COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE ON LAW AND GOVERNMENT - - - Room 400, City Hall Philadelphia, Pennsylvania Monday, May 22, 2006, 1:20 p.m. - - - Bill 060335 - An ordinance authorizing the City Solicitor to enter into a multi-year contract with a provider of codification, editing, and marketing services to produce printed and electronic versions of the 9th edition of The Philadelphia Code and periodic supplements. Bill 060388 - An ordinance providing for the submission to the qualified electors of the City of Philadelphia of the proposal set forth in a resolution approved by Council proposing an amendment of the Philadelphia Home Rule Charter to require the Finance Director to issue an annual report that analyzes the participation of disadvantaged business enterprises on City contracts. Res. 060408 - Resolution proposing an amendment to the Philadelphia Home Rule Charter to require the Finance Director to issue an annual report analyzing participation of disadvantaged business enterprises on City contracts... Present: Councilman James F. Kenney, Vice Chair Councilman W. Wilson Goode, Jr. Councilman Jack Kelly Councilman Michael A. Nutter V A R A L L O Incorporated Litigation Support Specialists 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 I N D E X WITNESS BILL NO. 060335 Evan Meyer, Esquire...................... Attorney, Law Department BILL NO. 060388/RES. NO. 060408 John Childress........................... Exec. Dir., African American Chamber of Commerce 9 Carolyn Nichols.......................... 41 10 MBEC Director and Deputy Finance Director 11 Wendy Staton............................. 53 MBEC Deputy Director 12 13 * * * 14 Public Meeting.......................... 94 15 16 17 18 19 20 21 3 5/22/06 - LAW AND GOV'T - BILL 060335
Good afternoon, ladies and gentlemen. This is a public hearing of the Committee on Law and Government. Present today are Councilmembers Goode, Kelly, Nutter, and myself, Chairman Kenney, Vice Chairman. Our first bill is Bill No. 9 060335 authorizing the City Solicitor on behalf of the City to enter into a multi-year contract with a provider of codification, editing, and marketing services to produce printed and electronic versions of the ninth edition of The Philadelphia Code and periodic supplements, all under certain terms and conditions. Please identify yourself for the record and proceed. (Witness comes forward.)
Good morning, Councilmembers. My name is Evan Meyer, and I'm a senior attorney in the Law Department. For at least the past ten 4 5/22/06 - LAW AND GOV'T - BILL 060335 years, one of my responsibilities has been arranging for the publication of the Philadelphia Code of ordinances and the periodic supplements of the Code. I'm here to testify as to the need for Bill 7 No. 060335, which would give Council's approval to a multi-year contract to publish The Philadelphia Code. As you may know, the Home Rule Charter requires that Council approve any service contract that has a term of more than one year. A multi-year contract is needed because it is most efficient to have the same publisher produce the main Code edition as well as the supplements for the following three years. A new edition is produced every four years. In fact, four years ago, I was here testifying to an almost identical bill, Bill No. 010689, which authorized the current contract. Our contract with the current vendor, LexisNexis Matthew Bender, expires September 30, 2006. They have 5 5/22/06 - LAW AND GOV'T - BILL 060335 just produced the last of the three printed cumulative supplements, which covers bills passed by this Council through December 31, 2005. Sometime in August or September, they will do an electronic update, which means updating the Code on the Internet and sending the City a new CD for City computers, and that update will include ordinances passed through June 30th. We are in the process of preparing an RFP, requesting proposals for a contract for the next four years, in complying with the requirements of the Council ordinance that mandated certain contract reform measures. The four-year contract will include the next full edition of the Code and periodic supplements, which will probably be published at least twice a year. The City has a good record, since 1998, of publishing the Code and 6 5/22/06 - LAW AND GOV'T - BILL 060335 its supplements on a regular predictable schedule, with considerable savings for the City, both in time and money. We would like to continue with this record, and the Bill before Council will help in that effort. The Law Department respectfully requests Council's favorable consideration of this ordinance before the summer recess so that we can make the necessary arrangements to continue to publish the Code on a timely basis. I will be happy to answer any questions.
Thank you very much. The Law Department solicited this contract itself, and not through Procurement?
Okay. Was 7 5/22/06 - LAW AND GOV'T - BILL 060335 there a bidding process, or did firms receive RFPs to respond? And how was the winning bidder determined?
