Just so the record is clear, Mr. Rafdal, it appears to me, as I look at where you are, that you have a binder probably 83 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 with some kind of a tab system, and you're going back and forth between the various issues; is that correct? There's no one document where you're just reading down the page on.
Just so I don't forget this question, you mentioned 20,000 person hours of work being done so far. What are these people doing?
Most of the work so far has been to demolish the old part of the Navy Yard that we will use in the future, to take down buildings. That's the very most of the 20,000 hours.
So this is the demolition prior to the construction, which part of the earlier discussion was with regard to 84 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 Keating and the buildup the Navy Yard. You have to demolish first and then you're going to build up; is that correct?
Of the 45 percent hours by minorities and disabled, can you say where they are? Are they all in labor, or do you have any in technician and professional and managerial classes, what we used to in the old days an EEO-1 spreadsheet? Are they all down at the bottom, or is there vertical integration throughout the company in the skills being hired? If, for instance, I asked you what percent of the officers and managers were minority and women, are you prepared to answer that question, what percent of the professional, what percent of the technicians, what percent of 85 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 laborers? Do you see that gradation that I'm asking?
Mm-hmm. I think that all of the questions you are asking for is going from -- is going in -- are presented in detail in our reports, and you can get the report. But it goes with the nature of the demolition. Most of the hours that are spent are related to workers. So that's the reason why it's mostly workers in this 45 percent as well. But we have it specified in detail in the report with the names and everything of the people that have been working there.
Thank you. Question 5: Has Kvaerner been able to determine its minority participation at its New Jersey facility? Answer: On November the 9th, we sent a letter to our sister company and we requested this 86 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 information from our New Jersey office, and a copy of this correspondence is available if you desire. However, we have not received the response yet from the New Jersey office, but we will do that. Another question: Does Kvaerner have a detailed plan outlining what it plans to do with respect to minority participation? And, A, when will the plan be implemented? And, B, who has the responsibility of implementing the plan? Our answer to this is the following: From the beginning, Kvaerner has attempted to supplement a plan of action with regard to minority and female participation. In the beginning, the plan did not work as well as I thought, as I would have liked. However, since our meeting with Council on October 27, 1998, we have made additional strides to reach out to minority participation goals. In our letter of October 26th, we outlined for the Council members the process of the communication we had established to ensure that minority contractors receive the information and in sufficient time to compete. 87 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 We further contacted each and every contractor who appeared at the hearing by letter to specifically direct his or her company on who to contact at Kvaerner to guarantee access to information that would allow them to compete. Both of these pieces, the letter to the Council and the letter to those contractors present at the hearing, are in my possession if any member of the panel wishes to see them. And when it comes to professional services, there was a question: What has Kvaerner done with respect to women and minorities in the area of professional services? And our answer to that is: Currently, Kvaerner has engaged the service of one of the minority law firms in the City of Philadelphia. And it also, through its PSDC component, engaged the services of a minority accounting firm. We have minorities providing services in architecture and design. We have invited minorities to bid for work in the areas of insurance and printing, and we are exploring the possibility of minority involvement in car leasing, pest control, travel 88 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 services, and maintenance.
Are those people on board now, or are you looking for them?
Part of them are on board and part of them we are looking for. Good-faith efforts, the question was: Has Kvaerner implemented a plan to demonstrate its good-faith efforts to include minorities and women? And our answer to that is: The GPUAC has been contracted to prepare periodic reports on Kvaerner's program in this area. We are prepared to mention some of our efforts specifically to date, but obviously, this is an ongoing project and will include other contractors and subcontractors as the project moves forward because we are in the very beginning. In regard to the UMBEA letter response, what is your response to that letter of November 10, 1988? I'm sorry, excuse me. The question is: What is Kvaerner currently doing to guarantee the further involvement of minorities and women in the future awarding of contracts? And our answer to that is: For the 89 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 moment, we have currently three minorities contracts under negotiations. We have finalized them. We have also recently corresponded Jim Roundtree of MBEC, asking him to identify minority and women prime contractors who could qualify to bid on two bid packages, the construction of two guard houses, and the construction of an administration building. We haven't identified these as areas that small contractors could be very competitive in, which would not in any way exclude them from bidding in the larger contracts as prime contractors or as subcontractors to the subcontractors. Another question: Will you follow up with the contractors who were present at the last hearing and who complained of their inability to get access to Kvaerner representatives? Our answer is: Yes, we have contracted each and every contractor who appeared at that hearing by way of correspondence, directing them as to who they should call specifically to get information. I think that's the questions that I 90 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 have prepared answers on, and I'm more than willing to try to answer any additional questions from the Council.
I'm trying to recall where we were. You were in the middle of questioning, then we had Councilwoman Miller, then we had Councilwoman Clark, 'cause I know you've got a question ton of questions. Councilwoman Miller, then Councilwoman Clark for another round.
