Is this board 206 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 governed by bylaws and a constitution?
Now, prior to the meeting that you remember most vividly, when was the one previous?
So you had a meeting in April and another meeting in --
I believe it was in July. I'd have to check the records to be sure, however.
That's okay. This is from your -- you all might want to write some of this stuff down if it's no better memorized than the other people, then you might want to write it down. Prior to that, when was it?
Yeah, well April and July are the ones we remember, so you had two in calendar year 1998. Do you remember any others?
I did not join PSDC until April so I wouldn't be aware of the others. 207 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
And to your knowledge, there is no written proceedings prior to April?
Well, do you want to squeeze your memory to see when they were?
Is there any way for you to tell me what the date of those meetings were prior to April?
I would be happy to confirm the dates for you and would be very happy to call your office tomorrow and give you the specific dates.
Send it to me on a fax, write it to me, please, and I'll give you my fax number.
Thank you. Now, do you accept as your responsibility to monitor the minority, female, and disabled participation of PSDC? And is it PSDC's job to monitor Kvaerner too, in addition to everything else you do for them?
Well, when you have monitoring, where does your report go? Are you going to ever let us know, we who have indicated a very strong interest in the subject, would you think it reasonable to report to us what you have found?
I could report to you essentially what Kvaerner has been reporting to you. I have almost the same information they do because I rely on Kvaerner, who is ultimately responsible for carrying out the terms and conditions of the master agreement, to provide PSDC with the force to show that, in fact, they are fulfilling those obligations. 209 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
But the reason we have PSDC and didn't deal directly with Kvaerner is that we needed an entity to safeguard the public interest. Do you agree with that?
The PSDC is indeed the representative of the principles in the deal. And in that respect, I would say that they do represent the parties' interest, yes, indeed.
Thank you. Now, can I get you to accept as one of the subjects that is a good deal of interest to some members of this group is how well the company performs its minority, female, and disabled participation?
I would be happy to provide you with all the information that I have in that regard.
Okay. It may be that you need to talk to us either on the record or off so that we can agree as to the areas that you should be monitoring since, clearly, there is not an interest and it is not an area that you're expert in.
No, I'm sorry, I would take exception to that. 210 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 The area that PSDC is responsible for monitoring is defined specifically in the master agreement.
I understand that. And now I have asked you if you will accept as an additional, more fully spelled-out responsibility the responsibilities to monitor the minority, female, and disabled participation. And your answer to that was yes; now are you changing your answer?
No, I am not, I am not. I will take the information that Kvaerner makes available to us and --
That is not acceptable to me. I don't need you to repeat to me what they've repeated to me. I need you to look at it with new, fresh eyes as a government-monitoring agency. I mean, if you're getting a copy of what they sent you, that's just another piece of paper in my file.
I believe that's the point. The point is that Kvaerner has the responsibility.
No, no, let me 211 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 stop, you let me stop you. From our point of view, you are our representative that makes sure that Kvaerner is on point. I don't want you to tell me what Kvaerner told you. I want you to look at Kvaerner with fresh eyes and say, They're spending the money well, they're buying the things we need, and they're being affirmative in their contracting and employment policies. I don't want you to send me what they sent you.
I agree with you and this is exactly what we would do. However, I must tell you that we must rely on Kvaerner and the information that Kvaerner provides us, which we do verify, and I would only send you verifiable information.
Well, what can you verify it against if you do not yourself have any standards that you're expecting, what are you verifying?
Councilwoman, our standards are the master agreement. The master agreement contains the specific MBE/WBE goals. It also 212 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 includes, in the appendices to the master agreement, the HUD regulations regarding the minority hiring practices. All of that is in master agreement.
I'm fully aware of that. Why, then, do we need you? Why couldn't we just have them tell us, Here's what I'm going to do, here's what I've done and, therefore, I have performed in an admirable way? What does your looking at them add unless you say, I looked at it, and I agree that they did everything that they said they did. Are you prepared to do that?
So would you take their unaudited financial reports and not check them yourselves?
Well, if you would not take their unaudited financial reports, why then will you take their unaudited self-appraisal of how well they're doing?
I'm sorry but I believe I said that we would verify all of Kvaerner's 213 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 information before reporting it to you.
I heard you, I'm following this very carefully. And I said, how beyond parroting what they just said will you verify what they said?
-- mentioned to you, on the employment side, a consultant in Price Waterhouse Coopers, who monitors the hiring practices of Kvaerner and ensures that all of the candidates that Kvaerner is hiring are eligible.
No, excuse me, stop right there. How affirmative is Price Waterhouse? See, we have the fox in charge of the hen house. Now, go ahead. They take care of employment, and who's going to take care of the rest of it?
