Thank you you can provide that information to the chair. So on the budget detail, supporting detail, professional services section 41 , there's questions about some outside contracts. There's a $180,000 contract in FY12 and $179,000 contract in FY13 for, quote, sustainable energyinitiatives for which the vendor is listed as TBD. Have these funds been incumbered for FY12 yet?
They have not? ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 226
I may have been incorrect. No, I was correct, sir, that those have not been incumbered.
I believe those are to be determined if it -- if they are, in fact, funded at all in the system so theory we have $180,000 we can use to put up fences around lots or any other thing we would choose to transfer money on.
You have appropriation power, Councilman. I don't feel like -- that was a rhetorical question I'm assuming?
ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 227 Obviously, there's money in the budget that we're not spending for this fiscal year of $180,000 and so to next year's budget does -- I assume because it's there this year that next years overall carryover amouth does not include that 180.
Okay. And that would be the case for anything in this budget that we haven't incumbered this fiscal year that's still reflected as potentially being spent in the remaining three months.
I'm not in a position to give a -- to give that broad of an answer.
If you could just provide an answer to the Chair. ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 228
The budget detail indicates that the Philadelphia Solar City Partnership Grant has an award period of June 2008 through April 30, 2012. The budget detail goes on to show a 245 increase in this grant for FY13 for a total of 365. Is the grant being renewed beyond the end of this month, and what's the scope of the work covered by the grant?
Councilman, I can speak to the scope of it, and I'll confirm for you whether or not it's being renewed. The Civil American Cities Grant is a grant from the Environmental protection agency to the city. We were selected among a few dozen cities to promote solar activities. In -- in the city, it funded technical assistance that we've used for the development of the ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 229 Southeast Water Pollution control facility for the solar guide book that we've put out that helps residents in commercial businesses put solar on their homes and will streamline that process with L & I and has also served a coordinating function to promote solar installations on institutional -- institutional facilities in the -- in the region.
We'll get back to you on whether that's being renewed or not.
Are there any other questions for the panelist? Seeing -- yes. Councilman Green.
Thank you ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 230 Mr. Chair. As in past years, I've asked at the five-year plan hearing for each department planning to fill a vacant -- a currently vacant position or create position to come to it's budget hearing prepared to discuss those newly filled or new position. My undertanding is the department will be providing this information prior to their hearing but we don't have it yet for today's hearings. If you could just, and I -- for the sake of time, please provide the response for that in writing. I'd also like for your department and for each department that reports to the Managing Director's Office prior to their hearings to receive a list of all Class 200 or contract spending that has not been incumbered as of today. Thank you. ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 231
We truly appreciate your presence. Are there any other questions for the panelist? (No response.)
Seeing none, we will -- take a break until 2:15. Thank you. (A break was taken from 1:20 p.m. through 2:15 p.m.)
Will the next group come up, I believe it's the Procurement Department. Will all members be aware that the Commissioner is having a problem with his hearing devise, so we need to be real clear about our questioning so as he's able to respond to it. Can you hear me?
I was just making the members aware that you ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 232 have a hearing aide and for us to be considerate and make sure heard the question before we --
I appreciate it. It's working fine now, but it's been going on and off. I'll get a new one by next year.
That's fine. All right. Can you state your name for the record and begin your testimony, please.
Certainly. Good afternoon, Council President Clarke and Members of City Council. I am Hugh Ortman, Commissioner of the Procurement Department. With me is Deputy Commissioner Mary E. Stitt. As you know, we have submitted our budget testimony to the Chair for review and by the members of City Council. The contents concluded a break down of our funding request ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 233 for FY13, additional discussion included our general mission statement, the final implementation of an electronic purchasing -- purchase order imagining system, as well as a cooperative purchasing process, and a future implementation of reverse auctions. Other topics included our ongoing partnership with the Office of Economic Opportunity, a break down of each division within the Procurement Department, and a brief summary of a local business entity program. Not included in our testimony was a last-minute directive to provide details on the makeup of our upper and mid-level management class -- management team. We currently have thirteen employees in these positions. There are five men and eight women, four are Caucasian, two are Hispanic, six are African-American, and one is classified as other. ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 234
Mr. President, I understand the council has reviewed the testimony. We will be happen to answer any questions you or the other members of City Council may have.