Thank you. Mr. Rafdal, I need you to repeat because I didn't quite understand your comments relating to PHA and welfare to work. I didn't understand what you said. Have you offered to make some arrangements with PHA to get people from public housing engaged in some welfare-to-work activities at Kvaerner, or training rather?
We have just had initial discussions with them, so we will follow up, yeah.
Okay. And, you 91 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 know, I think what makes some of us pretty nervous is that -- when was the date of the first contract that was released from Kvaerner? Was it in the spring?
What is the date of the first contract that Kvaerner released?
We signed the first contract -- I can't remember it by exactly the date, but that was early May, with Pennsylvania Shipyard Engineering for the design and architectural work of the shipyard, and that included minority companies.
Okay. So, basically, you were alerted in September, by way of the communications from the Councilmembers and City Controller Jonathan Saidel, that there were problems with minority participation and minority firms getting information on bidding, etc.?
Yes, yes. First, my position in the company, among many things, is to 92 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 see that this agreement is followed up and that all the commitments that Kvaerner have done is followed up in a proper way. I was assured by -- I can't remember the date again, but we are talking about June, July -- that we had an appropriate structure to handle the minority issues. I was aware by late August, through comments in the newspaper, that we didn't follow up in the way that people thought we should do. So I took personal action on that to dig into detail and to set it up in a structure so that I'm convinced that Kvaerner would then reach the goals as good as possible.
Okay. So now you have a system that will alert you when things aren't going correctly. Is that because of the consultant sitting there to your left and minority business or Urban Coalition or Urban Affairs partnership? See, my concern is that if Keating was supposed to be involved with monitoring the goals and he didn't know it, you didn't know it, and if OHCD was already involved, through Hanford Jones, 93 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 and he was thrown off the yard when he raised the questions, I guess, back in July and August, and it took letters from the City Controller and letters from City Council people, and we called, of course, Bill Hankowsky to say, Hey, what's going on? I'm wondering now what preventive measures are in place? I know you talked about them, but sometimes we need things specific too. We need specific information about how we're using the term "monitor" or "good faith" or "measure." We need steps as to what is going to take place. What is going to be different in the future than it has been in the past?
I think that, first of all, all the information that there are within different City entities in Philadelphia and within the region as well are added up on the chart. 'Cause in the very, very beginning, when we are looking for suppliers on the construction side, we are asking MBEC, we are asking OHCD, we are asking PIDC, as well as PSDC, for information. Are there any minorities companies here in this region that can do this specific package that we're looking 94 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 for? So they are involved in the very early stage. And I think that the figures that we can present today, as I said, on the employment side, one of the goals that we have, the goals is to, throughout whole construction project, is to have 30 percent minority accumulated. As it is today, it is 45 percent. So in that part, we are ahead of the goals. On the other part of it, to set contracts, if we include the contracts, I have signed a letter of intent and other contracts that are very, very near to be signed, I think we are a bit above 100 -- someplace between 100 and 105 million U.S. dollars in contracts. And then approximately of them are signed or will be 18 signed up by minorities companies. 19 So we are well on our way, we are not 20 finished, and I will work hard to see that this is 21 fulfilled. 22
I have another 23 question. I think someone told me that there was a report that was submitted by Kvaerner, that minority participation report that gives numbers, 95 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 percentages and not the names, and your answer just a few minutes ago reminded me of that. If Kvaerner does have such a report, we would also like to know the names of the minority firms that have received the contracts and any that will be receiving them in the future.
It appears that there are copies of a report available. If I could get the sergeant-at-arms to pick it up the report and distribute it.
Okay, I yield my questioning right now to Councilwoman Clark.
Councilwoman, let me caution you, unless -- last time you yielded to Councilwoman Clark was about a half hour ago.
Only kidding. Councilwoman, you have any other questions 'cause I was going to --
I was going to let 96 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 you finish, then I want to go to Councilwoman Clark on her own round and then come back to Councilwoman Tasco.
I'll just ask one question right now and I'll come back later. But in the testimony of Mr. Benko, on , he mentions that PSDC has retained consultants in connection with all phases of the shipyard project. Would Keating and Price Waterhouse be two of those consultants?
Okay. So what other consultants are you looking for, what types of consultants and how many? And what's the process?
We're not looking for any consultants. We have initially indicated that we would hire consultants on the construction side to advise PSDC of the construction aspect and on the workforce development side. And that's it.
Okay. So that's 97 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 the end of the consultants, just the two. Okay, thank you.
Thank you. Mr. Chairman, I assume that I am now called on?
There is no 7 question that you are the next person, Councilwoman Clark.
