COUNCIL OF THE CITY OF PHILADELPHIA2 COMMITTEE ON COMMERCE AND ECONOMIC3 DEVELOPMENT4 - - -5 Room 400, City Hall6 Philadelphia, Pennsylvania Thursday, June 4, 20097 1:25 p.m. 8 - - - 9 10 PRESENT: COUNCILMAN W. WILSON GOODE, JR., CHAIR11 COUNCILMAN FRANK DiCICCO COUNCILMAN CURTIS JONES, JR.12 COUNCILWOMAN MARIA QUINONES-SANCHEZ COUNCILWOMAN BLONDELL REYNOLDS BROWN13 14 RESOLUTION 080052 - Resolution authorizing the15 Committee on Commerce and Economic Development to hold hearings to review the annual City16 contract participation goals released by the Finance Department pursuant to Title 17 of the17 Philadelphia Code. 18 19 20 - - -21 22 V A R A L L O Incorporated Litigation Support Services23 Eleven Penn Center 1835 Market Street, Suite 60024 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.267025 2 1
Good2 afternoon. This hearing is called to3 order. This is a public hearing of the4 Commerce and Economic Development5 Committee on Resolution No. 080052. My6 name is W. Wilson Goode, Jr., Chair of7 the Committee.8 A quorum is present, although9 it's not necessary. To my far left is10 Vice-Chair of the Committee, Councilwoman11 Blondell Reynolds Brown. To my immediate12 left is Councilwoman Maria13 Quinones-Sanchez. To my far right is14 Councilman Frank DiCicco, and to my15 immediate right is Councilman Curtis16 Jones.17 The title of Resolution No.18 080052, authorizing the Committee on19 Commerce and Economic Development to hold20 hearings to review the annual City21 contract participation goals released by22 the Finance Department pursuant to Title23 17 of The Philadelphia Code.24 Our first witness is Michael25 3 1 Bell.2 (Witness approached witness3 table.)4
Good afternoon. My7 name is Michael Bell. 10 Good afternoon, Councilman11 Goode and members of the Committee on12 Commerce and Economic Development. This13 is an opportune time to discuss setting14 M/W/DSBE goals for City departments for15 Fiscal Year 2010. July 1st of this year16 presents a starting point for our office17 as it has undergone changes within the18 last eight months. 20 We have begun to monitor selected21 projects. And we have become involved in22 private initiatives like the Comcast23 Diversity summit. 4 We will utilize the disparity5 study as the basis for goal-setting for6 Fiscal Year 2010. We took a different7 approach to completing the study this8 year. One aspect of the study that I9 directed was to have Econsult interview10 randomly selected certified vendors to11 find out why there were a low percentage12 of them bidding on City projects. We can13 set goals of 50 percent MBE and 4014 percent WBE participation, but if our15 vendors are not pursuing opportunities16 with the City of Philadelphia, then this17 process is faulty to begin with. Firms18 in our directory should be ready, willing19 and able to bid on the large number of20 opportunities advertised by the City of21 Philadelphia. We discovered that some22 companies were discouraged by the cost of23 doing business with the City. Insurance,24 bonding and slow payment does play into25 5 1 some firms' decisions to forego City2 opportunities. Also, it was expressed3 that the need for union affiliation4 discouraged firms from participating. 14 Forty percent of the respondents -- and15 this is for individual vendors -- were16 not aware that this process had taken17 place. One respondent thought that this18 was a rebranding and that significant19 changes had not taken place. One20 respondent missed the advocacy provided21 by the former MBEC. And another felt22 that the certification process was23 burdensome and not worth the time. At24 the Office of Economic Opportunity, we25 6 1 are focused on increased outreach. 7 We also asked Econsult to8 investigate why some certified firms were9 not having much success winning City10 business. 19 While these comments are20 painful to hear, they also provide a21 starting point for improvement in these22 areas. We have purged firms from our23 directory that have not actively bid City24 contracts. We also removed a number of25 7 1 firms that let their certifications2 expire. 6 Availability remains a7 challenge. Increasing the number of8 certified firms in the OEO directory is a9 paramount concern. 20 We will be arranging meetings21 with City departments during the months22 of June and July to discuss upcoming23 projects, goals and reporting. We24 already met with some departments in25 8 1 March and were encouraged by the2 cooperation that we have received. The3 Office of Economic Opportunity has gone4 through a transition period. As with all5 City departments, we have had to take on6 increased challenges with less staff and7 resources. In spite of this, we will8 aggressively pursue the goals of 309 percent overall DBE participation10 outlined in the disparity study. We will11 provide quarterly reports to the Economic12 Opportunity Cabinet and be guided in our13 efforts by this body. We will also not14 hesitate to meet with departments who are15 not meeting the goals set forth in the16 study. 24
Thank you,25 9 1 Mr. Bell, for your testimony. Just a few2 questions before I open up questions for3 the Committee.4 This disparity study and5 participation goal-setting was defined by6 Bill No. 060855-A, and within it it7 actually breaks out which goals should be8 set, and I'm not sure I found all of9 those goals within the disparity study.10 I know that MBEC and now OEO also11 releases another report that outlines the12 goals, but I want to run through the13 specific goals.14 You mentioned the overall 3015 percent DBE participation goal in16 general, but what is the goal for DBEs17 owned by African Americans?18
,5 this chart, Figure 4.9, recommended 20106 citywide participation goals.7
Yes. I'm looking at8 the chart, but it's not breaking it out9 by African Americans.10
No. It's15 just in the disparity study.16 It's not A-62.17
Okay. Now I'm on18 of the -- I'm looking at the19 African American goals, public works, 620 percent.21
It says '08,6 but actually the title of the chart says7 2010 Citywide Participation Goals.8
The goal for11 African Americans just for the record,12 for all contract types.13
It doesn't break it14 out. This is Fiscal Year '08 actual15 achievements, but in terms of the goal16 for African Americans, I'm not looking at17 it on this chart.18
I think the19 chart is labeled wrong where it says20 Fiscal Year '08, but on top of that it21 says Recommended 2010 Citywide22 Participation Goals.23
Good7 afternoon, Mr. Mullin. Please identify8 yourself for the record.9
Good afternoon.10 My name is Steve Mullin with Econsult11 Corporation.12
Mr. Mullin,13 do you have the disparity study in front14 of you?15
Are those20 meant to be the 2010 participation goals?21
The goals -- yes.22 They're 2010 based on the latest23 information available, 2008.24
Now, there's19 a goal for disabled persons, businesses20 owned by disabled persons? I believe21 that goal is --22
Now, is2 there a goal for DBEs operating within3 the City of Philadelphia?4
I'm talking14 about those that are located in the City15 of Philadelphia. There's supposed to be16 a separate goal set for those.17