Well, for the record, I'm not Mr. President. I'm Mr. Chair.
-- and so a couple of quick questions. What -- in your testimony, you state the electronic purchasing order system imagining system is now operational?
That particular topic I'd like the turn over to Mary to respond.
And my question becomes: What is the amount of cost savings realized from this initiative?
I just have to get something. ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 235
Mary Stitt, Deputy Commissioner of Procurement. Can you hear me?
Great. So the cost savings that will come from the purchase order imaging system annually is about $8500. I know that doesn't sound like a whole lot, but we are saving on paper. We're saving on envelopes and things of that sort. We're also able to reallocate some of our -- some of our staff members to do other duties. So little by little we're just trying to become more electronic with the resources that we have.
How has ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 236 the reallocation of employees in different areas of work increased performance and efficiencies within the Procurement Department?
Many times they can respond to inquiries more quickly. This has been a great customer service initiative for our departments because now we no longer have to wait for the purchase order to be printed, distributed, things of that sort. So it's a great customer service initiative, but specifically when it comes to staff members, inquiries, data entry, other clerical type of staff assignments.
Now, on your electronic purchasing, isn't it true that you cannot do business with the City of Philadelphia unless you can electrically receive an invoice and receive payment? Is that still the standard?
That's correct ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 237 with professional service contracts. That's not correct with what we do.
So with construction contracts you don't have to be automated?
No, sir. If we certainly appreciate it if you can take e-mail, but you may come pick up -- you literally have to come and pick up the package. It's so complicated it's -- we don't have the technology to send it up electrically yet so --
By way of invoices, by way of payables, is that all electronic now?
I don't -- I don't handle invoice or payment, so I can't really comment on that the question.
Okay. It's out of your department? ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 238
Please explain in more detail the implementation of reverse auctions and how it benefits the City of Philadelphia.
Okay. A reverse auction, as I described in the testimony, is just the opposite of a regular auction where what happens is that a bid will out on the street and the bidders will have to start at a certain time, say, 10:00 on Tuesday morning. They then start to bid electronically, though this is -- the electronic is not set up yet, but they would bid electrically. Let's say it's a fire engine they would start out with a million dollars, but the other biders wouldn't know what that was. They would just know that their bid was not the low bid at this point, so they don't --
So it's ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 239 not -- I'm sorry. So it's not like EBay where you see the highest bid?
Absolutely not. Only our -- only we would know what the pricing was. So the -- another bider can then throw in his price at -- say, he puts in a million 2, they're going to say, yup, you know, you're not low even at a million 2. So they'll in and he'll try maybe 9 million 5 -- 905 -- 950,000, and they'll know that he's -- he'll know that he's low, but the other bider that now bids a million won't know that he's -- he'll know now that he's high. So he may come in and bid a lower price. He won't know it's 950. He can try 975 and they're going to say, sorry, you're still not the low bider, so he has to keep trying until he gets below whatever the low bid actually is. And then at 10:30, if that's the deadline, ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 240 that's the end of biding.
In a regular, if you auction a piece of artwork, the most important -- the highest bid is going to get the bid. In our case, it's going to be the lowest bid. So at 10:30 we cut off the auction unless somebody bids right at 10:30. Then it's extended for three more minutes, and then other people have a chace to try and beat that bid. If somebody bids, it will be another three minutes until they stop bidding.
So in another life I understood the ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 241 procurement where we had big room 2 where we opened the bid publicly. How do we -- how do we deal with the transparency issue online as it -- how do you address that?
Well, the Controller's office will have the -- he has to attend, or at least, use his computer on his desk to review the entire process. We haven't gotten all the little kinks nailed down yet, but the public won't know except what the lowest bid is. The public will be told what the low bid is, and that will be it.
And what are the services or contracts that you're going to put on -- on that system?
Historically, our experience has been around the country, it's almost always a very little bid -- bid. It could be a requirements bid if it's -- if high ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 242 enough requirements, in other words, basically, $100,000 and up is kind of the rule of thumb which is why I brought up fire engines because they're always above that particular total. But like -- and it has to be individual discrete pricing for individual items. It couldn't be like office supplies because that's 500, 600, 700, 1000 items. So the -- they're limited most of the time to one item, maybe two, and the award we made to the lowest bidder for those two or three or whatever item, whatever they be.
