I understand. From what time period up through October of '98?
Well, this report was developed last week, so this information for contracts executed is as of last week.
I understand. What is the starting time period of this --
This is from the beginning of the project. We came on board in August so we are kind of capturing information historically at this point.
So your testimony is that a little over $60 million in contracts 140 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 have been let from August of '98 up through sometime in October of '98. Is that your --
But you're saying, by adding the phraseology "awarded," that means that there are other contracts that are out there in the pipeline or in the bid process, that are at some stage of going to being in the category of awarded.
Okay. Now, at the last hearing, on October 27th, I thought we had received information or testimony by some individual indicating that there were upwards of $80 million in contracts that have been awarded.
Well, that's not my understanding. I think there's one contract that would have been included that is not an awarded 141 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 contract, and that's a contract around roughly $19 million with a firm, Agat, that's doing the pilings. From what I've been told by Kvaerner, that contract has not been executed or awarded at this point.
Take me back to that. You've got a $19 million contract. I assume there's been a bid opening and people have responded. And all you're saying is that the contract is not executed.
Okay. And do you know what the minority component is for that contract? 142 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
Okay, all right. Maybe it's possible that people are aware of the $60 million and they're possibly adding the in 7 as a contract that's at least been bid, although 8 possibly not awarded. That gets you the 79 9 million, and that may be the 80 million that 10 people are talking about. 11
Okay. Who are the 13 minority companies associated with Agat? 14
I do not know at this 17 point. We have not received documentation of that 18 so I'm not certain. 19 What we have received are some general percentages at this point. So that information, we haven't been able to confirm, at least preliminarily, so we --
All right, let me try to understand the process. You know that I'm not anywhere near an expert as the three of you 143 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 are at you table.
A bid package gets put together, people respond to the bid. I assume that as a part of their response, they have to identify what minority or female or disadvantaged businesses they plan to utilize in the fulfillment of the contract; is that correct?
At this point, what's identified at bid date is the participation they hope to achieve, they are planning to achieve in terms of a percentage of the overall dollar amount of their bid.
All right. So in this particular case, let's forget about the company for a second. It's a $19 million, I want to bid on the work, all I have to tell you up to bid point is that I plan to try to do 35 percent of my work on this $19 million contract with minority firms, but I don't have to tell you who they are.
At this point, no, Kvaerner is not informed at the bid date of the firms specifically. 144 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
All right, okay. Then I win, then what do I have to do?
At that point, we would need you to start providing us some information. We would request information from the contractor as to who is going to use and what percentage and what type of work they're going to do to assure that they were certified.
Again, excuse me for asking such elementary questions, but is there a reason why the prospective bidder doesn't have to identify who they would plan to do this work with as a part of the bid package versus just talking about percentages, and then if I win, I go and run around and try to get some folks to fulfill the requirement?
What I'm sharing with you is the Kvaerner process as we've been instructed as to what will be the bidding process.
I'm not sure. But, again, we interact with Mr. Thompson and with Mr. Ryan. 145 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
So the process was created by parties unknown, and at the point that you stepped in, someone explained to you one day, This is the process.
Well, yes. I don't know, you know, who created it. But, again, we were informed --
You don't have to apologize. You know, it's just -- it is what it is.
Mr. Roundtree, just for a second tell me a little bit about the City process. Do you have to say who you're going to do business with when you're doing our work?
Okay. You know, I had this notion in my mind that you had to fill out on a sheet who you plan to actually do the business with at the time that you bid on the work, but then I thought maybe I had confused myself.
One of the processes is, both of the -- all three entities have some 146 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 resources to the process. And during the --
We have -- from this point on, we've been receiving the documents. We've received the schedule of all the bid packages that will be let. Our team has developed a listing. We've gone out to the current bid packages, solicited or at least identified minority and women businesses that could participate, contacted them about the activity. And then as we are made aware of information -- i.e., the bidders list or firms who picked up the bid packages -- we forward that information to the minority and women business vendors. So we try and get them involved at the early part of it or at the early stage. And that's what this process had not allowed to us explain to you.
Okay. And I'm 147 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 sorry, I may have missed the last part of what you said. But I guess I'm still trying to understand why the process or the system was created the way it is in this particular project versus the way we do it on the City side. Is there some advantage or disadvantage to writing down on the sheet who you plan to do the business with up front?