We're going to comply with the contract reform process mandated by the bill that was effective February 1st. We're still in the process of setting that up. Actually, it requires the City Solicitor's signature, and since he's been out of the country, we haven't obtained that. So once that done, it will be posted on the Internet, and the RFP will be attached. And then applicants, according to mandated process, can apply on line.
So then Council's not being asked to approve a specific award but the authorization to pursue the award.
Right. This is just the authorization to permit it to be a multi-year contract since it's more than one year. 8 5/22/06 - LAW AND GOV'T - BILL 060335
And who will make the final determination? Under what criteria will make the final determination of who wins the bid?
Um... Well, ultimately, it will be the City Solicitor, but Richie Feder and I will be the primary people making the cuts.
And is it the lowest responsible, or is it -- how -- what is the -- how do you determine who's the most qualified to do it?
This is not competitive bidding as it would be for a product; it's a service contract.
So we, you know, will be weighing a number of factors, including previous experience, you know, comments of references, their ability to do the kind of things we want them to do and so forth.
And 9 5/22/06 - LAW AND GOV'T - BILL 060335 traditionally, are there a large number of firms who do this kind of work, or is it pretty much a niche?
It's pretty much a niche, I think. We tried to identify all of the reasonably possible applicants last time, and I think our list was only six or seven vendors.
And does local get any type of perhaps not formal preference but some type of -- any type of conversation that they're local?
We would consider that. We didn't put that in the RFP that we've drafted so far.
Okay. Councilman Nutter? 10 5/22/06 - LAW AND GOV'T - BILL 060335
Thank you, Mr. Chairman. You may be aware of another legislative effort that this Council put forward, the local bid preference legislation that does provide for a 5 percent bid preference for local firms?
Okay. Well, that's a part of the problem, Mr. Meyer, if you're only vaguely aware of it. I think, you know, clearly there's a need for a better explanation in marketing and promotion that people understand that if you're bidding on work with the City of Philadelphia, if you are a local business and get certified as a local business enterprise, you get a 5 percent bid preference. That's to encourage local firms to do business with the City and, you know, keep some of the business here at home. 11 5/22/06 - LAW AND GOV'T - BILL 060335 I can, subsequent to this hearing, either point you in the right direction by way of the Code or would encourage you to be in touch with the Procurement Commissioner; and certainly on their website, there's a designation for LBE's.
This is a service contract, so this is a -- you know, an RFP process.
Okay. Okay. And how does any of the other contract reform legislation affect this particular contract, especially in the multi-year context?
Well, the... the bill that was effective February 1st that amended Chapter 17 to provide for the contract reform measures is one that 12 5/22/06 - LAW AND GOV'T - BILL 060335 we're going to follow; we're looking into that right now. It requires that we post it on the Internet.
There's a process for responding op Internet. And as I mentioned, we anticipate, as soon as we get the Solicitor's signature, to do that posting, probably this week.
No. We didn't do that four years ago; I didn't anticipate that.
So as the pointed out, this bill is just to authorize the Solicitor to start a process and sign a contract, but the actual contract does not come here.
Okay. And 13 5/22/06 - LAW AND GOV'T - BILL 060335 why is that?
I wasn't aware that that was a requirement. We didn't do that four years ago.
What is the anticipated cost of the contract? What was it four years ago, and what do you anticipate it being this time?
The maximum amount that we put in the bill was $40,000; that was what we did four years ago, so we stuck with the same number. In fact, I expect it to be considerably less than that. The current contract is 14 5/22/06 - LAW AND GOV'T - BILL 060335 essentially free. These firms -- in -- we give them the ability to market the Code to sell it to other vendors, and that's valuable enough to them so that they are willing to provide the codification and editing services to put the Code into code form essentially for free. In fact, we get royalties under the current contract, which we can take either in the form of money or in the form of Code books. We've been taking it in the form of books, and we've been able to provide City Council with free books 17 over the last four years as a result of 18 those royalties. 19
And how 20 much would the royalties amount to; do 21 you have any idea? 22
There's a minimum 23 royalty level that we're guaranteed, 24 which, I think, is $4,000. They have not exceeded that, so evidently, they're 15 5/22/06 - LAW AND GOV'T - BILL 060335 not...
