Thank you, Mr. Chairman. Good morning, Ms. Hamilton. I guess it's still morning.
You testified that it was a lack of political will in terms of gaining access for minorities and women into the building trades. And I would think that that political will 70 3/21/03 - Commerce - BILLS 020816 and 020827 needs to be exerted the point at which you're actually talking about whether it's going to be a union job and whether that is a short or long discussion. But moving beyond the issue of whether that's a short or long discussion, I want to deal with the issue as relates to contractors and debarring contractors. Is that a matter of political will also, or do you feel that's a matter of legal consequence?
I don't think it is the latter. I'm not convinced that it is solely the former. I think, again, as I said, we become so accustomed to operating in a certain manner, that we try to resolve issues prior to taking a really hard line and hard position, especially if it's a contractor that has been responsive. I mean, one of the reasons the same contractors get the business all the time is because most of them are good, they perform. I mean, you ask them to build a building, they're going to do it well, they're going to do it on time, on budget.
The question I'm really getting to is -- 71 3/21/03 - Commerce - BILLS 020816 and 020827
The question I'm really getting to is, what is the role in terms of a legal engagement that should be played by the City? For example, the city solicitor came into budget hearings and testified that 52 percent of the contracts that come out of his department go to minorities, and basically said that it's because he's not afraid to be sued, because he has a team of lawyers, he's a former judge, he's a good lawyer himself, and so he's going to give as many contracts as he wants to minorities and women, unless someone tries to force him not to. And at that point, there began a discussion of whether the Minority Business Enterprise Council should somehow maybe be under the Law Department, if it's a matter of legal consequence in terms of forcing people to be in compliance with contracts, enforcing people to be in compliance with what they said they were going to do in terms of good faith. And so how might we use the City Law Department and solicitors office and a legal strategy to pursue what we need to pursue in terms 72 3/21/03 - Commerce - BILLS 020816 and 020827 of contractors beyond what needs to be done in terms of political will?
Well, the mechanisms are in place, but I think I said earlier unless you have the commitment from the person who is in charge of or owns the project to take a hard line and a hard position -- it is, I will tell you, not easy from experience. I can tell you, it is not easy to look at an apparent low bidder and there is a dollar difference between the apparent low bidder and the second low bidder and the second low bidder and everyone else has met all of the objectives, your goals, and the apparent low bidder is significantly lower than everybody else and hasn't met what you think is a substantial level of participation. Do you toss the bid? I'm telling you, it takes a substantial level of will and commitment to do that.
I'm asking whether that political will is also a matter of legal authority, whether people feel comfortable they have a legal authority to exercise a political will? I mean, already we've made it clear that when people talk about the City in terms of contracting, they're not necessarily talking about 73 3/21/03 - Commerce - BILLS 020816 and 020827 City Council, because we don't sign contracts. We talked about the systems that are set in place in terms of monitoring compliance. I'm asking to what extent do people think they have the legal authority to institute the political will and how involved the Law Department should be and whether, in fact, MBEC perhaps should be placed under the Law Department and we should be pursuing legal strategies as a result of passing these three bills.
I believe that department heads should not be concerned about legal ramifications. That's why we have lawyers. That department heads should worry about getting done what needs to be done, provided they are not being reckless. You can't operate under the threat of legal action. That's why you have a law department. So I'm going to do all that I can do, even if it seems like it's risky and it's on the edge.
So you think it's really a problem of department heads actually giving the business to who they've always given the business to, as opposed to being afraid to reject 74 3/21/03 - Commerce - BILLS 020816 and 020827 low bids, legally?
I think you try to be as prudent as possible with your bids and you try to minimize the amount of litigation. I mean, because there's some time and effort and real money involved in litigation, so you've got to have the resources to go into court. And you don't want to go into court every time you make a decision, but I think --
I'm not so sure we don't want to go into court if the decision we make is what we want to make. I mean, that's why basically the solicitor said he'll give contracts to whoever he wants to give contracts to, because he can legally defend it and willingly defend it. So I'm really asking the question, how big of a factor are legal consequences?
Okay. Thank you. 75 3/21/03 - Commerce - BILLS 020816 and 020827 Thank you, Mr. Chairman.