No. It's basically preference. In a lot of private activities, they reserve the right to hold the minority of women business listing until they negotiate a contract, but it's not done on public work. Similar because in past practices, that's the opportunity that the prime bidders have used to kind of shop the bid around, so government agencies have required them to name at the time of the bid.
Right, yeah. I mean, it would just seem to me that, from a leverage standpoint or just, you know, the normal life process, I mean, if I have been awarded the bid, I'm in a slightly better position to 148 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 negotiate with other people or dictate certain things to other people or kind of almost do whatever I want to do in that situation versus if I have to kind of partner with you or walk in the door with you and that, you know, your legitimate presence and involvement and participation is a live factor in whether or not I get the work, I might be more inclined to deal with you at a different level versus I just want something, you can participate, you cannot participate, I really don't care, I could do you, I could do the other one, I could do somebody else, and take it or leave it. I mean, is that like how it works sometimes?
Not quite, not quite. In an over-simplistic manner, it has both pluses and minuses, as you explained. We, as the City, would prefer the latter, that you came in with your minority, women, and disabled name, tell us the dollar amount and so forth and so on. But private industry has also found it to their advantage because they still hold the 149 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 contract. They still retain the right to determine whether or not you actually get the contract versus the (unintelligible). I mean, you're the low bidder, but you may not be (unintelligible) responsive if you don't meet those criterias. Private industry has used that as their leverage to say, Okay, first we just want to know that you will do this. And then after we get to the part that, you know, we've looked at it, we've reviewed your numbers, crossed your T's, now we're about ready to dot your I's, so where's this person to do that?
Well, I understand that. I mean, the only difficulty I guess I'm having here is that when you talk about what the government does versus what private industry does, this is a situation where the government and private industry are involved together. I mean, the private industry is doing the business with the government's money, right?
I think I'm not the person to answer that question for you. I can say that -- 150 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
You wouldn't be sitting here if the government's money wasn't involved, right?
I mean, you must have had something better to do at 2 o'clock this afternoon than to be sitting here with us till 20 till 5.
Again, going back to your elementary question, your rudimentary question about who drew up the language, we're only manifested after it's been done.
We're trying to make sure that whatever the language is, it's palatable for all concerned and to make sure that minority and women and disabled businesses get a piece of this activity.
Gotcha. Okay, Mr. Solomon, let me go to your 151 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 --
Yes, a question from the Councilwoman, a follow-up question.
Mr. Nutter, you're too young to remember this but some of the older guys will remember Dinah Washington. Dinah Washington said, "Whatever it is, if you're going to sell it, don't give it away." (Laughter.)
And if minority participation is the lever that you're using to get minority involvement, how are you going to get it if the contract's already let? Then the person only gets it if he's a good guy.
No, no, no, it's let but it's not awarded. And I shouldn't say -- the term of "letting," and I'm on both sides of that issue.
Okay. 152 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
But the term of "let," it's there, they're analyzing whether or not the firm is low, okay. If, in fact, they are considered low, then the next item is to determine whether or not they're, in our term "responsive." And adding the responsiveness is who the is who the minority or women businesses are and if they're providing with us 'cause that's going to be another issue that we deal with, if they're going to be providing what is considered a commercially acceptable function. I mean, if they're doing something that's --
But when you get through all of that, if the contract is let, awarded, whatever our final term is, and the minority participation is not a condition of its being final, aren't we kidding ourselves? 153 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
Yes, Councilwoman, but, we have the terminology. Remember this document and, again, I'm on both sides of this issue so --
Because, from being the City representative for MBEC and understanding what we need to have in this document.
The City. And I'm talking about both the administration as well as City Council.
Okay? Understanding what we need, what the City of Philadelphia needs as far as minority participation as well as, on the other side, what the contracting community is saying that they need for it to have leverage and get the lowest responsive bidder to make all of our tax dollars amenable. 154 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 Now, having said all of that, which is the dance, what I am saying to you now is that even -- we haven't given anything away unless they sign contract with our participation. That's when you give it away. If, in fact, they receive the documents and they are reviewing it, and we get an opportunity to get a last look and say, This meets or does not meet, then we haven't given anything away. If the shipyard or Kvaerner decides they're going to do this irrespective, which they have since we've been involved since August or September, or whenever, since we've been involved from that point, they have not said that to us. And so that's where our Catch-22 arrives.
