COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE ON COMMERCE AND ECONOMIC DEVELOPMENT - - - Room 400, City Hall Philadelphia, Pennsylvania Wednesday, January 20, 2010 10:30 a.m. - - - PRESENT: COUNCILMAN W. WILSON GOODE, JR., CHAIR COUNCILMAN BILL GREEN COUNCILMAN CURTIS JONES, JR. COUNCILWOMAN MARIA QUINONES-SANCHEZ COUNCILWOMAN BLONDELL REYNOLDS BROWN RESOLUTION 090860 - Resolution authorizing the Committee on Commerce and Economic Development to hold hearings to review the strategic plan of the Office of Economic Opportunity. - - - 2
Good morning. This hearing is called to order. This is a public hearing of the Commerce and Economic Development Committee on Resolution 090860. My name is W. Wilson Goode, Jr., Chair of this Committee. A quorum is not necessary. I note for the record the Vice-Chair of the Committee, Councilwoman Blondell Reynolds Brown, is present, as well as Councilman Bill Green. Other members may join us as we go along. The title of the Resolution No. 16 090860, resolution authorizing the Committee on Commerce and Economic Development to hold hearings to review the strategic plan of the Office of Economic Opportunity. Our first witness is Kevin Dow. (Witnesses approached witness table.)
Good morning. Good morning, Chairman Goode and members of 3 1/20/10 - COMMERCE - RESOLUTION 090860 the Committee on Commerce and Economic Development. I am Kevin Dow, Deputy Commerce Director and Acting Chief Operating Officer of the Commerce Department. Joining me today is Curtis Gregory, who is the interim Director of the Office of Economic Opportunity, otherwise known as OEO. We are here today to provide testimony regarding Resolution No. 12 090860, which calls for Council hearings to review the strategic plan of the OEO, Office of Economic Opportunity, which will be released shortly. However, it is my understanding that a focus of today's hearing will be the review of the Annual Disparity Study and those completed over the last few years. Pursuant to Section 6-109 of the Home Rule Charter and Chapter 17-1500 of The Philadelphia Code, the Annual Disparity Study is designed to analyze the City of Philadelphia's utilization of minority, women and disabled-owned 4 1/20/10 - COMMERCE - RESOLUTION 090860 businesses, collectively known as disadvantaged business enterprises, relative to the availability of such firms to compete for City business, for Public Works, Personal and Professional Services, and Supplies, Services and Equipment contracts. Per the Home Rule Charter, the Annual Disparity Study is due 30 days before the start of the new fiscal year to the Mayor and the President and Chief Clerk of City Council, and as such, the Fiscal Year 2008 study has been delivered to City Council. The Fiscal Year 2009 report is in process and will be delivered to Council by June 1st, 2010. The goal is to identify areas in which disparity exists between availability and utilization of minority, women and disabled firms and compare the results to those of the Fiscal Year 1998-2003 Disparity Study conducted by DJ Miller and Associates and provide recommendations and goals for future 5 1/20/10 - COMMERCE - RESOLUTION 090860 M/W/DSBE participation based on these results. We have gained invaluable information from the Disparity Studies conducted by Econsult since Fiscal Year 2006. The data demonstrates that the City of Philadelphia has indeed made tremendous gains in MBE, minority business, and WBE, women business, utilization between the 1998-2003 time period and 2008. In the years between 1998-2003, participation for MBEs, minority businesses, was 2.3 percent and 2.2 percent for WBEs, or women businesses. This participation has increased to 12.7 percent for minority businesses and 5.1 percent for women businesses in 2008, representing approximately a 280 percent overall increase as measured on a percentage basis. Although these numbers are not quite where we would like to be or where we strive to be, we have come a long, long way, and we will continue to work 6 1/20/10 - COMMERCE - RESOLUTION 090860 with Councilman Goode and this committee so that this trend continues. The Commerce Department has already begun to implement changes at OEO, incorporating many of Econsult's recommendations. This is clearly reflected in the Economic Opportunity Strategic Plan. These changes include reforming the certification process to streamline it, taking a more proactive approach in enforcement, promoting capacity, establishing a process for reporting DBE participation on non-profit contracts, and verifying actual payments to DBE subcontractors. Thank you for the opportunity to testify today. This concludes my written remarks. I will be happy to answer any further questions. In addition, representatives from Econsult are also present today to assist in responding to any questions you may have regarding the Annual Disparity Study. Thank you. 7 1/20/10 - COMMERCE - RESOLUTION 090860
Thank you for your testimony, Mr. Dow. I have a series of questions. I've already informed the Committee that I'm going to go through my line of questioning, then I will open it up to other members of the Committee. Please feel free to take your time in answering them. Don't feel free to rush and answer. The first question is, should the Office of Economic Opportunity be an independent agency, a Charter-mandated authority like the Board of Ethics, with the power to institute penalties and fines?
Should we have an independent Charter agency, we be an independent Charter agency?
Like the Board of Ethics, like has been recommended for the Office of Inspector General. Should the Office of Economic Opportunity be a Charter-mandated agency with its own authority and 8 1/20/10 - COMMERCE - RESOLUTION 090860 responsibilities separate from any administration, any branch of government?
I think the answer to that question depends on what you would have the mission of the Office of Economic Opportunity to be. If it's solely an enforcement and monitoring, that could possibly be a case where it might be a separate Charter agency, but I would also argue that that could also be considered part of the IG's office or the Board of Ethics' office as separate -- as a function of that, so not a separate function. If the current charter or mission of the Office of Economic Opportunity, which is to help engage departments achieve participation ranges and goals around minority participation, remains the same, I think it remains a part of the Administration, so that we can have the influence we need to drive the outcomes.
The Board of 9 1/20/10 - COMMERCE - RESOLUTION 090860 Ethics was originally done by Executive Order. The Inspector General's Office is still done by Executive Order. OEO is under Executive Order. Should it be an independent agency like the other two? I mean, essentially the Mayor, when he was a Councilperson, drafted legislation that made the Board of Ethics independent. The Mayor has submitted legislation to Council to make the Inspector General's Office independent. Should the Office of Economic Opportunity be independent or do you have sufficient authority to reach your goals?
Well, I don't know if I have authority to say whether or not this should be independent or not, to be quite candid with you. Do we have the authority to reach our goals? I think what we have to do is to have -- we have the authority to influence departments in reaching their goals. The overall responsibility of the Office of Economic Opportunity is to help guide departments 10 1/20/10 - COMMERCE - RESOLUTION 090860 in achieving participation goals.
Specifically, does OEO have sufficient authority to reach its FY11 goals?
According to the strategic plan, the total DBE goal for FY11 is percent; is that correct? 10
According to 12 the strategic plan, the total DBE goal 13 for Fiscal Year '11 is 25 percent; is 14 that correct? 15
That's in a draft 16 document that we've provided, yes. That 17 is stated there. Until that document is 18 finalized and executed and delivered by 19 the Mayor, I can't commit solely to that 20 goal right now. But that is what's 21 stated in the goal plan right now. 22
I don't have that 25 information -- hold on. Let me see. Do 11 1/20/10 - COMMERCE - RESOLUTION 090860 we break it out? Okay. What we have is minority and women. It would be -- again, this is not defined, set in stone. This is something that's still being debated, and once we have finalized the document, we will --
Mr. Dow, I understand that the strategic plan is still in draft form, and the purpose of the hearing is to allow the Committee some input before it's in its final draft, but I don't think there should be any problem referring to what's already in draft form.
Sure. Thank you very much. We would put it at a range of anywhere between -- it would be anywhere between 12 and 20 percent. And then the women would be anywhere between a range of 7 and 12 percent. The total goal is around the range of between 20 and 30 percent, is really what's stated. In the 12 1/20/10 - COMMERCE - RESOLUTION 090860 plan that you have as a draft, it's stated as a specific goal of percent. 4
We have not broken 7 out the African American segment. To 8 break out an individual segment of the 9 goal would be, in our estimate, improper 10 and that we should not set specific goals 11 to an African American segment or 12 Hispanic segment or -- 13
No. The 13 1/20/10 - COMMERCE - RESOLUTION 090860 Home Rule Charter gave Council the power to define what goes in the Disparity Study and in participation goals, and the law -- in fact, I have the bill here. It's Bill 060855-A, and the law specifically says that it should be broken down by African Americans, by Hispanic Americans, by Asian Americans, by Native Americans, by women, by disabled persons and by DBEs operating within the City of Philadelphia. So what is the African American goal?
Well, right now the process that we just embarked on was to meet with individual departments to find out what their specific commitment was going to be from a participation --
If you don't have it, you don't have it. It's a 14 1/20/10 - COMMERCE - RESOLUTION 090860 number. It's a range.
We don't have it right now. We don't have that level of detail.
Is that the local versus the MSA in terms of Philadelphia specific, Philadelphia County?
-- sets a goal for these areas. The last one is DBEs operating within the City of Philadelphia.
Will the departmental goals be submitted to City Council in June?
You do 15 1/20/10 - COMMERCE - RESOLUTION 090860 realize that usually when a Disparity Study and participation goals are done, participation goals are generally broader goals and we do not give them by department in June. My question is more specifically, will we get the goals by department in June?
Can you please describe the new goal achievement process outlined in the strategic plan and the assignment of OEO staff to project managers and procurement officials?
