3

Eighty-three4 thousand. It's on the sheet. I believe5 it's 84,000.6

Okay.7 Any other questions, comments?8 (No response.)9

Please10 let the record reflect that Councilman11 Kenney, the Vice-Chair of the Committee,12 is also present.13 Being no further questions,14 thank you all very much. Thanks for all15 you do.16 Our final panel that I have17 listed is the Administration.18 (Witnesses approached witness19 table.)20

Good21 morning, Mr. Abernathy.22

Good morning.23

I think24 you know how this works. Please identify25 77 3/2/11 - LAW & GOV'T - RES. 1008481 yourself for the record and proceed.2

Good morning,3 Chairman Greenlee and members of the4 Committee. My name is Brian Abernathy,5 Chief of Staff to the Managing Director.6 I'm joined today by representatives of7 the Departments of Public Property,8 Procurement and Finance to testify and9 answer questions related to Resolution10 No. 100848.11 I'd like to take this12 opportunity to thank Councilman Jones for13 his commitment to providing local14 residents with job opportunities and for15 furthering this conversation. Like the16 many members of Council who take deep17 interest in this issue, the Nutter18 Administration is committed to offering19 Philadelphians as many opportunities as20 possible, while balancing the cost and21 efficiency of our contracts for22 Philadelphia taxpayers.23 To start this discussion, the24 Finance Department and I would like to25 78 3/2/11 - LAW & GOV'T - RES. 1008481 quickly outline when and why we contract2 with outside vendors, specifically for3 construction contracts in my regard.4 Construction contracts are5 offered to outside firms because the City6 cannot offer competitive wages to skilled7 tradesmen, because the City cannot afford8 the overhead that most construction9 companies carry and because of the10 efficiencies of employing, through11 contractors, the necessary workforce only12 on a project-specific basis.13 These contracts are awarded for14 various types of construction, ranging15 from water and sewer infrastructure to16 street paving to the construction of new17 facilities. Although the professional18 services portion of such work is handled19 like other professional services20 contracts, through the RFP process, the21 award of contracts for actual22 construction itself is managed by the23 Procurement Department through a24 competitive bidding process. Unlike25 79 3/2/11 - LAW & GOV'T - RES. 1008481 professional service contracts, these2 types of contracts must be awarded to the3 lowest responsible responsive bidder.4 Of course, the City has5 developed a significant structure for6 seeking to promote the inclusion of7 minority firms in connection with the8 work performed under these contracts let9 under both the low bid and RFP processes,10 while the Office of Economic Opportunity11 working closely with the contracting12 departments in that regard. In recent13 years, largely through the use of EOPs14 for which Council has advocated, we have15 also made strides in seeking to promote16 the inclusion of hiring of historically17 disadvantaged and our own Philadelphia18 workforce in connection with large City19 projects.20 Workforce development is also21 an important area of consideration in22 addressing the need to promote local23 workforce hiring in connection with all24 City work. As a city, we are investing25 80 3/2/11 - LAW & GOV'T - RES. 1008481 in a workforce system and job-training2 partnerships that are industry-led,3 aligned with the region's economic4 development, educational and human5 capital strategies and career oriented to6 ensure adults have the skills needed to7 compete in an increasingly competitive8 global economy.9 This is a very wide-ranging10 topic, and rather than go on at length11 with respect to any of these various12 aspects of City contracting, I'd like to13 ask the wonderful and beautiful Judi14 Cassel, Chief of Staff to the Finance15 Director, to testify on professional16 service contracts. Following her17 testimony, we are available to answer18 your questions and look forward to this19 hearing furthering our ongoing dialogue20 on these issues.21 COUNCILMAN GREENLEE:22 Ms. Cassel, please.23

Thank you. Good24 morning, Chairman Greenlee and members of25 81 3/2/11 - LAW & GOV'T - RES. 1008481 the Committee. My name is Judi Cassel,2 Chief of Staff to the Finance Director,3 and I'm here to testify on and answer4 questions related to Resolution No.5 100848.6 For professional services7 contracts, all departments are required8 to follow the process and procedures as9 delineated under Chapter 17-1400 of The10 Philadelphia Code. Specifically,11 departments must announce new contract12 opportunities on the City's website,13 review the applications submitted for14 these opportunities, announce again on15 the City's website their notice of intent16 to contract, and enforce eligibility17 limits based on campaign contributions.18 Not only does this process promote19 transparency, the open process increases20 the overall competitiveness of the21 applicant pool for professional services22 contracts by inviting any interested23 applicant to apply.24 The Office of the Director of25 82 3/2/11 - LAW & GOV'T - RES. 1008481 Finance is responsible for ensuring that2 each department follows the procedures3 under Chapter 17-1400. However, the4 decision to contract out services is made5 within each department itself. Each6 department will have its own reasons for7 contracting out services. These reasons8 could include, but are certainly not9 limited to, time-limited projects that10 cannot justify the hiring of permanent11 full-time staff, projects requiring very12 specialized skill sets, and direct13 services for social service programs14 which the department may not have the15 internal capacity to provide.16 Furthermore, because departments can17 consider a number of factors when18 awarding professional services contracts,19 such as cost, quality of the applicant20 experience, quality of solution proposed21 by the applicant, among others,22 departments will also have unique reasons23 for selecting the contractors with whom24 they are contracting.25 83 3/2/11 - LAW & GOV'T - RES. 1008481 This concludes my testimony.2 I'm happy to answer any questions you may3 have at this time.4

Thank5 you.6 Councilman Goode, then7 Councilman Kenney, then Councilman Green.8 Councilman Goode.9

