They go through -- oh, no. They go through to the Revenue Department. They can -- we actually can't approve them until we have proof that their taxes are paid up to date and that the BPL is in place.
The system won't even allow us to approve it until that's been done.
Okay. So what if you find somebody who is disingenuous on the information that they provide, do the -- the next step, are they fined, penalized or are they disbarred? Is there a --
It's not a problem with the contract if they ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 270 were --
Right. We'll send -- if we have any doubts at all, before we even approve them the first time, we'll send our inspector out to look at their location. We find people that put their garages in there as a location, mother-in-law's house, et cetera. Well, they don't get it. But initially, that probably wasn't done as well as it should have been, and it's done much better now. And we caught people that received contract because of it, and about two or three of them have been -- the Inspector General then starts to investigate but the Inspector General will investigate if they find if somebody has been awarded a contract. The penalty is 10 percent of the value of the contract, so it's kind not -- what I'll do is, if I just don't like the looks of a -- the bidder's application or something I've seen, maybe something in some ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 271 report from another vendor another contracting ratting somebody out, I'll send my guy out, take a picture, bring it back. And I have -- I have actually thrown out six, seven -- no, six people off of the program after they've been in it for a couple of years because they didn't qualify, but they haven't don't anything overly illegal except to give us false information because they didn't receive any contracts. So that it's -- it's a question of the IT --
If they're providing false information on -- on a contract, I'm sure they're providing --
-- false information in other areas of their business here in the city.
I agree with what you're saying, but I can't do much with that. The Inspector General ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 272 is the only one who will do -- to go after someone who has a contract. As I said, there's no penalty built into the legislation except for percent 5 of the awarded contract. 6
And how 7 many contracts do you -- on a normal 8 -- right now, how many contracts are 9 you -- do you have out on the street 10 or participate in this upcoming FY13?
How many -- how many contracts will we have? We'll probably have about -- hold on one second. Let me see the notes.
Could you break them down by classification, Public Works?
That's fine. If you could break it down and provide it to the Chair, we would appreciate it.
Okay. Sure. For the record, for service, supplies and equipment, there was 151 bids, that was in FY11, and 192 con -- 93 contract awards resulted from that. What happens there is that you could have a bid, but you could have multiple contractors because they may take a portion of the -- of the bid. So that's for service supplies and equipment. We anticipate they'll be pretty similar. Historically, it ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 274 kind of follows that. For capital programs, there were 126 bids which resulted in 126 contracts.
-- is with an office, you know, which could use a few more people as I heard, right? You have some positions that aren't filled?
Do you have all the resources to do the follow-up on some of the subcontractors or some of the partners that we have with that amount of contracts that are on the table right now?
OEO subs, LBE subs 1099's. ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 275
LBE is not a sub. LBE is a prime. As far as -- I mean, there is in the legislation the ability to get a contract using an LBE as a stub, but in the eight years that I've been there I don't think it's ever happened, but it could -- it could happen, but it doesn't right now. All LBE awards have been to a prime, used just as a prime, and anything but the OEO -- OEO or if someone makes a complaint, it could certainly go to an IG or the Controller's office, things like that.
But you do coordinate with the Revenue Department when subcontractors are using 1099's for some of there --
We don't -- we don't pay the subcontractor, only the prime pays the subcontractor.
I understand. ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 276 Is there any follow-up to -- from your office to ensure that the City's taxes and requirements are being met?
We don't handle that. We don't pay any invoice or any billing, any payments.
We can push the contract and make sure the requirements are met, and then it's out the door so to speak?
And it's the departments that have to manage the contract or Revenue would manage the revenue, and OEO would manage the OEO and so on.
And you do that on -- with every department for the City of Philadelphia?
They would be ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 277 doing that on -- that's their responsibility.
Maybe I'm not answering your question properly, but I'm trying.
I understand. If you want me to spend with you afterwards, whatever you need.
Here's what we can do. What I'd like you to do is provide a flowchart --
-- from request to the Department which shows a process chart. It goes -- the requisition goes to your office, what you do within that time frame, and then once award happens, how it goes back to the department and then ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 278 request for payment are possessed through the Treasurer and Revenue departments and, like, I think that would be instructive particularly for the new members so that when constituents call them and say, hey, my check isn't being paid by Procurement, they actually know it might be in the treasurer's office. There's an schematic that can be produced really easily.
As I said, it doesn't include the billing process because we don't handle billing in any way, shape or form.