Under -- in your testimony, please provide details about how capital projects are bid and if there are charges for timely completion maybe against someone's bond, and who implements that part?
The procedures for the entire capital project's ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 243 requisition to award, the notice to proceed is about five-page long. I can provide it to the -- to the Chair you'd like. There is a penalty built into the standard terms and conditions of every construction contract.
Is that you or the law department that goes after that?
Well, that's -- I'm almost there. It states that it's -- it's a percentage based on the amount or the initial award. Then, what happens is that the department's manage those contracts. We don't manage them once they're -- they actually -- okay? So the department has to either let us know there's problem and we'll go after the vendor and say, hey, you're ten days late, this is the deal. The vendor -- the contractor may have a specific reason for it, and the City may be willing to accept that reason. ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 244 We don't deal with that part of it. If they can't -- they reach an impasse and the contractor and the City can't agree, the department would contact Procurement to go from there. Would we get vol? Certainly, if they be. We've done it a couple of times in the past, but usually the department somehow usually settle these on their own. We haven't had -- we've had very few actually go after -- that I know of, actually go after liquidated damages.
Sure. Just give ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 245 me a second to get my notes. One of the vacancies is a Clerk Typist 1, it's clerical position that supports the department. There is also a administrative technician technical supervisor, and that's an supervisory position that oversees clerical work, inquiries, things of that sort. There's also the Procurement Inspection Services Officer. This position goes out and inspects the services and goods that the City contracts. So, for instance, if we seem to have a complaint regarding landscaping, he would go out to that area and find out if the specifications of the contract are being met. And then we have a Public Works Special Services Manager. That's a vacancy also. They would oversee the public works in the Special Services Unit which includes ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 246 inspections advertising, surplus disposal, and inventory. Those are our four vacancies at this time.
Are we -- okay. How many of your employees have signed up for DROP?
We have 11 current -- currently I believe, and we have about 50 employees. I believe 46 at this moment or 44 at this moment. So we do have a significant amount of individuals who are signed up for DROP percentage-wise when it comes to our department.
And are they in senior -- and to your knowledge, in senior positions or in clerical positions although important? ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 247
Right. Some are mid-level and some are, you know, more of a clerical position; however, they're very important. A lot of them are technical positions.
And so how are you planning for those eventually vacancies?
We've been working with the Personnel Department with a secession plan. What we're trying to do is bring people in and hire people actually before the person leaves so that they can pass on that training and that knowledge to that person. But if we're unable to do that because of resources, we do transfer that knowledge to someone who is already there, and then we can back fill at that point.
Can you explain how Procurement was able to cut it's advertising cost by half a million? ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 248
I don't believe we actually cut them. We had to, I think, actually get an appropriation during out midsession.
So is this based on legal responsibilities to advertise?
Almost all of the advertising that's condemned -- that's paid for by the Procurement Department are mandated ads. There are adds that the departments themselves pay for that are not mandated, but that's the way it was originally set up in about 1982, and it's still pretty much set up that way.
Political -- not political, but the election campaign advertising, advertising for ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 249 Procurement ads themselves, which is actually a very small part of the budget.
This is my last question, and I'll turn it over to my colleagues. But are -- how are you dealing with piggyback purchases at the federal and state level, and what economies of scale are we getting based on that? What commodities are we looking at?
I'd like to bring my operations manager who is really the nuts and bolts of that particular program, Trevor Day, and he can explain everything in very good detail for you.
Good afternoon. My name is Trevor -- Trevor Day, Assistant Manager. I'm waiting for a piece of paper that I gave Mary earlier.
That's ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 250 fine. When you speak to these things, kinds of give the members a sense of what commodities this sense versus the ones they don't and whether not -- for example, gasoline--
Currently, we have eight contracts that we piggyback off of the state contract -- or the state, and we do not piggyback back off of any federal contract currently. Those eight contracts include things like IT software and hardware, rock salt, sodium chloride for Streets, some equipment, vehicle equipment and tires are what we've used generally in the past and what we're using right now.
And I ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 251 didn't hear fuel.
My question is: Why not? What -- have you looked at it and does it for one reason or another not make sense to do?