I think in terms of the Price Waterhouse, it would be best if you would speak directly with them.
Well, I can't 214 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 speak directly with them because you are relying on them? Do you see what I'm saying? You told me that you rely on them. I'm at least trying to ask you, trying to give you some questions to ask them so that you could evaluate whether they are a strong post or a slender reed on which to rest your case.
I believe that if you review the record of Price Waterhouse Coopers as an organization, you will find that they are a strong post, that they have an excellent --
They are not a strong post in affirmative hiring and contracting. Now, they may be excellent among the four sisters in accounting, but they are not very strong in affirmative hiring.
Well, I can tell you that Price Waterhouse Coopers is far more diversified than accounting, and that the people we have from Price Waterhouse Coopers are excellent in the training area, they have subcontracted to the Delaware County Community College, they work closely with the Shipyard College, and they have subcontracted with John Milligan, CPA. 215 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
Are any of those subcontracts, to your knowledge, do they have any minorities, very many minorities?
I believe they don't, but that's subject to proof. All we have to do is look at whatever we study, if we're going to study their staff, we will look at percentage and numbers, right?
Yes. The 15 Price Waterhouse Coopers staff that are sharing offices with PSDC.
And are any of the 5 women minorities? 216 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
I didn't accuse you of double-counting. I asked you a straight question, and your answer was no. 10
Councilwoman, right on that point, what's the value of the contract -- is it Price Waterhouse Coopers now?
It must be a merger of Price Waterhouse and Coopers & Lybrand?
The value of the contract over 5 years is approximately $6 million.
Microphone. The question was: The value of the contract is $6 million over 5 years and an RFP 217 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 went out on this nationwide?
Funding from the contract is coming from the federal government, from Department of Labor through to the State Department of Labor and Industry, who will pay for the cost of the contract.
You know, look, let's -- it's been very interesting this afternoon. Do you plan to maintain the level of workforce that you have at PSDC presently?
No, no. At the end of the construction of the shipyard, the workforce of Keating will be eliminated, there will not be a Keating presence there. They're only there on the construction side.
The Keating workforce may be under contract to you, but they are employees of Keating, right? 218 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
Do you plan to keep the PSDC workforce at the level that it is presently, which is --
And so in order for you to be able to operate, I mean, guess you have a choice in that -- you can either staff up PSDC.
Or you can give out contracts to a whole bunch of folks for them to hire people or essentially have their own workforce work for you, and you've chosen to do the latter.
Okay. And you basically plan to proceed along that kind of path and program. If, from time to time, as you need expertise, you go out and give a contract to somebody to do that work for you, and then you'll manage them and get reports back and that kind of stuff, that's the game plan?
And how much do you anticipate it over -- what's the magic to the five years with Price Waterhouse Coopers? I mean, are all contracts pretty much going to be for five years? Is that tied into how long it takes to get things up and running?
The workforce training, the training of the workforce, the monitoring of the workforce, the ensuring that the workers' activities on a day-to-day basis are consistent with the federal funding guidelines and other 220 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 funding will require a five-year period of time because that is what, in the master agreement, is known as "the transition period."
On the construction side, the construction is to be completed in September of year 2,000. And at that point, we would terminate our relationship with Keating Building Corporation.
Price Waterhouse Coopers has offices here in Philadelphia?
Yes, they do. They have offices here in the city but, of course, they're all over. They have 130,000 employees.
I understand, right, they're a nationwide firm, but it's the Philadelphia office that's doing the work?
I believe that some of the people are coming out of Philadelphia, some of them are coming out of Virginia, some of them are coming from elsewhere.
Councilwoman, I didn't mean to step on your question. So when all is said and done, I'll come 221 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 back to that question. Councilwoman Clark asked you about bylaws and the board of directors. Can you provide us with all of the various government documents that go with it?
Yes. I'd like to clarify one point. The contracting for Price Waterhouse Coopers is over and above the money that is in the deal for Kvaerner. In other words, it's not in the financial package for Kvaerner.
Where does that 222 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 come from?
Well, that will come from funds that we would receive from various sources, including the interest earnings that are made on the funds that are held by PSDC. (Councilwoman Clark addresses Chairman Nutter off-mike, inaudible.)
I'm sorry. You were a little too nice about that one. Can we go back to that again, from the interest earnings of what?
PSDC draws down funding from the Commonwealth. PSDC is in receipt of funds from a variety of entities.
Well, such as DRPA money will be coming to PSDC for a period of time.