I've spent 32 years in active efforts to deal with this situation. I believe, Ms. Hamilton, you are absolutely right. The situation can be solved over night if people who had the power wanted to solve the problem. Getting everybody at the table is meaningful only if people want to achieve a common goal. But when you bring people to the table who don't want to achieve that common goal and who have assurance from the top authority that they don't have to meet that common goal, of course you won't meet it. But what's important apparently to the city administration was getting these stadiums built. If they could along the way help the youngsters and give a small amount of money to a children's fund, if they could make a little bit of progress so long as their basic rights were not interfered with, the building trade unions would go along. 76 3/21/03 - Commerce - BILLS 020816 and 020827 All that's needed to solve this problem now that the democrats in Philadelphia control the government is for the whole government to be united in an effort to reach this goal. I submit to you on the record, as a lawyer, I find the City totally delinquent, not your committee. You're trying to do the best you can do. (Applause.) And because of your efforts, the bar has been moved up a tiny bit. But we're not talking about tiny bits. We're talking about opening up the process so that everybody in the City of Philadelphia enjoys the benefits of democratic rights. And all the Mayor has to do, instead of rewarding the people with chairmanships to the Redevelopment Authority and other important agencies when they fight democratic principals, instead of rewarding them, he ought to punish them. He ought to take those jobs away. Everybody here, we're just fencing when we talk about setting goals and passing legislation. Sure we should pass the right kind of legislation, but that's going to do us absolutely practically no 25 good, because the people who have to enforce the 77 3/21/03 - Commerce - BILLS 020816 and 020827 legislation are not going to be moved by it. Apparently finite campaign contributions and goals of wanting to get projects completed is more important to the leadership of the City than seeing to it the democratic rights are carried out. All the Mayor has to do -- it's easy, you know who the three people are, maybe five people who lead the building trades. Call them in and say, It's over. From now on, you're going to have democratic procedures. (Applause.) You're no longer going to tell us that if a councilman wants a minority firm employed in a job we'll pick the minority firm because you're not going to pick them, because you're going to have a democratic process. It's going to be open to everybody. And we're going to see that the goals are met. You know, we're wasting our time really here at the hearings. I welcomed, even though I was very embarrassed to have to tell you, on Monday of this week when going -- I'm a democratic ward leader, one of 69. And when I went to the democratic meeting on Monday, the place was rigged 78 3/21/03 - Commerce - BILLS 020816 and 020827 in front and back with pickets of color, protesting unfair treatment. And I said, How could they be doing this to the democratic party? The democratic party is supposed to be the party that wants democracy. Yet, the people finally took off their gloves and they unveiled the real threat. The real threat is a lack of political will. All that the Mayor has to do is call in the leaders of the building trades union and say, History is over now. From now on, we're going to operate democratically, and there will be no 13 projects built with your membership unless your membership is conducted in a democratic way, unless it's open to everybody. You know, doesn't the government pay for the apprenticeship programs? Isn't the government supporting it?
In the face of that and in the face of total government support that no 22 other unions in the country have or ever had, that is the guarantee of a prevailing wage. No union has that. These big powerful unions that claim 79 3/21/03 - Commerce - BILLS 020816 and 020827 they're for independent action, they're not independent. They're more dependent than the welfare mother is on government action guaranteeing their wages. How dare they confront American democratic principles and say, We're so big and powerful, we can abuse those principles and act in the contemptuous manner. Let's hold them to account. We hold everybody else to account. And in this case, we'd be holding them in account for the most noble of all purposes, and, that is, to make America a country that really operates on democratic principles, and the best place to start is where this nation started, here in Philadelphia. So I urge, let's subpoena the leaders of the union, and if we don't get the answers from them, let's subpoena the Mayor of the City of Philadelphia, because they're the ones that make all the decisions on this. And then we'll have the people at the table who have the power.
Don't feel compelled that you have to respond. It can't do you any good. It's up to you. 80 3/21/03 - Commerce - BILLS 020816 and 020827
Well, I just wanted to add that none of the efforts that we're talking about, increasing opportunities for minority businesses and women businesses and disabled businesses, nor increasing employment opportunities for minorities and females, none of this disenfranchises anyone else. There is enough opportunity in the City for everyone.
We've been through this. 1968 the Operating Engineers lawsuit. Philadelphia plan came out of that lawsuit. 1985 Councilman Cohen and I, with his lead sponsorship, sponsored a bill called 649. That was going to try to open up and re-claim at least 50 percent of all employment in every project done by the City be inclusive of all of the people of color in this city. 649, we had a huge crusade during that period of time. We're talking 1985 now. This is the year 2003 and we're still talking about this 81 3/21/03 - Commerce - BILLS 020816 and 020827 issue. And this is all about political will. And we got legislation and we're going to pass Councilman Clarke's legislation and we're going to put my bill through, but it doesn't and will not have any impact until the leadership, political leadership of this city, stand up and say, Enough, there's the line, no more, from now on we will not take it. There will be no work in this city unless these things happen. And that has to be -- that doesn't even have to be written into law. You come in here, you don't have it and don't come back again if you're a contractor. Don't come back again. But we have to be able to tell them that. And let them then take us to court, but that's where we're at. And I think finally we have enough of a grouping of people that are willing to stand up and say, Here's where we stand, we will not go back.
Judith Robinson. Ms. Robinson? 82 3/21/03 - Commerce - BILLS 020816 and 020827
Please identify yourself and proceed with your testimony.
Yes. My name is Judith Robinson and I'm here to speak on all three bills. I am happy to have the opportunity to speak on all bills, and I understand right now we're at --
I did read this bill, and I will say regarding all three bills, and this one in particular, this process, this problem that we have has been going on for a very long time. There are only a few developers, and they do most of the work. Are all the members of this Committee here?
There are, I believe, nine members on this Committee. One is 83 3/21/03 - Commerce - BILLS 020816 and 020827 ill. We've read about that member. But you've had, I believe, six of the eight members who could possibly participate have been in this hearing. Some will be listening on their conference.
And I just think if all the Committee members would focus that could possibly be here will be here, then that will show the importance and the seriousness of this issue.