We've commenced -- as we've being putting together the strategic plan, we figured that we would begin to implement the structural changes that we are anticipating moving forward and announced in the strategic plan. That includes a goal achievement process or a goal process whereby which we engage individual departments by department as individuals to determine what their 16 1/20/10 - COMMERCE - RESOLUTION 090860 contracting opportunities are, what opportunities are available for minority firms, and we do analysis of what availability we have in our participation -- our certified database rather, and we do a match, working hand in hand with the individual departments to get the individual goal and objective for that department. The idea is that we build accountability at the department level so that we can achieve and hold them accountable to achieving their success at the individual goal. So this is a process that will take place -- has already begun to take place. That's how we're getting the individual department goals that we will report to you. It will be an ongoing process by which we will begin to look at monitoring and compliance around those individual departmental goals. We'll look at each individual department individually. We've had additional staff -- 17 1/20/10 - COMMERCE - RESOLUTION 090860 or staff rather, excuse me, assigned. So the OEO staff has been assigned and will continue to be assigned to individual departments so that there will be an ongoing relationship with those individual departments. So it's not changing characters on the OEO side. Again, we believe that allows that relationship to be built, allows us to be viewed as a partner, as a contributing and valued partner into their contracting process where we can add information, value to the minority participation aspects of that, which over time there will be some success in achieving goals and objectives. So that's it in a nutshell.
It began back in earnest in August, September timeframe of 2009.
And what happened prior to that? 18 1/20/10 - COMMERCE - RESOLUTION 090860
My understanding is that it was not -- it was a process that did not occur consistently over the years prior to our involvement. It was one in which -- as an example, when we came in front of you guys, in front of the Council last budget season, it was a process by which the departments didn't feel as though that there was a working relationship with the Office of Economic Opportunity, that we just gave them their goals and really didn't have the dialogue about how to achieve them. And so that dialogue, while it may have taken place in some areas, it was not across the board and consistent, and our internal departments didn't feel that we provided value there.
How many staff were assigned to that responsibility before and how many are assigned to that now?
I don't know how many were assigned to it before. I know 19 1/20/10 - COMMERCE - RESOLUTION 090860 in terms of the goal-setting process, that was led by myself, Candace Hitchcock and Alice Dungee-James.
So they 20 1/20/10 - COMMERCE - RESOLUTION 090860 weren't doing their job before? I don't understand. If it's a new process, it's in your strategic plan as a new process, goal achievement process, the acronym is GAP --
-- you said the new process began in August, September of 2009?
I asked how many people were assigned to it, this new process, and how many people were assigned to those responsibilities before. So there were seven people assigned to it before?
Yeah. I just think that what we did was that it was configured in a way in which -- well, let me stop. Let me retract that. It was -- the results of a process that existed before did not achieve what we would like to achieve in terms of outcomes. So what we've done is 21 1/20/10 - COMMERCE - RESOLUTION 090860 that we've refined the process --
Let me try to simplify it more. The goals have not been achieved in the past.
No. We've reallocated the current staff that was already in the Office of Economic Opportunity to this particular staff.
So if they didn't achieve the goals before, what's going to make them achieve the goals now?
I think what you might be referring to is, there is a shift of resources. There's no addition to staff, there's no reduction to staff, but what has taken place is, in the past 22 1/20/10 - COMMERCE - RESOLUTION 090860 a significant amount of time and energy and resources was spent on the actual certification process as it's designed. Going forward, we are going to shift those resources away from the certification aspect of what we do and more towards the reporting and monitoring aspect of what OEO is responsible for.
That's the answer I was looking for. In terms of DBE availability, what are your certification goals over the next six months into Fiscal Year '11?
We'd like to see a 16 percent increase in the number of 17 certified firms in our database within 18 the first year. So if we are at 19 approximately 1,200 firms right now, 25 20 percent increase in that, and then 21 increasing it all the way through in each 22 year. 23
I'm asking 24 actually before Fiscal Year '11, through 25 January 2010 to July 1st, 2010 as Fiscal 23 1/20/10 - COMMERCE - RESOLUTION 090860 Year '11 starts, how many certified firms will we have based upon your new certification process?
I can't tell you how many we will have. Our goal is to increase it by percent. So that 8 would be -- 9
Next year. So 12 between this calendar year, essentially 13 we would have it increased by 25 percent. 14
So roughly 17 150 over six months perhaps. 18 Does the Fiscal Year '11 goal 19 take that into account? 20
So as you 22 stated, the plan is to shift human 23 resources from local certification into 24 the goal achievement process. Is that 25 how you reach 25 percent? 24 1/20/10 - COMMERCE - RESOLUTION 090860
That's part of it. The other part of it is, when you're reaching out to other partners that do certification, to add them to our list of organizations that do certifications. So we're hoping to get immediate lift.
But you're only going to have 150 to 300 more firms over the next year. So there's a new certification process that will bring some new firms up to percent, is your 13 goal. So you're not going to get it 14 necessarily by increasing availability 15 dramatically, because that's not within 16 the strategic plan per se. The Disparity 17 Studies already show based upon 18 availability that you can achieve a 25 to 19 28 percent goal, although you have not 20 achieved a 25 to 28 percent goal. My 21 question is, is it the goal achievement 22 process and the shifting of human 23 resources from certification to the goal 24 achievement process that you've outlined 25 that's going to make you reach 25 25 1/20/10 - COMMERCE - RESOLUTION 090860 percent?
I think it's a combination. I think, like I said, it's not just the availability side, it's the utilization side. And so the shifting of the resources or shifting of staff focus from the certification process to the compliance and monitoring side, consulting with internal departments, will allow us to engage them in a way where we will see an increase in the utilization of firms.
I think the availability -- it depends on how you define "availability." I think that there's a greater need for availability to capture more firms within the database outside of what we have right now.
You actually can bring your consultant to the table now. 1/20/10 - COMMERCE - RESOLUTION 090860 (Witness approached witness table.)
Lee Huang. I'm a Director at Econsult Corporation. Last name is H-U-A-N-G.
According to your last Disparity Study, is it fair to say that availability exists to effect utilization of to 28 percent? 14
Broadly speaking, 15 yes. Obviously every department, every 16 procurement varies, but broadly speaking, 17 I think that answer is yes. 18
Thank you. 19 Mr. Dow, from 1998 to 2003, 20 only a single percentage of City contract 21 dollars were committed to all 22 minority-owned businesses, black, Latino 23 and Asian combined. How and why has it 24 risen to a double-digit percentage? 25
I think if you look 27 1/20/10 - COMMERCE - RESOLUTION 090860 at the work of certainly your committee and your efforts to make sure that there was a focus by past and current Administrations to make sure that the City paid attention to minority participation where it was not before, that certainly has had a tremendous impact in our ability to change the numbers to where -- increase and improve the numbers to where they are today. I think also that they're looking at how we do the work of minority participation has been a greater focus in helping departments understand that, with more work around that. That's how we believe we'll increase the utilization of minorities and women and disabled going forward. So I think if you look at the combination of all of the efforts, the increased awareness around it has driven that number of increasing over the years.
Mr. Huang, where specifically did the increase 28 1/20/10 - COMMERCE - RESOLUTION 090860 occur?
From the single-digit percentage of participation from 1998 to 2003 to the double-digit percentage of utilization from 2005 on.
From 1998 to 2003, it was in the single digits for the total --
The question is, in what area of contracting did it occur?
According to the FY08 Disparity Study, we now have double-digit utilization of minority, women and disabled-owned businesses in Public Works at 15.1 percent and in Personal and Professional Services at 22.7 percent. It is still under double digits for Services, Supplies and 29 1/20/10 - COMMERCE - RESOLUTION 090860 Equipment at 9.2 percent.
Is it safe to say that most of the increase in participation came from Professional Services?
How is it taken into account related to the strategic plan?
The increase in Professional Services? So we look at that and from the context of if we know that there's opportunities for utilization that we have right now and don't have the ability to fill, we go out and do technical assistance outreach. We're looking at how do we -- from an outreach perspective, how do we identify firms that are not ready in our database that we could go out and put in the database that are in Professional Services. So we're doing that across the board. That's part of the monitoring, 30 1/20/10 - COMMERCE - RESOLUTION 090860 the compliance in departments working with OEO. As we begin to be more involved in those contracting conversations and processes, we'll be able to identify the gaps that are available there and then go out and work within the Commerce Department and all of our resources there, in addition to OEO, which is part of Commerce, to find out how we can go and attract those types of businesses, even if it's coming into the City or it's us going outside the City where we don't have the availability in the City and reaching out to minority firms that are outside the City or looking at firms that just traditionally have never been certified for various reason and going back to them and saying, Hey, we've changed this process, it's less invasive, it's easier, it's faster, why don't you come on in, get certified so that we can count your numbers. The other part about that, we 31 1/20/10 - COMMERCE - RESOLUTION 090860 believe -- and we're getting more and more information about this, so I don't have quantifiable information, but we believe that there are firms out there that are being utilized that are not certified, that are being utilized by the City of Philadelphia already that we can't count because they're not certified. So we think that there's also a base right there that we could reach out to and say, Okay, we've changed this, we made it better, we want to be able to count you as far as our participation number.
Mr. Huang, I guess my question really is, how has availability changed by contract type since the 1998 to 2003 period? If from 1998 to 2003 we were in single digits in terms of participation and we moved to double digits, can you tell me by contract type how the availability has changed?