Well, while I hate putting you in that position, I can get over my hatred of that much better than I can if we don't use the leverage of the valuable consideration which buys the contract.
Okay. 155 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
One of the elements that relates directly to that, that was the result, I believe, of a lot of the inferences on inclusion of minority- and female-owned firms was that there was a contractor, a major contractor who was a low bidder. However, he had not provided the actual MBE/WBE participation. We had to meet with him so he could identify to us the percentage, the contractor, and the amount that he's going to --
Now, Mr. Solomon, if you had not met with him and required him to fill in the blank as to which contractor he was going to use, is it your considered opinion that he would have followed up and acted affirmatively?
No, well, let me finish my answer. With this particular contractor and other instances, that has happened so --
So it was just an oversight that he hadn't filled in the blanks? 156 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
No, I think it was a matter of him identifying the contractors, that we know we wanted reasonable participation and he had to go out and find someone. And he did.
Well, I don't know your contractor, but I really do know that if there is pressure and a consequence for failing to comply, that people are more likely to comply that not. If that were not so, there would be no 11 justification for any affirmative action, EEO going back through all the names by which this effort has been known.
So we cannot count on people's voluntary compliance, we cannot do it. There has been not enough history showing that people who have will deal fairly with people who have not. And, therefore, if the consideration for getting this contract is that you either find qualified minority, women, or disabled, or make a very credible good-faith effort, not, you know, a lick and a promise, I mean that real kind of I turned over every stone, looked under every bush. 157 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 That's what we're here for. Because it's not going to make us feel very good to say we had a lot of good-faith effort if we don't have some performance. Some contracts are going to have to change hands and some people are going to have to get work who, but for the affirmative monitoring that you do, wouldn't get it.
Let me say one thing. I think the process that we have in place right now is going to facilitate that. The questions early on had to do with whether or not contractors had access. I think, in terms of what we've provided now in terms of a process, it provides that access. The emphasis is on participation, and we're going to see greater interaction between contractors.
What was your answer to the first question? Did they have access prior to all this inquiry? It's a yes or no. 23
I've just been advised that a representative from Kvaerner would like to 158 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 come up and address the actual contracting process or the bid process 'cause we haven't been doing a really good job at this.
But don't step on Mr. Solomon's answer 'cause I think that was a very important question and I think his answer is as important as the question. And your answer was what, sir?
I said: Do you think, absent all this agitation, that the minority contractors have access to contracting opportunities?.
I think the access has significantly increased since we've had a lot of the discussion about it.
If you had to reduce that had to a yes or no, what would it be? (Laughter.)
Wait a minute, if 159 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 you had to reduce it to a yes or no, the answer would be, "Yes, they had adequate access"?
No, I'm saying that it has increased. No, they did not have it before, but they do have it now.
One other comment. That's documented by a follow-up with some of the contractors who participated in the first hearing to -- we inquired as to whether or not there was increased access and they said, "We have had it, our phone calls have been returned, we've gotten information, we're bidding, and we're pleased with the process."
And I just want to respond on behalf of MBEC. In the initial stages, no, there was not significant access for minority, women or disabled business community. But, again, as Solomon says, that has drastically changed.
Just on a very narrow point of lowest responsible bidder, is it your testimony that a company could, in fact, be the lowest bidder but then deemed to be not 160 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 responsible, possibly because of deficiencies on MBE/WBE/DBE issues or some other issue and subsequently would not be awarded the bid because of deficiency in the responsibility area?
Councilman Chair, I would have to defer to the person who's actually going to do that. I could tell you how it would be done on a City bid, but this is not our process, so I would defer to them to respond to that question for you.
No, that's Kvaerner. 'Cause, see, we don't review the bid. We basically make no representation from that vantage point, so I would like for them to respond to you on that.
Okay. Well, I'm going to do my best to keep that question in mind. Councilwoman Tasco had a question that she wanted to get in.
We'll be finished in a minute. Now, with the Urban Coalition coming on board, what was your process, where were you in all of this prior to this agitation? Where was OHCD in this process of making sure that there were some minority participation on this project before all this agitation came down?