Over the past eight years I have attended these hearings, various hearings of various committees, and I contend negotiation is important before you start to even sign contracts. Negotiation is important before these bills come out of these committees to the City Council. I agree with Ms. Hamilton, the political will is very important. Over the past eight years I've watched the tax incrementing finance process come through this group; OHCD, every one of their hearings over 84 3/21/03 - Commerce - BILLS 020816 and 020827 the past eight years; and various other developments. All of the development that goes on in this city comes through City Council and then is signed by the Mayor. So definitely political will is important. I have over the years requested information from MBEC, also from OHCD, Kevins Brooks, their affirmative action office. Also, Mike Bell, I've requested information from RDA, from the Commerce Department, and also I took time to go down to SEPTA. They have a whole affirmative action department. All of these folks have information. I had no problem getting any information from any of these entities, but what I always found, even after receiving the information, the information was always stating the same thing. It was fair -- I'm sorry; it was very unequal, out of order, and African-American participation and women and so-called minorities -- I don't even like to use that word -- were not participating in an equitable way in most of the projects. I really am concerned that at this late date, here we are trying to figure out how to handle 85 3/21/03 - Commerce - BILLS 020816 and 020827 a situation that's been going on for years. I really am concerned about it, because it's only every 30 years or so that you build a stadium, and I understand that's 75 percent completed. It's only every 30 years, from my research, that you do total implosions of PHA and do all of this building all over the city. It's only every 30 years or so that you rebuild your schools. So now while we're over here in this body talking, shuffling papers, trying to re-figure how we're going to come up with a new committee, the work is going on. I contend, because I want to have something to add of value here, I contend that the problem is with the developers, the unions and the politicians. Let me tell you why I say that. Pay to play, I contend, is like the foundation of where some of these problems lie. December the 15th, the Philadelphia Inquirer did a breakdown of all of the contributors to Mayor Street, Sunday, December 15th, Inquirer. I can just go down this list and see where you have Dale Construction, for instance -- I'm going to give you that as an example -- gave 86 3/21/03 - Commerce - BILLS 020816 and 020827 $100,000 to the Mayor's campaign. Dale Construction does a substantial amount of work throughout the City. They have down here this Dale Construction replaced a non-donor on a no-bid contract to renovate the Mayor's office. But I know Dale Construction because Dale Construction is right in my neighborhood at 20th and Diamond putting up PHA properties, and use no African-American identifiable contractor on that job. Now, I live in the fifth district where all of this building is going on, so-called construction industry. I went to my councilman over four years ago and said, Listen, if this job is coming to our community, how come we're not training people and getting them all prepared to work on this job? You know, I come down here, take time away from my schedule, try to contribute. I feel like it's my civic duty. I have a background where I think I can really contribute.
But when you contribute, when you go beforehand to these politicians and you say to them, Things are out of order here, and then here we are five, six years later, the work is going on and we don't have very 87 3/21/03 - Commerce - BILLS 020816 and 020827 many African-Americans from the community involved with that project, nor do we have any of the contractors that's from the fifth district, I said I thought that we should have sort of like a district-first type of opportunity if a project is in a community. Like when the executive order came down back in 1998 that a neighborhood should have a benefit strategy, I thought that was a great idea, but the neighborhood benefit strategy executive order was sent down by Rendell in 1998. So, I mean, we have all these things on the books already and we're still acting like we can't figure this out, you all. None of these ordinances, except one, I'm sorry, this one, this economic task force ordinance, say that the unions should be at the table. All of the hearings you all had last week and before, no union members were here to talk about any of the problems. In addition, I'm very concerned with that connection to the unions and the developers, because Dale Construction was able to reject a bona fide contractor from the fifth district that's certified, bondable, everything, because that 88 3/21/03 - Commerce - BILLS 020816 and 020827 contractor was not interested in being part of some formerly corrupt roofer's union. So I think that's an area where you need to start. I understand from an article in last Friday's Daily News Ms. Amina Young, who is on this task force for the stadium, said that when they call for workers, the union doesn't send them, African-Americans or so-called minorities. I really, with all due respect to this Council, think that this is really like -- I don't want to say a waste of time and energy, but I think it's disrespectful to have so many people come here and think that we're going to have some impact on this issue, when we have pay to play being a foundation of how work gets done in Philadelphia, and everybody knows that. Okay? Also, the unions are allowed to be disrespectful to black folks, and we know it's true. They do not want to allow as many African-Americans in their union as are seeking to get in there. I don't know what you can do about that as a Council, but I know that you can stop City work from going to union-only shops, because it's unfair. There's no law that says that unions have to do all 89 3/21/03 - Commerce - BILLS 020816 and 020827 the work. If there is, then I think that would need to be abolished. I am concerned that when you do have a contract such as the contract that's in the fifth district or maybe part of -- yeah; the driving range at 33rd and Oxford. In this contract for the driving range, it states within the contract that there should be golf plans, a golf program for all children, and it also says it should be in cooperation with the local community group so as to create a hiring plan. You have a chance to do that per this agreement, per this contract, but as I have asked my councilman about it, it seems to be, Oh, that's something we'll deal with, we'll handle it. But there's a board there that's supposedly going to make sure that the community gets a fair shake as it relates to that. I contend, you law makers -- and I know this is true because I've been here throughout these hearings -- you have an opportunity to stop voting 16 to zero to make sure things just get done. You know, you're not the Senate. You don't hardly ask any questions. You don't get the information. And 90 3/21/03 - Commerce - BILLS 020816 and 020827 then when you pass these bills, like with all these TIFs, they claim they're going to do hundreds of jobs. How are you all as law makers -- you all have some responsibility, I should say, to make certain that if they say they're going to create X number of jobs, that they are, in fact, creating.