The most relevant 32 1/20/10 - COMMERCE - RESOLUTION 090860 availability figures that we take into account are for the metro area. So I want to preface by noting that there has been an out-flux of minority and women-owned businesses from the cities to the suburbs. This is a general demographic trend, and it is true of entrepreneurs as well. The availability has increased at the same time and approximately the same rate as the utilization. We now see double-digit availability rates in Personal and Professional Services, as well as Public Works and as well as Services, Supplies and Equipment when we compare for the period --
I'm asking specifically what's the change in availability by contract type.
I'm not aware that DJ Miller showed availability by contract type. I have the report with me and I can look at that. So I don't know what the change is from '98 to '03 versus '06 33 1/20/10 - COMMERCE - RESOLUTION 090860 to '08.
Would it make sense that if availability has risen for certain contract types, that those are the types of businesses that OEO should go after aggressively in terms of certification?
That would be one factor, is if there is more availability of a particular type of business, that they may want to consider focusing their outreach in that type of industry, but it also depends on the types of contracts that are available.
Well, I was already assuming that we're dealing within the contract types that exist in the City.
Right. So if I may, what I think we're -- if there's an opportunity for a greater level of utilization in any one particular type and we see that there is a low level of availability of the firms that can do 34 1/20/10 - COMMERCE - RESOLUTION 090860 those type of contracts --
Oh, if there's a higher availability. So if there's a greater availability --
I'm asking because this is based on what the Disparity Study -- this is what I meant. If availability is rising in a certain area, are we capturing those opportunities, and how closely are we monitoring availability to capture those opportunities to make sure we aggressively certify those people?
I guess what I was suggesting is that it does depend on what City contracts are available.
That's already understood, that we're basing it upon what City contracts are available, if this is the agency that is monitoring City contracting for opportunities for disadvantaged businesses. If we also, 35 1/20/10 - COMMERCE - RESOLUTION 090860 through a Disparity Study, are monitoring the availability of those businesses that could be certified for those opportunities and we see availability rising, right now are we actually -- have we actually, based upon that, tracked availability and made decisions to actually go out and take advantage of those opportunities?
I think the general answer is, probably not as well as we would like to. The general answer is no. 14
Well, that's actually how we went from single digits to double digits.
And the only way you're going to go to percent or 20 over is actually to look at availability 21 and make sure that all those available 22 firms are certified and that we're 23 actually doing the outreach to them, not 24 only to get them certified but for their 25 participation, and that's actually, in my 36 1/20/10 - COMMERCE - RESOLUTION 090860 mind, a goal achievement process.
I think what Mr. Dow is referring to -- and you can correct me if I'm wrong. I don't want to put words in your mouth -- is, I don't think it needs to be an either/or. Councilman Goode, you're correct that where there is high availability, you would want to focus some effort to match that with high utilization, and the long-term strategy is that where there are situations where the City has contracts that are available and the availability of minorities, women and disabled-owned businesses is low, that there are some ways that OEO can be involved with other entities in the City that provide technical assistance and business outreach and entrepreneurial support to increase those availability numbers, in the hopes that, in concert, utilization levels would increase as well. 37 1/20/10 - COMMERCE - RESOLUTION 090860
Mr. Huang, you did not present your testimony, but just one question in your testimony and then I'm going to finish up very quickly so my colleagues can jump in. In your testimony, your numbers actually differ from the numbers in the Disparity Study. Why is that?
Do you have the most recent version which I made available this morning?
So if you look at, for example, Page VII in the Disparity Study, the 2008 numbers are consistent with what's in the executive summary of the Disparity Study.
Right. Yes. Thank you for bringing this up. This is a -- Figure 1.2, of the FY08 Annual Disparity Study is incompletely labeled. Those numbers represent -- the DJ Miller study that covered '98 to '03 looked at utilization in three ways - purchase orders, awarded contracts and, where possible, where the data was available, payments. The FY08 Disparity Study Figure 1.2 shows the utilization based on purchase orders, and I believe those were the numbers that were quoted by Mr. Dow in his remarks. In my testimony, I felt it more appropriate since we, Econsult, for the '06, '07 and '08 reports used awarded contracts, that a fairer side-by-side comparison would be to use the awarded contracts number for the DJ Miller years so as to be resonant with the Econsult numbers for '06, '07 and 39 1/20/10 - COMMERCE - RESOLUTION 090860 '08. And so that's what I put in my prepared remarks.
I guess my only question is, what will go in the next Disparity Study?
We're going to decide either to more properly label this or to change it to reflect awarded contracts.
And you understand why I'm asking that question. We want to make sure that we're comparing apples to apples and oranges to oranges.
We haven't decided that yet. But we'll certainly be sure to label everything so that it's not as misleading as this one is.
Mr. Dow or 40 1/20/10 - COMMERCE - RESOLUTION 090860 Mr. Huang, what's the most current DBE participation info that you have?
Most current DBE participation for the City? We have draft numbers for Fiscal Year '09.
We have participation roughly 7.5 -- excuse me. I apologize. 17.5 for the total participation. Minority participation would be 11.05 and women would be 6.44.
I don't have that information right here. Hold on. Maybe. Excuse me. I apologize for that. I think I do. I apologize for that. We have -- hold on, give me a moment. In 2009, the total was 17.5. African American would be 8.61.
On a percentage basis, it comes out to zero percent. On an absolute dollars basis, it is $14,000.
Okay. The strategic plan calls for quarterly tracking. Why not --
It boils down to when we are able to -- essentially, it's a systems problem, technology problem.
That cannot be overcome? 42 1/20/10 - COMMERCE - RESOLUTION 090860
If you have a strategic plan that is not final, in your draft strategic plan why would you aim for quarterly tracking rather than realtime tracking?
Well, what we would try to do is get what is most reasonably -- what we can deliver. So if we know we can't deliver the realtime, we're not going to tell you we're going to deliver that. Right now we know that it's a systems problem.
Does quarterly tracking allow you enough response time?
I believe it does, because what you should be less focused on necessarily on terms of how do we change behaviors, it's not necessarily the tracking of it.
So we are in the third quarter of Fiscal Year '10. 43 1/20/10 - COMMERCE - RESOLUTION 090860 Where are we?
-- of Fiscal Year '10. So you have no idea whether you're going to meet your Fiscal Year '10 goals or not?
If we are in the third quarter of Fiscal Year '10 and you can't give me a number, there's no 22 way you can have an idea whether you're going to meet your goals or not. So quarterly tracking is not sufficient.
I mean, that's public information. I would believe that it should be.
My understanding is that that information is public information and so it can be asked for.
Would someone have to request it or are you going to post it on your website? 45 1/20/10 - COMMERCE - RESOLUTION 090860
To be determined. I believe that in order to be transparent, we should post it, but that's to be determined.
This is my last question. You set a Fiscal Year '11 goal of percent. Moving forward, you 9 roll out the strategic plan. The 10 strategic plan is final. The strategic 11 plan is working, even if you only have 12 quarterly tracking. What's the earliest 13 point that we will actually know that we 14 are achieving that 25 percent for Fiscal 15 Year '11? 16
Will we know 19 October 1st, after the end of the first 20 quarter? Will we know January 1st, at 21 the end of the second quarter? 22
Typically we report 23 out -- participation numbers come out in 24 November timeframe, if I'm not mistaken. 25 November timeframe. So after November 46 1/20/10 - COMMERCE - RESOLUTION 090860 1st, we would be able to have a good indication of where we were. I would --
So a year from now when we hold this hearing and you have a percent goal for Fiscal 7 Year '11 and we're halfway through Fiscal 8 Year '11, you'll be able to tell me -- 9
What I would hope to 10 be able to -- what I will be able to tell 11 you, excuse me, is that we are trending 12 in this direction or that direction, and 13 I will be able to tell you -- 14
But a year 15 from now, when we are halfway through 16 Fiscal Year '11, will you be able to give 17 me a number in terms of whether you're 18 reaching your goals? 19
I will be able to 20 give you a good estimate, yes. I can't 21 say -- 22
Why would it 23 be an estimate if you're doing quarterly 24 tracking and you've already had two 25 quarters pass? 47 1/20/10 - COMMERCE - RESOLUTION 090860
To be honest, I think it's really a systems. It's about when actual payments come in, when they don't come in. It's the process by which we go through our procurement process. So depending on how fast what happens in that particular aspect of it will dictate how much good information we will be able to account for. And so I'm hesitant -- my hesitancy is about not being able to verify the information at that point in time.
Will the Procurement Commissioner approach the witness able. (Witness approached witness table.)
Good morning, Mr. Ortman. COMMISSIONER ORTMAN: Good morning.
Identify yourself for the record. COMMISSIONER ORTMAN: Hugh 48 1/20/10 - COMMERCE - RESOLUTION 090860 Ortman, the Procurement Commissioner for the City of Philadelphia.
Mr. Ortman, two questions. One, is realtime tracking possible? COMMISSIONER ORTMAN: For this --
For DBE participation. COMMISSIONER ORTMAN: Not in my opinion, but I don't actually track it. From what I'm aware of, I would say no. 14
Why is it not? COMMISSIONER ORTMAN: Because there's so much involved with the actual process, so many if's, and's or but's. I mean, you can award a contract --
When a contract is awarded -- let me step back. Other than for this information, in terms of City contracts in general, is realtime tracking possible in terms of your process? Do you have 49 1/20/10 - COMMERCE - RESOLUTION 090860 realtime tracking? COMMISSIONER ORTMAN: As to where it is in the process?