Thank you,10 Mr. Chairman.11 Good morning to both of you.12 I'm first going to make some comments13 that I would like you to refute, if14 possible, and then I have a couple15 questions.16 Let's start with the fact that17 this is not just a finance issue but an18 economic issue, that it's clear that DC19 33 and DC 47 members have to live in the20 City. So we know that people who are21 doing the work live within the City,22 spend within the City and that those23 dollars stay within the City.24 At some point, a decision was25 84 3/2/11 - LAW & GOV'T - RES. 1008481 made to take that work away from those2 employees that are local and possibly3 contract out to places that are not4 local. Then along the way it seems a5 decision has been made in many cases to6 keep giving those contracts to the same7 contractors year after year after year.8 In other words, Cathy said it was stupid9 financially, but if that is true, isn't10 that stupid economically?11 That's it.12

So just -- well,13 in terms of -- I hear what you're saying14 about the economic development issues,15 and I agree with you, and one of the16 things I did yesterday was to take a look17 at -- and this is just for professional18 services contracts, but to try to figure19 out what proportion, either in terms of20 numbers of contracts or dollar amounts of21 those contracts, go to local businesses.22 It's not easy to figure out. I think in23 Procurement, there's actually an LBE24 designation. We don't have that in25 85 3/2/11 - LAW & GOV'T - RES. 1008481 professional services contracts. What we2 did was use a local address for -- a3 proxy for that.4 In any case, when we took a5 look at that, we found that just over 676 percent of contracts were with7 Philadelphia businesses or businesses8 that had a Philadelphia address, and9 that --10

Excuse me.11 You're referring to professional service12 contracts or all contracts?13

I am, yeah. This14 is just professional services contracts.15 And that just over 83 percent of the16 contract dollars went to businesses with17 a Philadelphia address. And, again,18 that's professional services contracts.19 Because I agree, if we're talking about20 economic development, I think I would say21 it's more than just about City employees;22 it's about Philadelphians having jobs.23 So I think these data provide24 some information about how much is25 86 3/2/11 - LAW & GOV'T - RES. 1008481 staying within Philadelphia of our2 contract -- for our professional services3 contracts dollars are staying within4 Philadelphia versus going outside.5 And I know -- I heard what6 Cathy Scott said about contracts going to7 the same vendors year after year, and I8 don't have data on that.9

That's one10 of the questions, so if you can provide11 that data.12

Yeah, I could13 provide that data. Sure. Yeah.14 COUNCILMAN GOODE:15 Mr. Abernathy?16

Currently17 there's 175 LBEs registered in the City.18 I don't have the data of how many19 construction contracts are currently20 owned or let to those LBEs. I'm happy to21 provide that data at a later time.22

There are23 more than construction contracts. My24 question -- two questions I want answers25 87 3/2/11 - LAW & GOV'T - RES. 1008481 to be sent to the Chair is, what2 percentage of contract dollars go to3 firms outside the City and the number of4 contractors on an annual basis that are5 actually new contractors and what6 percentage are, in other words, repeat7 contractors.8 The reason why this is a9 serious issue economically in the simple10 sense is because it is stupid to11 basically give money away to people12 outside of the City when the City itself13 has economic needs. That sort of runs14 parallel with our other concern in terms15 of City contracting and in terms of16 whether there's enough diversity. Some17 of those issues in terms of using City18 workers obviously answer some of those19 diversity questions. So even as we are20 struggling to get to 25 percent or more21 diversity on City contracts, we would22 better serve those interests the more we23 keep that work within City government.24 Now, I'm not making an argument25 88 3/2/11 - LAW & GOV'T - RES. 1008481 strictly for keeping the work within City2 government for diversity's sake, but if3 you're not going to do the right thing in4 terms of privatizing that work in a5 diverse way, then it's sort of a double6 slap in the face. It's a definite double7 slap in the face when, as it was revealed8 through last year's budget hearings, that9 you were contracting out stuff like10 daycare, maintenance, landscaping, which11 sounds crazy, and when questioned12 about -- I think Councilman Jones had the13 question -- about why we actually14 wouldn't give that work to a local firm,15 because I believe that work was done by16 an outside firm, let alone not have that17 work done by our own City workers, the18 answer was because that contractor knows19 exactly how we want it cut.20 Now, if you have City workers21 who have done that before and are already22 going to be working for the City,23 wouldn't it make more sense to tell them24 how you want it cut?25 89 3/2/11 - LAW & GOV'T - RES. 1008481

And,2 Councilman, you're raising a specific3 issue, and, again, the issues raised4 around the Water Department and their5 lawn maintenance, I'm not familiar with6 the issue. I'm happy to contact the7 Water Commissioner and provide a decent8 answer. I can't do that today.9

So aside10 from a cost-benefit analysis that would11 deal with the financial issues here, I'm12 raising the much larger issues, economic13 issues, and just making a simple14 statement. I'm going to keep it as a15 simple statement.16 It's an economic issue of17 whether you're throwing away dollars18 outside the City. It's a diversity issue19 in terms of whether you're throwing away20 dollars outside the City and not doing it21 in a diverse way and whether we actually22 benefit the City economically in terms of23 job creation, as Councilman Jones is24 aiming for through contracting, whether25 90 3/2/11 - LAW & GOV'T - RES. 1008481 you've actually helped the City more by2 just doing it a smarter way. And I hope3 I've pointed out so far that regardless4 of what you want to talk about in terms5 of contracting process and cost-benefit6 analysis, that economically what we're7 doing is stupid.8 Thank you, Mr. Chair.9

Thank10 you.11 Before I recognize Councilman12 Kenney, I just add -- and I have a13 feeling the other Councilmembers may ask14 for information, too. If I could ask15 that -- I'm not going to hold you to a16 specific day, but if you could try to get17 us that information as quickly as18 possible, because as Councilman Jones19 said earlier, this also spins off into20 budget decisions and that kind of thing.21

Understood.22

So I23 would appreciate -- and obviously during24 the budget process, there's going to be25 91 3/2/11 - LAW & GOV'T - RES. 1008481 other requests. So if you could get that2 to us as quickly as possible, at least3 some of what Councilman Goode asked. It4 doesn't sound like it should take long.5 That being said, Councilman6 Kenney.7