This is not a mystery, because the same about contractors or developers do all the work. 10 I mean, over and over again. So it's not like you 11 can't figure this out and stop them at the pass for 12 the next one. And this has been going on for eight 13 years that I've just been watching myself. Probably 14 longer. 15 I think if you really think this is an important issue, have some guts, you all. And this is for the Mayor, Mayor John Street. People want to know why now. The Mayor just didn't come to town yesterday. He's been around for years or more. 20 Do something about this. Do it now. I heard a suggestion that you stop taking the money from the unions, and that means we would have to give you more money and we would have to guarantee you that we would support you. I would say yes, we would guarantee you that if you stop 91 3/21/03 - Commerce - BILLS 020816 and 020827 your pay to play, we'll make sure you get back in office. Have some guts. Trust us, like you ask us to trust you all. ) Stop taking the money. Stop taking the money. Do you all have enough guts to do that? And do you all have enough guts to stop voting to one 9 on the next project? It's a little late, but 10 there's still a lot of building that's going to go 11 on in the next five, seven, ten years. But have 12 enough guts, you all, to say, Hell, no, you're not 13 getting another contract because you're out of 14 order. 15 That's the only way it's going to work. 16 Deal with the unions. But you can't deal with the unions when you're in bed with them. Thank you very much. )
Thank you, Ms. Robinson. I will display a certain amount of guts as Ms. Robinson indicated by at least letting her know for the record the driving range is actually in the fourth councilmanic district, not the fifth 92 3/21/03 - Commerce - BILLS 020816 and 020827 district. And all that's going to get me is a visit from Ms. Robinson. But I want to make sure the record is clear. I take my whippings like a man. Councilman Goode -- Ms. Robinson?
There was a question, actually. Councilman Goode had a question.
I just wanted to know whether all of us are crooks. I just wanted to 13 know who you were accusing of being part of the pay 14 to play system, if you were accusing all 17 members 15 of Council being crooks. 16
I have not looked at every councilperson's campaign contributions, but I would venture to say -- 93 3/21/03 - Commerce - BILLS 020816 and 020827
I just wanted to know whether you were accusing all members pay to play 4 that we were crooks. 5
I would say this: Let me 6 talk about the Mayor, because I have his list of 7 contributions here. Okay? I have not looked at 8 every councilperson's -- 9
If you come to 10 testify and you make a statement, you should be 11 responsible for your statement. I'm just asking you 12 to clarify your statement. 13
Yeah. And I will say 14 this: You certainly are responsible when it comes 15 to your votes 17 to zero over and over again. 16
I vote against every 17 TIF project that's come through this Council since I've been here on 16 to one votes. So you have to be responsible for the comments that you make.
When did your ordinance 23 for the CDCs to get money, did you put anything in there more African-Americans and minorities to participate and make sure that they got a part of 94 3/21/03 - Commerce - BILLS 020816 and 020827 that money that the sponsoring agents gave to them?
Citizens Bank just gave Universal Companies a million dollars. I can run down the list of --
Is anything in your legislation, okay, that says minority participation should be a part of this, any projects that the CDC does, because they're getting this tax break?
What is in your legislation that says minorities should participate with any project that a CDC does --
Legislation is very direct. What it does is bring $15 million into low- and moderate-income communities, economically stressed communities, from the private sector. The check is cut from private businesses community development corporations. No money ever passes through the government.
I understand that, sir. 95 3/21/03 - Commerce - BILLS 020816 and 020827 I asked you, was anything in your legislation that said that CDCs must deal with minority contractors because they're getting this money?
That wouldn't go into a bill dealing with money flowing directly from a private business to a community development corporation. So you can try to add confusion about what should be included in a specific piece of legislation, but it would not be in that specific bill.
I'm not trying to cut you off. I do want to suggest on a separate piece of legislation if you'd like to send specific questions about that piece of legislation, that would be more than in order. I appreciate your 96 3/21/03 - Commerce - BILL 030125 testimony. We're now going to hear testimony on Bill No. 030125. The title of the bill is repealing Chapter 17-500 of The Philadelphia Code, entitled "Goals for the Participation of Minority, Female and Disabled-Owned Businesses in City Contracts," and enacting a new Chapter 17-500 of The Philadelphia Code to establish City Contract participation goals for Disadvantaged Business Enterprises, which are businesses owned by socially and economically disadvantaged individuals, and which presumptively include businesses owned by women, minorities and the disabled. There is a fairly extensive list of witnesses. Councilman Ortiz is going to make an opening statement. He is the prime sponsor of the legislation. I am going to have to exit the room 19 for a few minutes. The first witness who is listed for testimony is Thomas Corey, chief of the Office of the Minority Women in Business Opportunity from the City of Baltimore. I would ask if Councilman Ortiz in my absence, as this is his bill, would manage the witness list in my absence, and I shall return. Thank you. 97 3/21/03 - Commerce - BILL 030125
Thank you, Mr. Chair. Let me say that I think we've had a good discussion, and I think it comes down that no matter what we approve, it comes down to where is the will that we have as leaders of this City to be able to see it through. The proposed ordinance 030125 is a policy that has been close to my heart for many years. The last three years my office has been seeking ways of improving the City's performance with regard to its capacity, to be more inclusive in its contracting with socially and economically disadvantaged firms. In that time, we as a City Council conducted investigatory hearings, collected statistical and anecdotal data from affected and concerned contracted citizens and city administration officials. In January of this year, I, along with other members of this Council, participated in round-table discussions involving community representatives, local, state and congressional legislators to discuss how we can improve what has been described by the City's finance directors as a 98 3/21/03 - Commerce - BILL 030125 dismal record in our efforts to include minorities and women in our contracting process. We have collected and reviewed many reports and studies. These have helped to provide evidence of past and present discrimination against minority and women-owned enterprises. For the record, some of these reports, and which I would like to include into the record and submit for the record, reports and studies include the DJ Miller report issued April 1998, a comprehensive disparity study -- that is these two booklets right here -- the Illusion of Inclusion, a report by my office, which provides an overview of the status of affirmative action in Philadelphia, a minority and women business state-wide task force report issued in March 2002 by the Department of State and the auditor general, which highlights the lack of fairness and equality in government contracting, and an August 2002 report by the Pennsylvania Advisory Committee of the U.S. Commission on Civil Rights titled Barriers Facing Minority and Women-Owned Businesses in Pennsylvania. And they do make mention, very specific mention, of Philadelphia and the studies that we have done in this Council. 99 3/21/03 - Commerce - BILL 030125 Added to that are the recent Council public hearings on Resolution 02023038 and the resolution presented by my colleague, Councilman Wilson Goode, in terms of the GPUAC and the hiring aspects in construction projects. I am entering for the record the available transcript of the February 27th public hearing. These hearings, which will be continued in April, have provided significant updated information about the persistent under-utilization of disadvantaged business enterprises in our city. The bill before you seeks to provide a legislative remedy to discrimination. It basically replaces Chapter 17-500 of The Philadelphia Code, and although the bill focuses on increasing the utilization of DBE, a by-product of the bill will be to increase employment opportunities for minorities, women and socially and economically disadvantaged persons. Mr. Corey, Mr. Thomas Corey, is from the City of Baltimore, who will share that city's experiences. Our bill is loosely modeled after their legislation, and Mr. Corey will be sharing with us the experiences and the framework that they 100 3/21/03 - Commerce - BILL 030125 have used to increase the participation of DBEs in the City of Baltimore. Mr. Corey, welcome to the City of Philadelphia.