Yes. COMMISSIONER ORTMAN: Just for the bids and awards themselves, not participation, yes.
So if under the strategic plan OEO is going to be involved before the contract is let, in the bid process, they're going to be involved in the contracting process and they're going to be involved in the monitoring, if you have realtime tracking capability and they're involved in the process, then why is it not possible? COMMISSIONER ORTMAN: From what I know about the participation reporting --
We're not talking about the past. We're talking about the future. COMMISSIONER ORTMAN: I understand. If you award a contract, a 50 1/20/10 - COMMERCE - RESOLUTION 090860 hundred-thousand-dollar contract, and there's percent participation, that's 4 $10,000. That hundred-thousand-dollar 5 contract may not be touched for a year 6 before somebody finally uses part of that 7 contract. So that 10,000 is still 8 sitting out there. 9 I'm sorry. So I guess my point 10 is, it depends which answers you want as to whether there's realtime tracking.
So in terms of realtime tracking, if you go into your system right now, is there any DBE information? COMMISSIONER ORTMAN: No. 17
What is your anticipated date for the formal release of the OEO plan? 51 1/20/10 - COMMERCE - RESOLUTION 090860
I would think very shortly. I don't have an exact date for you right now, but this was the last kind of feedback opportunity we were looking for which was going to influence the final strategic plan, the final draft of it. Conversations with the Administration would be held at this point in time, to roll it out within a very short timeframe.
At what juncture did you meet with department heads to help them understand their role in helping your department reach the OEO --
You stated in your testimony and in answering Chairman Goode's questions that you, 52 1/20/10 - COMMERCE - RESOLUTION 090860 quote, plan to influence the departments or help guide departments in helping you meet the OEO plans. Elaborate on what that means.
Well, first of all, we take the philosophy we want to make sure everyone understands. The Office of Economic Opportunity does not write the contracts itself. So all of the contracting processes are taking place in the departments, and so what we want to be able to do is hold them accountable to contracting. It's these individuals who are writing the contracts and the individual departments that have to be accountable to holding it. And so when I say influence and guide them and so forth, what we need to do is be able to be a valued partner by giving them information, statistics, availability, what they can do, what they cannot do in an ongoing process that will allow them to make more informed decisions about minority participation in 53 1/20/10 - COMMERCE - RESOLUTION 090860 the contracting process. That's what I meant by influence.
The process that actually took place was that we sat down initially with the big spends, the Water, the Aviation, and we had one-on-one conversations with them in terms of what their historical participation has been, and then recognizing that the economic climate has changed significantly from 2008, we talked about what's getting ready to happen with the upcoming budget and where are there opportunities to improve your participation and then sought commitment from them on that participation. In addition to that, we're working with the -- I believe it's the Finance Department, starting in February where we're going to meet with the individual purchasing managers throughout the City to talk about how you can have a positive influence on that goal. By the way, this is the goal that your Deputy 54 1/20/10 - COMMERCE - RESOLUTION 090860 Mayor has committed to, what can you do to exceed that goal. No matter what we commit to or what the Mayor commits to -- and I said this to the Mayor as well -- my goal for OEO is going to be a little bit higher than that.
So you expect to guide and influence them, and then you used the word you expect to hold them accountable. What does that mean for departments who do not meet their goals? What's the hammer?
Well, we got the Mayor being part of that as a hammer. We're also looking at -- well, first of all, it's a leadership perspective. So we're asking leadership all the way from the Mayor to Deputy Mayor to Commissioners to hold these folks accountable. So in a performance management perspective, it's holding them accountable and to actually get the results that we want. It's looking at -- 55 1/20/10 - COMMERCE - RESOLUTION 090860 if we are unable to -- if they're unable to achieve goals, we have to understand why they didn't achieve the goals. Is it because they chose not to do the minority participation that they elected or that they said they would do for some reason or another or they didn't do contracts. We have to understand that and then hold them accountable to what they've said in the beginning. So if they said they're going to issue so many contracts within a certain period of time and within those contracts they're going to have minority participation and for whatever reason they didn't issue those contracts, we have to hold them accountable to issuing those contracts in order to meet those goals. That's what we mean by accountability.
To get more specific, the Economic Opportunity Cabinet, which is pretty much the same composition as the Mayor's Cabinet, is our opportunity to go back to the Deputy 56 1/20/10 - COMMERCE - RESOLUTION 090860 Mayors and go, Look, here are the ones that are doing very well and let's share some of the best practices with the ones that are doing really well. Here are the ones that are struggling. In my initial conversation with those department heads, I said for the ones that are doing very well, you may hear from me on a quarterly basis. For the ones that are struggling, you're going to hear from me more often and we're going to talk about ways we can improve your utilization.
So what are your red flags or signals for those departments that are struggling? Because it goes straight to Councilman Goode's question regarding realtime reporting.
Yeah, and this is when contracts go through the process and one red flag is when it goes through the ASIS process and it doesn't have participation, that's a red flag, we're going to stop it. Finance is a wonderful 57 1/20/10 - COMMERCE - RESOLUTION 090860 partner in that report, the Finance Department, in making sure that we're able to capture or catch, quote/unquote, those contracts that are not coming through. So that's an example, where we will say, Okay -- and then if we see bad behavior, continuing bad behavior of departments, let's just say it's one department that never gets participation ranges and we always see their contracts, we're going to go and have some deeper and more direct conversations with them. We're going to make sure that the Mayor is aware of what's going on. We're going to highlight the bad behaviors so that we can then change the subsequent outcomes.
If I could, the process right now unfortunately is a very manual process. We're looking to try to make that more of an automated process. Now, those conversations are happening with the Department of Technology even as we speak, and the men and women of the Office of Economic Opportunity have done 58 1/20/10 - COMMERCE - RESOLUTION 090860 a fantastic job, quite frankly, in catching some of those human errors that may take place as it pertains to our process. But if I could be king for the day and write the script, it would be a matter of a point and click and I could have realtime data, but I'm working with the systems that we have right now in place with the Department of Technology.
As a part of the strategic plan that you're rolling out, are there discussions with the Department of Technology? Because you mention a lot in your testimony how the systems are not in place to -- systems are simply not in place to help address quarterly, I might argue monthly and Councilman Goode's expectation is realtime.
We are having those conversations with DOT, the Department of Technology, to see what we can do in terms of capturing actual data, the Procurement process, which we get 59 1/20/10 - COMMERCE - RESOLUTION 090860 involved in. It's a much bigger process than OEO, but it's the Procurement process, they're looking at that. So we're at the table having those conversations trying to make sure that any changes that come about are going to have things in there that benefits the Office of Economic Opportunity and our ability to track awards, current, real data, so forth.
So can we expect to see some discussion of that in the final draft --
Yeah. It's taking place. We've even talked to some outside partners, like University of Pennsylvania has a very nice procurement system. There are some shelf products out there. My plan is to come up with a proposal, quite frankly, for Kevin and 60 1/20/10 - COMMERCE - RESOLUTION 090860 say, Look, this was what the actual cost might be to either put a Band-Aid on it or help fix part of it. This might be the cost to do the bells and whistles, Cadillac in terms of meeting all of OEO's needs. So it's too complex to get into this conversation today and it is a lot of detail involved and, quite frankly, I need the people that are actually day by day doing it having that interaction with the Department of Technology, but we are working through that.
Who makes up the OEO Cabinet? What is the composition of the Cabinet?
The Economic Opportunity Cabinet is all the Deputy Mayors, it's the Managing Director, it's the City Solicitor, it's --
Hugh Ortman and a procurement officer, IG, Mayor, Chief of Staff.
How often 61 1/20/10 - COMMERCE - RESOLUTION 090860 do you meet?
We've been meeting monthly, it seems like, the last three months, four months, but quarterly is the standing meetings, and over the last three months, we've met three times.
And where is the overlap with the OEO and the Mayor's Cabinet?
Well, the Mayor's Cabinet -- essentially the folks that are on, other than -- I mean, the key people on the Economic Opportunity Cabinet are Mayor Cabinet members. The Deputy Mayors are all there. We didn't mention Rina Cutler. She's there. All the Deputy Mayors are there. So that's part of the Cabinet. We've added additional folks like Hugh Ortman, like -- Hugh Ortman, as an example, who is not on the Mayor's Cabinet because of his critical role in the procurement process. So the Mayor's Cabinet also includes the City Solicitor. She's on the Economic Opportunity Cabinet 62 1/20/10 - COMMERCE - RESOLUTION 090860 as well. So it's a mirrored group. We don't have everybody on both, but there's a mirrored group.
My last question is, can we therefore expect that the breakdown in your final document will be by ethnic group so that it is consistent with the law?
Thank you very much for your testimony. Thank you, Mr. Chairman.
Thank you, Councilwoman. Let me note for the record that Councilwoman Sanchez and Councilman Jones are here. Councilman Green.
Thank you, Mr. Chairman. I just have a few quick questions. You've sort of briefly hit on my areas of interest with respect to 63 1/20/10 - COMMERCE - RESOLUTION 090860 improving the efficiency of this process. So how many people right now are in the Office of OEO?