What I would like to do is have the Revenue Department and/or treasurer continue that process.
What ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 279 would be helpful is from requisition to actual --
Payment. And so when breakdowns in the system happen, as they sometimes do, we can track them a bit better from our constituent side.
If anyone ever want to con -- if anyone wants to contact our office to help you with that, we can do that as well. We will try. We certainly don't handle it, but we can certainly call the right person who might.
OEO, so I know. So it is difficult because a lot of times people don't know exactly where in the system it is. So I appreciate the offer, but if you do it in a chart form everyone knows it. ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 280
All right. And if a vendor does calls us, we don't just hang up on them we just sit there and we try and figure why he's not getting paid.
Thank you so much, Mr. Henon. Council -- Councilman, are you done?
-- Commissioner and Deputy Commissioner. You testified that the Department's electronic purchase order imaging system is now operational and ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 281 has resulted in a, excuse me, reduction in paper cost increased efficiency by allowing for the reallocation of employee work hours. Before getting to the details of the savings, could you please describe for us how the imaging system works.
Sure. The way that the imaging system works, Councilman, is that if a department has a purchase order they are now able to go onto the system. They have log-ins ins and things of that sort, and they can actually go into that purchase order and bring up the image. And at that point they can send it electronically wherever they need. They can store it electronically, things of that sort.
Logging in and bringing it up on the -- ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 282
I don't believe so. Trevor, can you -- I'm going to have our operations manager jump in a bit.
I hate to make you say your name for the record again but --
Good afternoon. Trevor Day, Procurement Operations Manager. The -- it's an image of a piece of paper, but it's not scanned by a manual process. It's basically taken from our main frame financial system and creating an image. OIT created this ad -- the software that ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 283 we took advantage of, and so it automatically becomes an image in the system that departments can access.
So it's a purchase order that goes from the City of Philadelphia to a vendor --
-- for a contract -- for which we have a contractual right whether through it's a state contract or through a City contract we've led with water, paper or whatever. So it's actually information that have been entered in fields --
-- that have -- are -- then are placed in the appropriate place in an image?
It's taken from our legacy procurement and financial system and pushed to this imaging system.
So that ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 284 we are able to send to third parties an electronic document as opposed to anything on paper?
Okay. So how -- how does this differ from the prior paper process?
The prior paper process, we had to distribute up the nine -- nine copies? I think, it was nine copies to nine different locations, the Controller's office, the finance department, the vendor, the department and so on, all via either snail mail or interoffice mail.
Now there is no paper, and people are putting information into a -- computer systems and automatically that information is being shared among all the departments via this purchase order imaging system?
This is phase one, so currently we went from nine copies ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 285 down to two printed copies. So we currently do not have a database of vendors that we can automatically e-mail the PO, although we do e-mail to the top volume -- use vendors that have the highest volume of PO's is the process that we've implemented but the rest of them still do get --
Did hear you -- just for clarification, did I hear you say that you only send the PO's to a select few?
They still get a paper copy because we do not have a current database that we can push the PO's to.
Does that give the electronic version -- I'm sorry to interrupt, Councilman -- an advantage over the paper snail mail ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 286 vote?
If I know about a procurement opportunity two days to possibly three days before the others, does that give me an advantage?
These are purchase orders we're dealing with. The awards have already been made.
Thank you, Mr. Chair. An important clarification: So explain to me how the current process differs from the previous process in terms of the number of personal required to perform the tasks in each department.
We've completely eliminated distribution within the ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 287 City of Philadelphia by paper so that the operating departments no longer get copies.
So what specific steps were eliminated from the old process?
What else? What did the other departments with the piece paper once they got it?
They can now -- now if they want because they can send it to the vendor immediately.
What did ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 288 they do though, there were records clerks that had the piece of paper they had to keep track of?
If they had their own computer system, they had to enter it on their databases. All of that has been avoided through this process?
So what's the overall city-wide savings as a result of going through electronic procurement?
I don't think we have an estimate for the overall city-wide savings.
Within the Procurement Department it's $8500 a year, and then the reallocation of -- ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 289 of staff time.
They can be responsible for other functions such as responding to inquiries. There may be other clerical functions that they need to pay -- you know, we need attention to and things like that.
So instead of hiring people to perform those functions, people who were doing this process are doing those other functions?
So shouldn't you include the fact that you don't have to hire other people in your savings?