Thank you,8 Mr. Chairman.9 I wanted to preface my comment10 and question by saying that I recognize11 that you haven't been here the entire12 time we've had problems with outside13 contracting and outside contractors, but14 my main question deals with quality15 control. Who is the project16 manager/managers, the people who hold the17 contractors' feet to the fire relative to18 getting work done? And I'll give you19 some examples.20 I know it probably was related21 to stimulus dollars because we spent a22 lot of money ripping up streets and23 putting them back together again to get24 people back to work, and I understand25 92 3/2/11 - LAW & GOV'T - RES. 1008481 that, and we're probably spending federal2 money that wasn't ours anyway, but the3 street where my home is was reconstructed4 four years ago, five years ago, and a5 year ago it was reconstructed again. The6 contractor was a disaster, towing cars of7 neighbors, not knowing where they put8 them, not complying with requirements for9 water trucks to be sprayed at the end of10 the day, creating a dust-ball effect,11 foul-mouthed, annoying workers who argued12 with neighbors and created a scene every13 morning and every night, contractors who14 were hired to redo rec centers who decide15 on their own that once they start work,16 they got another job somewhere else, they17 pull off their workers and they come back18 in three weeks, creating an increase in19 cost, delay in the job being done,20 something as simple -- and Councilman21 Goode mentioned landscaping. We spent22 private dollars in a rec center in South23 Philly to have the overused field seeded24 and aerated to get some grass on it so25 93 3/2/11 - LAW & GOV'T - RES. 1008481 the kids weren't playing on hard-packed2 dirt. I drove by one morning and an3 outside contractor was mowing the grass4 that hadn't grown yet, because that was5 his scheduled time to do it. I had to go6 wave him down across the field like a7 crazy person, running across the field,8 waving him down to stop, while he was9 mowing dirt that we had just aerated and10 seeded.11 There seems to be no one -- and12 either there are people or they're in13 individual departments, but there seems14 to be no one place that folks can go to15 to complain. Now, if it's a City worker16 that misses a trash pick-up or spills17 something in the street or something18 happens, I have somewhere to go. I have19 a commissioner to call. I have a20 supervisor to call. People in the21 neighborhood have 3-1-1 to call or they22 have their Councilperson to call.23 Who herds these calves? Some24 of them need to be herded. And we're25 94 3/2/11 - LAW & GOV'T - RES. 1008481 wasting money, we're sending some money2 outside of the City, we're not getting3 our money's worth, and it seems to be a4 total chaos in some instance.5 Now, there are instances where6 we have water and sewer construction7 projects that go well and things get done8 and we get our money's worth, but there9 seems to be an attitude of independence10 because they're not City workers that11 somehow they can treat people differently12 and not have any repercussions. And I13 understand that there's also street14 construction projects and other types of15 projects that have an impact on the16 community. There's supposed to be a17 person assigned from that company to be a18 liaison -- it's like, Where did they take19 my car?20 I don't know, dude. Go find21 it. Call the police.22 I mean, that kind of stuff. So23 who is in charge of that? Who is the24 project manager for the City?25 95 3/2/11 - LAW & GOV'T - RES. 1008481

Generally2 speaking, on all the professional service3 contracts, the departments themselves are4 managing those projects, and departments5 will have someone assigned to help --6

So they go7 out and check the quality of the work?8

Can I just say, if9 it's a professional services contract,10 that's right, there'll be a departmental11 project manager. There are about 2,000,12 give or take a couple hundred, depending13 on the year, but on average, about 2,00014 professional services contracts each15 year. There is probably a very wide16 range of kind of ability to manage17 projects across those 2,000 contracts, I18 think it's fair to guess. There isn't a19 centralized project management entity in20 the City.21

Should22 there be?23

I will say --24 well, one of the things our office, the25 96 3/2/11 - LAW & GOV'T - RES. 1008481 contracting office, is doing -- and2 actually it's happening right now -- is,3 we're giving -- I'm not, but the folks4 who work for me are giving a series of5 trainings over last week and the next6 coming weeks on project management and a7 couple other areas for literally hundreds8 of City employees who have responsibility9 for contracts.10

So we don't11 have one high-level individual who is in12 charge of capital projects?13

I'm sorry. I14 wasn't talking about capital.15

Many of16 these contracted construction services17 are capital projects.18

Right.19

Who is the20 over -- who oversees this stuff?21

Generally for22 capital projects for construction, for23 building a rec center, et cetera,24 generally the Department of Public25 97 3/2/11 - LAW & GOV'T - RES. 1008481 Property will handle that contract.2

What's the3 Rec Department's responsibility? Don't4 they have a group of people who do that,5 too?6

They're7 certainly involved.8 And, actually, Commissioner?9 (Witness approached witness10 table.)11