And seven people are in charge of what we're calling GAP now?
Well, I guess there were two that were mainly focused on certification, and those two are shifting towards the -- I mean, we're not rolling it out yet, but they're getting ready to shift towards more of a reporting/monitoring responsibility. It might be three.
Right. Three on the certification side. So you have support staff there as well. So you got two, 64 1/20/10 - COMMERCE - RESOLUTION 090860 three people of support staff. You have a manager, two managers, Alice Candace. So you subtract those out, you have basically five, six people. And then if you add in the other seven, that's where we get the 12.
Okay. So describe to me the typical day for somebody with that responsibility.
Well, there's two aspects. There's one group that is receiving RFPs and setting ranges and goals and monitoring those RFPs to see if those participation goals are being met.
Okay. That's a job description. I want to know a typical day. You come into the office. You've had your cup of coffee. What do you do? 65 1/20/10 - COMMERCE - RESOLUTION 090860
I don't know if I can describe my typical day. I don't know if I have a typical day. Every day is unique, with different challenges and different opportunities.
Is there a specific process -- I mean, that should not be true of staff people who have a specific responsibility like measuring, right? There should be a specific process in place that is, Okay, these are the contract -- are contracts assigned to specific people in the office? In other words, are the people who are doing measurement assigned to specific departments?
Okay, the Water Department, and you measure that department, what do you do on a -- 66 1/20/10 - COMMERCE - RESOLUTION 090860
Like what I started to say before, you're receiving those proposals from the Water Department. You're setting the ranges for those particular contracts, and at the same time, you're monitoring to ensure there's compliance with those contracts.
I think there's several systems reports that they look at. I think ASIS is one of them. Don't ask me what that acronym is. I'm still learning some of those.
That's just the actual -- ASIS is the contract being awarded presumably with language that's already been approved for a goal or some other kind of understanding in it. But then how are you actually doing monitoring? What is the daily function of monitoring or weekly function with respect to every contract? In other 67 1/20/10 - COMMERCE - RESOLUTION 090860 words, are there written processes in place for this -- written processes in place for the performance of the job so that the people who are supposed to be monitoring can be held accountable to a process? Every week I will review every contract in every department that is under my purview to see what progress has been measured. Is there any kind of --
There is? Could you please provide those written processes to the Chair?
Thank you. My other question is, what cities in the country do this very well?
I've heard good things about Baltimore and I've also heard some good things about Toledo. Toledo has a very similar demographic composition to what the City of Philadelphia has. 68 1/20/10 - COMMERCE - RESOLUTION 090860
Right now it's really execution. I mean, I looked at New York, I looked at DC. I attended a conference down in DC. A lot of the strategic things, a lot of the tactical things are very, very synonymous, very, very similar to what the City of Philadelphia is proposing to do in their strategic plan. The difference might be just execution.
Execution. And that would mean sort of what people do in their daily everyday job?
And how we measure that, their performance in their job?
So have we looked at what their written processes are and what the technology is that they 69 1/20/10 - COMMERCE - RESOLUTION 090860 use that make them able to better execute than we can?
We have? So you said you've heard good things about it, but you've actually gone and looked at it or you've got a written report on it, or what?
I think through our general research as we began writing the plan, as Econsult looks at the statistics and so forth, through a combination of all of that.
That specifically described the technology the cities use, the workflow processes those cities use?
I haven't gotten into that level of detail. Most of the people -- some of them, matter of fact, are even in this room right now -- are some of our, what I'll call, technical 70 1/20/10 - COMMERCE - RESOLUTION 090860 assistant partners in gathering information from them. Baltimore came into my radar from talking -- from conversations with those technical assistant partners.
Okay. So what I'd like to ask you to do before Councilman Goode calls another hearing on this is to actually figure out the cities that are doing this well and better than we are, what their workflow processes are, what their job descriptions are and what technology is it that they are using that we may be able to implement here to get closer to a realtime system, like, for example, requiring in contracts that people report weekly to us on subcontracts, what they've spent where and stuff like that, that makes the information available so that you can catch things before the end of a contract. We could certainly put whatever we want into our contract in terms of a reporting mechanism and have a 71 1/20/10 - COMMERCE - RESOLUTION 090860 website where people can go in and have to fill in, and if they haven't filled that in, they don't get their next check. There's lots of different ways we can improve the process to make it easy for you to do monitoring without a lot of manpower involved, pushing buttons, as you were saying.
Leaving more time for us to sign up people that are firms that we want to help.
Thank you. Gentlemen, obviously this Committee, particularly our Chair, who has worked with this for a long time, has 72 1/20/10 - COMMERCE - RESOLUTION 090860 some concerns when you see a trend going downward, especially when we've been talking about this issue for so long, and so there is a concern, a serious concern, around this. In terms of certification and increasing our numbers -- and you talked about a percent increase -- have we 10 cross-referenced the minority 11 certification list at the state as a 12 potential pool of folks that are not in 13 our pipeline in light of the fact that 14 we're now doing reciprocity? Have we 15 looked at what that pool looks like? 16
So 19 what's their list compared to ours in 20 terms of Philly-based minority firms? 21
I really could not 22 answer that specifically. We do know 23 that there's some opportunities for 24 growth there. We do know that -- 25
So we 73 1/20/10 - COMMERCE - RESOLUTION 090860 have the list and we're cross-referencing it?
Yeah. It's a public list. So we'll cross-reference it, make sure that -- one, we look at our own list first, make sure that if -- and we focus on those that don't have any other certifications out there. So that's our first tier group that we're going to concentrate on. Second of all, second direction is to look at other entities that we want to consider, so like the SEPTAs, the states and things of that nature, to see if there are any there that are not on ours, and then we do an outreach to those that are not on ours to say, Hey, get on ours so we can count you. The third list is maybe even looking at private organizations, Minority Supplier Development Council, Women's Business Enterprise Center, a number of different ones there that also have firms here that might not be on the 74 1/20/10 - COMMERCE - RESOLUTION 090860 list, have an outreach to them as well.
In terms of the goal-setting process, we are now meeting with department heads in preparation for the budget, and I must say, I am extremely concerned at department heads' inability to give me goals, and a lot of them say, Well, we're meeting with OEO. So I'm really concerned about who is going to set the goal in light of the fact that there is literally historical resistance from these folks to change some of the stuff they're doing, especially from our large departments who consume many goods, whether it's the Water Department's 200 million or whatever. So when you were talking about the goal-setting process, I'm a little concerned that we're leaving a lot of this up to the departments and then not raising the bar on them. And to that, when you talked about the contracts, I have yet to hear any discussions around 75 1/20/10 - COMMERCE - RESOLUTION 090860 the potential de-bundling of contracts so that we can make sure smaller guys -- create that pipeline to increase this. So I'm very concerned, because when I have these conversations with department heads, if they're not telling me they're looking to de-bundle the work -- we talk about the stimulus packet, we're doing a lot dredging, we're doing a lot of small projects, small projects where we do have utilization and opportunity for increased utilization, and I haven't heard any of you gentlemen mention that. So that's an extreme concern, because double-digit increase is very hard and painful to get to. The decrease seems to be happening much quicker, and unless we're seeing those things, unless we're telling departments, You must de-bundle, you must do certain things, if you're leaving it up to these folks to make up numbers, we're going to be back at the same place. I really want to get to a place -- I think Councilwoman 76 1/20/10 - COMMERCE - RESOLUTION 090860 Blondell Reynolds says this at the budget -- where this language around de-bundling, participation flows out of these Commissioners, not out of just OEO's office, and I haven't seen that so far with the departments that I'm meeting with.
You're right, and that's exactly where our focus has been. Even though we talk a lot about metrics or the participation goals or the availability, utilization, the bottom line of what we're trying to create right here is changing the DNA of the City where part of their day-by-day, week-by-week, minute-by-minute environment is to think about inclusion and participation. So in the front end, we started those conversations with department heads so that -- I heard the message loud and clear, I don't want to see departments standing in front of City Council not know what their participation goals are and not have any interaction 77 1/20/10 - COMMERCE - RESOLUTION 090860 with OEO. So we eliminated that right out of the gate. But on the flip side, we're going back to the actual purchasing managers, recognizing that the Deputy Mayors are here -- the department managers might be there, but the ones that are actually getting capital on the streets and getting contracts in those businesses' hands are the purchasing managers, and that takes some time. There are a lot of interaction back and forth where some would come back with a goal of two percent, where historically it had been 15 percent. We'd go, Wait a minute, let's talk about this a little bit. And there were some that might have came back with a goal of 80 percent and historically they're running five percent. Well, we need to have a conversation with them as well. And that's where a lot of our energies, a lot of our efforts have been taking place over the last few months.
Okay. 78 1/20/10 - COMMERCE - RESOLUTION 090860 Again, we have three or four months before this budget process, and I don't see a good trend in my meetings so far with some of the department heads. I don't see them owning this. That has always been our concern, whether it was MBEC or OEO, how these departments view your role and how much they think they have to give you to satisfy you and get off your radar. It has to flow naturally, and it only flows when you follow the contracts and you follow the money. So unless departments heads are going to be prepared to come in here and say, Over the last year, these were the contracting opportunities that we opened up through this process, we're going to be playing this song and dance for the next ten years. Wilson has been doing this for ten years. I don't like to do this dance for ten years. I think that we have to be extremely serious about this, and until the department heads -- 79 1/20/10 - COMMERCE - RESOLUTION 090860 we're political candidates. If we can't say in two minutes why we're here, then we have a problem. If a department head comes to me and in two minutes he can't tell me how he's reaching the goal, I know I have a problem and we have a problem.