Thank you. First, I want to say that I appreciate the answers that you gave, sir. In response to very serious questions, you have given us serious answers. And if you will now give them to us in writing so that we can pore over them, I believe that we have the makings of at least a rational discussion without anybody being "it" in this game. I need to know, at what level of performance will Kvaerner's management trigger an action because your minority participation was too low? And what is too low? And what will be the flag to you that you are falling below an acceptable range of minority, female, and disabled participation?
As I said, we are in the 98 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 middle of a process, and I think more than percent of the contract that we have signed, we have signed with minorities. And they are involved in the whole project. And we are trying to work this out as good as possible, together with MBEC and OHCD, to find companies that are able to do the outstanding contracts that we have to sign throughout the next couple of months. And to my opinion, with their experience, with their knowledge about the city and the region, if they can't find them, I can't find them.
If they can't find 16 companies that are able to sign contracts either 17 as prime contractors or subcontractors, then I 18 really would have difficulty to figure out how 19 Kvaerner, as a new kid in this town, can do it 20 better than them.
I agree with you. If they cannot find them, surely you cannot find them, because you are the new kid on the block, Kvaerner.
And that's the reason why 99 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 we brought them on board as -- to kind of -- to make common effort to reach the goals.
What sanctions are available to you as a chief officer when and if the company should fail to meet your reasonable expectations with respect to minority, female, and disabled participation? What sanctions are available?
We have the same text in our contracts with our prime contractors as we have with PSDC, and that is to use the best efforts on the equal basis to achieve the goals.
Yes, sir, but I'm asking worse-case, I'm asking about a situation where, in your estimation, best efforts have not been used and, therefore, we are substantially below reasonable expectations for participation rates, then what happens? What can you do to bring pressure on contractors to conform and comply?
First of all, we are having a separate meeting with all of the presidents for the suppliers that have a signed contract with us and explain to them thoroughly 100 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 that this is an issue that I am concerned about because I would like to see that this shipyard, both when it is constructed and later on, when it's in its operation, reflects the environment here in Philadelphia and in the region. Other than that, we have to follow them up on a contractual basis to verify that they are doing their best efforts to find minority companies. In part of their work that they are doing, it's most likely that they will succeed, succeed more; in part of their contracts, it's mostly likely that they won't succeed in the way that we hope. So it just has to be measured on an average for all of the suppliers as a total.
We are clearly at the part of the contract where finding minorities would be easier in the demolition, would you say?
No. I think the outstanding issues -- we have to sign up HVAC, electrical and all of that works. And I think that that should be most likely quite common to the demolition. But I'm not an expert on the local 101 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 industry here in Philadelphia, and that's the reason why I have asked MBEC and OHCD for help as well as hired Urban Coalition as my own advisor on this.
Would you ever see cancelling a contract as a sanction?
Would you ever see cancelling a contract as a show of your disapproval of their performance rate?
If we sign up a contract with a supplier, a minority issue is a part of the contract.
And if that supplier has told us that this will most likely happen and if they are showing no progress, no attitude, no 20 willingness to do that, yes, I would consider that.
But it would be your action of last resort, of course, because you would not want to interfere with the smooth flow of the work that you're doing. It's everybody's 102 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 last resort; nobody wants to cancel a contract, 'cause then you have to go back to ground zero and let the contracts all over again. But do you understand where we're coming from? Do you see how desperately we're looking to have you put up on the public record that you agree with us that this is a legitimate business goal of yours?
Yes, I understand where you're coming from. And I didn't give a thoroughly presentation of myself where I'm coming from either. I'm born out of a family where both my grandparents and parents are workers. I'm raised in a very small city in the west part of Norway, where 5,000 people lived, and Union Carbide was the only employer in that city. And both my parents and my grandparents went through strikes throughout the sixties to get in my country equal opportunity. And so I know what's going on here, and I fairly understand it. And that's the reason why I'm trying to involve and trying to reflect the City of Philadelphia in this region and what we 103 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 are doing in this city, down here at the shipyard.
I thank you. I yield back. And I appreciate the last part of your testimony, sir, which gives us some insight to you as a person as well as a businessman. And, Mr. Chairman, I appreciate your opportunity.
Sure. Thank you, Councilwoman Clark. Councilwoman Tasco.
I just have a couple more questions. You talked about using the Private Industry Council to utilize some of the individuals who will be moving from welfare to work. How do you plan to engage them in your hiring and recognizing the labor issue, the union issues on the job -- on the project?
I would kindly ask you to say the question once more and try to separate the issues 'cause we --
We have signed up single 104 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 union agreements with the metal trades, so all the workers that are entering into the shipyard will be a part of that union.
Well, that's my question. If you plan to hire employees through the Private Industry Council who are maybe people who are not necessarily -- I guess the question is, where do you plan to put them to work? And if most of the jobs down there at the shipyard are union jobs, how do you plan to make them a part of the workforce?