The other12 issue too, to be fair, there's not enough13 City workers that are to do the job14 they're being responsible to do. So15 everybody -- it seems that -- so they're16 overburdened and overworked and can't get17 to the stuff they need to get, and the18 private contractors are totally free. If19 they're a good, competent company who has20 pride in what they do, there's no21 problem, but if they're not, there's that22 mess.23 So I don't want to dump it all24 on departmental people who are25 98 3/2/11 - LAW & GOV'T - RES. 1008481 responsible for this kind of work,2 because there's so many jobs that they're3 responsible for doing.4 So how are we getting our5 money's worth in outside contracting if6 we don't monitor the quality and7 timeliness of the work they're doing and8 we don't hold their feet to the fire?9 How do we get a company who leaves a job10 and doesn't come back for two weeks, how11 do we get them back on the job?12 COUNCILMAN DiCICCO: Could I13 just do a point of order on that? Going14 back to the rec center, I had that15 problem with Columbus Park a couple years16 back, and I think at the time when we17 brought up this open-endedness, if you18 will, on the contract, it was because19 there was never a date scheduled for20 completion. A contract was awarded -- I21 don't know if that's been addressed. I22 mean, a couple years ago I remember23 bringing this up at either the budget24 hearings or someplace else.25 99 3/2/11 - LAW & GOV'T - RES. 1008481 A contract gets awarded to a2 private contractor to do renovations or3 rebuild a rec center, but there was no4 date for completion. So, in theory, they5 could have spent ten years, and I know6 almost seven in mine. But I think in7 Councilwoman Tasco's district, it was8 over ten years before a rec center was9 completed, because the contract was not10 specific. You have a start date, must be11 completed by a certain date, and if not,12 then there should be some penalties. I13 learned that many, many years ago when I14 worked for the Department of15 Transportation on highway construction.16 You had a start date and you had a17 completion date which you had to meet.18 If not, there was a penalty. And there19 was also a reward for completing before a20 schedule.21 So kind of where Councilman22 Kenney is, has that been addressed? Has23 there been any change in the way we let24 contracts?25 100 3/2/11 - LAW & GOV'T - RES. 1008481 COUNCILMAN GREENLEE:2 Commissioner.3 COMMISSIONER SCHLOTTERBECK:4 Joan Schlotterbeck, Public Property5 Commissioner.6 I'm going to start. I'm going7 let Gary take over.8 I think that we're trying9 desperately to fix problems that we have,10 and one of the things that I believe used11 to happen, we would use the citywide's12 requirements contract, and that's how13 those kinds of things happened. So we14 had a mechanical contract. We would just15 have a general, if you will, like a16 million dollars in that contract and, as17 needed, we would engage those folks.18 I think -- and Gary can correct19 me if I'm wrong. I think that's how we20 would have a project start. It was a21 quick fix, if you will, and it was sort22 of open-ended, and they were overbooked,23 because we had the only game in town. So24 they would be able to basically spread25 101 3/2/11 - LAW & GOV'T - RES. 1008481 their resources across various projects,2 and we would be left with incomplete work3 all over the City.4 We're working desperately hard5 to fix processes that are internal right6 now, and that's one of them, and we're7 working on a job order contracting8 system. Gary, who is to my left -- I'm9 going to let him take over in a minute --10 he's done an amazing amount of work11 internal with Procurement, with Law and12 getting the buy-in and the ability to do13 this new way of doing business, what will14 eliminate those kinds of open-ended15 contracts.16

But I think17 the overall question I have is, should18 there be one department or one individual19 that's responsible for monitoring all of20 the work that's done in Rec, Public21 Property, Streets? Should that be22 centralized or not?23 COMMISSIONER SCHLOTTERBECK:24 Okay. Well, Public Property's Capital25 102 3/2/11 - LAW & GOV'T - RES. 1008481 Budget Division is responsible for all2 capital projects.3

Including4 Streets?5 COMMISSIONER SCHLOTTERBECK:6 With the exception of Streets, Water,7 Airport and Commerce.8

But that --9 COMMISSIONER SCHLOTTERBECK: So10 we do all Rec, Fire, Police.11

But in all12 fairness, that's kind of uncentralized,13 too, if you're not responsible for that14 many other areas that are not -- for15 example, in the Streets reconstruction16 question, who determines -- I mean,17 didn't somebody know that street was done18 four years ago in the Streets Department?19 So we can get the street done, but we20 don't have to do that one. We can do one21 that needs to be done. So, I mean, all22 that is what's frustrating, I guess.23 COMMISSIONER SCHLOTTERBECK:24 Understood.25 103 3/2/11 - LAW & GOV'T - RES. 1008481

And it2 makes, I think, the residents say, What,3 are you guys crazy? We just had this4 done and you're doing it again. And I5 think that engenders an attitude in6 people that we don't know what the -- the7 right hand knows what the left hand is8 doing.9 COMMISSIONER SCHLOTTERBECK:10 Well, I think to answer it very11 broadly -- and I'm really not -- it's an12 administrative decision. But the two13 enterprise funds, I don't think we would14 ever want to mix those funding sources.15 I think that's one thing.16

That would17 be Airport?18 COMMISSIONER SCHLOTTERBECK:19 The Airport and Water. So I think if20 there was any desire in the21 Administration to centralize, we would22 not -- I would not think we would include23 those.24

I'm not25 104 3/2/11 - LAW & GOV'T - RES. 1008481 talking about centralizing the choice of2 projects. That's up to the departments.3 COMMISSIONER SCHLOTTERBECK:4 Centralizing the work?5

With the6 Council and the Administration to7 determine what needs to be done. I'm8 talking once the contract is given,9 awarded, who rides herd over these10 outside contractors?11 COMMISSIONER SCHLOTTERBECK:12 The individual departments letting the13 contract.14

I think15 that's problematic. I really do. And16 it's problematic because it's not17 centralized, but it's more so problematic18 because there's not enough people within19 those departments to do that. I mean,20 it's like -- it's the same old question21 as we get, why don't we enforce Licenses22 and Inspections the way we should? Well,23 because there's not enough people to go24 out and enforce it. So it's not going to25 105 3/2/11 - LAW & GOV'T - RES. 1008481 get done properly because there's not2 enough personnel.3 Why don't we collect all the4 taxes and fees that are owed to the City5 by the Revenue Department? Well, because6 there's not enough people that are going7 out there to collect that money. So it8 winds up uncollected. And not only does9 it wind up uncollected, then the10 reputation goes out that we don't have to11 pay anyway, so don't worry about it,12 because nobody is coming to get you.13 I think in some ways the City14 is shortsighted in not providing enough15 personnel that make money. Hiring people16 in the Revenue Department makes you17 money. Hiring people in other18 departments to watch construction19 projects saves you money. So, I mean, I20 think that in an effort to, in budget21 crunch times, in an effort to be austere,22 we wind up making our situation worse23 because we're not doing our job24 adequately because we don't have the25 106 3/2/11 - LAW & GOV'T - RES. 1008481 personnel to do it.2