I'll have to look.18 The number I quoted, 30 percent, is for19 all location, yes.20
According to21 the ordinance, there's supposed to be a22 goal set specifically for DBEs that23 operate in the City of Philadelphia.24
And are25 15 1 domicile -- are located in Philadelphia2 firms?3
Yes. And4 there's supposed to be a goal set for5 not-for-profit City contracts relating to6 for-profit subcontract opportunities.7
Councilman, the goal8 for Philadelphia-based DBEs, is that9 tying into City Council legislation10 relating to the Neighborhood Benefit11 Strategy or is that different?12
It's a13 separate ordinance.14 So do we have a goal for15 Philadelphia-based DBEs?16
Okay. I23 guess the question is good for24 Mr. Mullin. So these goals are25 16 1 definitely based upon the disparity2 study?3
Because5 they're contained within the disparity6 study.7
And when9 will the disparity study be delivered to10 City Council?11
We are in the12 process of having it approved by the13 Administration, and it should be -- after14 we make the changes and the updates that15 you recommend, we can have it within a16 week.17
After we have the20 final approval. And I would say less21 than two weeks, but I would say -- like I22 said, once we make these changes and then23 go back and look at the non-profit goals,24 it's just about ready.25 17 1
Okay.2 Mr. Mullin, last year we had a discussion3 about the data that the disparity study4 used and whether we were using City or5 regional data.6
We looked at both,10 but the utilization and disparity numbers11 are based on the regional data as the12 denominator.13
One more14 question before I turn it over to members15 of the Committee. Do you make16 recommendations within this disparity17 study relating to the certification18 process?19
And what are21 those recommendations regarding the22 certification process?23
The primary24 recommendation is to streamline the25 18 1 process and take a look at ways to make2 it easier for certification, with the3 ultimate objective of making more firms4 available.5
So that6 would change the availability rate and7 affect the goal setting?8
That would10 change the availability rate and change11 the goal setting?12
Not certification13 per se. I think it would ultimately14 change utilization, but not necessarily15 availability, because availability that16 we use in -- the picture is whether firms17 are certified or not. The idea is to get18 more into that.19
So the20 utilization, would that affect the goal21 setting?22
If you24 streamline the certification process and25 19 1 it improves utilization, that would2 change the goal setting?3
That would4 possibly change the goal setting to the5 extent that our goals are set in sort of6 three sort of three ways. One, if7 utilization is greater than capacity,8 then we say use utilization and continue9 to try to build capacity. Second, if10 capacity is greater than utilization,11 that's the example that you don't want12 and you try to find ways to increase13 utilization when there are firms there.14 By the way, still trying to increase the15 number of firms that are ready, willing16 and able. And then we have what we call17 a stretch goal, where in one case the18 utilization is maybe greater than the19 capacity, but you don't want -- but it20 could be an area where, say, you want to21 try to increase even greater capacity to22 try to -- and the stretch is to say have23 programs, have OEO to try to get more24 firms available and more firms utilized.25 20 1
One of4 the things that we've talked previously5 in these hearings have been when we6 talked about streamlining certification7 was looking at the state and this whole8 issue of reciprocity with the counties,9 with the state. I don't hear you talking10 about that as an option.11
We currently accept15 reciprocal applications from state16 agencies, the Department of General17 Services --18
But19 they're going through a whole new20 application process.21
But23 they're still going through a whole new24 application process.25 21 1
No, no, no. If2 there are situations where we have to3 request additional information, but we4 would -- if you fill out a certification5 affidavit, we will accept the reciprocal6 application without the rest of the7 documentation. But we've had situations8 recently; for instance, an engineering9 firm applied and we didn't know who10 possessed the engineering license, so we11 had to request additional information,12 but the reciprocal application process is13 a much more streamlined process.14
So if15 I'm certified at the state, with this16 additional application, I get certified17 at the City?18
Yes.24 Good afternoon, gentlemen. Let25 22 1 me first say how pleased I am to hear2 that you are already thinking and3 anticipating the budget round for 2010,4 because for 2008 we sent a letter to the5 Mayor making it clear that we wanted each6 and every single City department to come7 with their numbers in the body of their8 testimony. And then '09, based on9 discussions, I did not send a letter, but10 there were departments who showed up and11 did not honor the verbal request.12 So we're hearing now, June '09,13 that starting with our budgets in 2010,14 every single City department will come15 prepared to tell us what their MBE, WBE16 participation is, correct?17
Thank you23 for that.24 A couple of questions. One,25 23 1 first paragraph, you state, "We have2 begun to monitor selected projects." Are3 you at liberty to share now what those4 selected projects are?5
Yes. The selected6 projects are the Philadelphia Biosolid.7 We have the Verizon project. We have a8 Salvation Army project, which is through9 Cultural and Commercial Corridor funds.10
Is that11 the one in Councilman Jones' district, do12 you know?13
And we reached out17 to the Councilman's office when we set up18 a job fair for those individuals. So we19 have reached out and worked with Council20 to meet some of the employment goals.21 But we're monitoring that project also.22 So between those three in terms of -- one23 of the criticisms of the former MBEC was24 that we weren't actively involved in25 24 1 monitoring and enforcement, and in some2 situations our staff is going to do it,3 but we're also going to look for4 increased participation from some of the5 other City departments. But with those6 projects, we're setting up project7 meetings, we're requesting reports, we're8 documenting participation by contracts,9 because, like I said, we also get10 criticized for the fact that we count11 encumbrances and not actual12 participation. And in these ways, we13 want to let people know that we're14 serious about the process. If you set a15 20 percent goal for participation, we're16 going to monitor and make sure that you17 actually actualize that, or we're either18 going to make a recommendation to not pay19 you or to recommend additional20 participation.21
And in those23 situations, with the staff that we have,24 we can do it. We're also in discussions25 25 1 with upgrading our software. So with the2 projects that we can't get out to3 physically, we can monitor payments4 through the software system.5 COUNCILWOMAN BROWN:6 Incrementally along the way.7