The operational cost of PSDC, for example, the day-to-day operations, providing office space for our operations at the Philadelphia Naval Business Center, other costs, are paid for through earnings that are -- interest earnings that accrue on the money that PSDC holds 223 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 for a short period of time before transferring it to Kvaerner for disbursements.
That's like a little money on the side, it's like a little mad money? (Laughter.)
Well, no. Quite frankly, quite seriously, we're trying to be very frugal with the process and not utilize government funds and maximize the funding that we have available.
Interest on government funds is government funds. Isn't it? That's money too. Interest on government funds is government funds.
Well, I think you ought to have around the table, then, the lawyers who drew this up. I am here telling you to the best that I 224 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 can, as frankly as I can how PSDC operates. If you have questions about it, then I believe you need to bring the lawyers in.
Well, do I have questions about it, and since they sent you, I assumed that you were the person that they wanted to answer them.
Right. Well, we may need to, with the advice of the sponsoring member, we may want to get a little further, much further into the operation of PSDC and its construction. I mean, that's why I asked for the board of directors list and the documents that set it up and any contractual information. Under what circumstance is PSDC allowed, for instance, to use interest earnings on funds that you're receiving for the pure purpose of transferring to Kvaerner? Under what provision are you authorized to do this?
We are authorized under a delegation agreement with the Commonwealth, for example, to --
A delegation agreement. 225 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
Well, I can explain it for you if you'd like. The $182 million that is available from the Commonwealth for the construction of Kvaerner is provided to Kvaerner through PSDC based on a critical path schedule for the construction of the shipyard and a schedule of cash flow. So a monthly schedule of cash flow is available. On a monthly basis, PSDC draws down funds from the Commonwealth to pass through the Kvaerner for various aspects of the project, whether it be for the purchase of equipment or the payment to contractors.
Under the terms of the delegation agreement, the Commonwealth are the -- I'm sorry, the PSDC is able to hold to any one time a million dollars of the funds to be drawn from the Commonwealth. And that's what I'm referring to, those are the funds that we have invested. 226 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
So the money comes in, you hold on to it for a little bit, generate a little bit of interest, and then you send it over to Kvaerner, you slice your little piece off of the top and take care of some of these other contracts and expenses and all that kind of stuff. I mean, that's basically the way it works, right?
I'm definitely in the wrong business. So when all is said and done, I mean, should people -- and we asked this question at the last hearing. Should people contact yourself if they have questions or concerns about -- if a person wasn't at this hearing, they haven't read anything in the newspaper recently, they just heard somewhere that there is a Philadelphia Shipyard Development Corporation, and the person wanted to go and try to get some information about doing business with the shipyard or with Kvaerner or whomever, could they call you?
And you would, like, talk to contractors and try to get a basic understanding of what their issue was, and then you might point them in another direction, you might send them to Mr. Ryan or Mr. Thompson or Mr. Roundtree or Mr. Kromer. I mean, you'd do something with them?
What is the composition of the staff and educational units for the shipyard university? Who is in charge of the shipyard university?
The shipyard university, to the best of my knowledge, is established at the 228 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 Philadelphia Naval Business Center through PSDC. And the shipyard university has relationships with the various community colleges in the region. That's my understanding of the way it works. There has been some support and assistance between the shipyard college and the Private Industry Council here in Philadelphia who we worked with on the recruiting side. There have been some conversations between our consultant, Price Waterhouse Coopers, and the shipyard college to utilize some of the equipment that the shipyard college has to do some of the training or the testing on. And I think Kvaerner, if I'm not mistaken -- and Harold can comment on this further may -- may have additional relationships with the shipyard college. But to the extent that I'm aware of it, that's our relationship with them.
If trainers other than community college were interested in 229 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 participating in the training activities of the Kvaerner project, how would they have their qualifications tested? Here I'm speaking of, say, OIC, which has a good deal of experience in training the structurally unemployed and specifically a welding company which has experience in the old-fashioned way of welding but wishes to have its skills updated so as to train other people as well? How does that happen?
I would like to answer that question. First of all, we have signed an agreement with the shipyard college, which are out of four different universities in the region. Second to that, I know that was a company here at the last hearing dealing with training, and we have been in separate meetings with them, and we are in discussion with that specific company.
So it is possible that some trainers, other than community colleges, can find a place in training the workforce as a result of the conversations which you are having ongoing? 230 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
Other institutes or suppliers on the training side, whether they do this as a part of the agreement, we have set up with the shipyard (unintelligible) to our suppliers, or they set up a separate agreement with us. That's the same for me. But they have to -- they have to cover some specific needs other than what we have. The agreement we have set up with the shipyard college is set up in a way that if it does (unintelligible), we will look for other, maybe we need additional trainers as well. But we are working with that, we had a meeting with that company last week.