Sir, that would be a decision that Fleet Management would need to make up front and tell us whether they found a contract that they think they can save money on, and then they would have -- they have to send in a written justification which has to be approved by both the procurement commissioner and the finance director, and they would often do that. If they -- if they are at this point, they're -- if they're satisfied with the price that we have, and I think they are at this point, then they would not seek another ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 252 contract.
You're saying that they are because we procured a really good deal that locked us into a price?
So I guess I will would hold that for Fleet Management. But I would ask you, in these tough budget times, you said eight commodities, I have to believe there are probably another half dozen to a dozen that might make sense if there's --
And I would not argue that point. It's a matter of we just started -- we were just able to our first contract in place last October, probably last October, so we're still taking some baby steps stakeing and trying to get done it right. It took us a while to get the first one done right because we had to be very careful not to break any laws ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 253 or break any local ordinances, et cetera, et cetera so that we -- as soon as the department, once they have identified a commodity and they know they can save money on, especially IT, they're come to us every day, they will -- we will go out and try and find from the -- one of the cooperatives -- because there's more than one cooperative out there, we go out and try to find the best contract for that particular commodity as, again, it all still has to be justified.
I appreciate that, but I want to, for the record, know that you will explore items like asphalt. We just talked about because of it being a derivative of oil products it has to be going through the roof by way of cost. And if, indeed, the Commonwealth of Pennsylvania has Henry Avenue as a State highway and that's the same ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 254 asphalt on Point Breeze, then I don't understand why we're not exploring the opportunity to look at their asphalt purchase under a requirements contract and piggyback and -- because they're buying a lot or asphalt than we are.
Councilman, just to add one thing to that, fuel costs and other overhead costs, we are hiring and outside consultant, and overhead cost consultant, to come in and look at some of the costs that you're mentioning to see if we could possibly do it in different way or see how to maximize purchasing across departments. So your point is well taken, and that's something that we are working towards.
One other item, commodity, is energy consumption by way of electric?
They fund and light a number of buildings. We ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 255 are a major purchaser.
If we walk in the door together, we might find some synergy that reduces costs for taxpayers. So what I'm putting on the record now is that we'll look at some big ticket items --
-- that we both purchase in common and at least explore it. If it does not make sense, if there are distribution and supply issues fine, but at least let us explore it. We're looking for quarters in the couch to pay for a candy garden so -- so we can kind of explore efficiencies at the state level. I'm going to turn it over to Councilman Goode.
Thank you, Mr. Chairman. Good afternoon, Commissioner ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 256 Good afternoon, Deputy Commissioner. Returning to the area of services, supplies and equipment, which I will now refer to as SS and E because I'm not going to keep saying services, supplies and equipment, what is the largest SSE contract you will award in Fiscal Year 13?
And what firm holds that contract for this physical year?
Because of the -- I believe it's last -- it was four ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 257 years, a little longer with extensions.
Well, it's pretty everything at the airport on the -- from the tarmac out to the street, all the management services of the airport, the cleaning of the bathrooms and the walkways and the windows and snow removal. As I said, it's on the out -- the tarmac out.
And Elliot Louis is not dis -- a certified disadvantaged firm?
Elliot Louis is not a certified disadvantaged firm. Does it contract with disadvantaged firms?
What was ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 258 the contract participation goal in the RFP?
I don't know what it was in the RFP, but I do know what the actual participation was which was -- 7
Can you 8 forward to the Chair what the actual 9 goal was in the RFP? 10
The current 14 contract that's on the street right 15 now or the one that was awarded for it 16 years ago? 17
The one that's 20 on the street now it's a combination of bid and RFP. Some of the work went out outside of Procurement as an RFP, and some of the work that could bid a little from a service, supply and ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 259 equipment standpoint is a bid contract. The ranges are to percent MBE -- I'm sorry, yes, MBE, and to percent WBE. 5
Those are the 8 goals in the current contract bid 9 that's on the street. 10
That's not the question. The question was: What was the largest contract --
What was the goal within the RFP, and then what was the goal within the contract?
The goal within the RFP I just referred? As an RFP, as I said, that went out -- outside of Procurement, and there was a bid that was done within Procument.