Understood,3 Councilman. I think we're happy to have4 that conversation on a larger scale.5 It's not something I can answer here6 today, but I think that the idea is valid7 and we're happy to have that conversation8 internally.9

Okay.10 Thanks.11

Gary, did12 you want to say something?13 DEPUTY COMMISSIONER KNAPPICK:14 Yeah, just one thing, Councilman.15

Just16 identify yourself for the record.17 DEPUTY COMMISSIONER KNAPPICK:18 Gary Knappick, Deputy Commissioner of19 Public Property.20 Just to answer the question of21 Councilman DiCicco relative to timing on22 contracts, every contract that's bid23 under public works construction contract24 has a time of completion in it, and we25 107 3/2/11 - LAW & GOV'T - RES. 1008481 also kicked that project off with a start2 date and an end date.3 Now, during the course of the4 project, things can happen, change5 orders, et cetera, that can change that6 end date, and lots of times, I mean -- it7 happens during the course of a project.8 You get towards the end and the9 contractor loses interest. It's10 certainly something that we should11 discuss and we've thought about in-house,12 and perhaps a way to really circumvent13 that problem is to hold a little more14 money until the end, so it makes it a15 little more --16

Just let me17 interrupt a second. Is there some way to18 grade these folks in past projects so19 that if they get in the next go-around,20 that that grade is held against them or21 held in favor of them in the awarding of22 the next contract? Again, why are we23 being redundant and the guy -- when the24 contractor loses interest, to hire them25 108 3/2/11 - LAW & GOV'T - RES. 1008481 again is kind of crazy.2 DEPUTY COMMISSIONER KNAPPICK:3 That's a great, great point of4 discussion. Absolutely. We do grade5 every contractor. Every contractor,6 every consultant is graded at the end of7 a project. And to your point, the8 process of pre-qualification is something9 that we're extremely interested in, and10 it has to be done within the confines of11 the administrative type laws that we have12 that we deal with.13

Just one14 other point, and we've had this15 conversation before on a number of16 different levels. I recognize how you're17 hamstrung with Charter requirements,18 statutory requirements and other types of19 requirements, and I will ask again if we20 can at some point in time get this matrix21 so we can start removing some of the22 handcuffs of the 137 processes you have23 to go through to build something in the24 City, because there's no reason we have25 109 3/2/11 - LAW & GOV'T - RES. 1008481 to have all those obstacles. And that2 makes your job harder, it makes us more3 frustrated, and the taxpayer spends more4 money.5 So as soon as you're ready to6 change the Charter or change the statutes7 to give you the flexibility, we're8 willing to dive in.9

And,10 Councilman, since we met two weeks ago or11 so, we have been working on that. I12 provided some background information to13 your office. It's not complete. It's14 not exactly what you asked for, but we15 are in the process of developing that.16

I'd rather17 do it in big chunks as opposed to --18

Understood.19 Understood.20

Thank you.21 DEPUTY COMMISSIONER KNAPPICK:22 And if I might add, we would certainly23 like the assistance of Council on the24 pre-qualification process as well. It25 110 3/2/11 - LAW & GOV'T - RES. 1008481 really is important in private industry.2 We really run up against subjectivity in3 the selection process. But in private4 industry, a company that doesn't do work5 appropriately for another company just6 doesn't get another contract. That7 doesn't happen with us.8

I think9 it's safe to say you let us know what you10 need and we'll work on it. I know11 Councilman Kenney has been talking about12 this for a long time.13 DEPUTY COMMISSIONER KNAPPICK:14 Be very happy to. It will really help us15 out an awful lot.16

Thank17 you.18 Councilman Green.19

Thank you.20 My questions are really for21 Ms. Cassel and Mr. Abernathy.22 So a couple of things, just23 sort of housecleaning. First of all, if24 you could please provide the Chair with25 111 3/2/11 - LAW & GOV'T - RES. 1008481 every single document you have that2 relates to either the performance of3 Synagro, whatever grades they've been4 given, if there's grading done of that5 contractor, the costs associated with6 that, including the free gas they get,7 the free water they get, the cost of8 putting in the 12-inch main at our9 expense for their benefit, et cetera.10 And if you could also just give us what11 the cost was the year before Synagro took12 over compared to the cost of Synagro13 running that contract, so that we can do,14 unfortunately after the fact, a15 cost-benefit analysis and see where we16 are.17

To be fair,18 Councilman, at the time of the contract,19 I think there was a significant number --20 a significant cost analysis done. We're21 happy to provide that information. At22 the same time should we include the23 specific work that was done prior to the24 contract and the quality of that work?25 112 3/2/11 - LAW & GOV'T - RES. 1008481

Well, the2 cost analysis was debated during the3 discussion and, in my view, the cost4 analysis at the time was flawed because5 it did not take into account the6 increased use of gas and water and other7 things in the analysis that was presented8 to City Council at that time. So let's9 look at what actually the costs are10 compared to what we were told the costs11 were in the cost-benefit analysis.12

Understood. I13 just wanted the record to be clear that14 we had done some work and understood that15 there was some disagreement.16

Yes, you had17 an incorrect cost analysis.18

We're happy to19 provide the records.20

And now we21 can compare the actual to the estimate.22

Yes, sir.23

With respect24 to contracting out from departments, I25 113 3/2/11 - LAW & GOV'T - RES. 1008481 don't know whether -- I'm sorry. Is it2 Cassel or Cassel?3

The former,4 Cassel.5

Cassel. I6 don't know whether you're aware of7 departments' requirements to do a8 cost-benefit analysis prior to doing9 either an RFQ or RFP for a professional10 service contract or for any other work11 that we might decide to outsource rather12 than do internally through Procurement or13 otherwise. Is that a requirement to do14 an outside contract, that a cost-benefit15 analysis be done and presented to Finance16 or somebody else?17