How many volumes of the Code are there, I mean as far as -- when it's finally put in print, how many actual books are there?
There's only two, okay. And do you have any idea what they sell for? (No immediate response.)
Just as an attorney experimentally, I mean, is it expensive?
I'm pretty sure that the main Code sells for $150 for the Code, and I think the supplements are $50.
But I'm not exactly 16 5/22/06 - LAW AND GOV'T - BILL 060335 sure.
All right, thank you. Any other questions? (No further questions.)
Seeing none, we will now hear testimony on an ordinance and resolution for proposing an amendment to the Philadelphia Home Rule Charter, which is first Bill No. 060388, an ordinance providing for the submission to the qualified electors of the City of Philadelphia the proposal set forth in a resolution approved by Council proposing an amendment to the Philadelphia Home Rule Charter to require the Finance Director to issue an annual report that 17 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 analyzes the participation of disadvantaged business enterprises on City contracts and sets participation goals for such businesses, using such categories as Council may define, under certain terms and conditions, and authorizing appropriate officers to publish notice and to make arrangements for the special election. Also a Resolution No. 060408, a resolution proposing an amendment to the Philadelphia Home Rule Charter to require the Finance Director to issue an annual report analyze the participation of disadvantaged business enterprises on City contacts and sets participation goals for such business. Councilmember Goode would like to have an opening comment. And whoever is testifying can please come forward. I'm sorry. We have -- I apologize. The Councilman is requesting that Mr. Childress go first, so he can approach the table while Councilman Goode 18 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 makes his comments.
Thank you, Mr. Chairman. I'd like to briefly outline the purpose for the bill and resolution. The resolution would amendment the Philadelphia Home Rule Charter related to the powers and duties of the Finance Director. The amendment will require the Finance Director to file with the Mayor a written report on disadvantaged business enterprises at least 30 days before the start of each fiscal year. The report shall include: (1) An up-to-date study analyzing the participation of disadvantaged business enterprises in City contracts for the purchase of goods and services compared to the percentage of qualified disadvantaged business enterprises available to participate in such contracts. The Annual Disparity Study shall be performed either by the 19 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 Office of the Director of Finance itself or by contract. And (2), City contract participation goals for disadvantaged business enterprises for the upcoming fiscal year. In devising the Annual Participation Goals, the Finance Director shall consider: * the present availability of qualified disadvantaged business enterprises; * participation of qualified disadvantaged business enterprises on past contracts; * a forecast of eligible contracts to be awarded within the fiscal year; and * the latest Annual Disparity Study. At the same time the report is filed with the Mayor, the Finance Director shall file a copy with the Department of Records and with the President and Chief Clerk of Council and 20 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 shall arrange for publication of the report on the City's official website. The resolution also gives City Council the authority to enact further ordinances on this matter. The bill 7 allows for a November ballot question to make this change to the Charter. The purpose of this legislation is to create more diversity in City contracting by employing a data-driven method to determine the underutilization of qualified disadvantaged businesses and requiring annual participation goals based on an up-to-date Disparity Analysis. It should become a Charter-mandated duty at the Cabinet level of the Executive Branch. In the last fiscal year, the City did over $600 million in for-profit contracting for goods and services with taxpayer dollars. This legislation is a necessary step toward ensuring fairness in that process. This legislation incorporates best practices for the 2003 21 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 Ortiz ordinance -- practices that are not found within the current Executive Order or employed by MBEC. City Council and the voters must now empower the right to fair contracting under every administration based on best practices, not whatever practices a given administration wants to employ -- or not employ. Thank you, Mr. Chairman.
Thank you, Councilmember. Please identify yourself for the record and proceed with your testimony.