Can I jump in? ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 260
So the goal for the perturnic contract of the -- the services that are needed, the goal was for the current contract, and 6 that's Minority Business Enterprise, 7 and then 5 percent for women, WBE. 8 For the RFP, I do not have that 9 information, but we will be happy to 10 forward it. 11
I believe 12 I asked that question last year. 13 How has the participation 14 goal changed during the contract 15 period? 16
How has the goal 17 changed during the contract period? 18 We would have to do some research on 19 that. I'm not sure we have that 20 information with us today. 21
There is a ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 261 time it would be -- for instance, I'll give you an example, the roofing contractor that was one four years ago, there was only one in the OEO registry. Most of them were -- there's more than one in the registry, but most of them were residential. We needed nonresidential or commercial. The person that won that part of the contract never did any roofing work, never showed on file, went out of business.
My question is is not about participation. My question is about goals set within the contract because it was approved as a one-year contract with three one-year renewals?
At the point of renewal, I'm asking have the goals changed upon renewal in any of those years? ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 262
We can ask them vendor to try and do a better job. We can ask them to find --
My question was: How have the goals changed during the contract period?
All right. So what subcontract opportunities exist within the contract?
What subcontract opportunities exist within ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 263 the contract?
Any work that's done at the -- at the airport outside the tarmac, whatever -- and snow removal. There has to be -- there's some there. As a matter of fact, snow removal does have 5 percent MDDE.
I guess my question is real simply: Have you identified new subcontract opportunities at the point of renewal to explain to the contractor, even though you don't remember what the goal was in the RFP, you did set a goal in the original contract, you are renewing the contract from year to year, and so are you going through the process of identifying new subcontracting opportunities and possibly expanding the goals? That's the simply question I'm asking.
That would be up to the department or to the Office ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 264 of Economic opportunity. All we can do is renew the contract with the exact language that was awarded the day it was opened. It's a sealed -- it's a sealed bid which we can't change.
Councilman, do you want the OEO director to come to them?
Angela Dowd-Burton, Executive Director for the Office of Economic Opportunity. The standard protocol for evaluating the level of participation in terms of goals set are driven by the Office of Economic Opportunity and the using department to identify the major components of that contract, and then to identify those minorities and ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 265 women within the OEO registry that can provide services for each of those components. Based on that analysis the goals are set. Once they are set and bids or a request proposal come in, a contract is put in place, those goals are not changed unless the contractor request a substitution which has to be approve by OEO. Currently, we have a -- a -- an opportunity to manage the performance on contracts by exception, that is, if a contractor comes in and says an NBE is or WBE is not performing and they would like to request a substitution --
Ms. Dowd-Burton, what my question was: Have you looked at new subcontracting opportunities as you renew new the contract?
And what ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 266 was the result? Have you found now subcontracting opportunities?
Before you answer the question, I met with Elliot Lewis after last year's budget process. They realized they weren't meeting even their percent goal, 10 and we talked about how we meet that 11 goal and whether they were actually 12 going to look at identifying new 13 subcontracting opportunities. 14 And so the question is: Are 15 you working with Elliott Lewis to 16 identify new opportunities? 17
We 18 actually worked with the operating 19 department. 20
And so 21 what's the result of working with the 22 operating department and finding new opportunities within the contract?
Well, the ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 267 goals were set and the request for proposal and bid were put on the street.
What's the result of trying to identify new opportunities within the contract? Did you find new opportunities within the contract?
So they're going to do what they've always done. Thank you. Thank you Mr. Chair.
Thank you, Councilman. The Chair recognizes Councilman Henon.
Thank you, Mr. Chair. Commissioner, Deputy Commissioner, how are you how? I have a few questions. What is the process in ensuring the ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 268 integrity of the materials supplied for a bidder and contracts whether they are LBE or NBE or WBE, disadvantaged companies? Is there somebody in your office that vets and researchs and, you know, make sure that they qualify for that -- you know, for the designation?
The Procurement Department spends many, many hours and a lot time besides that on investigating the LBE applications we receive. All of the OEO applications will go all -- completely through the Office of Economic Opportunity.
Does your -- does the Office of Procurement or the -- or that individual, the inspection officers, do they check with -- cross check the reference with other departments within the city whether it be Labor and Standards, Revenue or the Controller's Office --