No, there is not a18 citywide requirement to do that kind of19 analysis.20

So really21 when a department comes to you with Class22 200 dollars and they want to spend them23 on something that has been appropriated24 by this body and signed by the Mayor,25 114 3/2/11 - LAW & GOV'T - RES. 1008481 there is no internal analysis done as to2 whether or not it is actually cheaper or3 more expensive to hire -- to do this4 internally, whether it can be done5 internally and what the cost benefit is6 of outsourcing that? Is this a fair7 statement?8

No. Well, there's9 no citywide requirement to do that kind10 of analysis, but certainly, as I said,11 there are 2,000, plus or minus,12 professional services contracts let each13 year, and I wouldn't guess what14 proportion of them have that kind of15 analysis to back them up, but, I mean,16 certainly in my years in City government17 both in Finance and in the Managing18 Director's Office and in operating19 departments, I can say that has been20 required many, many times. I mean, it21 absolutely happens. I'm just saying it's22 not a requirement for every contract.23

Please24 provide the Chair with copies of any25 115 3/2/11 - LAW & GOV'T - RES. 1008481 written analysis that was done prior to2 the awarding of the current 2,0003 professional service contracts; in other4 words, whatever kind of written5 documentation you have for that. In6 other words, I'm looking for what exists,7 not for you to go back and create8 something.9 Are you familiar with, to10 Councilman Goode's earlier point,11 something called Philadelphia First12 legislation that has been introduced by13 almost every member of -- co-sponsored by14 almost every member of this Committee?15

Yeah.16

Yes.17

Basically it18 would require that when we do outsource19 any contract through Procurement, because20 we have to change the Charter to deal21 with professional service, so22 construction contracts, cleaning23 contracts, et cetera, that 50 percent of24 man hours performed on that contract have25 116 3/2/11 - LAW & GOV'T - RES. 1008481 to be performed by Philadelphia2 residents.3 To Councilman Goode's point, is4 there an objection of the Administration5 to this as an economic development tool6 when -- assuming you've done a7 cost-benefit analysis, assuming it makes8 more sense to go to an outside contract9 and it can't be performed less10 expensively by City employees, shouldn't11 we be hiring Philadelphia residents to12 perform these contracts?13

And,14 Councilman, I think we've had some15 significant large conversations with you16 and your staff about this legislation.17 In concept, the Nutter Administration18 certainly agrees with this legislation.19 We have some concerns about its20 implementation and its legal21 ramifications, and we've made some22 suggestions on ways to amend it that we23 think are more legally defensible. But24 in concept, that's why then-Councilman25 117 3/2/11 - LAW & GOV'T - RES. 1008481 Nutter introduced the LBE legislation to2 begin with. He is a large believer in3 hiring locally to improve the local4 economy, and that has not changed when he5 became Mayor.6

Right.7 There is an LBE preference for contracts8 that are Procurement contracts, which is9 essentially a five percent bid10 preference. What we have proposed in the11 legislation is an amendment to that,12 which actually allows for an opportunity13 for a local contractor, as amended, as14 we've discussed with the Administration,15 to submit with their bid that they would16 match a bid of within X percent of their17 bid, so that it is not done after the18 procurement process but done during the19 procurement process.20

Right. And if21 I -- okay.22

I don't want23 to turn this into a legal debate, but if24 we agree in concept, let's problem-solve25 118 3/2/11 - LAW & GOV'T - RES. 1008481 the solution together rather than what2 we're currently getting from the Law3 Department and others, is this is why we4 can't do it. We always seem to be able5 to find a way to do something when the6 Administration wants to do it. The Law7 Department will go way out there. When8 we're proposing something, Well, I'm not9 sure we can do that. Let's do it and10 we'll wait until somebody sues us and get11 Philadelphians employed.12

And,13 Councilman, to be fair, I certainly had14 said similar things when I was on the15 other side of the street.16

But now you17 found out it's not true?18

No. In this19 case specifically, we've made significant20 efforts to try and make this legislation21 work. There are -- I think there's --22

Okay. Well,23 I look forward to working with the24 Administration on getting this done,25 119 3/2/11 - LAW & GOV'T - RES. 1008481 because we need to put Philadelphians to2 work.3

There's no4 argument. I think we're willing to work5 with you and your staff to get this6 legislation done. I'm sure there's going7 to be some bumps along the way, but in8 concept, I think we agree.9

I'm aware of10 specific professional service contracts,11 most recently RFPs that went out, that12 did not change the cost structure where a13 law firm performing services for the City14 that opened an office just to perform15 services for us here. Essentially there16 was another RFP put out for their exact17 service, after they had already won, that18 basically said, You don't apply, because19 we're trying to diversify this work. So20 they fired -- the contract for half the21 services was awarded to somebody in New22 Jersey, a very politically connected23 firm, and we lost nine City of24 Philadelphia employees so that a bunch of25 120 3/2/11 - LAW & GOV'T - RES. 1008481 people in New Jersey could have jobs.2 So I don't -- I think part of3 the cost-benefit analysis the City ought4 to do is just that, who is going to5 perform the work, what does that mean for6 us in terms of employing Philadelphians7 every time we outsource also.8

Understood,9 Councilman. And as a whole, I think10 Shelley Smith and the Solicitor and the11 Law Department deserve some credit.12 They've made significant efforts to bring13 that work back inside the Law Department14 and contract out less over the past15 couple years, and those numbers are16 represented in their contract numbers.17

So with18 respect to the fact that there is no19 centralized database of the fact that20 every professional service contract and21 other -- like they're all out there, each22 department is sort of negotiating it,23 creating its own standards, doing its own24 grading, all that stuff, I would echo25 121 3/2/11 - LAW & GOV'T - RES. 1008481 Councilman Kenney's point, which is a2 point that I've made for the last three3 years in budget hearings, that what we4 need to do is have a centralized5 electronic procurement process so that6 every single contract is in one place,7 available to the public, available to the8 stakeholders and unions and everybody9 else who wants to see it, sort of like10 there's a seamless process. Where they11 have actually done this, they have been12 able to save significant amounts of money13 in the administration of contracts, and14 the administration has been far more15 effective and the grades and everything16 else are transparent to City Council, to17 unions, to other stakeholders.18 So this could be done in six19 months. We've been talking about this20 for three years. There's no reason not21 to do this. We have capital dollars to22 do it. There's private off-the-shelf23 software that can be implemented to do24 this. There's Cloud software that can25 122 3/2/11 - LAW & GOV'T - RES. 1008481 manage contracts.2 It's unbelievable to me that3 for you to respond to a Right to Know4 Request, you have to go to each5 department because you don't have copies6 of all the contracts in one central7 place.8