So we have to do a better job before folks start testifying in March about their goals.
Thank you, Mr. Chairman, and let me go on the record and say thank you for your years of consistent development of an MBE, WBE, DBE program for the City and being consistent on your public policy stance 80 1/20/10 - COMMERCE - RESOLUTION 090860 on this. Are we in the afternoon yet?
No, I'm not. No, I'm not. I think a lot of the questions that I would have have already been vetted. I think the answers are or aren't what they are. And I think that the expectation has been made real clear by this Committee. So I will try to narrowly tailor my focus to things that I don't think were covered. Could the Procurement Commissioner please join us back at the stand for this. (Witness approached witness table.)
I don't know who is doing your math over there, but if 81 1/20/10 - COMMERCE - RESOLUTION 090860 I were to look at -- if I were to ask you what is the flagship example of minority participation in the City of Philadelphia's procurement process and I want to eliminate Scotlandyard and I want to eliminate Team Clean, who would be that flagship? What would be that example of what us getting it right and what would be the prototypical way that we could expand that to other departments? Give me one WBE, one MBE example of that, your signature -- COMMISSIONER ORTMAN: You took my two best answers away now. I don't recall the actual name of the company. It's a minority company that's over in Camden that handles some of the pest control. It does an excellent job. Never get complaints, and he's --
Is that a female-owned firm? COMMISSIONER ORTMAN: He's a minority-owned company and he has subs 82 1/20/10 - COMMERCE - RESOLUTION 090860 that are minorities.
And what would be the total contract value that they have? COMMISSIONER ORTMAN: Off the top of my head, it's over a hundred thousand a year. It's a pretty good size. There's different areas around the City that are covered by different contracts.
So your flagship example of minority participation is a hundred-thousand-dollar contract? And what is our total budget? COMMISSIONER ORTMAN: Other than --
What is our total Procurement expenditure for FY09? COMMISSIONER ORTMAN: Upwards of several hundred million. I don't know the exact figure in front of me.
We only purchased -- 83 1/20/10 - COMMERCE - RESOLUTION 090860 COMMISSIONER ORTMAN: And we're talking SS&E, we're talking Public Works? Public Works, of course, they're huge, much larger than that. I don't have the total dollar figure with me.
My question to you -- and I'll repeat it -- is, if you were to use one company, other than Team Clean and other than Scotlandyard, what would be your example of a successful minority and/or female contract and how much would that contract be for? COMMISSIONER ORTMAN: The dollar figures I'd have to go check.
You said a hundred thousand dollars. COMMISSIONER ORTMAN: I don't have them in front of me. We have 800 active contracts. I don't have all the numbers in front of me.
But what jumps to your mind as a -- COMMISSIONER ORTMAN: There's a 84 1/20/10 - COMMERCE - RESOLUTION 090860 trucking company that's used both by SS&E and --
Do you know the name? COMMISSIONER ORTMAN: Yes; Beasley.
And what was their contract award? COMMISSIONER ORTMAN: Well, he's a sub for all these different companies.
And what was his subcontract award? COMMISSIONER ORTMAN: I wouldn't -- I'd have to check on that figure, sir. I could get that for you, but I don't have it off the top of my head. I don't want to give you the wrong answer, that's for sure.
Do Scotlandyard and Team Clean still have the triplex contract? COMMISSIONER ORTMAN: The triplex contract is not handled through 85 1/20/10 - COMMERCE - RESOLUTION 090860 Procurement. I know Scotlandyard is the actual security force there. I know Team Clean is the actual janitorial service there, but it's not something that directly goes through Procurement.
I will -- COMMISSIONER ORTMAN: It would go through Public Property.
I will pose that question to the two of you. If you had one example of a minority company, a female company, what would that company be and what would the contract award be?
And straight up, I wouldn't know the actual dollar amount of the contract really. I just don't have that detail right on the top of my head right here right now. I would say Alpha Supplies is one company that we partner with. Particularly it's a nice partnership because that's on one of our citywide contracts, which is the office supply, their sub there. Beasley was another one. You 86 1/20/10 - COMMERCE - RESOLUTION 090860 took away Team Clean. You took away that one. They're under U.S. Facilities, Inc., which is a minority-owned company, one of the largest in the United States. So I would include them there as a significant contract that that goes through. We've had some success with --
Do you know -- let's go back to Alpha. Do you have any idea what Alpha's award is?
It's a requirements contract, which means an annual contract and you use them as needed. Do you know what their participation levels were last year?
Not right now. Not right off the top of my head right now, no. I can certainly get that to you. It's easy information to get, but I don't have it right now.
Do you want to take a stab at it? 87 1/20/10 - COMMERCE - RESOLUTION 090860
No. I was going to say most of my focus has primarily been on meeting new business, new minority-owned businesses, new women-owned businesses and getting our availability and utilization increased. I haven't really focused a lot of time or focus on the past or what past contracts have been, but we certainly can get that information for you.
All right. Let's go to the question that was posed for realtime payments and the difficulty, technological challenge of doing that. If I were to allow you to use the phone and you needed to find out how much the contract was for the moving of election voting machines, would you be able to tell me exactly who, what, where and how much that contract was for? COMMISSIONER ORTMAN: Yes, sir, within 15, 20 minutes. That's a -- find the contract number, the vendor.
Pretty much 88 1/20/10 - COMMERCE - RESOLUTION 090860 realtime. COMMISSIONER ORTMAN: I can get that for you.
And you probably could do that also for a requirements contract, let's say salt expenditures for the year after a big snowstorm. You could pretty much tell me where we were by utilization of salt. COMMISSIONER ORTMAN: Utilization or contract award?
Contract award and then what the amount of use we actually drew down on that contract, within 15 minutes. COMMISSIONER ORTMAN: I can tell you how much money was encumbered on that particular contract. I can't tell you what was spent on that particular contract without contacting Finance.
Then my question becomes, why is it so difficult to track minorities and females and disadvantaged companies -- 89 1/20/10 - COMMERCE - RESOLUTION 090860 COMMISSIONER ORTMAN: What you just asked me would be manually done. Those two contracts would have to be pulled. I would have to look at them, research them and give you the answer. We have a technology called Speed, which unfortunately was built on Access 95, Windows 95, and that is falling apart. We're in the process of trying to fix it. That was our only way of tracking minority participation on an electronic basis and it just isn't working right now, and as we've discussed already, DOT is working feverishly to try and fix that problem or possibly get an off-the-shelf product that would work.
Let me pose the question a different way. If you could not on a daily, monthly, quarterly basis track how much we expended in a Procurement commodity, would that be of concern to you? COMMISSIONER ORTMAN: Are you talking one commodity and one contract? 90 1/20/10 - COMMERCE - RESOLUTION 090860 I'm not sure what you're asking.
Let me try it again. We can do this. If we were just dealing in commodities and in payments and in fiscal integrity of how we pay our vendors and for some reason you could not track your vendor payments to know whether you had an outstanding payable, would that be of concern to you? COMMISSIONER ORTMAN: Procurement does not handle invoices or payments. That's why I can't really answer your question.
Okay. But you work with -- COMMISSIONER ORTMAN: I can call Finance or get into FAMIS and try and look it up. It's usually a lot quicker to call, to tell you the truth.
All right. We'll try it one more time. If we can keep track of our fiscal record-keeping, because there are 91 1/20/10 - COMMERCE - RESOLUTION 090860 penalties and consequences of not doing that, why is it so difficult for you and other departments to not keep track of minority participation? Is there some reason technologically that we just can't accomplish that? And this is not -- this doesn't begin with you and it goes back to other administrations, previous administrations, but I don't understand for any logical reason why we can't have another input, another category that we can just keep track of what we are doing on a realtime basis, and I just need to know what that challenge is so we can meet it. COMMISSIONER ORTMAN: I believe -- maybe Kevin could answer this or Curtis -- DOT has worked every day practically with these two guys trying to come up with an off-the-shelf program or something that we already have in order to be able to do exactly what you want us to do. And we agree it should be done. Nobody is arguing that, but it still 92 1/20/10 - COMMERCE - RESOLUTION 090860 takes a little time for DOT to come up with this particular program. But it should be -- if I were in charge, it would be a system where OEO gets the participation, enters it into their system, does what they want with it and ten minutes later they go back and look at the whole thing all over again electronically. We just don't have that yet. We did have it, but it broke.
I just sense if it was a fiscal issue and we had a monetary defalcation, that we would have a sense of urgency in fixing the problem, and that sense of urgency, when it comes to participation, needs to be there. It needs to be there. There are people that count on us for their livelihoods, taxpayers, business owners, that are counting on us to meet and get it right. So that sense of urgency needs to be there. If I were to do case in points, the Neighborhood Stabilization Program, 93 1/20/10 - COMMERCE - RESOLUTION 090860 for example, that we have had for a number of months now, how are we doing on participation with that?
We don't have that information right here with us. That's through the Regional Development -- Redevelopment Authority. Are you talking about the NSP program?