Good afternoon. My name is Thomas Corey. I'm chief of the Minority and Women's Business Opportunity Office for the City of Baltimore. I appreciate --
Mr. Corey, you've got to pull the microphone close to you.
I'm here this afternoon to share with you the experiences that we've had in Baltimore City with our Minority and Women's Business Opportunity or Business Enterprise Program. We've had what we consider very good success with this program, and we are slightly flattered that you've decided to model your bill after ours. Our program started, as a matter of brief history, we had a prior ordinance that was struck down by a court challenge.
And as a result of that, we went out and we had a disparity study done and we came up with the current law. And we think this law meets pretty well with the requirements that were set out in the Crossen decision, and some of the features of it I would like to share with you so that you can see how we do things. Now, there's one thing I would like to say prior to these comments. One is, in our city, we have a Board of Estimates, which ratifies or approves every contract that comes out of the city.
Right. That means that if we're going to fix a curb or a sidewalk or repair or buy a multi-million-dollar computer system, the Board of Estimates approves that contract.
So every contract in the City of Baltimore, does it go through the Council of Baltimore?
No. It goes to the Board of Estimates. The Board of Estimates is comprised of the Mayor, the president of the City Council, the comptroller, the director of Public Works and the 102 3/21/03 - Commerce - BILL 030125 city solicitor. And all the contracts are presented to this Board, and they decide or approve that contract.
Every single contract, including those instances where the city is providing tax-incentive financing, pilots or below market sales to developers on private development projects. All of those projects come before the Board of Estimates.
It has to be for $25,000 or more. Now, as I just said before, the scope of our law involves every contract that comes before the Board. And we think that it works well and we've had success for a number of reasons. Besides the actual content of the law, one of the reasons that it works well is because the Mayor of the City of Baltimore, Martin O'Malley, is steadfastly behind the program. In addition, the president of the City Council, the comptroller and 103 3/21/03 - Commerce - BILL 030125 all of the other members of the Board of Estimates are behind this program. So that when an issue comes up, then from my vantage point coming before this Board, asking that a contract not be awarded, as long as I have a legitimate basis, then I can be assured that I will get a fair hearing and possibly the contract will not be awarded to the bidder. Now, in our program, we have annual goals. We set annual goals each year, and we look at and in determining the annual goals, we look at the availability of MBEs and WBEs versus the number of contractors in a particular industry that's out in the business community.
Right. In the construction industry, every contractor that wants to do business with the City of Baltimore directly as a prime contractor must be pre-qualified. 104 3/21/03 - Commerce - BILL 030125
No. There's a Boards and Commissions office that pre-qualifies them. My office certifies minority business enterprises and women business enterprises. We take a look at the number of pre-qualified businesses out there and the number of certified businesses that are willing, able and available to do the work, and we look at the utilization statistics of those companies from past years and determine an annual goal. This annual goal is a maximum. Then we set a goal on every contract. Each contract is evaluated individually, and we look at the availability of the certified contractors at that time to determine the goal. Thus, a goal can be anywhere from zero to the maximum goal. As an example, in the construction field, the goals now are currently 27 percent for an MBE and eight percent for a WBE. If we, for example, were looking at a contract where we're repairing the curbs and gutters in a community, we will take a look and see how many firms are available, certified firms are available at that 105 3/21/03 - Commerce - BILL 030125 time, to perform this function.
Because when it goes to federal court, one of the things that they said, you cannot put those goals in your legislation, those percentages that you're using.
Well, we do put it in our legislation. We put the text that there's annual goals and the -- they're not quotas.
No. I understand that. You say annual goals, but you don't specify the numbers?
No, we don't specify the number, but what we have are annual goals that are set by the Board of Estimates and then ratified by the City Council each year.
The disparity report, the utilization statistics that we collected in my office, and the availability of the MBEs and WBEs. From those figures.
I didn't understand 106 3/21/03 - Commerce - BILL 030125 the testimony. You said you set annual goals and then you said you don't set a number?
No, no. I said the legislation. Like the legislation here doesn't say you've got to use a certain percentage. It says that the city will set up an agency that will set up annual goals per area.
Okay. So it's not a pre-determined goal number-wise; it's just pre-determined that there will be a goal?