Councilwoman, I think, apparently, Bill Hankowsky has some information he would like to share. Let the record note that this may be one of the few times that Bill Hankowsky has willingly took the mike. (Laughter.)
Next week might be another story. But for today, we'll --
I'll be here next week. As you know, we have a busy Council schedule, so I'll be here very often this next month.
My name is Bill 105 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 Hankowsky, President of the Philadelphia Industrial Development Corporation. And I don't want to be Kvaerner's labor lawyer, but perhaps just for clarity, Councilwoman, I think I might be helpful. When the shipyard was closed, there was a union place called "The Metal Trades Council." Historically, it was a confederation of individual trades, so it had a sub unit, there was an electrical sub unit, there was pipe fitters, etc. The shipyard closed, those agreements don't exist, the federal government's no longer an employer. Kvaerner proactively approached the Metal Trades Council at the national level and said, We're prepared to -- and Harold can clearly correct me if I misstate this -- have a union shipyard, but we want a unique agreement. And so this is an agreement you will find nowhere else in the United States. So basically, there was no longer the separation by the 15 or 17 sub trades. It is, in effect, each employee will be was is called "cross-trained" and multi-skilled. And these 106 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 employees will be coming in through a process that's been established, Mr. Benko mentioned earlier, through the Private Industry Council, so there's actually an outreach to formerly-displaced shipyard workers who may not have employment, other people who are what are termed, under the job training act, "displaced," and we're also looking at the welfare to work. So that when these people are then trained through the training money that Mr. Benko mentioned and hired by Kvaerner, they, in effect, become union employees that way. Harold, is that a fair description?
Yeah, that's a fair description. And the union agreement that we had signed up with, that is an agreement for the 21st century modern production. And, in fact, 20, 20 leaders from Pennsylvania, they are on their way 21 today to our yard in Germany in order to see how 22 this is functioning in practice. 23
There's an 107 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 informational question that Councilwoman Clark wants to ask.
This is not what is known as -- and sometimes, you know, in construction, you call for employees and they come off the bench. This is not an off-the-bench agreement. So you don't have to be a preexisting union employee to be able to work at Kvaerner, but you would be a union employee once you've worked there under this agreement.
But do you have to be certifiable? See, we're talking about people who don't even have --
Councilwoman, you only have to be certifiable to work here. (Laughter.)
Do you have to be a trained electrician and carry an electrician's union card to come in to get the other cross- training or -- let me finish the question. Or can you be a person who has never worked but who is willing and able to be taught to be an electrician? Can you come in with nothing but the 108 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 desire and the physical ability?
It's all in place. You prefer to have -- the better they are, the most likelihood that they'll get the job. But the whole idea of this project is to hire people. Kvaerner is defining a certain level of skills and knowledge, but other than that, we are sending 200 of our employees to Germany for an extensive training program.
Did some of them go today? Some of them went today, didn't they?
Yes. And we have a program for 200 people, over one and a half years, going to Germany for training. We have a program at Philadelphia Shipyard College as well. But most of the training will be on-the-job training at the site throughout the next five years.
Okay. You're 109 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 right where I want to be, I want to talk about training. But I want to tell you that if you're going to be involved in welfare to work, you're going to be working with people who don't have those skills. So the people who are going to get the cross-training will be the laid-off ship workers or laid-off union skilled crafts persons. People who are welfare-to-work-eligible will not have those skills, or they wouldn't be unemployed, they wouldn't be on welfare. Do you see? So if you're going to put former welfare recipients to work in the naval shipyard in the skilled crafts, you're going to have to train them first so that they will then be eligible to be cross-trained in another and compatible skill. If you're an electrician, I can turn you into a plumber or into a sheet metal worker; but if you don't have any of those skills, how do I get my foot in? Those are the questions that we are going to have to answer if we are going to do the 110 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 welfare-to-work piece of it. And then I want to talk about --
Oh, then I yield back the rest of my time, but I didn't get the answer..
Why don't we finish the answer to that question, then we're going to come back to Councilwoman Tasco.
Okay. I'm not a hundred percent sure whether I catch your question.
The question was: If you have a person who is coming in through the welfare-to-work program, more than likely, they are not a former shipyard worker, more than likely 111 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 they are not a former union person. We're talking about a group of people who, in many cases, have very limited skills. You want to take your employees not only where shipyard workers used to be, which is expertise in one trade all broken up, but you want multi-talented, multi-tasked -- it's the new language -- people who can be cross-trained in a variety of disciplines. How do you take the person with virtually no skills coming out of a welfare-to-work program and give them an opportunity to work down at the shipyard? Is that essentially the question?
How does that happen and who work with them in between?