I don't have that right now, to be candid with you. We were focused solely on our internal departments and the quasi agencies. While we are focused on them, making sure we get them playing in this val park as well, they do a good job and we just don't have that information right now. We can get that for you.
Yeah. That's what I mean. And they do very well, let me tell you. RDA, they've done -- historically 94 1/20/10 - COMMERCE - RESOLUTION 090860 they've done fairly well. So we are confident that that is going to continue on down the path. We have had goal-setting conversations with them as well.
And I want to commend publicly the Mayor and the Administration for receiving extra money. The City is, I think, scheduled to receive --
-- forty-four million dollars. Are there going to be conversations about how that can benefit minority, female companies?
And in that process, in order to know what we need to do, we should know what we have done and what works and what has not worked. So that kind of dialogue, seems to me, needs to be engaged, and I would like to get the Chairman information on that. 95 1/20/10 - COMMERCE - RESOLUTION 090860 Finally, some of the big-ticket departments are the Water Department, the Airport, DHS, Police, Fire and Prisons. Police, Fire and Prisons represent 6 percent of our entire budget. How are we 7 doing there? 8
Well, this is where 13 we have a department that has good 14 behaviors. They're helping us track, 15 they're helping us count for it. We 16 probably -- if there was one area where 17 we get solid information, it's from the 18 Prisons area. I mean, we've had some 19 very good conversations, and not only 20 that, it has been in their behavior, in 21 their mindset for years. So they have 22 been able to institute programs there, 23 processes there that allow us to achieve 24 the goals and objectives that we want to achieve, and what we would want to do is 96 1/20/10 - COMMERCE - RESOLUTION 090860 take some of those best practices out of there and apply them to some of the other areas. Plus they have large dollars, so there's been always a focus on -- the larger departments there's always been a focus on.
We are having dialogues with them. They are, I guess -- I call them -- I lump them in with quasi organizations. But we certainly are beginning to -- it's the First Judicial District. We capture their numbers. We're looking to have some ongoing conversations with them where we talk to them, engage them, try to influence them in their decisions as well. So we are -- yes.
So has there been dialogue about the new Family Court that's being built?
Not yet. I don't know that answer right now. I can't say yea or nay about that. That has not gotten to the point where we've begun to have some conversations about minority participation in there. So I would reserve final say in that regard, because I just have not been involved in that type of conversation.
What is important is the timeliness of information, whether you're talking about the African American Chamber of Commerce, whether you're talking about the Hispanic Chamber of Commerce, Women's Chambers of Commerce or just Philadelphia-based businesses in general. By the time the bids hit the street, it's too late.
So the dialogue needs to begin earlier so that 98 1/20/10 - COMMERCE - RESOLUTION 090860 the information flow to those entities can happen and so that roundtable matchmaker sessions can happen. A positive example -- and maybe not under your direct influence, but I would say you delivered a check, so therefore you get a -- in for a penny, in for a pound -- is the Salvation Army. That dialogue began well before they ever broke ground. And if that is -- and I would have used that as a flagship example, not under the departments but in the private sector, in their voluntary compliance, as an example and best practice, if you would, on how to engage early, how to disseminate information often, and then at the end of the process, it doesn't take rocket science to understand why the participation levels are higher there. So it means bringing people to the table so that they can have that information. One of the things that you and I struggle with on a weekly basis with 99 1/20/10 - COMMERCE - RESOLUTION 090860 the whole stimulus package is how do we engage different groups so that they are at the table early so that they can prepare in advance to get their bonding and insurance correct, so that they can craft strategic partnerships that work and that are meaningful, meaningful joint ventures. But it takes time, and what we find ourselves doing is responding at the last minute. The more information out front and early, the better the participation at the other end. So if that is true, we have to have those dialogues a lot earlier. They're getting ready to build probably the largest courthouse in our lifetime, and we need to be at the table early, before the bids go on the street, so that that inclusion is, first of all, acknowledged that it is a requirement and then, B, actually -- which are people that actually do the work every day and your consultants that actually bring people to the table, so that they have 100 1/20/10 - COMMERCE - RESOLUTION 090860 enough lead time to actually, at the end of the process, be able to report good numbers back. The Chairman and other members of this Committee, this is how it gets done. It's not a question of 17-500 whatever. It's a question of will and consistency. And we have the will, and we're going to be consistent. So we need to kind of use these best practices and examples as rules and guides for the future. I will conclude with one other thing. That Philly-based information for me is just as important as the levels of minority, female and disadvantaged businesses, because it better gives me a sense of the economic impact of how we're doing by way of increasing tax revenues. And Lord knows and you know, we need them, but also in the job creation end. If we have local firms, they tend to hire local people, and to me if we were scoring -- and I know there is no matrix 101 1/20/10 - COMMERCE - RESOLUTION 090860 to do that, but if we were scoring, I'll take one local business over two minorities that are from Chicago any day. So to some degree, whether or not it's in the regs to do that, that Philly-based information is critical for me as a participant on this Committee. Thank you, Mr. Chairman.
Mr. Chairman, if I may address one last thing that Councilman Jones had brought up. Alpha Supplies participates in the Staples contract, and their number -- and Alpha Supplies is an African American male, and their number is 190,023. It's 18.7 percent of that participation. We referred to Natural Pest Control, I believe was the company that Mr. Ortman was referring to. They are a participant on a contract that's African American male. That is $197,000. And one more for you is Manna Building Supply, which is an Asian female company, and that's roughly -- they have a couple 102 1/20/10 - COMMERCE - RESOLUTION 090860 contracts, maybe three that I have right here in front of me, 150-odd-thousand dollars.
One of the things -- and I know you have a lot of responsibilities, all of you gentlemen do, but those are the kinds of examples I'd have tattooed on my forehead. I mean, whenever you come here, you need to be able to lead with some good news. And I understand how difficult the challenge is before you, but every now and then, we like to hear about a success story so that all of our back and forth, all of your good efforts aren't in vain, that somebody somewhere has a contract doing something. And if you get a dozen of them and then analyze them, how did they become successful, how are they sustaining themselves in a recession and kind of make that your mold and model, I think we can all benefit and learn from it.
Thank you, Councilman. I'm glad you provided information to the Councilman before you left. I can tell you that I had a professional flashback to the point when I worked for him, and there is a difference --
There's a difference between these responsibilities being in the Finance Department and being under the Commerce Department. The difference is not just what share or procurement there is, but actually when it becomes an economic development mission, you have to have success stories. It's a much different scenario. I mean, I cannot imagine looking at five, six, seven hundred million dollars worth of contracts and running the Office of 104 1/20/10 - COMMERCE - RESOLUTION 090860 Economic Opportunity and not being able to rattle off the top of my head my success stories in terms of, I got this contract, I got this contract, I got this contract, in terms of what I did. And that's very serious, not just when you come before this Council but in terms of how people will view how credible your strategic plan is in the future. If they can't see it in those simple terms, then it's not going to be real for them. But, Mr. Gregory, I had a more specific question in that regard. When the Councilman asked you about what DBEs jump out and what size contracts they have, you said you've been focused more on new businesses rather than old businesses.
I've been focused primarily on meeting some of those new businesses, increasing the availability of firms on our registry, on our list, yes.
What does 105 1/20/10 - COMMERCE - RESOLUTION 090860 that mean?
That means although I'm happy about the victories we've had, I'm excited --
What does it mean in terms of you've been meeting with new businesses?
Well, just that. I meet with new businesses. I talk to them. I reach out. I sit as part of panel discussions and talk about how to do business with --
Well, in some cases we matched purchasing managers with the actual vendors or contractors and they get awarded contracts.
Those are old businesses. I'm talking about new businesses. 106 1/20/10 - COMMERCE - RESOLUTION 090860
So how many new businesses have been certified since you have been head of OEO?
Oh, wow. I know what's in the pipeline right now. It's about 129.
I know. I'm trying to remember. I don't have every single statistic for OEO.
Not every single statistic. If what you've been doing is meeting with new businesses -- Mr. Gregory? Mr. Gregory?
If what you've been doing is meeting with new businesses to increase availability and availability means certification, then you should know how many businesses have 107 1/20/10 - COMMERCE - RESOLUTION 090860 been certified under your watch. That's what I'm trying to tell you. If you don't know, that's a problem.
If you don't know what new contracts have been awarded to DBEs, that's a problem. If you don't know the range of the awards in terms of what the typical DBE contract is by contract type, that's a problem.
This is my last question, then I'll move to Councilwoman Brown. Can you tell me what the strategic plan calls for in terms of Economic Opportunity Plans and how that information is communicated to department heads and to the contractors?
Well, legislation requires Economic Opportunity Plans on contracts over a million dollars. As those then are developed and contracts are going up in that range, we develop EOPs in that regard. The departments 108 1/20/10 - COMMERCE - RESOLUTION 090860 that are responsible for those contracts are intimately involved in the creation of those EOPs, and the ongoing monitoring and compliance with all of that, reporting out of all of that, most situations of that particular size, particularly the larger ones, engage oversight committees where the departments are involved with it, a number of community partners are involved with those as a means in which we are able to monitor those particular types of contracts that have EOPs attached with them.
So for all contracts or projects where EOPs are required, department heads are fulfilling that responsibility and communicating that to the contractors?