Well, our responsibility and activity prior to this time was in trying to contact the people responsible for procurement and contracting and so on, and making them aware of their obligations in trying to make available information about workers and contractors and vendors, and in trying to get involved in the prebid process and to get our material published along with the bid documents. The Coalition's responsibility is different from that; it's a reporting responsibility, which is very important, but our responsibility is getting it together to make sure that the obligations to HUD are met.
Well, were you in the process, you say, of doing that? 162 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
Yes. I'm sorry, as I said previously, it was not easy at first because a number --
No. A number of people were involved, and we had difficulty in engaging the right people in the discussion and making the requirements clear to the people involved. As I said, Mr. Rafdal came to our office on two occasions early in the fall after this had become a public issue and had said, What can we do to comply? And from that point on --
When the first contracts were being let, where was OHCD in the process?
OHCD was doing those things that I described to you, but the process was not easy. The reference has been made to our representative, Handford Jones, being unable to attend a prebid meeting, that's a basic need that 163 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 we have. And some of other needs with respect to advance notice about advertisements and contracting and the need to have information about the HUD obligations published with the contract documents were also not met prior to that time.
Mr. Kromer, I'm sorry. At the October 27th hearing, I believe read into the record, or Councilwoman Miller may have read into the record, there was an issue or a question was asked, I believe not by myself, with regard to an allegation about -- I don't know whether it was just Mr. Jones or Mr. Jones and someone else not being able to attend certain meetings and possibly allegedly being told that they couldn't come on the facility. And you just said something about Mr. Jones not being able to come to meetings. Can you expound on that if not verify what the situation was?
I understand that on at least one occasion, Mr. Jones was unable to attend a prebid meeting, which, I believe, was held on the site. 164 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
I believe, based on the subsequent conversation with Mr. Rafdal, that someone who was involved in the meeting had the impression that there was just one agency to deal with and that it was not necessary to have OHCD staff involved, and the conclusion was made mistakenly that --
Was that prior to the meeting that you said -- that prior to any of the two meetings that you and Mr. Rafdal had.
That's right. Kevin Brooks, who is Mr. Jones' supervisor, is here if you need any further detail. Or he can correct me, but that's my understanding.
That's kind of the corroboration of some earlier information. Councilwoman, I'm sorry.
What is our advocacy role? What is OHCD's advocacy role in all of this? If you are to monitor and protect 165 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 our funds, federal funds, and your staff doesn't get access, where's your yelling, where's your screams, I mean, where's your advocacy for what's happening to our tax dollars?
The advocacy role is absolutely critical. It's monitoring, but it's much, much more than monitoring. We have a responsibility to make sure that it happens. And in the case of Section 3, "it" is ensuring that the developer does as much as possible, as much as possible to employ neighborhood residents and Philadelphians of low to moderate income in ventures such as this. So the fact that we couldn't connect early on, that we couldn't follow the process that needs to completed in order to achieve this was a big concern of ours.
And what are your sanctions on Kvaerner if they're not in compliance with the federal regulations, as monitored by you?
We can stop the financing. More importantly, HUD can stop the financing and can stop the program in the future. 166 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 And so it's a very, very serious issue.
Yes. Good afternoon. I guess I'm trying to understand the process, the series of events that takes place when people are awarded a contract that has HUD obligations in it and why would it take four months -- if it was four months. I mean, I'm not really counting. Why would it take four months for this to all come to the forefront? Now doesn't the Minority Business Enterprise Council get involved pretty early on or 167 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 either OHCD to meet with the contractor to say, These are our requirements, these are our obligations to our funding sources, and we need a plan in place that will show us how you're going to execute this plan so that we'll meet all of the obligations of all the federal or whatever agencies. And this didn't happen in this case, though, and I'm just wondering why.
That's right. I want to ask Kevin Brooks to just describe the process as it relates to the HUD requirements and the Community Development Block Grant fund.
As I said previously, the fact that there were these multiple parties involved made it more difficult, but that's not really an excuse for not achieving the goals that were mandated to achieve. So if Kevin could go through that process, I'd appreciate it.
I don't think 168 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 Kevin's here. Oh, he's on the phone.
I'd also like to ask Handford Jones a question a little bit later.
While Kevin's coming forward, I talked to you about compliance and sanctions. Have you ever stopped the flow of funds for a project that's not in compliance?