Are the recruitment and employment goals the same as the goals dealing with construction for your workforce?
Pardon? I didn't catch 231 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 your question exactly.
Okay. In the end, I guess you're going to have a thousand workers. What are the minority participation goals as it relates to your employment, your workforce that will be at the Kvaerner?
From a legal standpoint, the agreement says that we should use all good-faith efforts to employ minorities. There are no certain goals. From a practical standpoint, a lot of money funded in these projects are related to former shipyards workers and the Navy workers, so I think we will pick up minorities and I think that we will pick up people that in percentage reflect those groups. Other than that, I would say that I would like to see that the people who are employed at the shipyard reflect in the region we are living in. 232 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
I didn't understand the last part. You'd like to see them do what?
I have raised a lot of questions, whether people from the Midwest or the west side of the United States, they start living on the shipyard, and I always explain to them, If you work eight hours a day, you shouldn't drive more than one hour back and forth 'cause you should take good care of your family the rest of the time you're awake. So I think that the shipyard will pick out people from the region that we are living in. As it is today, we have 40 local -- 40 local people employed, and I'm not a hundred percent sure but I think approximately percent 18 of those are minorities. 19
Okay. So how are 20 you going to incorporate the HUD requirement of hiring low- and moderate-income people and also live up to the agreement to hire X-number of naval yard workers? 'Cause some of those -- I mean -- I mean, is there someone working on that, is there a 233 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 plan to try and incorporate all of that in the outcome that we're looking for here?
I know that there's been some recruitment going on at PIC.
Yes. It's functioning in a way that we're we are setting the criteria. And PSDC and PIC, they are helping us by picking out the people that are eligible for the funding.
Do you know who has been picked? 'Cause we've been referring people over to PIC also, you know, for the training, but we have no of idea the status, we have no idea. And I'd appreciate it if -- maybe we can just call PIC and get that information from them on what's going on with the people that we've been referring for the jobs for the jobs at Kvaerner for the training. Do you get a report for PSDC? 234 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
Yes, we receive reports from PIC on a regular basis as to the number of resumes they have received, where those resumes are from. They're in the process of contacting people who have applied for positions, they are bringing them in for briefing sessions. And once they're completed with that, they'll go into the second stage, which is some basic assessments of the skills and so forth in preparation for the development of the training plans, which then Price Waterhouse Coopers will take over doing or has done and, you know, will, in conjunction with Kvaerner, will begin to implement those training plans.
There have been, I believe, a handful of people. I think Harold would be in a better position to answer this question. There have been a handful of people who are very much specialists in shipbuilding, who Kvaerner felt were their top priority for hiring, and that these people needed to be hired and sent overseas for training as quickly as possible 235 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 because of the aggressiveness of the time schedule. So I think Harold could shed a little more light on that.
To be quite honest with you, I don't know exactly the numbers from the people that are coming through PIC. What I know is that we are 40 local employees as of today, and approximately 11 percent of them, 10 persons, are minorities. And 12 we are relying heavily on PSDC's and PIC's ability 13 to pick up people that are within the different 14 funds, 'cause that's the only way that we can get 15 the necessary funds for the people that we have to 16 train. 17
Okay. So who 18 would be a good person for us to call at PIC 19 rather than your office? 20
Well, I think Lisa Derrickson, who's the director of the office at the shipyard.
I think we are just about done with this panel. And while it was only 236 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 intended that we would pretty much have the people who testified, I know that there are some contractors here. I don't know if they have any additional testimony that they wish to add to the record or share with us about their experience between October 27th and today. I do want to put one point of clarification on the record. Councilwoman Miller asked about the much talked about thousand employees. It is my best understanding and also my recollection, from the public hearing when City Council dealt with the Kvaerner deal, that there are goals for contracts, there are goals for construction employment. There are virtually no goals or there are no goals for the composition of the particular workforce on the thousand employees primarily because you are going after the former shipyard workers. And I believe the response on that question, either at a briefing or at the public hearing, was that the workforce composition at the shipyard when it was up and run was about 10 to 15 percent minority. And that your best hope is you would at least mirror that population. 237 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 I think, Mr. Rafdal, I will only add to that given the composition of the city and its diversity, there is certainly naturally an interest in trying to move those numbers up. But we recognize that the pool from which you are basically trying to draw -- and it's not only the Philadelphia or Philadelphia suburbs pool, it's my understanding that you're trying to draw from a pool of former shipyard workers who could have possibly worked anywhere but who worked at the shipyard but may have been downsized the same as Philadelphia. Is that fairly accurate or representative of what the situation is?