Well, so for9 professional services contracts, all10 those contracts are managed centrally11 through ACIS, the Automated Contract12 Information System. So we do know and13 can produce a report, and we actually do14 produce a report quarterly that's15 available on the City website and is with16 the Department of Records that lists17 every single contract that was active18 during that quarter, the term of the19 contract, the dollar value of the20 contract and any payments made for that21 contract.22

That's all23 dealing with inputs. It doesn't deal24 with how well the contractor performed25 123 3/2/11 - LAW & GOV'T - RES. 1008481 the contract, whether or not we were2 satisfied with it. There's no way for3 any member of the public or Council or4 anybody to know, other than, Hey, this5 money was appropriated, we had this6 contract, we paid these guys.7 So I understand what you're8 saying, but in order for us to perform9 our oversight job and hold people10 accountable for what is over 25 percent11 of the City spend, we have to have a12 better system, and it needs to be13 electronic and it needs to be protected14 so that any changes made, it's clear who15 made them and how we follow it, et16 cetera.17 So if that is something that18 you're working on -- and I know through19 the Private Sector Outreach Board, there20 have been, out of that process,21 amendments proposed to the Charter to22 allow us to use GSA schedules and other23 things. I mean, we're moving in the24 right direction, but the pace of change25 124 3/2/11 - LAW & GOV'T - RES. 1008481 has to speed up.2

Understood,3 Councilman, and we certainly understand4 your frustration with the pace. We are5 moving in that direction.6 Having said that, the systems7 that the Nutter Administration took over,8 we have underinvested in technology for a9 very long time.10

And we11 continue to do so and have for the last12 three years.13

I think the14 Nutter Administration has made a15 significant investment in technology.16

Not yet.17

We're going18 to -- we have a commitment to technology19 and we're moving in that direction. It20 has taken longer than we wanted, but I'm21 confident that we're going to get there.22

Right, and23 we're -- I mean, I don't want to preface24 the budget, but I think we're going to25 125 3/2/11 - LAW & GOV'T - RES. 1008481 see a delay in the implementation of2 technology investment.3 So I understand what you're4 saying. It's a great sense of5 frustration to me that it can -- we can6 provide transparency, accountability,7 access to the public and every other8 stakeholder in the City through the use9 of technology. We can create10 efficiencies through the use of11 technology. We can create a fair process12 through the use of technology, including13 the opportunity to have electronic14 notices go to every stakeholder involved,15 unions, allow potential competition by16 them if they want to take over the17 Synagro plant or something, et cetera,18 and we don't do it. The pace of change19 in the City has to change.20 Thanks.21

I appreciate22 it.23

Thank24 you, Councilman.25 126 3/2/11 - LAW & GOV'T - RES. 1008481 Before I recognize Councilman2 Jones, if I can just say to the3 Councilpeople -- and I said this to4 Councilman Goode -- I know you're asking5 for a lot of information. If you can get6 me a list of what you're requesting, if7 you can get me a list of what you're8 requesting and maybe a timeframe that you9 think is reasonable to follow up with the10 Administration so you could get it to me,11 or even better, Ms. Marconi, who is way12 more organized than me.13 So saying that, Councilman14 Jones.15 COUNCILMAN JONES:16 Mr. Chairman, again, thank you and the17 Committee for the dialogue which was18 started today.19 And I want to say to the20 Administration, to the respective unions,21 this is an opportunity. This is an22 opportunity for us to create a win, win23 and win scenario, that we win by24 utilizing Philadelphia-based companies,25 127 3/2/11 - LAW & GOV'T - RES. 1008481 we win by utilizing Philadelphia-based2 workforces when cost effective. The3 taxpayers win when we constantly create a4 vigilance over our spending.5 If nothing else we've learned6 in this crisis is that we have to do7 this. I mean, it's a concept that's time8 has come. And, yes, there are9 procurement laws on the books, there are10 contracting-out laws, but if we're not11 monitoring what the net impact to our12 budget is on this, then we're missing13 again an opportunity.14 I think that the Private Sector15 Task Force can be a part of the16 discussion, along with the unions. What17 I've heard over and over again in the18 testimony is that that exchange of19 information, that exchange of data to20 make good decisions, is not happening as21 much as it should.22 We've brought this process up23 in our budget negotiations and budget24 deliberations in past years, and each25 128 3/2/11 - LAW & GOV'T - RES. 1008481 year we've kind of presented it to the2 Administration as something we should do,3 but we're at the point of demarcation4 where we're going to insist upon that.5 We're giving you enough of a head-start6 opportunity to be able to give us that7 analysis and to afford to do some good in8 our budget deliberations.9 Mr. Abernathy, you're an10 alumnus of this body. I saw Councilman11 Kenney look at you in fond admiration as12 you gave your testimony. You know how we13 think. Unfortunately, you know how we14 think. So to be forewarned is forearmed.15 We're going to look at this. This issue16 is not going to go away.17 I saw members of the Committee18 writing down notes and talking about19 possible legislation that may be20 introduced, and I'm thinking that this is21 a good beginning dialogue and let's not22 waste this opportunity.23 Thank you, Mr. Chairman.24