We have come this close to stopping it a couple of years ago. And I believe on one occasion, we had stopped because of compliance issues several years ago. So we have done that, we have threatened it as a way of achieving compliance in the past as well.
Yes. In fact, we have stopped payment on some ventures. (Councilwoman Clark addresses Mr. Kromer off-mike, inaudible).
That's right, that's 169 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 right. (Kevin Brooks comes forward.)
My name is Kevin Brooks. I'm Assistant Director for Employment and Training in the --
Kevin Brooks, Assistant Director for Employment and Training, Office of Housing and Community Development. My recollection on that occasion is pretty vague. It was maybe four or five years ago and the circumstances were employment issues. They didn't employ a sufficient number of minorities on a project, and I believe that one of the contractors just didn't do sufficient reporting, so it was both noncompliance and reporting obligations for a number of contractors and the absence of minorities in the workforce over an extended period of time. And we took the contract back. And we have, in the past on housing 170 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 projects, we have suspended payments a number of times. We do that quite regularly. If there are, over the life of a construction project, one contractor -- or several contractors for that matter -- who are not submitting reports or who are not achieving the levels of employment or contracting that we look for, we sit down and talk to them and say, You're not on goal, if you're not on goal next month, we're going to stop payment. That happens quite often on housing projects. It hasn't happened so much on economic development projects as yet. We're fairly new in working on economic development projects with PSDC and the Commerce Department, so we are trying to apply the same principles that we have on housing projects n economic development projects. In all due fairness, John is correct in saying we've had a number of fits and starts in trying to get across what our policies and procedures are around the bid processes. I have to say that with federal funds, we do require a list of firms who should be using subcontractors. If it's not a complete list that meets the goals of 20 percent MBEs or 10 percent 171 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 WBEs at the time you submit a bid, we want you to reach that goal in your submission or have some representation to us -- names and address to us. And that part of the bid process for this level project a collection project like that has been an issue that we've been wrestling with.
Is there a plan in place? I think I heard at one of the hearings that there was not a plan for Kvaerner.
There's no comprehensive plan that addresses all of the employment and the contracting goals for this project that would include both planning activity for professional services, construction-related activity and no 22 permanent employment contract. But, obviously, Kvaerner has worked with a number of organizations throughout the City to not just one document but they've doing an 172 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 awful lot to (unintelligible) organizations and people for various phases of development of the Kvaerner Shipyard.
Is there a time line when a comprehensive plan needs to be developed as you go along based on the needs, the construction needs or whatever?
We have not discussed any one plan for this project. We're really trying to backfill in where we are and where we need to be.
Once you do that don't you think a plan is in order, and wouldn't it be helpful to know what the plan is? I think that was a question we had all along -- what is the plan?
It's contained in the master agreement. It just wasn't a comprehensive plan with minority employment and things like that.
Okay. Mr. Roundtree, didn't you say at a meeting that you were not allowed on the shipyard or you were asked to leave? Didn't you say that?
No, I never said that, 173 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 Councilwoman.
Oh, okay, all right. I have one more question. Do you at OHCD believe that Kvaerner is now on track and is being responsive to carry out the MBE/WBE policies and goals? And if not, would you recommend stopping the funds for noncompliance with HUD 108 and Section 3 regulations?
I'll respond and then ask Kevin to supplement if he feels that it would be helpful. We feel the situation's improved a great deal in recent months and that we're getting the kind of responsiveness that we need to see. However, as we go forward -- we're not there yet, but as we go forward, it's really essential that the kind of participation I described, the attendance at the prebid meetings, the inclusion of our language, and the spelling out of the HUD obligations in all the contracting documents, the preparation for the bid and so on, the message that we have to be involved all along up and down the line is very important. 174 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 And we need -- this is a complex project, and all of the people involved need to know our role and that their obligation that they share with us to HUD is really essential. So we're not there, things have improved, but we need to follow through. And I've had indications from the top, from the company's president, that we will get the follow-through.
Well, when I met with Mr. Rafdal too and with some of the contractors, you know, I thought he was sincere in trying to follow through with the goals. But I do want to ask Handford Jones a question. (Handford Jones comes to the witness table.)
My name is Handford Jones, I'm the Economic Opportunity Coordinator for the Office of Housing and Community Development.
Good afternoon, Handford. 175 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734