Hi. I'm John Childress, Executive Director of the African-American Chamber of Commerce. Thank you for this opportunity to speak. " These two principles helped 22 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 create this country and this very city over 230 years ago. Today, we live and work in a city which is approximately 55 percent of the citizens are non-White; yet a recent disparity study told us less than 2 percent of the contracts went to non-White firms. It has been years since 11 Mayoral Executive Order 6-90 was enacted, 12 and we still do not have anything close 13 to a representative share of City 14 contracts awarded to non-White firms. We 15 feel that is not acceptable. 16 We live in a time when over 50 percent of the black males in high school do not finish. Of those, nearly 80 percent will spend some time in prison before they each the age of 40. The real unemployment rate of black males ages 18 to 40 is over 30 percent, and that's a figure that, many years ago, was called a Depression. Right here before us, with 23 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 Councilman Goode's legislation, we have the ability to do something significant about this crisis. Let's show the people of Philadelphia that this City Council will not stand idly by and lose a generation. Every elected leader in this city says they want to do something about this crisis, but the time for just talk is long past. This is clearly time for action. I tell you that the lack of business opportunity for the majority of this city's residents is one of the greatest problems facing this Council. Without opportunity, there is no hope. You will see the dropout, unemployment, and incarceration rates continue at this crisis level. If this is not an issue that deserves a cabinet-level priority, then I don't know what is. That is why we at the Chamber implore City Council to support Councilman Goode's resolution. 24 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 We feel that this resolution is a major step forward in addressing the many issues that have hurt the City's efforts to increase participation. Specifically, we would like to see these issues addressed. Number one is minority participation goals for nonprofits. Each year, the City spends hundreds of millions of dollars on contracts for nonprofit firms. Most of the children served by these contracts are children of African-American, Hispanic, and Asian descent. Unfortunately, most of the people on the boards and management teams of these organizations are not. The City used to issue an affidavit to nonprofit organizations based upon three factors: 51 percent of the Board is comprised of minorities and women; the population served is predominantly minority; and the services are delivered in predominantly minority communities. 25 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 We urge you to adopt some new form of this affidavit that will give our nonprofit leaders the support they need to increase participation. The second is accurate and detailed numbers. We would like to see the goals set for participation based on the actual contract dollars paid out instead of just the bids. And we would like to see the numbers broken down by race and gender, and done each year to illustrate the trends and also to show the gaps. There is no business that I can think of that does not do a detailed analysis of its success, including market segmentation. The third thing is monitoring and enforcement. Obviously, the best laid plans of City Council and the Mayor's Office are usually only carried out if the plans have teeth. Companies that continually fail to meet the stated participation levels must their lose eligibility for City contracts. 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 Fourth is goals with the mandate delivered to each department. On any issue, you will find that there's people who get it and those that don't. That won't get the job done.
This problem is so serious, we need everyone on board and everyone to get it. One way is to have a top-down mandate delivered from the Finance Director that must be obeyed. Number five, very important, is identification of gaps between contracts offered and minority firms bidding on them. We must identify the areas where we have been successful in increasing participation, the areas that have not been successful, and find out why. Is it because there's a lack of qualified firms, or is it because the firms that are qualified did not get a chance to bid or some other factor? And number six is participation in this process by the African-American Chamber of Commerce, the Hispanic Chamber 27 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 of Commerce, and the Asian Chamber of Commerce. As you can see from the history, the City has seen many efforts over the years to increase participation; so many, in fact, that the citizens may be skeptical of yet another effort. One possible way to help address this is through the participation of the African-American Chamber of Commerce and other Chambers to help determine the review criteria and process. We at the Chamber stand firm in our commitment to these ideas. We do not accept the notion that all that could be done is being done. In just three years at the School District of Philadelphia Kim Sangster and John Bars were able to increase their minority participation from 9 to 25 percent. How was she able to do this? Because she was committed, and she had the support of CEO Paul 28 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 Vallas. This story can, and must, be repeated for City departments. It's a perfect opportunity now that we have an outstanding new director of MBEC. We feel strongly that support of this resolution is the next step. We must also get behind this effort to make it work. This is not just about the division of the City's economic pie, but this is about life, how you can improve life, the quality of life, for thousands of Philadelphians. The African-American Chamber of Commerce stands ready, willing and able to help in any way possible, and we urge your support for this resolution. Thank you.
Thank you, Mr. Chairman. Mr. Childress, thank you very much for your testimony. 29 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 I have to leave the chambers now, unfortunately, on other Council business, and when the session moves into the public meeting, Mr. Chairman, I'd like to be recorded a voting aye on any motion to move the bills out of committee. Councilmember Goode, I believe, may have some amendments; I'd like to vote yes on his amendments to either the bill or the resolution. With that, Mr. Chairman, may I be excused?