Second9 paragraph, you say that insurance bonding10 and slow payment does play into some11 firms' decisions to forego City12 opportunities.13
With that15 reality, which we know is not new, we've16 known it forever, has the Department17 begun to think about how the Department18 can provide technical assistance, for19 whatever that means, so that we can20 ultimately minimize these barriers for21 those who do not want to go after City22 opportunities?23
Right. The24 neighborhood business services concept is25 26 1 something that is intended to address2 that, and with the technical assistance3 aspect, that's very key. So this is4 just -- from the interviews that were5 done, this came up a number of different6 times, that because the City is a slow7 pay, a lot of people just won't come out8 and bid after projects, because there is9 in some concepts people think that10 there's mobilization money out there, and11 I don't think that is the case. So, like12 I said, once again, your lines of credit13 are going to be key, and we still have to14 just go out and really focus on15 opportunities.16 There are more people bidding17 on our projects because of the economic18 downturn. For instance, right now we're19 in the process of reviewing bids that we20 received for the Youth Study Center21 project and it is showing an increased22 number of people bidding. So in spite of23 this, there are still people interested24 in doing business with the City of25 27 1 Philadelphia.2
Okay. To3 the question of slow pay, do you think4 that's a fair criticism?5
I think so. I mean,6 we've had situations where payments are7 like 60 and 90 days behind, and that8 really is an impediment and a burden on9 smaller companies.10
And so11 recognizing that is an impediment, have12 you had a chance to begin to think about13 strategically how your department fixes14 that fact?15
We're going to need16 cooperation from various City departments17 on this issue.18
So when a voucher20 comes in that is processed without21 delays, as long as there's no work22 related with the application for payment,23 that it could be improved. And that's an24 area that we could look at, because we do25 28 1 hear that. It took me 90 days, it took2 me 120 days. And, like I said, we don't3 point fingers. We want to in this4 situation work in the spirit of5 cooperation with the City departments6 that are processing payments, but it7 seems like it is an area of improvement8 that we need to look at. And this is9 City departments.10
And those14 other City departments might include? A15 couple of examples.16
What would18 be examples of other City departments19 that become a factor in this slow pay?20
Procurement21 Department, maybe the Law Department.22 We've heard that some vouchers can sit in23 the Law Department for 60 days. So in24 those situations, we just need to focus25 29 1 on those departments in which we can kind2 of speed up the process.3
Okay. And4 you should know we're taking notes for5 next year's budget testimony.6
Last8 sentence, second paragraph, you say that9 the actual participation rates reveal10 that we are exceeding availability in11 many areas. In many areas such as what?12
Oh, in almost all13 City areas. Based on the actual14 availability of the firms, like, for15 instance, African American firms, even16 though we get beat up and recently we've17 had a movement to have like black only18 goals on projects, the actual19 participation rates exceed the20 availability of the certified firms.21 And maybe, Steve, you might22 want to talk about that.23 Because, like I said, this24 being the first year that I've actually25 30 1 had the complete and finished the2 disparity study, the light finally came3 on in my mind. It's like we get4 criticized for what we don't do, but5 based on the participation numbers, it6 shows that we need to increase the number7 of certified firms. We're actually doing8 quite well with the number of firms that9 we have in our database. The goal is to10 increase the number of certified firms11 that are ready, willing and able, and I12 think Steve can talk to that.13
You may14 want to state your name again for the15 record.16
Steve Mullin again17 with Econsult.18 In that, one of the biggest19 issues has always been you've got a pool20 of certified firms that count and you21 have a pool of DBE, MBE firms that aren't22 certified, but in the big picture, sort23 of normal human being, they should count,24 they should be part of what we're trying25 31 1 to encourage their business growth and2 things. So one question is trying to --3 is how do you make all of the ready,4 willing and able firms sort of get to5 that level where they're certified or6 where they can be counted. And by the7 way, not just can be counted, but can be8 on lists so that when you're looking -- I9 mean, that's a key.10
Being11 counted means nothing if you don't get12 opportunities.13
When the real14 rubber hits the road, a lot of times it's15 how do we find some opportunities of who16 we might be able to do joint ventures17 with and things like that.18 So we think that our real view19 is that it's that big universe that20 you're really -- that the public policy21 is really after. And so the notion of22 saying, hey, we're doing well with the23 certified firms, is not really what24 you're after. You're after, We're doing25 32 1 well with the entire universe and growing2 the entire universe.3
Third4 paragraph, you say, And another -- MBE, I5 imagine -- felt that the certification6 process was burdensome and not worth the7 time. So strategically or tactically8 within your department, what are you9 doing to change the burdensome process,10 which is a consistent complaint,11 observation, criticism that we hear from12 MBEs, WBEs?13
We are trying to be14 more proactive with regards to15 information that is submitted. Recently,16 unfortunately, our Deputy Director of17 Certification received a layoff notice.18 So I actually had to put my hands on the19 process. And I think one of the things20 that we've done is maybe when an21 application first comes in, we let it sit22 too long. If there's information that23 needs to be requested; for instance, your24 tax returns, your financial statement,25 33 1 your lease agreement, a lot of this is2 information that we can request in a more3 expeditious manner and we can decrease4 the amount of time. With the fact that5 we're still certifying companies for6 ownership and control, there's7 information that we have to have.8 COUNCILWOMAN BROWN:9 Absolutely.10
If you're applying11 to become an electrician, if you don't12 own the license and you're not in the13 minority class, then it's going to be14 difficult for you to become certified,15 meaning your company. And in some of16 these situations, rather than letting the17 certification application sit six to18 eight weeks, we're going to be more19 proactive in terms of you need to submit20 this or we need this information, and21 that's what we're trying to do. And I22 definitely think the process can be23 streamlined. I'm thinking within the24 next couple of months your application25 34 1 comes in, we can get to you within a week2 or two to let you know this is3 information that we need, and I think we4 can take that process down to four to six5 weeks to get you certified and less time6 than that on the reciprocal application.7