Before you answer, Harold, otherwise this is an illusory promise, I want to be very careful that you don't sound better than you are. If people who don't have the skills are told they could be cross-trained if -- that's the 112 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 Catch-22 that they find themselves in now, so please understand, if you're making an offer, you have to offer it to people who are in the situation that we've just described or else you offer them another opportunity, but it cannot be the same for a laid-off worker as it is for a welfare-to-work person because they come with different backgrounds and the same expectations.
I hope I understand your question right. It's in the nature of this project and that goes with the criteria for the funding that most of the people that will be employed are either former shipyard workers or have worked for the Navy. And we are committed to do that in the agreement. There will be some few slots as well for people that have less skills. But we are in the very, very beginning of that so, I cannot give you any clear statement as it is today, but --
Well, is it fair to say, Mr. Rafdal, that not everyone who works down at the shipyard for Kvaerner is going to build ships? Is that an accurate statement? 113 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
I hope that all of my employees will be helping me build the ships, but I --
Well, I understand that, but everybody's not driving rivets or carrying a hammer. I mean, somebody's got to, like, pay the bills, order equipment. You know, like I'm fairly known for, like, writing a whole bunch of letters. I might, you know, one day send you like a half dozen letters one day. I assume somebody's typing those letters or running around. So that's why I say that everyone working there is not going to be building ships. They may do things to support the people who are building ships. Otherwise, I think we're just trying to understand, if you have a totally unskilled person and you're going to take 'em down to the shipyard, and we're very well versed on what you plan to do with the workers to get them to the Kvaerner standard, but how do you take totally unskilled person to do that work? Or is it that maybe that person, the unskilled person, is going to be trained for something but they're not necessarily going to be 114 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 building ships?
Okay. Out of the plan, there's close to a thousand people, and I think 750 will work out in the production one way or another.
The rest are people working within the administration and engineering. And please be aware that compared to what the Navy did, they were self-sufficient and they did everything themselves. Approximately 70 percent of our activity would be out-sourced in one way or another to suppliers and subcontractors, some of them working on the site, some of them working outside the site.
So there is twice as much possibility for doing business for the supplier industry compared to what it is for us.
I mean, the limited information I have on your way of doing business as compared to the U.S. Navy which, I guess, is a whole 'nother, I mean, they would order a whole 115 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 bunch of equipment, then they'd have buildings where they'd store stuff. You follow a process, it's real time something -- I mean, you order something.
Real time, just in time, prime time something. You order the stuff as you need it, you're moving something down the conveyor that the materials are literally maybe coming in the door a couple hours ago and you're in the construction process. So if all the folks are not necessarily going to be building the ships, what is the plan, and is there a document to deal with the welfare-to-work component that we've talked about and what you anticipate doing with that category of employee? Is there a piece of material that we can get on that?
As long as we are in the very, very early beginning of that, I'm not going to give any statement because we have to sit down 116 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 with them, trying to figure out what the possibility is.
Where we can tell what we want and they can tell us what is the quality of this workforce. And then we maybe can see whether there's something to do.
Okay. So you're in the planning negotiation stage, right?
I need you to say something for the record to that question.
Okay. We just want to be clear that we know how this welfare-to-work program operates, and we want to make sure that it's not something you say. We believe you're sincere but to say to us so we'll feel good that you're going to hire welfare people, but we know all of the areas associated with that process. We just had a hearing from 10 to 1:30 about welfare to work. 117 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 Let's go to your prime suppliers. What will you require of your suppliers in terms of their minority participation since you say 70 percent of your work will be out-sourced? Will there be any commitment to require your suppliers to have a diverse workforce and subcontractors?
We had said in this master agreement that as well on the future operation of the shipyard, there is good-faith efforts to use minorities, minority companies, but there are no 12 certain goals there when it comes to percentage. But, as I said, it goes with the nature of this shipyard. It has to reflect its environment in this region to succeed. And this is not in order to help us achieve the goals for the minorities; this is to help us achieve the goals of the whole project to succeed. If I can't find companies and suppliers that are living close to the yard, in the future, we won't succeed, so we have to find it, so it's on our side as well, it's very, very important to involve companies from the region.
How do you define "good-faith effort"? If the contractor comes to 118 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 you and says, Well, I tried but I couldn't find anybody, what do you say, Okay, fine, you can have the contract? What parameters will you require them to employ to ensure that there was a good-faith effort?
The following answer on good-faith efforts (reading): Good-faith efforts, for us, that means to exhaust all avenues available to us such as MBEC, OHCD, DPUAC, the African-American Chamber of Commerce, and the Hispanic Chamber of Commerce and in obtaining qualified minorities contractors to fulfill our contract needs. And I need help from their side to get the companies and the names and so on that can either be a prime contractor or a sub to the sub. And, as Bob Benko mentioned earlier, we are working very thoroughly with the supply network Internet so that we can structure the information and the companies in a way to fill our needs, to find out all the companies, what kind of quality do they have, what kind of price level are the on, either to do business directly with us or 119 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 that they can do business with our prime contractors.
