I want to see how this will -- actually, my bottom line question is, how would this benefit my district?
Councilwoman, I am Marla Neeson, Deputy Procurement Commissioner. Not to get ahead of myself and my testimony, but with respect to the 365 days, within any public works construction process, that 365 days is only after the bid document has been awarded and the notice to proceed has been given. 83 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 There is obviously many activities that precede that within the Capital Program Office with Mr. Tustin related to the design of the project and meeting with the community and doing the budgeting process. But you asked how would this proposed bill affect you?
Once we get the notice to proceed, past the community meetings, the design, all of that --
There would be a definite negative impact. One, the project would be delayed. As a result of the project being delayed, bid dollars would come in higher to cover that wait period.
How would the project -- I'm sorry, 'cause you guys keep saying the same thing. How would the project be delayed if all the due diligence was completed, the notice to proceed was granted, and we had to sign off either through resolution -- probably through resolution, that we had to say, Yes, this is in fact a project that we want to see done? How would that delay the process? 84 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228
We could not issue the notice to proceed. If the actual contract conformance was predicated on presentation and approval by City Council, we couldn't issue the notice to proceed. We could be delayed by the fine issues. For instance, we know that when we had to have PICA approval prior to proceeding with all capital projects, that had approximately a three-month delay. We did see increases in price because also vendors weren't certain. We were no 12 longer -- correctly or incorrectly, the perception we are no longer awarding to the lowest responsive and responsible bidder; we are awarding predicated on an additional approval outside of the bidding law by City Council and --
No, forget that. We just kind of conveniently forget that document in our discourse, but that is -- what this does is basically memorialize what's in the Charter. And I'll go back to another example that we just went through last week because we 85 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 were told a year and a half ago or so, or two years ago, that this $343 million expansion project at the Airport needed to be taken out of the control or out of the loop of the government for issues of expediency and efficiency, and then they come back last week and ask for $175 million more because USAir was running the show. I mean, it's either -- which is it?
Unfortunately, I am not involved in that and I can't comment on it.
I understand, but it's still a major capital improvement project, expansion project, that we were asked to say, Look, trust us, give us the $443 million authorization, we'll proceed, we won't have government because USAir will be the developer and we'll get rid of all of those problems, and then they come back with $175 million hole. I mean, can you at least be sympathetic with our frustration?
Oh, absolutely. No, I understand what your concerns are, but there are comments in the testimony related to that.
Well, the other 86 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 thing -- see, I feel that it takes too long to get public works projects started as it is. And already, we have a $500,000 cost overrun with our playground project. And then in addition, it's complicated when you get money from the State and money from the City to put the projects together, and then you have thee cost overruns. And I don't really know, and maybe I'll find this out later, what Charter-required oversight means as it relates to this whole contract piece. I mean, suppose you bring something to Council and suppose we don't like who's been chosen to be the contractor? I mean, I don't really know what our role -- I would need to know what our specific role would be under this bill.
Let me just make one comment about that. And I believe that instead of looking at it from a delay standpoint, I would look at this bill as an expediter. And let me tell you why. If your playground project is not exactly on the hit parade of the Capital Projects Office, it's not something that they're all that 87 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 necessarily motivated to get done, but they have another project that they're dying, that they're salivating to get done, you're not voting for that one until your project comes before that table and gets done. Now, the way the capital projects works now is that the priorities are set by the Capital Projects Office and by the Administration, not by the District Councilpeople. So if they have some major project that they have to get done for good reason and your project's been languishing somewhere in the bureaucracy of the capital works project, I can assure you, yours will get done much quicker than they're getting done now if we have to in some way have oversight and approval in the big projects that are priorities for them. I can assure you your stuff will get done much more expeditiously than it's getting done now.
Councilman Kenney, my name's Rick Tustin, and I'm the Director of the Capital Program Office, and I have to disagree with that blanket statement before I get a chance to testify. I have been -- in the short period of 88 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 time I've been managing the Capital Program Office, I've had many favorable instances where I've had to meet with certain people from City Council, and upon their request as to expedite a certain project, getting them done very, very quickly -- probably much faster than they've ever been done before. So I don't believe the statement that Council projects would sit on some back burner is a very accurate statement. There is a process that we go through where we --
Well, you could talk to the District Councilpeople and ask them what they feel the pace of projects are in their districts that were approved maybe two or three capital budgets ago. I'll bet you there are projects in this Council that were approved two, three, four years ago that still aren't in a position to be started yet, and it's frustrated District Councilpeople tremendously. I mean -- so, I mean, maybe, you know, you have a different view of what this is, but I'll tell you, I know I hear a lot of frustration from District Councilpeople as a result of their 89 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 inability to see, you know, projects in their district that they feel are a priority designed and started after being authorized for the funding. And they can speak for themselves, but I hear a lot of frustration this that regard.