There will be a goal, but it's set by his office by the legislation. The legislation gives him the authority to do that by area. So in the construction business -- and they set it up on the availability in the construction area of how many minority contractors and women contractors are available in the City of Baltimore. Is that right? 107 3/21/03 - Commerce - BILL 030125
Right. Let me make sure I can answer your questions directly. In our legislation, there is a provision that the office that I run will set annual goals for each industry category, construction, commodities, architectural and engineering and services. That's the provision that said that annual goals will be set. Then outside of that law, I go in or my office goes in and we make a determination of what the annual goals will be for that year, and we come up with numerical goals. We then submit then to the Board of Estimates, and then it goes to City Council, and they're enacted for that year.
And then on a contract-by-contract basis, we take a look at every contract that's going before the Board of Estimates for ratification and we set a goal. And we do that by having the agency, the procuring agency, submit to our office or my office a sheet that says that if you're going to repair the curbs and gutters in this neighborhood, what are the tasks associated with it, 108 3/21/03 - Commerce - BILL 030125 and tell me what the percentage this task is of the whole job and the dollar amounts as an estimate, best estimate by the engineer or the contract administrator. We then take a formula that we devised and come up with a goal for that particular contract. And then that contract is then put out for bid. A responsive bidder must agree to meet that goal. He can be the lowest bidder, but if he has not put in his bid that he will achieve this goal -- and there's proof because there is a statement that he and the MBE or WBE must sign and submit with this package. If that sheet is not in there, it's now the lowest bidder.
So as a part of the qualification for lowest responsible bidder, you have a category that speaks of participation as realistic goals?
Exactly. As a part of the bid. Just like the technical specification that's been drawn up by the engineer, if you do not 109 3/21/03 - Commerce - BILL 030125 identify who you're going to use and what you're going to use them to do and how much you're going to pay them and it does meet the goal that our office has set on that contract, then you're not the responsive bidder and your bid is tossed out. Now, it's important to note that, because if you have a mayor or a board of estimates that doesn't agree with that, when you come before the board and you have a contract that's, say, the lowest bidder is $100,000 and the next bidder $130,000, you have to have the political will, as I've heard here today, to throw the lowest bid out and take the next one, because the next one has the MBE and WBE participation goals that's been set on that contract. And that's the way we do it in Baltimore. The responsive bidder must meet the goals set on the contract or else this contract is not awarded to him. We find that bidder in non-compliance, and then the agency then will to send to my office the next lowest bidder and we will review that contract. We review them one at a time, not all at a time, because we never see the second bidder until we have found, if that's the case, the 110 3/21/03 - Commerce - BILL 030125 first one is non-compliant.
Thank you. Can you give us an example of the different -- you set goals every year in terms of the availability of minority contractors in different industries. Can you give us an example of different ranges? Like some of the goals have been set for this year?
Yes, I have them right here. For this year, the current year, 2002, for construction, the MBE goal is 27 percent and the WBE goal is eight percent. For architectural and engineering, the MBE goal is percent and the WBE 16 goal is 13 percent. For the services industry, the 17 MBE goal is 17 percent -- I'll give you a copy of 18 this afterward this. The MBE goal is 17 percent and 19 the WBE goal is nine and a half percent. And for 20 commodities, MBE is five percent and the WBE is two 21 percent. Those are maximums. As we evaluate each contract, as I said before, that's the highest goal that can be put on a contract. And based on the availability, it can be anywhere from zero to that 111 3/21/03 - Commerce - BILL 030125 maximum.
So your construction goals for this year in terms of availability in terms of where you max out would be 35 percent between MBEs and WBEs?
I don't like to say it that way. The goal for the MBE is 27 percent and the WBE -- because women do not like to be lumped in to one group. It's just a better way of saying it because --
Right. I agree with you. I lumped it that way for a purpose.
Right. The total is 35 percent on the contract. That's what the -- the successful bidder is actually having that amount of participation on the contract. You were right in that.
The one thing that's in our law and it's also in your proposed bill that meets squarely with what's required in the Crossen decision is waivers, the waiver provision. The Crossen decision requires that any type of program shows that it's flexible. And one of the ways of 112 3/21/03 - Commerce - BILL 030125 showing that you have a flexible goal and the way we do it in the city is waivers. And waivers are granted on a contract where in the instance there is only one contractor that can perform -- subcontractor that can perform the service, then a waiver is in order. If there are no contractors available to provide the particular service at all, a waiver is granted. For instance, last week I had a contractor that came before me where the police department, they were ordering patrol boats. Well, there are no minorities in the United States that make police patrol boats. It's funny, but -- so there is --
So the contracting agency, the procuring agency, asked my office to grant a waiver on this, so that when the contract goes out for bid, there are no goals on it, and that's a legitimate basis for granting a waiver.
There has to be a request for a waiver submitted to my office. It's reviewed 113 3/21/03 - Commerce - BILL 030125 by me or some member of my staff and most -- I review them all, I'll just put it that way.
You said it jokingly when you talked about any minority making police boats. Is your bill limited to the City of Baltimore proper?
Yes. One of the other areas that the Crossen decision spoke about is that you have your program narrowly tailored to remedy the discrimination within your geographic area. In our instance, our disparity study conducted says that we did 75 percent of our construction business in three counties, Baltimore City, Baltimore County and Howard County. So that became the market area for the construction industry. So if you want to get certified by my office, you have to have an operating office in one of those jurisdictions.
If you're outside that jurisdiction, you cannot be certified by the office. And what that means is that if a contractor, a prime contractor, is bidding on a contract, he doesn't have to be certified or she doesn't have to be 114 3/21/03 - Commerce - BILL 030125 certified, and then wants to use you as an MBE sub, the participation of that sub cannot be counted if that subcontractor is not certified by the office and has an office in the jurisdiction.