The United Minority Enterprise Association is the credible association of minority contractors, and they were the ones who brought the issue before us and to the Controller. Can they be a part of the working committee that you're organizing?
We have selected throughout the summer City entities, MBEC and OHCD, and I feel that the channel that we have established is good enough for the purpose we are doing. And I would please ask them to go through those channels and to get all the information they need on an equal basis. 'Cause to my understanding, there is other entities as well representing different minority groups, either in the City or in the region. So I would kindly ask them to work throughout the channel that we have established.
The letter you sent in, I think, October, you said you were working with the MBEC program, Jim Roundtree, and with the Greater Philadelphia Urban Affairs 120 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 Coalition.
How do you interact with them? How will Kvaerner interact with these two entities? Will there be somebody on site every day to come in and check your records? Just what is the process? Do you all have a round-table discussion once a month to evaluate what's going on with your company?
First of all, the Urban Coalition, they are hired and paid by Kvaerner, so they are working directly on behalf of us.
No, they don't have an office on-site, but they are meeting on a regular basis for the last two, three months on a weekly basis. They are a weekly setup with OHCD and MBEC, together with my people on the construction side as well. They meet at least weekly.
The chart that we saw at the hearing on the 27th, the flow chart of information, had the minority participation pretty 121 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 much far down in the process. If they are now hired to give some assurance to monitor the minority participation, at what point are they involved in the process? Certainly, there is some -- you have some idea of what you're going to bid for projects that are coming up for bid, and you don't wait until the last minute to have them review the project. At what point earlier in the process are they involved? Suppose six months from now, three months from now, you're going to do "Project X," at what point do you bring in the Urban Coalition and Jim Roundtree in the process?
We have a schedule for what we want to do from this summer on the construction throughout the summer and the year 2,000, and we know exactly what kind of packages we have to do at a certain time. So when we are close to the different packages, we sit down and set up this vendor selection material, and we pick out information. We ask MBEC, we ask PIDC, we ask OHCD as well as the Urban Coalition to come up with companies that 122 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 most likely can do work on these certain packages. And they are in the very, very beginning on each packages.
I have one final question. You talked about getting information to the contractors. What have you done about -- this is sort of like ending my questions on a lighter note. But what has been done with the secretary who answered the phone all those months and did not give the messages to the appropriate person? And if a contractor contacts Kvaerner now, what is the process for getting their phone call returned?
The process is, and has been all the time, that we are asking people to send information in written. We have been either indirectly or directly called -- I think there are someplace between a 1,000 and 1500 companies that have sent information to us. There have been approximately someplace between 1,000 and 2,000 123 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 people asking for a job and through -- by early summer, we were people down at the yard. And 4 now today, we are 60 people, 40 of them are local. 5 I mean that we have an appropriate 6 setup for taking care of calls and so on. But 7 please bear in mind that if there has been some 8 companies or some people that have felt that they 9 have been treated in an inappropriate way, I think 10 that we try as good as we can, and we ask everyone 11 that's called us up to please send us some written 12 information so that we can structure it in a way 13 internally so that the right people, they can take 14 care of it. 15
Do you have a data base that will allow you to categorize the various contractors? You wouldn't have to send a concrete or a contractor information if you're looking for a contractor to do something else. I mean, if you categorize these on a data base, what normally happens on projects, RFPs or bids are sent out to all of the contractors in that category, and then they are asked to respond. And that is a way for getting information out to the various contractors on the projects that are 124 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 coming up for bid. Do you have the data base to manage that kind of information?
Yes. In my opinion, I thought that it was the -- I maybe misunderstand but when we are coming close to a part of the package of the project, as we are going to set out, we ask for all of the information from MBEC OHCD, Urban Coalition, PSDC, please give us information about companies that most likely can be a part of this package, whether they are most likely to be a prime or a sub to the sub.
I guess you weren't here at the first hearing and so the reason we're here is because we got complaints that contractors were not getting information from Kvaerner. They made telephone calls, calls were not answered, no information was given to them. All we want to do is to make sure that if an inquiry is made, that some communication is sent to the person making the call. I mean, it was very, very painful to sit here and hear business person after business person state that they couldn't get past the secretary. 125 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
That's the reason why we sent all of them information, who to call, the phone number, and so on.
Thank you, Councilwoman. I think what I'd like to do at this point is get Mr. Roundtree, Mr. Kromer and Mr. Solomon up. We may have a few questions for them, so now we'll ask Mr. Rafdal, Mr. White, and Mr. Benko to just be excused for a few seconds because we may have some follow-up questions for them based on that testimony. Can you stick around for a little bit? (Messrs. Roundtree, Kromer, and Solomon come forward.)