Thank you Mr. Chairman. Mr. Childress, could you please elaborate on what you think is contained within the participation numbers submitted by MBEC to this Council and 30 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 what is not contained in those participation numbers?
Sure. What we have found at the Chamber is that a lot of times some companies will bid on a particular job and will have, say, 8 percent minority participation included 9 in that bid, but by the time the job 10 actually happens, they will not use the 11 company which they have put in their bid. 12 And so what will end up 13 happening is that their actual 14 participation in terms of dollars paid 15 out will turn out to be far less than 16 what was originally quoted in the bid. 17 And that is, you know, a really strong 18 issue. 19 We've had companies -- members 20 of the African-American Chamber of Commerce that were surprised to find out that they were on a particular bid. You know, they didn't even know their name was used 'cause they certainly never saw an actual contract or any subcontract 31 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 from that. So that is, you know, a major issue. So between that and the fact that there's no mechanism in place today for looking at nonprofits, which represent a huge portion of the contract dollars for the City, it makes it difficult to have a really, good accurate number.
So the participation numbers we see in terms of percent by minority business 14 enterprises is probably far less than that.
Thank you. Second, your position is in favor of the bill and resolution. Do you believe that Disparity Analysis is something that can be commissioned and conducted on an annual basis? Or do you think that we should conduct them on a less-than-annual basis? 32 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408
Well, we feel that it should be conducted on an annual basis. We also feel that you have -- that it is the goal -- it is the job of City Council and for everyone to make sure that they have the resources necessary to conduct those -- to conduct those surveys on an annual basis. That's very important that those resources are made available. But it is a major problem that we do need to look at and be able to measure progress and see year-to-year how things are going.
Lastly, I thank you for your testimony and for your commitment to being a continued part of this process, understanding also that we can't invite you to the process until we actually put ourselves into the process, which, at this point, is to try to change what's necessary to put City Council within this process. But, again, I thank you for 33 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 your testimony.
Thank you, Mr. Chairman. Mr. Childress, I just want to know, whose responsibility is it to enforce those contractors to live up to their commitment to subcontractors as far as minority participation is concerned?
That, I believe, would fall under the jurisdiction of MBEC.
MBEC. And MBEC, as far as I know -- I don't know if they have the personnel to do this or not. That's been in previous testimony before this Council. They seem to be -- either they're saying they're not fully staffed to do the required work that's necessary to make sure that these contractors live up to their obligation 34 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 to the minority community. And right now, I know there's a lot of companies that they're almost sham companies. They create these companies by putting their wives as officers or putting some of their friends who are minorities into the positions as officers of a corporation, and then they -- they get involved into the contracts themselves. I just think that in my previous experience in working with -- in working with purchasing and whatnot, I found that a lot of companies do this on a regular basis. And as far as I know, MBEC, I don't think, has the personnel to do an effective job into solving that problem. Thank you.
You know, this is not necessarily rocket science. I've been on a board of directors at Independence Blue Cross for about 15 35 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 years. I serve on the my Minority Business and Contracting and Procurement Committee. We meet quarterly to go over the company's goals that are set in the beginning budget year, how they're meeting those goals quarterly. There are members of the executives in the company from the H.R. senior vice president to the senior contract and compliance officer and higher members of the company who come in before the committee and are grilled basically by the board members, by the committee members when they don't meet their goals or when they are meeting their goals, or when they an opportunity to each out to companies through the institution of job fairs and contractor fairs and other types of outreach that are done regularly at IBC. But the only way that happened is because the late G. Fred DiBona had a commitment to doing it and putting people in positions that were responsible and 36 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 responsive at a high live.
Joe Frick, who has taken Fred's place since his passing, has had the same commitment to doing it. And we could do this quarterly in the City of Philadelphia if we had the will to do it and we were getting the direction from the top down. It is not difficult to do. It is difficult sometimes to find specific companies in specific areas because of the technical nature or because of bonding or insurance or other kinds of issues, but it's not impossible. And if you make it a mandate, if you make it a priority, and you hold the high-level people accountable, as they do it at IBC, on salary, bonus and promotion -- if you're not doing your job, you're not moving up -- this is the commitment that's needed. Yearly is -- you know, requiring it yearly is a great start. 37 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 Having it as a part of our charter is even a better situation, giving it the imprimatur that it needs. But unless there is a serious commitment to doing this, it's unlikely to happen. And I agree with you that it has to come from the top down, and it's got to be a priority that's set by the Administration -- and not only just mouthed, but actually on a quarterly basis or on a biannual basis, have to measure the results. And if the results are not measured in the proper way or meeting the goals, then there's a price to pay for those executives, and I think the same should be here in the City.