So that's how we do that. So that's what we call the Baltimore City market area. And we have a market area for each one of the business categories that I spoke of earlier, services, architectural and engineers and that sort of thing, and that came about through our disparity study. And in your program, I noticed that you've identified your area as the Philadelphia metropolitan statistical area, and presumably that's a defensible position.
We have researched it well. If we don't find it within boundaries of Philadelphia County, we can go to one of the suburbs possibly.
But the other aspect that I'd like to bring to the attention, one other thing 115 3/21/03 - Commerce - BILL 030125 that we do is that when we grant TIFs, pilots or even sell a playground or a lot to a developer at a below-market rate, our law provides that the program is invoked, meaning that we can then set goals on that project. For instance, there is an $80 million development project going on in the west side of Baltimore. That project is getting a TIF and perhaps a pilot from the City of Baltimore. So that means when that happens, that we can set goals on the entire $80 million project. And the way that we do that is, once the developer applies for a pilot, we then bring him into my office, they submit to my office a budget consisting of the hard and soft costs.
The developer. The developer is the person that is responsible for achieving the goals. Now, who he hires to develop his project is his own concern or her own concern. We then hold the developer responsible for achieving the goals. We bring them in, we look at the budget and we take out those items within the budget that 116 3/21/03 - Commerce - BILL 030125 we consider non-discretionary types of costs, taxes, interest, some insurance payments and some other fees, similar fees that are associated with doing a project. We'll remove those and then we'll apply goals to the entire project. And then as the project proceeds, what the developer has to do is, when the developer is about to retain a contractor, a subcontractor, on the project and wants to count that subcontractor's participation, they have to send to us what we call a statement of intent form, and that statement is signed by both the subcontractor and the prime contractor. And on that form, it identifies what the contractor is going to do and what he's going to be paid. And the participation is only counted, one, if the subcontractor is certified, he's certified to perform the tasks that's put on that form, and then we monitor the whole project through that. Now, there was a question earlier that was raised by, I think, Councilman Nutter about what to do if you have someone in non-compliance. We have a very simple straightforward way of handling that. 117 3/21/03 - Commerce - BILL 030125 Here's a good example: We gave one developer a TIF or a pilot, I can't remember which, of about a million dollars. He sent in two notebooks the size of those and said he couldn't find any minority and women-owned businesses to participate on this project. So we called him up and invited him into the office and told him that he did not have to comply with this law. He did not have to make the goals, but on the way out the door, leave the million dollars on the table. It works every time. And that's not an exaggeration. That's actually the way we do it. We don't go through the negotiation, we don't go through the begging and the cajoling and whatever. It's the authority vested in this office that I run to say, If you're not going to meet the goals and you have not put up a good-faith effort, you don't have to meet the goals, but you do have to leave the money on the table. And I can show you three examples --
And I can show you three examples of three very large projects whenever you 118 3/21/03 - Commerce - BILL 030125 come to Baltimore where we've had to do that. But once we've done that, the gentleman that had the two large notebooks, he had a goal of percent MBE 5 participation and five percent WBE participation. 6 He submitted his last report to me and his 7 participation of the MBE was 35 percent, his WBE 8 participation was 12 percent. I'd say he was a 9 convert. 10
You better believe he 11 was a convert. He wanted that check back. 12
But that's it. And those 13 provisions are in the law; that is, you have that 14 enforcement provision because you can take the 15 contract, the pilot, back to the Board of Estimates 16 and say the developer, or whatever, is not complying 17 and that we are now asking him to return the money. 18 In some instances, the way that we've 19 been able to do it is that we will not release the 20 money. They will get to a certain phase in their 21 project and they need that particular type of 22 financing, and that's when we take at that point, we 23 review all their participation up to that point, and 24 if they're up to snuff, then my office will sign a 25 form or send a letter to the lender saying that they 119 3/21/03 - Commerce - BILL 030125 are meeting their goals up to that point and that you should feel free to go ahead and give them the rest of that financing. So I've become a very popular fellow at times and someone I really have to worry about whether or not someone is going to come after me.
You can be a very feared individual in the City of Baltimore.
Does your city also have a law that requires you to employ union laborers?
Yes. There is a union labor provision. What we do in our bid packages, though, is that the responsive bidder must put in there, agree to a first-hiring program; that is, if he or she is going to hire new personnel to perform this function, then he has to agree to go to certain sources and give them first opportunity to be hired, which would include some folks that are in the 120 3/21/03 - Commerce - BILL 030125 journeyman program or in the apprentice program, and there's one other program that they also have to agree to. And without that, they are not the lowest responsive bidder.
It's the tone and the way that you do it. Once you set it up, if you stick by it, everybody will come to abide by it. They may not like it.
The mayor is the person that is my backup. He is 110 percent behind this program. And what we both between us generally say is that I will pull out the whip, but if I need the big dog, I will call him up or e-mail him and say, Get this person, they're not in step with the spirit and intent of this law. Because before they get to me, they've already sent signals saying, let's say a developer, that I can't meet the goals. That's how it happens. But once they accept the contract by the Board of Estimates, they're in. That's an agreement. And what we require in our office is that you sign a 121 3/21/03 - Commerce - BILL 030125 commitment to comply that's put into your agreement. So then if you don't do it at that point, you're in breach of contract.