We have considered that, Councilman, but we were being -- we were erring on the side of caution when it came to ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 290 putting a dollar amount to that. But you know, we -- we certainly are saving a -- some salary money because of this imaging system.
How many FTE's are not necessary as a consequence of putting this into place?
I would say a portion of one quite frankly. It's don't think it's a full FTE.
I'm sorry. This machine stopped working for a second. If I may --
Our staff has been reduced over the last four years from about 66 people down to 44 people so -- and we've been reorganizing a lot of people and people that -- like, ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 291 for instance, we don't have a person in charge of the mail room anymore. Some of the people who are doing some of this work, that is now something they're doing. One was doing it on Monday, one of them was doing it on Tuesday, and so on. So there's a whole lot of reorganization going on, and it's been a lot easier had -- when they don't have to be stuffing envelopes. That's -- that's the point I think that Mary is trying to make.
But, as you know, I think part of the Freshmen 15 was going to electronic procurement, not just imaging of documents. It's supposed -- it saves cities like New York and private companies between 75 and $120 per transaction. It -- how close are we to ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 292 that idea?
We have been working, of course, closely with the Office of Innovation and Technology, and at this point we have -- there was a priority list that was vetted through that office and other of the -- and other parts of the executive team. We are part of, I believe, that prioritization list. We're part of the ten. So we're hoping that in the next -- the very near future that we will start a full electronic procurement, not even evaluation, but start to a purchase and maybe an implementation; however, we do have to go -- we're driven by the office of -- the OIT, the Office Innovation and Technology.
OIT gave a presentation to Council in which they determined that -- for they showed us that in order for people to ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 293 be part of the ten or be prioritized, part of the analysis and scoring included a return on investment --
-- or annual saving, et cetera, that could be produced as a result of implementing new technology.
I believe that they already had that information based off of years of working with them before the prioritization project to a look at how -- how this would result in savings for the Procurement Department. A lot of the savings will also be customer service driven, but there will be hard savings.
Well, it increased -- increased customer service people not performing tasks within the bureaucracy but perform ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 294 customer centered tasks is the -- is tremendous in terms of value even if we keep the same number of employees because we're serving citizens better.
But what you're saying is, within your department, nothing was provided to OIT at all as part of this process of prioritizing you that talks about any kind of efficiencies with respect to that, whether it's cost avoided, the ability to provide additional service, et cetera.
Right. I would have to look at that research, but we've been working on this for many years before the prioritization project and it was --
Okay. So -- so -- ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 295
Last year you testified the Department would implement an electronic bid ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 296 announcement system and that would eventually allow the City to do all of its communication with vendors electronicly. What's the status of this project?
At this time, the electronic bidding notification process is in a phase two of the Philla dot Gov project. That's our website that's being upgraded. There needs to be a vendor portal for that to be implemented and that has been reprioritized to phase two. So I'm hoping that early in the new fiscal year they would start working on that.
It was designed and -- the testimony last year was that it was designed. Has it been redesigned?
I don't know. I ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 297 will -- we can provide them to the Chair, but one of them will just be the fact we're -- you know, our vendors can communicate with us electronically now instead of filling out applications and forms, that they had to fill out paper at this time and send it in so.
What happens to the paper that gets filled out and sent to the City today?
It is placed into a database probably by one of our staff members.
So what are the -- don't the saving in the City involve the ability to not have those positions or to reallocate -- ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 298
We anticipate that if we have a full electronic procurement system we will be able to reallocate a lot of our assignments.
How many people -- how many FTE's would be reallocated?
Did you ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 299 do an analysis to -- with respect to that that you turned over to OIT?
Not -- not particularly with respect to FTE's. We would probably have to work with an implementation team that could be able to give us that kind of information.
So you're designing a process without knowing how you're going to rearrange your internal workforce in advance?
No, sir. We wouldn't -- we wouldn't do that. I mean, we're going -- we're starting a -- we put an RFP out which we had our requirements. We've done a lot of research working with different municipalities and organizations to go find out how they do procurement and how electronic procurement has benefited their organizations.
But don't have to know how to change your internal -- know what your existing ELECTRONIC REPORTING STENOGRAPHIC AFFILIATES 300 internal workflow processes are and what you want them to be in the future in order to do the RFP in the --
-- absolutely have that information. And if that's the information you're looking for, we can get that that to you.
Please provide that the Chair. Thank you, Mr. Chairman.
You Councilman. The Chair now recognizes Councilwoman Brown.