Yeah, I agree that it really does have to come from a top-down push, and that what was effective in the School District. And then the people have to have the resources that they need in 38 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 order to get the job done. You know, I can't speak for MBEC, I can't speak as to, you know, do they have enough resources, do they have the right people? Everyone I've met with there has been more than willing to sit down and talk and say, Hey, we're working on this problem, so I'm sure they can speak to that effect. But my biggest push is for City Council and for the Mayor's Office to give them the tools that they need, and then we can put the plan out there to make sure that it happens, because we need to do a lot better than what we have in the past.
And the reason that IBC and other companies do this is very selfish: 'Cause it's good for business.
It's not just something that's the right thing to 39 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 do; it's the right thing to do for their business. And I think that the City needs in some ways to understand that this effort is good -- not only the good moral thing to do.
But it's the good thing to do for the City, 'cause if you're looking to rebuild neighborhoods --
If you're looking to get people back employed, if you want to get kids off the corner shooting each other selling drugs, they need to have an opportunity to go get a job to make a living. And if the money is going outside the region, outside the area, and it's going to majority companies only, you're never going to change it, ever. So I think that -- and I've had this discussion with Councilman Goode 40 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 last week that a company like IBC, I'm sure, would love to come in. I'm not speaking for them, but I'm sure that, knowing their past help they've given us with the 9-1-1 Call Center when we had the Eddie Pollack tragedy, they came in and trained our people. I'm sure they would be happy to come in if asked. Or any other company that has a large-scale minority contracting component, committee and commitment to come in and tell us -- show us how to do it, 'cause I think companies like that have really perfected the efforts. So thank you for your testimony.
Councilman Goode? Let the record show that Councilman Goode is now in attendance -- I'm sorry. (Laughter.)
I'm looking at him. I'm sorry, I mean Councilman 41 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 Rizzo. It was a long weekend, I'm sorry. Goode, Rizzo, it's -- both of them are here. Who else do we have to testify on this bill? Ms. Nichols? (Witness comes forward.)
Good afternoon. My name is Carolyn Nichols. I'm the MBEC Director and Deputy Finance Director. Good afternoon, members of City Council's Committee on Law and Government. As you know and you've heard discussed at length, MBEC is responsible for implementing and administrating the City of Philadelphia's anti- discrimination policies relating to the inclusion of minority, women and disabled-owned business in City contracts. The bill before us today, 060408, proposes an amendment to the Philadelphia Home Rule Charter to require 42 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 the Finance Director to issue an annual report that analyzes the participation of disadvantaged business enterprises on city contracts and sets participation goals for such business, using such categories as Council may define, and providing for the submission of the amendments to the electors of Philadelphia. In Bill No. 060408 under Section 6-109(1)(A), the Finance Director is required to file with the Mayor a written report that includes a Disparity Report at least 30 days before the start of the fiscal year. The City would incur a significant cost on an annual basis providing this report, and this is based on actual experience. J. 9 million. That study was updated to include analysis of The City's 43 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 Procurement activity during fiscal years 1998 to 2003 at a cost of approximately $900,000. The Disparity Study Report update was issued on January 27, 2004. That's the report that Mr. Childress was referring to when he cited the numbers. This report included statistical and legal analysis for the City and considered availability, utilization, disparity, and private-sector analysis. Conducting a study of this scope annually could prove to be prohibitively expensive. A study every four years could be -- and we say "could be" more beneficial in scoping costs to the City. And we do understand that, obviously, scope -- the scope of the Disparity Study could be adjusted and may not have to be $1,900,000, but we're just -- I'm just testifying based on our experience that we've had thus far. To put this recommendation in 44 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 context, the City's actuary utilizes four years for the Experience Study that serves as the basis to calculate the yearly Pension Fund contribution. The City utilizes a four-year interval for issuing its Disparity Study, MBEC's reports, as required under this bill and as required currently under Executive Order 02-05, could supplement the interim years as a monitoring comparison. Section B of Bill No. 060408 also requires the annual written report to include City contract participation goals for DBEs for the upcoming fiscal year, and that's the annual participating goals. Section B-1 requires the Finance Director to consider the present availability of qualified DBEs. Currently, MBEC maintains the listing of business that are owned and controlled by minorities, women, and persons with disabilities, and this listing is used to set participation ranges per contracts. 45 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 In other words, what I'm trying to bring up here is that we do have this information maybe in a different format. We may have to conform it, you know, to the report that you would require. Section B-2 of Bill No. 060408 requires the annual written report to consider the participation of qualified DBEs on past contracts awarded to the City. Currently Executive Order 02-05 requires MBEC to provide reports to the Mayor and City Council twice a year -- on January 31 and July 31 -- setting forth the dollar value and percentage participation by minority, women, and disabled-owned business in City contracts. During FY 2005, MBEC worked diligently with City departments in order to provide a complete and accurate reporting of participation numbers based upon actual dollars spent.