That would8 be encouraging, because I've made calls9 to the office prior to your arrival to10 find out where an application was,11 because there's been no feedback.12
So it goes14 to the point in terms of technology. Is15 there some place on your website where a16 prospective vendor can come and see what17 the specs are for app and and that they18 know even before they send in one that19 they got to have certain documents ready20 to go?21
Oh, yes. That22 information is on the website in terms of23 what you need. It's already there. But24 it's just you have a lot of companies,25 35 1 they will piecemeal you with the2 information that you need. And then also3 too recently we had a company that had4 been certified for years. They let their5 certification lapse, but they were on our6 project. It comes down to it, they7 didn't submit all the information that we8 need, and we couldn't just give the9 certification, because I don't think we10 should ever lower the standard to just,11 okay, I know who your company is, but if12 we don't have your updated tax13 information, your updated resumes of the14 principals, we're not just going to give15 a certification away.16
You still have a18 responsibility to give us the information19 so we can determine ownership and20 control.21
Indeed.22 To that point, Councilman Goode and I23 worked on a matter maybe a year ago that24 reflected some of the characterization25 36 1 you just made, and the question for us2 raised was, is there a separate track3 activity for longstanding companies who4 have been around for 30 years and simply5 want to be recertified? Should they have6 to follow the same --7
No. They don't have8 to submit everything. They do have to9 submit what is called a No Change10 Affidavit, that nothing in the ownership11 or control of your business has changed.12 A lot of times companies forget about13 that, like they'll just -- they don't14 think that the certification ever lapses.15 So we would send out notices. Like I16 said, when we went through a purge of the17 directory, one of the criticisms that we18 heard was that there were a number of19 firms in the directory that don't respond20 to phone calls, they don't respond to21 opportunities to bid. And so we felt22 that we had some fluff in there. So,23 like I said, the first hundred companies24 that we actually purged from the25 37 1 directory were companies that received at2 least three letters notifying them, your3 certification has expired, this is your4 second notice, this is your third notice.5 And I don't know if it didn't happen6 before recently, but we removed those7 companies out of the directory, because8 we don't want to get the criticism that9 prime contractors are calling people and10 they're not responsive to bid.11
Because then that13 turns people off. That also turns City14 departments off, because if we have City15 departments that are going to send people16 to our directory and the firms are not17 responsive or interested in bidding on18 City projects, we needed to make19 improvements in that area.20
So before21 your arrival, the time needed for a22 company to become certified, presuming23 they sent everything in and had24 everything right, the time was what?25 38 1
And now4 under the new leadership and with these5 new measures you're putting in place, the6 goal or expectation is what?7
I'm looking at four8 to six weeks, but I can report back to9 you on that as of July 1, because we're10 in a transition period now. I'm11 assessing how the applications have come12 in, how they were assigned to13 specialists, and I'm looking for14 improvements in that area.15
Okay. I'm16 a little remiss in that I did not bring17 down here -- there were more than four or18 five City departments who when we raised19 questions about MBE, WBE activity and why20 they were not meeting their goals, all21 fingers pointed towards OEO. And then we22 were anxiously waiting for an opportunity23 to revisit that with you, but leadership24 and the Administration made a different25 39 1 decision.2 So I am going to get to you3 those departments who made it clear that4 it's not us, we're doing our job, it's5 all because OEO isn't doing their job.6 And so that's not good, because OEO7 wasn't here to defend themselves, which8 is why we wanted you to come back with9 that department, so we can find out where10 the glitch is.11
Because it13 wasn't apparent to us simply talking to14 the leadership of that department. So15 I'll finish where I started. We can --16 no; just one final question I put here.17 With the work of Econsult and18 the new objectives of this department,19 are these matters discussed at cabinet20 level?21
They are?25 40 1 Because we believe that to the extent2 that is that high up on the agenda of3 leadership, then the expectation is that4 the needle moves. So we're going to --5 I'd like to finish where I started. Next6 year for budget 2010, it's our7 expectation that every single City8 department will come here with the9 numbers as a part of their testimony, not10 after budget hearings are over and then11 we get miles of paperwork with the12 numbers separate from the actual13 testimony. That includes Community14 College of Philadelphia, SEPTA and the15 courts.16
On the Community17 College issue, they reached out to us18 about the Northeast campus expansion, and19 then I had --20
Yes. And also one23 of my staff members attended a pre-bid24 meeting today, because they're doing some25 41 1 work on their main campus. So I don't2 know who actually ignited Community3 College to reach out to us, but we sent4 them firms, we notified people about the5 pre-bid opportunities, and I think that's6 a positive development, whoever started7 that.8
Quick15 follow-up of Councilwoman Brown before16 Councilman Jones.17 Mr. Mullin, on of the18 disparity study, you discussed how19 coordinating -- how to coordinate goal20 setting in terms of citywide objectives21 and down with department actions. Can22 you explain a recommendation of how the23 overall goals should be communicated to24 departments and the importance of25 42 1 departments being held accountable?2