Thank25 129 3/2/11 - LAW & GOV'T - RES. 1008481 you, Councilman.2 And before we conclude, I just3 wanted to bring up the subject that I4 think both unions brought up, and,5 Mr. Abernathy, you may not have the6 ability right now to comment, but there7 seemed to certainly be a concern that8 there was not, to use Councilman Jones'9 term, the dialogue that was kind of10 needed, because obviously all these folks11 have a lot of knowledge, and the more12 knowledge exchanged, maybe the better13 results.14 So, again, I don't know if you15 have a comment on that, if you can16 comment. I know you may not have been17 involved in this, but it does seem to be18 that real concern of the exchange of19 ideas or the consideration of those ideas20 aren't taken seriously enough. And I21 don't know if that's fair or not, but22 it's out there.23

You know, I24 don't know the specifics of these issues,25 130 3/2/11 - LAW & GOV'T - RES. 1008481 but I can say that I think we have the2 best workforce in the world. I think3 Philadelphia workers make this city run.4 The Nutter Administration recognizes that5 and we appreciate it.6 On these issues specifically7 and the conversations with management, I8 don't know the circumstances. I'm happy9 to raise it with the commissioners and10 the deputy mayors and find that out.11

If you12 could. Because I think that's important,13 because the more ideas exchanged, I think14 the better. That's what we're doing15 today. But obviously I'll openly admit,16 Cathy Scott and Bobby Davis and all those17 guys, they know more than we do about how18 these departments run and they have the19 experience. So I think including them --20 I'm not saying they haven't been, but21 there seems to be concern they haven't22 been included enough.23

Understood.24

Okay. No25 131 3/2/11 - LAW & GOV'T - RES. 1008481 other questions.2 Anybody else here would like to3 add any testimony or words?4 (No response.)5

Let me6 just say, the record will remain open for7 the information that has been requested8 by the members, and I think there's quite9 a possibility we may be convening again10 to talk about this subject.11 Sir, you wanted to say12 something?13 If you're going to say14 something, you got to say it up here.15 Otherwise, the stenographer can't hear16 your fine words there.17 (Witness approached witness18 table.)19

My name is20 Carlton Sampson, District Council 47.21 I was really involved with the22 crunching of our numbers, and I just23 wanted to put out here that it's really24 important that if we can get this stuff25 132 3/2/11 - LAW & GOV'T - RES. 1008481 all at once -- they mentioned ACIS. One2 of the things that I found with ACIS is3 that it helped me find out what contracts4 they did not give me, which then sent me5 out trying to find more contracts. We6 spend more time trying to get the data7 than we do actually analyzing the data.8 And Councilman Green is not here. I9 think it was Councilman Green who talked10 about the need for technology. Well, as11 you talk about the City jobs and things12 that we can do, what they're doing to13 satisfy that need for technology is14 creating more and more exempt positions.15 For some of these positions, it's work16 that the City workers are already doing,17 and because we could not get that data in18 time to crunch it to put it together like19 we did the health data, we weren't able20 to put that forward today, but we're21 hoping that you guys do provide us with22 that data. We can crunch those numbers23 down for you in time for this budget24 process.25 133 3/2/11 - LAW & GOV'T - RES. 1008481

That's a2 good point. Obviously when we get that3 information, we need to talk to you4 folks, too. So that dialogue goes in a5 circle, I guess is the best way to say6 it.7

Thank you very8 much.9

Thank10 you. Thank you for your comments.11 Anyone else?12 Louise, I knew you couldn't13 help yourself.14 (Witness approached witness15 table.)16

Please17 identify yourself for the record. And18 you're the smart one. You got gloves on19 in here. It's kind of cold in here.20

My name is Louise21 Carpino. I represent the probation and22 parole workers and other professional23 court employees, AFSCME Local 810.24 I have a question about the25 134 3/2/11 - LAW & GOV'T - RES. 1008481 City contracting with companies that are2 privately held, so that the taxpayers3 cannot know who is benefiting from the4 profits that they're making off the5 taxpayers' investment. And I was just6 wondering what Council's position on that7 was.8

When you9 say "information," just be a little10 more -- what are you looking for? What11 are you trying to get?12

Well, for13 instance, to offer an example, Aramark14 Corporation went private in 2006, and now15 there's no way to know who any of the16 shareholders are. I mean, you can go17 back and look at the companies that18 merged with it in '05 and '06 and see who19 the shareholders were then, but once the20 company is privately held, you're not21 allowed -- I mean, there's no way to go22 on the SEC website or anything and for23 the taxpayers to know who is profiting24 off this company. And that's a huge25 135 3/2/11 - LAW & GOV'T - RES. 1008481 contract, the Aramark contract with the2 prison food and the commissary, and all3 you can know is who the president is.4 And I just find that -- I'm wondering5 what Council thinks about that, and if6 there's any other contracts with7 companies that are privately held that8 the taxpayer is paying but can't know who9 is profiting from.10

To be11 honest with you, I don't have an answer12 for you right now. I think we have to13 take that under advisement, discuss it14 with each other and try to figure that15 one out. I'm not sure. I'm sure there's16 legal ramifications. I'm just not sure.17

Okay. Thank you.18

But we19 will follow up on that, too.20

All right.21

Thank22 you, Louise.23 Anybody else who would like to24 testify?25 136 3/2/11 - LAW & GOV'T - RES. 1008481 (No response.)2

Hearing3 none, the Committee on Law and Government4 will stand in recess.5 Thank you.6 (Committee on Law and7 Government recessed at 12:10 p.m.)8 - - -9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 137 1 CERTIFICATE2 I HEREBY CERTIFY that the3 proceedings, evidence and objections are4 contained fully and accurately in the5 stenographic notes taken by me upon the6 foregoing matter on March 2, 2011, and that7 this is a true and correct transcript of same.8 9 10 11 12 --------------------13 MICHELE L. MURPHY14 RPR-Notary Public15 16 17 18 (The foregoing certification of this19 transcript does not apply to any reproduction20 of the same by any means, unless under the21 direct control and/or supervision of the22 certifying reporter.)23 24 25