I would 109 1/20/10 - COMMERCE - RESOLUTION 090860 simply like to underscore the concern raised by Councilwoman Sanchez. During budget hearings, I know for sure Councilman Goode and I, when every department head sat down, we pulled out our little grid here that lists all City departments, what the goal was and then what actually happened. And when I looked at where we were a year ago, the signals here indicate that there's a lot of work that has to be done on your part, and you've already spoken to that. And the challenge is getting department heads to recognize -- it's not going to be in what they tell us. It's going to be in what they do, and what they do is reflected on this sheet. So we are maybe 90 days away from budget hearings again, and I have for sure kept a record of department heads who came to us who used the excuse, Oh, we haven't had meetings. No. In fact, many of them punted the ball to OEO saying, We hadn't met with OEO, which may 110 1/20/10 - COMMERCE - RESOLUTION 090860 have been true, because it was a new Administration. So as we look to the next 90 days, you assured us that come this year, we would not hear that explanation at all. The flag for me is in Councilwoman Sanchez's acknowledgement that she has actually met with some department heads and she is not encouraged at all that they are embracing what your mission is. So know that we are paying attention, and for the department heads that don't get it, it's going to be real, real clear to them that we are not dissatisfied, we are unhappy, because it's been ten years for me and ten years for the Councilman. And this strategic plan will have been released by then, correct?
And so we can be assured that they will have read it and they get it and be prepared to report accordingly? 111 1/20/10 - COMMERCE - RESOLUTION 090860
Is there anyone else to testify on this resolution? (Witness approached witness table.)
My name is Jacqueline Hill, and I promise to be brief, but I'd just like to make a couple comments. I am the Director of the Pennsylvania Minority Business Development Center, a program of the Enterprise Center, and as you know, our 112 1/20/10 - COMMERCE - RESOLUTION 090860 focus is advocating on behalf and growing minority-owned businesses. And I've sat here this morning and I've listened, and I guess my first question is, who is on first? There seemed to be a passing of the ball between Mr. Dow and Mr. Gregory, because we don't have a permanent OEO Director. We have Acting. And so that concerns me about who do we hold accountable and who is empowered to be able to get some of the work done that is proposed in the strategic plan. So one of the requests I would make of Council is that we push for some permanency so that there is someone empowered and in place and held accountable for the outcomes and activities that are being proposed. Number two, this is a three-legged stool, in my opinion. It is not an OEO issue. It is an OEO/Procurement issue. I heard Mr. Ott (sic) say that these two had been meeting 113 1/20/10 - COMMERCE - RESOLUTION 090860 with DOT around the technology issue, but I think in listening, if you were listening well, that that would be in isolation. Procurement clearly has to be a part of that discussion for all of the pieces to come together to be able to track. We need that body of information from Procurement as well as the body of information from OEO for all of the pieces to ultimately come together. I think that's what we've done in the past. We have lived in isolation and none of the dots are kind of clicked together here. Therefore, it has not worked. Thirdly, I sit on the EOP Committee for SugarHouse and for Verizon. Verizon has not had a meeting since July the 7th of 2009. I have had personal interactions with Verizon, the company, just to keep the process moving in order to ensure that the qualified minority firms with which we work have been given opportunity and access for contracting. 114 1/20/10 - COMMERCE - RESOLUTION 090860 But in terms of a committee meeting formally to say, Hey, this is what's happening, there have been a couple of outreach events. So I'm wondering about the accountability on that. And in regard to SugarHouse, we have met consistently. There's a regular standard meeting, but we get the reports, and they remain in red in terms of what the minority participation is. They print them out in color and you see a lot of red. One of the issues that concerns me is -- Ms. Flamer is on the SugarHouse Committee, and we have discussions about locally owned businesses and we have a situation where -- and, Ms. Flamer, please feel free to correct me if I'm wrong -- where Ballard Spahr, as long there's a minority partner heading the account, is considered minority. And that becomes a concern for me, because how do I get the opportunity to engage a growing minority-owned law firm and put 115 1/20/10 - COMMERCE - RESOLUTION 090860 them in position, because they're continually competing against a Ballard Spahr, if that's an acceptable practice. And so I guess my question is -- I mean, I know it's a habit that somehow somewhere along time has been acquired, but I question the legitimacy of that, if I'm going to be able to engage and grow a minority law firm or an accounting firm, because all of those could go and hire someone and put them in position and get credit, but then I don't get the opportunity to engage accounting firms and law firms and other legal professions.
Yes. Michelle Flamer, City of Philadelphia Law 116 1/20/10 - COMMERCE - RESOLUTION 090860 Department, Senior Attorney. The process that Ms. Hill just described is correct, in that the City has a policy of counting participation of minority lead counsel at majority-owned law firms. This practice was started pretty much, I believe, really when Stephanie Franklin-Suber was the City Solicitor, and it's really an outgrowth of a need to encourage diversity at majority-owned law firms. It was never intended to supplant the actual participation of minority-owned law firms or minority accounting firms or other types of professional service providers. It's just really a way of encouraging participation of minorities and increasing diversity at those majority-owned law firms.
I guess my question is, is that how the data is compiled on an annual basis in terms of City contracting?
No. In terms of 117 1/20/10 - COMMERCE - RESOLUTION 090860 the raw data that we put into the participation reports, we only count certified firms. So we're not certifying Ballard Spahr. But for purposes of counting in terms of EOP reporting, there's credit given, but it's sort of --
So it's for the purpose of EOP reporting and not for the purpose of the Disparity Study and/or the annual reports from MBEC or the Office of Economic Opportunity?
I am finished. Those were all the remarks that I'd like to make.
It's afternoon officially? Good afternoon. I wanted to ask -- and you've been a part of a number of hearings that the Chairman has pulled together, and in one of the hearings there was a question of communications and dialogue between the Commerce Department and OEO, and the response was not enough communications. Has that improved since the last hearing?
I don't know that I can respond to that, that I have enough information to respond fairly.
What I would like to see -- I think we got to get away from this little numbers game, percentage game. When a majority of the population of a city is comprised of majority people 119 1/20/10 - COMMERCE - RESOLUTION 090860 and we can't get off of the two and three percent in ranges and that kind of stuff and reposition our sales to grow the economy of the City, then we have an overall problem. I think that in fairness to Mr. Dow and Mr. Gregory, MBEs are at the mercy of their learning curve as we go through this process. They are new to this field. They are -- this is a new administration and inherent in that are some challenges, as with any system, but if you throw that on top of it, then that creates some additional challenges and it takes us ultimately longer to get there. I think some of the questions that you asked today were very basic questions. They weren't rocket science, but it was an indication of where the learning curve is. So in terms of internal communication -- and that's why the first issue that I raised was who is on first becomes very fundamental, because then at 120 1/20/10 - COMMERCE - RESOLUTION 090860 that point, if I'm Director, I'm accountable. If I'm Acting, I'm kind of there, but I'm not there. I think the communication between the two of them is probably very effective, but, again, who is held accountable, who is empowered to make decisions, to have the right conversation, to gather the right information, meet with you and get your support. But if we kind of still haven't made that decision, I can only go so far. So I think that's where there may be the challenge of the communication, because we don't have a permanent appointee.
Well, I'll give you this. I was encouraged when I went out to the Enterprise Center where we pulled together a meet, greet, information session on the stimulus program. That is the type of communication that I encourage. That is the type of dialogue between people who have opportunities and those seeking 121 1/20/10 - COMMERCE - RESOLUTION 090860 those opportunities that I want to see continuously happen. Even if we do not always result in a total moving of the meter on percentage participation, that dialogue at least explores and exhausts some of the possibilities, and it is important to me as a Councilmember that that continue, and I think it was clear by each of the comments that I was able to hear by each of the members of this Committee that during the budget process, which is going to happen, that the -- and I can almost hear my colleague Blondell Reynolds Brown in my ear say, Where is the participation, how are you engaged, when did you get the mandate. So real simple, basic questions are simple, basic solutions - dialogue between the departments and those entities responsible for that participation, dialogue between those entities and the business community. If that happens, then at least we can earnestly say that we were attempting a good-faith effort. 122 1/20/10 - COMMERCE - RESOLUTION 090860 And so when I hear communication happening, I'm encouraged. At least if there's dialogue, there's an opportunity for a contract. Somebody may get some work out of this. But I want us to kind of have a sense of urgency about this, because we're halfway through the Administration. We're halfway through the Administration. This is our big year coming up and this is an example to -- and I think the economy slowly, painfully is coming around, but on that upswing, I want us to take advantage of that and have the basics done, have the communication channels established, have the challenges by way of technology solved, have the kinds of matchmaker sessions where prime contractors understand and respect the capabilities of subcontractors, and grow some subcontractors into primes, so that as the economy improves, as the economy is stimulated, that some of that stimulation trickles down to some folk who have been 123 1/20/10 - COMMERCE - RESOLUTION 090860 underutilized. That's just my hope.
Seeing none, the hearing on this resolution is recessed to the call of the Chair. (Committee on Commerce and Economic Development recessed at 12:15 p.m.) - - - 124 CERTIFICATE I HEREBY CERTIFY that the proceedings, evidence and objections are contained fully and accurately in the stenographic notes taken by me upon the foregoing matter on January 20, 2010, and that this is a true and correct transcript of same. ______________________________ MICHELE L. MURPHY RPR-Notary Public (The foregoing certification of this transcript does not apply to any reproduction of the same by any means, unless under the direct control and/or supervision of the certifying reporter.)