Yes. Again, Steve3 Mullin.4 We, in working with OEO, looked5 at the -- and you can see in a chart on6 Section 5.5.1 -- the goal-setting process7 flow chart. We start with collecting the8 participation information. That's OEO --9 we did the study to come up with the10 goals that are set, recommended11 participation goals that are determinant12 based on the information looked at,13 always, again, with a one- or two-year14 lag here.15 In the olden days, I guess it16 was Director of Finance but now it's17 Commerce Director developing the citywide18 goals, developed departmental goals,19 again, with -- again now with Department20 of Commerce. So the initial goals for21 overall come from the overall data that22 we collect, and we analyze there. And23 then through the department, we don't go24 as the consultant and look at department25 43 1 by department, but those are set up2 through the Commerce Department there.3 We also note that the -- we say4 when you're looking in the direction --5 we'd say upward and downward here --the6 goal should be set with citywide7 priorities in mind here, and I think --8 it's our view that the creation of the9 Office of -- of OEO and the placement of10 it in the Commerce Department was a11 reflection of that first step, not all12 that they do, but that facilitates that.13 And then we talked about the departments14 being held accountable for their15 adherence to the DBE goals there.16 One of the biggest problems17 with the departmental utilization, in18 some cases when the numbers are in single19 digits, there can be certain types of20 expenditures, and one we're familiar21 with, large expenditures on fleet or22 large expenditures that could be an23 emergency expenditure or something that24 could really throw some of the25 44 1 utilization numbers off. But we believe2 that the departments ultimately should3 be -- if you're not reaching the goals,4 there should be a process, and I think5 OEO is looking at that, why didn't you,6 what's the explanation, what are the --7 and a sort of an overall commitment by8 the entire City government, from the9 Mayor on down and Council saying, Okay,10 if you're not meeting your goals, then11 there should be some corrective action12 taken. And, by the way, you should do13 whatever you can to get one percent more,14 but try to understand what was the15 rationale, why weren't these goals met,16 and to the extent that there are some17 things that are systemic say because of18 this in getting that kind of19 information -- and, again, in some of our20 recommendations, we note this -- are21 there changes in procurement practices22 and procurement processes that can help23 correct examples where there aren't --24 where there are not -- where the goals25 45 1 were not met by departments.2
And within3 appendix of the disparity study, I notice4 you did examine things department by5 department, so you did take into6 consideration in terms of the overall7 goals.8
Thank you,12 Mr. Chairman.13 Good afternoon, gentlemen.14
My senior16 colleagues know a lot more about the17 history recently with the transition of18 the organization than I do, so what I'd19 like to do is take a step back so that I20 might understand it a little better.21 Tell me who do you report to22 now?23
Well, I may6 be speaking Freudianly, because the7 current Commerce Director is on his way8 to London. That may be in your future.9
There you11 go.12 And how many staff people do13 you have now?14
You report20 in what way to the Economic Development21 Opportunity Cabinet?22
I have not met with23 the Economic Opportunity Cabinet24 recently.25 47 1
When was2 the last time you met with the Mayor's3 Cabinet for Economic Opportunity?4
How many7 times have you met with the Mayor's8 Cabinet for Economic Opportunity?9
As a17 follow-up to Councilman Jones' question,18 you may not have had an opportunity or19 been given the instructive. So who in20 your team, on your team or your person21 you report to, can they answer Councilman22 Jones' questions?23
Sitting25 48 1 down with the members of the Economic2 Opportunity Cabinet.3
Can you5 invite Mr. Kevin Dow to the witness6 table?7 Thank you, Councilman Jones.8
Good11 afternoon. I asked the question how many12 times has the office of EOE --13
Right.15 There you go. They change the acronym so16 much. Have they met with the cabinet?17
Right. On a formal18 basis, we've met -- the cabinet has met19 twice on a formal basis. We've met20 individually with a number of the cabinet21 members themselves. Certainly the22 Administration has been very involved in23 the activities of the Office of Economic24 Opportunity.25 49 1
So your2 office has met once with the Mayor's3 Economic Development Cabinet?4
All right.6 How many contracts have been put on the7 fast track based on the stimulus package8 and "shovel-ready" projects that are9 going to be in the next 120 days10 implemented in the City of Philadelphia?11
I would14 go -- and what would be the total dollar15 value of those contracts?16
In some situations,17 like you have Water and Streets18 Departments projects that are on one19 sheet. And I didn't have that20 information in in front of you, but I can21 get it back to you. But some of the22 aviation projects could approach a23 hundred million, and that could be five24 or six projects. But for Streets and25 50 1 Water, it's approximately 40, unless you2 have something different.3
You're4 close. And I'm saying to you that in the5 next 120 days, we are going to see the6 largest amount of construction we've7 probably seen in the past decade8 undertaken.9
You should11 be on speed dial with the Economic12 Development Cabinet, because this is13 going to move so fast that your 15-member14 staff will not have an opportunity to set15 itself to be able to take advantage of16 some of this. And so my point is that I17 question -- and I'm not trying to18 micromanage. I'm not in a position to do19 that. But there needs to be a higher20 priority and frequency of those kinds of21 interactions, because these22 opportunities, as we found out yesterday23 when we were presented the list of the24 stimulus money for the projects within25 51 1 our respective districts, it happens2 quickly, and if you're not in that3 communications loop, having sat where you4 sat, if you're not in the room, if you're5 not at the table, you don't have an6 availability of firms that can get the7 information in a timely fashion to be8 able to make preparations to make a bid.9 To make a bid, it takes hundreds of man10 hours sometimes, thousands of dollars11 just to submit a bid in a timely and12 professional fashion. So the quicker13 that information goes to a pool of14 minority and female firms, the more15 effective the amount of participation is.16 Second thing --17
Councilman, can I18 just say, there have been economic19 stimulus working group meetings comprised20 of various City departments.21
But just to3 highlight what Councilman Jones is4 saying, it's my understand that the5 Recovery funds are actually being6 organized to run through the Deputy7 Mayors.8
And the10 Economic Opportunity Cabinet is made up11 of Deputy Mayors?12
So in other17 words, all it takes is a connection18 between OEO and the Economic Opportunity19 Cabinet. And I would suggest that the20 next meeting probably should be strictly21 on the Recovery funds that are coming.22
And you should23 understand, Michael is about to go there24 with the projects that are coming down25 53 1 and the projects that you're talking2 about are primarily in there with federal3 money in it, are involved with the Deputy4 Mayor of Transportation and Aviation,5 Rina Cutler. We hold monthly meetings.6 We are involved with Michael's team7 there. So that's where we are very much8 involved and integrated into the process9 to make sure that the minority10 participation is being considered,as well11 as taking care of in that role.12