Now that the protracted 46 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 reconciliation process has established, we look forward to providing the FY 2006 participation report in a more timely fashion. Finally, 6(b)(iii) of Bill No. 7 060408 requires a forecast of the eligible contracts to be awarded within the fiscal year. Currently, Chapter 17-1400 of the Philadelphia Code requires the City to post annually, on June 1st, a written report for each City department, the number of new non-competitively-bid contracts the City agency anticipates awarding in the upcoming fiscal year. The report must include subject matter, term and total dollar amount. Currently, MBEC works with City departments to establish contract by contract participation ranges for contract opportunities to the extent possible. Subsequent changes to the awarding of non-competitively big contracts would be captured in the 47 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 End-of-Year Reflected Report the City must produce by September 30th of each year. Furthermore, MBEC meets quarterly with Budget, Procurement, and Law to review the legislatively mandated reports. Additionally, competitively bid contracts for the procurement of supplies, services and equipment are posted on the City's Procurement website. Thank you for allowing me to provide this testimony, and I look forward to working with all of you as MBEC director, and am available for questions.
Do you really believe that a thorough examination every four years of this issue is appropriate for us to make a difference? I mean, I understand the costs, but when I think about the money we wasted in large public projects, for 48 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 example, and in just the way we do business, because it's such a large organization, four years, you could lose a whole generation of companies in four years and never really -- never know what was needed to get them in the loop. I mean, I'm not expecting -- I mean, as I said, at IBC, we do it quarterly, and it's a smaller -- obviously, a smaller company than the City of Philadelphia.
But four years is a whole administration. I mean, it's a whole -- you could change administrations in four years and have companies come in and go out of business and never have the information necessary to try to figure out how to keep them involved.
Or we could -- as 49 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 I said verbally, not in my testimony, we could adjust the scope of the Disparity Study. I mean, what we did was a big report before, in '96, '97 and the update.
I'm sure Councilman Goode has something to say about this.
But part of what my experience is in the private-sector thing is that when we get the numbers quarterly, we go, Whoa, look at that, look at that goal we were trying to reach in printing. What happened? What happened there, Procurement Vice President? Well, this happened and that happened. And we're making this adjustment to do this. Four years. 50 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408
-- the enforcement and compliant units within MBEC. We're not sitting around, waiting four years, but --
But I'm saying, without conducting the thorough investigation to give you the real numbers that you need to work with and adjust and put resources into various areas where you're falling off, or figure out what you're doing when you're doing great, why you're doing great and how you apply it to the other segments of purchasing and contracting, I don't know how you can't do it every year. You have to do it every year at least. I mean, just in my opinion and from my experience in dealing with this on the other side, you know, I understand you're not just sitting there for four 51 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 years, waiting for the numbers.
But to me, the Disparity Study on a four-year basis is just not going to get it done.
We will work with you to -- or the Administration would certainly work with you to adjust the appropriate scope so it doesn't turn out to be --
Thank you, Mr. Chairman. The scope is already adjusted. We didn't call for the type of Disparity Analysis that you conducted, the two that you mentioned; we're calling for a very specific Disparity Analysis as defined under this Charter amendment. 52 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 But let me run through a few questions before I get back to that. First, when was the last Disparity Analysis commissioned by the City?