Gentlemen, as the veterans that you are, you know the basic drill. Identify yourselves for the record.
Thank you very much. I'm James A. Roundtree, Jr. I am Deputy Finance Director and Executive Director of the Minority Business Enterprise Council (MBEC). MBEC is the agency charged with the 126 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 task of administering the City of Philadelphia's affirmative action and anti-discrimination purchasing policies under Executive Order 1-93, and formerly under Chapter 17-500, of the Philadelphia Code. It became the goal of the City government that the City taxpayers' dollars are spent with all viable businesses in and around the Delaware Valley. Thank you very much for allowing me to testify on Resolution 980374, pertaining to monitoring minority, women, and disabled/ disadvantaged business participation on the Kvaerner project for rehabilitation of the naval shipyard. We have agreed to work in conjunction Office of Housing and Community Development and the Greater Philadelphia Urban Affairs Coalition on this project. To date, Kvaerner has been supplied with various minority, women, and disabled/disadvantaged businesses that are certified by the City of Philadelphia and that are able to perform on the project. Although these three different agencies are involved for various reasons, we are only using only one certification 127 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 mechanism, that is the certification of the Minority Business Enterprises Council. We have organized our agencies to perform separate functions, but we are aligned for a seamless monitoring process to benefit the City's minority, women, and disabled communities. The GPUAC will be responsible for reporting the mechanics of the day-to-day activity. OHCD will have responsibility for Section 3 compliance and reporting associated with those regulations. The MBEC role is to assure that minority, women, and disabled businesses are being submitted for consideration, are certified by our agency, and are bona fide minority, women, and disabled businesses who are performing commercially acceptable functions. I would like to now defer to each agency director to further explain their agency's specific role. And after that, I will be available for questions on my testimony.
And, Mr. Roundtree, if you could make that statement available to us, we'd be glad to make a copy. I know MBEC is trying to watch the budget. God forbid you bring 128 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 a dozen copies of your testimony over here.
If you will excuse two typos in the beginning, I will gladly furnish this one.
Mr. Roundtree, leave the testimony with typos in it. Mr. Kromer, please identify yourself for the record.
Good afternoon, Mr. Chairman and members of the committee. My name is John Kromer. I'm Director of the City of Philadelphia Office of Housing and Community Development. I'm very pleased that Community Development Block Grant funding in the form of a Section 108 financing was made available to support the shipyard development. S. Department of Housing and Urban Development to comply with affirmative action with respect to the hiring and the contracting with minority business enterprises, 129 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 women-owned business enterprises and disabled business enterprises. In addition, there's a HUD requirement, which I believe you're familiar with, known as Section 3, which requires that a developer or an entity receiving any funding through the HUD program do as much as possible to promote local employment. And "local" means the City of Philadelphia. Over and above that, there is a neighborhood benefit strategy in the form of an executive order authorized by Mayor Rendell in 1995 which says to specifically look at the neighborhood first in terms of looking for employment and purchasing and contracting opportunities. Every year I come to the Council of the City of Philadelphia and request authorization of the community development block grant plan for that year and that authorization includes, in effect, a directive from Council to comply with those requirements. So these are provisions that we take very seriously. Let me just briefly mention the resources that we have available and how we go 130 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 about complying with those requirements. We have a unit in the Office of Housing and Community Development that has responsibility for implementation. Kevin Brooks is the Director of our Affirmative Action Unit. He is here today. The person responsible on a day-to-day basis for this particular venture is Handford Jones. And the kinds of interaction that we have on ventures of this type involves having staff meet with the people responsible, make known the requirements, assist in interpreting the requirements as they apply to a particular venture. We have a very extensive data base of employees, contractors, and vendors who have worked on all of the construction-related and other activities what have been funded through the Community Development Block program in the past, and we make that information available to participants. From the perspective of the HUD regulations in terms of who is it that's responsible, who do you look to for this responsibility, the developer in this instance is 131 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 PSDC. And so the responsibility associated with the HUD mandate goes to PSDC. As a practical matter, however, as you heard this afternoon and previously, there are a lot of people involved in this thing. Kvaerner certainly, although not the last, the ultimate possessors of the ultimate responsibility for the HUD regulations is the most active in terms of implementing. And so we have a very important relationship to fulfill with Kvaerner. And characteristically in a project of this size and this complexity -- and it is complex -- sorting out the regulations and determining who is responsible for what takes some time, and there are adjustments that have to be made. We work closely with MBEC but our responsibility is a different one. It goes to the federal HUD regulations and is slightly different from MBEC's, but we work together and we get things done. The primary need that we have had and that we really need going forward is the need to meet with the people who are doing the hiring, who are doing the advertising, who are doing the procurement, who are doing the contracting, and 132 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 make sure that they're aware of their responsibilities, which we are passing onto them, with the funding.