Thank you,13 Mr. Chairman.14 What is the number of minority15 and -- give me a number for certified16 minority and certified female17 contractors.18
I can get that. I19 don't have that right here, but I can get20 that for you.21
And you're talking24 about prime contractors or25 54 1 subcontractors?2
Contractors.3 Just certified. Not prime or sub, but4 just contractors.5
I can go into our6 database and I can get that information7 to you.8
Based on9 your study, what was the pool of minority10 contractors that you looked at and11 female? We should have that within the12 body of the study.13
But, Councilman14 Jones, it's not just contractors that are15 in our database. It's also professional16 services firms and other entities.17
Yeah. What2 is the number of minority contractors,3 female contractors, in the City of4 Philadelphia today that are certified?5
Certified. I can6 get that to you. I don't have that in7 front of me right now.8
About a13 third of them are women-owned businesses.14 So it's roughly 400.15
Okay. I mean, I16 would need to get you a definite, because17 I know you don't want me to speculate.18 So I'm going to go back to our directory19 and pull out the actual number of20 minority and women-owned contractors.21
The22 disparity study says it's 34 percent23 white female and the rest, 66 percent,24 minority, 45 percent African American, 1125 56 1 percent Asian American, eight percent2 Hispanic, two percent Native American.3
What is8 important, as we start to talk about the9 disparity, it is critical to understand10 the exact number based on what you11 anticipate by way of participation at the12 end of the day.13
You15 mentioned in your testimony that in some16 cases we are overutilized.17
I'm making a22 point here that says there's a direct23 correlation between the number of24 available firms to the number of firms25 57 1 that were financed by agencies like PCDC,2 like PIDC and their available access to3 capital which allows them to be eligible4 to bid on jobs.5
To get the7 things they need, like insurance,8 equipment and those things. There is a9 direct correlation between the two.10 These things aren't, as you even put on11 testimony, separate and distinct things.12 These are a part of a total puzzle.13 The solution lies within that14 kind of matrix of problems; therefore,15 solutions. You can directly correlate16 the amount of new firms that are coming17 into the pipeline -- that's a word that18 I've learned to use recently by way of19 being a freshman for housing projects.20 But the pipeline, if you build fun21 companies, then you won't have them22 available for work. And so the notion23 that PIDC or PCDC aren't directly related24 to your success at what you do, you guys25 58 1 need to be meeting -- how many times have2 you met as a collective between PIDC,3 PCDC, the Commerce Department, the4 Procurement Department and the Housing5 Director? How many times have you sat in6 a room with those individuals to talk7 about participation?8
Approximately four9 times. I will have been in the office10 about eight months, and the focus on11 specific projects, like the Verizon12 project, we coordinated with PIDC and13 PCDC, and then also my staff is involved14 with Commerce Department staff, PIDC15 staff, maybe not as much PCDC on the16 commercial and cultural corridor17 projects, and they're focused18 specifically on participation. Those19 meetings probably take place at least two20 to three times a month.21
Humbly22 submitted -- and I do mean this, because23 you have the toughest job in government.24 I know you do.25 59 1
No. But3 understand this, you need to not just4 meet in that body for project specifics.5 You need to take a step back at a time --6 and I know sometimes it comes at you fast7 and furious, but in a way to talk about8 strategic planning and not just project9 specific. Because there is a correlation10 again between the Finance Department, the11 Treasurer's Department and ability to pay12 for firms that participate. So there is13 a solution that can be designed based on14 the availability of capital in short-term15 working capital within those departments.16 So you guys need to be -- I always use17 this term -- solutionaries, not just18 reacting to putting out the fire or19 dealing with the immediate project. So20 my suggestion, humbly submitted once21 again, is that you as a working group22 kind of meet quarterly to set systems in23 place. Like, for example, you should be24 able to provide to this body a process25 60 1 evaluation review chart on how a2 contractor gets paid and where those3 systems are and how much time it takes in4 each department, so that we as a body can5 evaluate that and help you. But as we6 start to look at budget times -- and we7 know we're in tough budget times right8 now, but at some point, God willing, we9 will get some revenues in here and we'll10 be able to know how to apply them better11 based on what your needs are, what your12 needs are to accomplish your task. So my13 hope is that you guys kind of -- and14 women get together to try to put your15 arms around some of the solutions to the16 problems that are being brought up by17 Econsult by way of the pool of available18 firms to create that pipeline.19 Very quickly, and I'll pass20 this along. To what degree do you employ21 joint ventures by way of satisfying22 participation goals and how are they23 structured?24
Well, we don't25 61 1 employ joint ventures. We encourage2 joint ventures to be certified. And we3 haven't had any joint ventures4 certification applications recently, but5 we have not seen any on the projects6 that I had mentioned in my testimony that7 we selectively monitor.8
So we don't employ.10 That would be contractors that would hire11 joint ventures. And in terms of the12 report that we submitted, I have not seen13 evidence of joint ventures.14
I mean,15 joint ventures have their supporters and16 detractors, and I'm familiar with that.17
But by way19 of the ability to give capacity to a20 firm, if it's equitably monitored in a21 way that they benefit from it, it's22 probably your quickest way to achieve23 some of the goals by putting an outfit of24 office supply with another company, even25 62 1 though the outfit can be a prime on its2 own, but using that as an example is a3 quick way to solve some of your immediate4 goals, particularly as we start to look5 at construction projects like within the6 Water Department and being able to put7 small contractors with larger contractors8 to do some of the excavation, the9 backhoes and things like that.10 So my question becomes, I need11 to see a plan -- and I would ask that you12 submit that to our Chairman -- to talk13 about how we're not going to be talking14 about these same issues 12 months from15 now.16