What role do the construction unions play in the political life of the city? Are they very close to the mayor? Do they contribute funds to his --
I'm sure they contribute funds, but it doesn't help them when they have a contract in front of the Board of Estimates and they're in non-compliance. Once the law is there, it's absolute.
Excuse me, David. In terms of this first hiring program, that is within the City of Baltimore?
So the apprentices that they're going after, they've got to go to the City of Baltimore and say these are the people that 122 3/21/03 - Commerce - BILL 030125 we have available in the City of Baltimore?
Yes. There's a program that's run by the Office of Economic Development and some other program and --
Well, we had testimony the other day here in which Mr. Jones, who was the president of GPUAC, who was the monitoring agency for hiring in some of these contracts that we've given out, in which he stated that there were over 100 people, apprentices, that they had available and they never get called. So in your situation, that developer, that contractor, that laborer would be in breach of contract --
Not the developer. The contractor that's won a city-owned project through the bid process. They will be non-responsive if, for instance, they're going to do a job and they have to hire five additional people. In order for them to be in compliance, they have to go to their first source hiring program and get somebody from 123 3/21/03 - Commerce - BILL 030125 there before they go to any other source.
And if they don't do it, they're in breach and you can take the check back?
They're in breach. You can take the check back, you can take the contract back. There are all kinds of penalties that you can wage against them. But generally once they're in, they usually comply. They may not like it, but they comply. But then there are some that it's just a part of their business life.
Do you know what the composition of your construction unions are from a diversified point of view?
Do they admit membership freely to people of color, to Asians, to African-Americans, to Latinos?
Do your unions have a reputation for being democratically operated so that any member in the Baltimore work force can join them, or are there bars? We're told that in 124 3/21/03 - Commerce - BILL 030125 Philadelphia it's extraordinarily difficult in the first place for anybody to get into the apprenticeship program. Government pays for the apprenticeship program. It's run by unions. We're told it's extraordinarily difficult for African-Americans, for example, or any minority or for women as a minority to get in. Then we're told if they do manage to get in, because they have to let a few in so that it's not 100 percent white, they let a few in and then those few find that it's a tough life to lead, so that they get thinned out in the process of the apprenticeship. Then if they finally survive in the apprentice program, they then got to seek membership in the union. And very few of those that seek membership get the membership. But, again, they can't bar everybody, because that would be so obvious. So what they do is, they let a few in, and then they get few jobs and in the worst locations and under the worst working conditions. And so that when the call comes for minority workers from the contractor, often the union says, We don't have any available, or they seem to have a group of minority subcontractors so that if they feel the heat is on 125 3/21/03 - Commerce - BILL 030125 and the public is really protesting, then the position often taken by the unions is, If you insist on a minority firm, we're going to pick the minority firm. We, the union, will pick it. Not the contractor, nobody, but the unions control which minority firm, and often it's a very select group. Some people think there might be some minority firms that play ball with the unions and they're on democratic policies. Now, do you run into that kind of situation in Baltimore? See, we applaud what you do, but what we'd like to know is, do you do it under our circumstances, or what can we do in the face of a continual opposition by the labor organizations? And I speak as -- I say it, I'm held without fear of contradiction -- the strongest laborer supporter that the City of Philadelphia has ever had in its Council. And yet I am horrified at the fact that the labor movement, which to me seemed to offer a road to democracy for everybody, is being subverted from that purpose. It's to the point where contractors and workers felt it necessary to picket the democratic party, because a major force in the construction trade unions is the treasurer of 126 3/21/03 - Commerce - BILL 030125 the democratic party and they accused him of being very undemocratic in his policies.
Councilman Cohen, one second. As you frame your response --
As you frame your response to Councilman Cohen, could you tell us the racial demographics of Baltimore and/or the area that applies to your law, and then tell us the geographic area that the trade unions are pulling from in terms of membership?
Baltimore City is 65 percent minority population. It has a 65 percent minority population. The trade unions, I don't know the demographics of that. What I may have to correct myself on, that the electrical union and the steamfitters unions, those are the two real dominant unions there in the city. Now, a contractor can be a non-union contractor, whether it's a prime or a sub, and they 127 3/21/03 - Commerce - BILL 030125 can get a contract with the City of Baltimore without being a contractor. If I said anything different than that, let me correct myself. But what happens is that there are some contractors that are electrical that are a union shop and some that are not a union shop, and either one can get a contract.
I guess the question really was, in view of the racial demographics there, really some sense of how broad a geographic area the unions are pulling membership from.
My understanding -- I have a limited understanding of that, but my understanding is that they get their members from the surrounding -- from Baltimore City and the surrounding counties. And that's Baltimore County and Anne Arundel County and some from Howard County. But from Baltimore County and Baltimore City and Anne Arundel County predominantly. And in the last ten or 12 years, there has been an exodus of a lot of union members, particularly white union members, to move to a northern county, Howard County, in order to move away from the city. 128 3/21/03 - Commerce - BILL 030125
In Baltimore and those surrounding counties, what is the racial demographics --
In Baltimore County, the minority population in Baltimore County is about 7 percent, and Baltimore County is about the largest 8 county that surrounds the city. It makes the big 9 area -- 10
It's about 12 percent. There's a 12 percent minority population in Baltimore County, which is the largest county that surrounds Baltimore City. The other counties, Anne Arundel County, and the next one that's outside of Baltimore County but close to Baltimore City is Howard County. But most of the folks that work in Baltimore City come from Baltimore County and a few from Howard County.
So the city is 65 percent minority, the county is 12 percent minority?
In the county. 65 percent in the city, 12 percent in the county, Baltimore County. 129 3/21/03 - Commerce - BILL 030125