We need to make sure that our representatives are at the prebid meetings so that our representatives can explain those requirements and answer any questions which may come up at the meetings. And we need to make sure that bid documents are very specific with respect to our requirements and contain a language that we need to see in those documents. We are very pleased with the engagement of the Greater Philadelphia Urban Affairs Coalition to handle the reporting piece of this. That will really be invaluable, and the Coalition has been very helpful in this regard in the past. But our responsibility is different from simply reporting and passing on the results. We need to make sure that the goals are met and that the results are achieved. And let me say that Harold Rafdal, on two occasions earlier this fall, came to my office and insisted on meeting with me and my staff on two separate occasions, and said, What can we do to help comply with the requirements of your 133 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 program, how can we work effectively with your staff? And I really appreciate that. No 5 business owner has ever done that in my tenure in the past nearly seven years. So I felt that this was some indication that Mr. Rafdal was certainly taking these requirements seriously. We feel that the process, although we've had some problems initially, this process is moving reasonably well. But the most important need for us, as I said earlier, is for everyone at all levels to be aware that they need to work with us, have us at the prebid meetings, incorporate our language into their documents, and work with us throughout to make sure that these goals are achieved. Thank you.
One quick question, Mr. Kromer. One, I'm assuming that your testimony was not necessarily written, that you're just an excellent witness, and you did all of that off the top of your head; is that correct?
I have no written testimony today, no. 134 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
All right. You are a good witness. Secondly, when you say that you want to make sure that everyone knows about the particulars, are you talking about the contractors who want to get work, or are we talking about the contractors who have work to give?
I mean the latter -- anyone who has a hand in bidding or procuring or awarding, whether it be the project management consultant or the contractor and so on. Everyone needs to be working with us to ensure that that happens.
And is it your testimony that there may have been some problems in getting that communication as a part of possibly just the normal bumps along the road of getting something up and running? Or were there some others problems?
No. I think there were some communication coordination problems early on. I don't think that they were the result of anyone's intent to circumvent the process, but I think part of it is conveying the information and 135 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 getting t to the right people. And I think we're there now.
Good afternoon, members of City Council. My name is Charles Solomon. I'm the Director of Economic Development of the Greater Urban Affairs Coalition. The Coalition is under contract with Kvaerner to basically facilitate and monitor the participation of MBE firms, DBE firms, and WBE firms on the Kvaerner construction aspect. We are currently working with Mr. Roundtree's office, Kevin Brooks's office, and we've formed a team of three individuals where we attend the prebid conferences. We have provided what we call a national listing, if you will, of certified MBE, WBE, and DBE firms to Kvaerner. We will follow that up on a per-package basis with additional listings of firms. Basically how that process works, a list is generated by Jim's office and by Mr. Handford Jones and Kevin's office. We review the list to make sure that the addresses are current, 136 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 considering the nature of small businesses, frequently telephone number and addresses and contact persons will change. We do a final check to make sure that is all correct and we forward that list on to Kvaerner. This is part of an effort to include or assure that the MBEs and the WBEs and DBE firms are, in fact, contacted. What I wanted to testify today on is the reporting process, and we have provided you with a copy of our report. And I think, if time allows, I'd like to walk through that with you.
Are you talking about the report identified as the "Greater Philadelphia First Coalition Kvaerner Philadelphia Shipyard Project Monthly Report of October 1998"?
I'd like to direct your attention into the report at Section A, .
That report is what's called a "Project Summary," and this is a report that we will be providing on a monthly basis. It 137 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 speaks to the contracts --
When you say you're going to be providing this report on a monthly basis, you're providing it to who?
The report will go to Kvaerner, to OHCD, to MBEC and to City Council, if you so desire.
One, I could pretty much assure you that the Council is going to desire to get a copy of this report so you can increase your mailing list by 17. Two, who do you send it to at Kvaerner?
Oh, they're my good friends from the last hearing, I know them. Okay. And what about PSDC?
We do not send reports to PSDC at this point. The assumption is that it would go from Kvaerner to PSDC. We have not had much interaction with PSDC. 138 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
Well, we've not been not directed. We're contracted with Kvaerner; if they direct us to send a report to them, we will.
Okay. I'd just like to suggest to you for this record and based on discussions that we've had, if you would go back and have some discussion with your client about how reports are going to go between either you and your client Kvaerner and their client, or whether complete the loop and make sure, for your purposes, that there is direct communication between yourselves and PSDC.
And then you'll be able to let us know what comes out of those discussions, right?
Okay, please proceed. 139 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
Okay. Directing your attention to of the report, the first area has to do with contracts, and the first item is total awards to date. That is a capture of contracts executed to date. There may be other contracts and negotiations or different stages, but this number represents contracts executed as of this report.