No. I would19 like to see a holistic plan and maybe led20 by you, Mr. Dow, that pulls together all21 of these entities that are acting kind of22 independent of one another to come up23 with an economic development plan for24 inclusion that takes advantage of some of25 63 1 the -- and my former employer used to say2 he sees the analogy of having a quiver of3 arrows that he would use to use that to4 hit the target of participation. So if5 you view some of your economic6 development organizations as resources7 then to put them all in a room and8 strategically say how are we going to get9 from Point A and, as Councilwoman10 Reynolds Brown points out, Point B.11 Second thing in that plan is12 that that plan has to be communicated by13 department. She is absolutely right, and14 I saw the frustration in her face when15 department after department came up here16 and was not clear about what their17 responsibility to DBE and MBE18 participation was and wasn't clear about19 how to apply it and to what pool of20 contracts to do so. So there needs to be21 like an orientation for departments so22 that they are clear about what the23 expectation is of Councilwoman Reynolds24 Brown and this body for participation.25 64 1 So that next year -- I mean, I watched2 her and Chairman Goode use a great deal3 of restraint and patience with4 departments. I don't think that they5 will use that same restraint next year,6 because we're not new anymore.7
I heard the same8 testimony, and like I said, Kevin and I9 in our planning meetings had talked about10 the fact that we need to meet with City11 departments early on to talk about the12 goals, because, like I said, it galled me13 too, but it's like I'm not going to take14 any of this personally. I'm just going15 to go back and work on improving it.16 Because it is a shame, we're all City17 departments and we could go 12 months18 without even thinking about minority19 participation. That's not good.20
So we'll come back to21 you with a strategic plan in that regard,22 and we feel comfortable --23
We will have some2 sort of draft -- excuse me; not some sort3 of draft. We will have a draft to the4 Administration by June 30th.5
Thank you.6 Last question, requirements contracts7 start on the fiscal year?8
Yes. You have9 contracts that are being let throughout10 the year, but I look at January -- I mean11 July 1st as like the starting point for12 really implementing the changes that we13 have made at OEO and that we want to14 disseminate to the various departments.15
May I make,16 humbly submitted again -- and I leave it17 to you to implement, but your18 requirements contracts are your way that19 departments allow the status quo to exist20 year after year. Your evaluation of21 those requirements contracts, those big22 contracts, are a way to include more23 people in the process. So you need to24 get a department-by-department calendar25 66 1 of when those requirement contracts begin2 and are sunsetting and begin to work a3 plan around that.4 Thank you, Mr. Chairman.5
Yes. I8 know we are pressed for time. There's9 another hearing. We haven't spoken at10 all about the Convention Center, and I11 would be remiss not to get some feedback12 from the office in light of the fact that13 on a weekly basis we drive to City Hall14 and there's a weekly protest of African15 American construction workers. Where are16 we on that?17
I've only been to18 one oversight meeting on the Convention19 Center. I just haven't been able to make20 them, because, like I said, over the last21 couple of months, just getting my hand22 around understanding City departments, I23 haven't been there.24 I don't know. Kevin, have you25 67 1 been to any?2
And I would say, with3 all due respect, that's a state program4 and --5
Time out.6 We actually had a huge fight when the7 Convention Center officials and state8 officials came in here without an9 Economic Opportunity Plan, and we held it10 up, and then we were actually pushed to11 approve the legislation before it should12 have been approved, with the13 understanding that there was going to be14 a Mayor's Commission on Construction15 Industry Diversity. And that in addition16 to that, when that Executive Order was17 signed, there was also the creation of18 the Office of Economic Opportunity and19 the Economic Opportunity Cabinet.20 And so there definitely is a21 connection between what happened with the22 Convention Center and what needs to23 happen in terms of follow-up by local24 government. But the biggest issue is25 68 1 this: Even if we're not in charge and2 even if we don't control it, are we at3 least making sure that they follow4 provisions in the ordinance that say that5 we're supposed to get monthly reports?6 We're not getting monthly reports. And7 technically at the very least, the Office8 of Economic Opportunity should demand9 monthly reports. Because the other thing10 about it being, quote/unquote, a state11 project was that the bonds were supposed12 to be defeased and then it was supposed13 to become strictly a state project. That14 didn't happen because of the financial15 markets. So those bonds were never16 defeased. So right now we actually still17 have a piece of the Convention Center.18
We will request those19 monthly reports. And I do want to20 comment that we had the Mayor's Advisory21 Commission on Construction Industry22 Diversity. They met. They issued a23 report. We have that report. That's24 been submitted to Council and the other25 69 1 follow-up. As a result of those2 negotiations with their approval of the3 Convention Center was the creation of the4 Office of Opportunity Opportunity that5 has been created, as well as as the6 creation of the Economic Opportunity7 Cabinet.8
But if they9 think they don't even have to give us10 monthly reports, that's ridiculous.11
And we will advocate12 on your behalf to receive those reports.13
So, in16 other words, the Administration has not17 intervened despite the fact that on a18 weekly basis there are protesters out19 there? There has been no official20 interaction with the Administration about21 that?22
I can't answer the23 question. I don't have the -- I don't24 know. I'm not at liberty to answer the25 70 1 question of whether or not the2 Administration has intervened. I know3 that it has been a high priority, that4 has been on the radar screen. We too are5 concerned about the daily protests out6 there and the weekly shutdown --7
We are embarrassed as10 well. You should know that the11 Administration -- it is a high priority12 of the Administration. I know that we've13 had some conversations with the Mayor,14 with Clay, with all of those that are15 involved about those protests, about the16 participation. There's an oversight17 committee, which we do have involvement.18 The City has involvement on the oversight19 committee. There's persons from the City20 who participate there. So there is21 involvement. There is some interaction,22 and the Administration is very much23 involved there.24