That would have been, let's see, '96-'97, and it was updated in '99.
That was in 1999? Yeah. Yeah, the last Disparity Study, according to my testimony, was completed during the years '98 to 2003. And the report --
The question was: When was the last one commissioned? When did you commission the last Disparity Study?
Because it's '96 53 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 to '97, and looked at the years '98 to 2003.
(Addressing a new witness.) Could you approach the witness table. (Witness comes forward.)
Miss Staton, when was the last Disparity Analysis commissioned?
That would have been the last Disparity Study conducted by the City of Philadelphia that Miss Nichols testified to.
Okay. I will take that as your answer. So when was the last Disparity Study commissioned?
1997. And 54 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 it covered what years?
You commissioned it in 1997 and it covered '98 to 2003? That doesn't make a whole lot of sense.
Well, wait a minute. Originally -- well, originally, the City contracted with D.J. Miller in '96, and then the scope was amended in '97, and the report ended up being between the years '98 to 2003 --
So the study you commissioned in 1997 covered what years?
You don't 55 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 even know what years the Disparity Study covered?
This is all that I have in my records, Councilman. I can go back and try to look further --
Yes, yes, it would. I'm not arguing with you, but I searched the records and -
That Disparity Study covered probably a ten-, twelve-year period as opposed to being an Annual Disparity Study.
So you, in fact, tried to mislead and misinform the Committee because the figure you have in terms of the Disparity Study is not for an annual Disparity Study. In fact, you 56 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 never conducted an Annual Disparity Study, have you?
That's correct. I'm not trying to mislead you on this; I'm just showing you the records that we have.
So you don't have a cost of an Annual Disparity Study because you never conducted an Annual Disparity Study.
That's correct. I didn't represent that it was the cost of an Annual --
So you have no idea what an Annual Disparity Study would cost.
The only reason for me presenting me this was not to represent what an Annual Disparity Study would cost; I'm just representing what we've done in the past. 57 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408
You have no 3 idea what an Annual Disparity Study would cost; is that correct?
You have no 7 idea what an Annual Disparity Study would cost; is that correct?
How many Annual Disparity Studies have been commissioned by the City?
None have been commissioned by the City. No Annual Disparity Study --
How many Disparity Studies have been commissioned by the City? Not Annual Disparity Studies.
Okay. 58 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408
The City originally contracted in '96, amended it in -- (Indiscernible; parties talking over each other.)
Miss Nichols, as the new MBEC Director, how do you plan to measure disparity in the City contracting?
As the new MBEC Director, how do you plan to measure disparity in City contracting? (No immediate response.)
How are you going to find out where we are and where we need to be?
I asked, how are you going to do it in your tenure? How were you planning on doing it before 59 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 I introduced this legislation?
What we've been doing is what we've been doing, is meeting with departments, trying to increase the participation levels based on --
How do you plan on measuring disparity under your tenure? What did you plan to do? You didn't know I was going to introduce this legislation, so how did you plan on measuring disparity? The City's only commissioned one study that covered over a decade.
Not to mention the study was faulty, so you got taken for your money. But how did you plan on doing it?
There would have 60 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 to be a new study. We were planning on recommending a new study because the study had not been done since this period of time.
Specifically with the information that I have, what I planned on doing was with the present eligible contractors that we have, we planned on increasing the participation levels in City contracts based on the information that we have. But you're correct, we do need an updated Disparity Study, and that would be one of my recommendations. I was not in favor of an Annual Disparity Study, but I am aware that we need an updated Disparity Study because we're Looking at numbers from a period of time of '98 to 2003.
Under your tenure, how did you plan to address the underutilization of qualified 61 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 disadvantaged business in City contracting?
The underutilization question goes to capacity of the minority, women, and disabled businesses.
That's what I'm trying to finish. Everyone's talked about a lot about MBEC's limited resources, so not using that as an excuse, but what we plan on doing is partnering with majority-owned firms with Chambers to up the ante to help match --
I'm talking underutilization, which means that you have to know how many qualified disadvantaged businesses are being underutilized. How did you plan on 62 5/22/06 - LAW AND GOV'T - BILL 060388, RES. 060408 addressing the underutilization?