I think25 71 1 it's important that if -- because I'm2 assuming, knowing this Administration,3 that there has been something done and4 that that should be articulated to folks.5 Because there's an appearance that6 without a public statement or something,7 that we're just sitting back.8 And going back to Councilman9 Goode's point, there was a lot of10 frustration and hostility around11 accepting the legislation and passing it12 in light of the fact that we had a number13 of votes not to do it, and we worked with14 the Administration, with the15 understanding that not only will the16 Diversity Board issue plan, but that17 there would be some action.18 So I'm very concerned that we19 are probably halfway through the20 completion of that project and that we're21 not aware of what their numbers look like22 or what the projected numbers are going23 to look like and that in the next year24 we're faced with a public outcry of, Here25 72 1 we go again.2 So I think we need to be3 prepared for that in light of the fact4 that we're having the discussion. It5 would be good if we could get officially6 some word from the Administration about7 where we are with that.8 I'll leave it with this,9 because I know we talked about the10 outreach plan. As soon as the11 Administration approves this Econsult, I12 am going to assume -- and, if not, I want13 to put it on the record -- that I'd like14 to see what the outreach plan is going to15 be with departments, vendors and16 potential certification for OEO, and I17 don't want to wait until September to get18 that. I'd like to be -- I think there's19 a series of monthly events and activities20 where we could infuse some of this if it21 is a high priority. So I'd like to get22 that before September so that we don't23 have to have a discussion in a formal24 hearing, but that we know what are our25 73 1 next steps. I know people have worked2 very hard for that Econsult report, and I3 think it's a great first step, but,4 again, if we're not doing action steps in5 the next three or four months, we're6 going to be in a situation where budget7 year 2011 we're still talking about8 aspirational goals. And, quite frankly,9 I'm a little frustrated with the role10 we're setting aspirational goals and we11 don't see the needle, as my Council12 colleague uses. We don't see the needle13 moving.14 Thank you.15
I would18 simply like to underscore how important19 it is for us to actually work together on20 sending a message to the Convention21 Center that what's happening over there22 is not acceptable. I mean, Councilman23 Goode only touched on how very24 deliberative we were in reading every25 74 1 single piece of word that they sent over2 to us around this issue. And even the3 appearance of benign neglect is4 unacceptable.5 So given that we are disturbed6 and irritated by what we see, this may be7 an opportunity for the Administration and8 us to work together to send a clear,9 clear message that it needs to be fixed.10 So that's my comment on the Convention11 Center.12 On the preparation for 2011,13 it's going to be important to us that OEO14 is not viewed as the agency that didn't15 get it right. That was the appearance in16 budget hearings. I was disturbed by17 that, as Councilman Jones indicated,18 because OEO wasn't hear to defend19 themselves with the progress to say --20 because ultimately we want to know who21 ultimately do you hold responsible for22 not achieving goals, and everybody said23 OEO. No one said, Well, really my24 department and OEO.25 75 1 So as we anticipate your2 testimony next year, do what you can to3 make it clear and make it plain, we've4 done our part, the leadership on this5 issue, and department heads,6 commissioners, need to do their part.7 Because ultimately we're going to listen8 to what they say, but then we're going to9 watch what they do, and what they do will10 be reflected in those numbers. Thank you11 very much.12 Thank you, Mr. Chairman.13
Lastly,16 before we adjourn, do we have numbers yet17 in terms of the goals for18 Philadelphia-based DBEs or non-profit19 contracts?20
You want us to get21 that, right? We need to get that back to22 you.23
If you don't24 have the goal for Philadelphia-based DBEs25 76 1 or non-profit contracts, just forward it2 as soon as you have it through the Chair3 and I'll forward it to the Committee.4
I'll6 actually ask that question for the7 record. There is going to be a separate8 OEO report in terms of what happened9 during the last fiscal year? I mean,10 normally there's a disparity study with11 goals within it, but there's also12 reporting that OEO does separately on13 contracting?14
Now, what is it that15 you want? This is the end of my first --16
MBEC used to17 issue an annual report in terms of what18 has been accomplished over the year. So19 in addition to the disparity study, which20 is required under the Charter, there also21 was a report that's issued by MBEC and22 now OEO in terms of -- like to some23 extent the information is contained24 within the disparity study in terms of25 77 1 utilization, but usually there's a formal2 report that actually gives the final3 numbers on what happened for --4
So essentially an5 annual report for the last year's6 activities. We will provide that.7
That's it.12 Thank you very much.13 Is there anyone else to testify14 on this resolution?15 Please come forward.16
You're19 welcome.20 (Witness approached witness21 table.)22
Good23 afternoon. Please state your name for24 the record.25 78 1
Yes. Clarice2 Williams.3 I have in my hand that I was4 given from leadership from Charlotte,5 North Carolina a 65-year plan in which6 the budget from now to 65 years.7 I'm running for City Council8 At-Large 2011. My proposal is that9 instead of waiting in such terms,10 everything is already mapped out for each11 stockholder --12
Excuse me,13 ma'am. Are you here to testify on the14 annual participation goals?15
Yes, I am. What16 I am proposing is, I've been listening to17 what is being said, and since I do have18 the key in my possession now, I'm ready19 to share it with the panel, if you want20 to see it. If you don't, that's up to21 you.22 Now, I've heard what the Mayor23 and everyone else is saying about all the24 stockholders and the budget --25 79 1
Two things.6 Could you first state your name for the7 record.8
Clarice9 Williams. I was sent by the White House10 also --11
Excuse me,12 ma'am. Have you read a copy of the13 resolution?14
I have sat into15 session and I have read some of it, but,16 like I said, I hold the key right here17 from this year on up to 65 years from18 now.19
I will be20 glad to review those documents if you can21 send them to me. We actually have22 another hearing scheduled that was23 supposed to start at 2 o'clock and I need24 to adjourn this hearing at this time. Is25 80 1 that fine?2
This hearing6 is recessed to the call of the Chair.7 (Committee on Commerce and8 Economic Development recessed at 2:309 p.m.)10 - - -11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 81 1 CERTIFICATE2 I HEREBY CERTIFY that the3 proceedings, evidence and objections are4 contained fully and accurately in the5 stenographic notes taken by me upon the6 foregoing matter on June 4, 2009, and that7 this is a true and correct transcript of same.8 9 10 11 12 13 ______________________________14 MICHELE L. MURPHY15 RPR-Notary Public16 17 18 (The foregoing certification of this19 transcript does not apply to any reproduction20 of the same by any means, unless under the21 direct control and/or supervision of the22 certifying reporter.)23 24 25