If I could respond also to a comment that the Councilwoman made, where you said, what happens if we don't like the vendor who is brought to us for approval? That is exactly -- you've nailed it on the head. That is exactly what will scare the vendors away. That is exactly what would compromise the open competitive bidding process, because now you take it out of strictly objective evaluation and you insert --
Oh, come on, come on. Don't tell me about objective evaluations. You mean to tell me that the $39 million in additional project costs put onto the Airport was done in an objective -- professional services was done in an objective standard?
I can only thing comment on -- 90 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228
-- every contract that comes through the Procurement Department -- I want to distinguish Procurement Department as defined by the City Charter versus the procurement process. We've been interchanging the vernacular. Professional services, as Miss Berkowitz discussed, are a negotiated process. They're an evaluation of objective and subjective issues, but every --
Every contract which comes through the Procurement Department is a bid written to the specifications for the service or the product desired. It is not written to favor one or more vendors, it is designed to be a generic specification to maximize competition. Once that bid is issued and opened, it is awarded to, without exception, the lowest responsive and responsible bidder. There are no 23 other variables that come into that process.
So in that process, bids aren't thrown out and rebid? Oh, that 91 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 happens occasionally, doesn't it?
There have been -- departments will come back and say vendors -- one of the things we try to do is encourage vendors to let us know basically when our specifications don't make any sense, okay? Of the 76 people within the Procurement Department who write bid documents, we cannot possibly be experts in the field of all of the items we purchase. We rely on the departments. But in addition, there are technology advancements, there are market changes. So we rebid because: One, we've made a mistake, the City, in our specification; two, we have forgotten something; or three, I can't tell you the number of times where we had responsible bidders responding at a good price, but because they submitted a totally blank minority business enterprise form, we had to throw them all out. It was as though nobody had bid. There are times when we when we can't award because everyone has 92 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 been determined non-responsive. We then go back and do additional training. So those are the reasons that we rebid, not because --
So there's no input from the Administration when a bid is thrown out? Those bids, when they're thrown out and rebid, are all done because you simply can't award the bid?
In my tenure of six years, I have never rebid anything because somebody called me from the Administration or otherwise and said "I want you to rebid this." We have only rebid for valid reasons in the best interest of the City. We have rebid public works jobs because the original bids came in grossly over estimate and we're not going to award. Maybe it's because we didn't have enough competition, maybe it's because we need to revise the specification. But there is -- we are happy to share with you the reasons because there are there is a valid reason for doing that in our best interest.
If this process and the people who are running it, along with the 93 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 second floor, were happy in sharing information with us, we wouldn't be sitting here looking at this bill, I can assure you. And there's no 5 desire to share information; there's a desire to hide information.
Well, I can -- I do not believe that the Administration is looking to hide information. As a matter of fact, just as the professional service process has made efforts through reengineering and technology to make information available versus a mystery, so has the Procurement Department. Every contract document, every purchase order is available for any City employee on our intranet. You can pull up anything you want, know where it is, why it's there. And we have never turned away anyone who's asked a question. We can produce reports out the wazoo for us you, we can discuss these. So if -- it would most unfortunate if we have gotten to this stage because of an unfortunate impression that we are holding back information.
I could give you instance after instance. Let's go, for example, 94 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 to the vending machine contract for the police stations and the rec centers. How was that done? I mean, I had a vending situation in a rec center where I am a hockey coach in the winter, and we used to have the machine ourselves and the money used to be dedicated to the kids and the sports programs and the ice skates and the ice time. In the month of December, which is our biggest month in history ever, we get a $9 check from the vendor, a $9 check from the vendor. So when decisions are made to hire people like that without our input, without our ability to go back and deal with it in the end, other than to complain about it, those are things that affect, from the highest level of contracts to the grassroots people in the neighborhood, who put their $1.25 in the machine and don't get a soda can out of it, and then they come and complain to us about it and come and complain to the rec center personnel about it, and then they rip off the rec center in addition to providing bad service. And this contract was let -- this contract was let with this wonderful, you know, objective process. 95 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 So there's a perfect example that I've had firsthand experience with.
Councilman, I think you have just reinforced one of the most significant benefits of a one-year contract with renewal options, and that is, it gives the City the ability to look at performance over the course of a contract term and to determine, in consultation hopefully with consumers of the service throughout the government, whether in fact the contract should be renewed at the City's sole option.
And I will guarantee you that that contract with that vendor will be renewed next year, because that contract was given to one vendor, who then subcontracted to other vendors, so that there's this layer of isolation that they can put on themselves. I'll bet you that contract is renewed. Maybe after this discussion, it won't be, but I'll bet you under normal circumstances, that contract would have been renewed. Because, guess what, the next month our check was about $150. It's amazing how stuff happens like that. 96 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228
Well, let me just comment. What you are speaking of and your frustration and our citizens' frustration has to do not with the term, the potential term of the contract, but the contract management. You don't watch somebody, they're going to give you crap. They'll do it for a one-year contract, they'll do it if there's renewals. But one of the questions that was asked was, how many contracts have not been renewed? Unfortunately, I can't give you that data right now. The report which you have does not properly identify those contracts with renewal options where we did not execute. But I not just from my involvement, probably within the last year, at least five which were not removed because, one, there was a change in the competitive marketplace so we were going to get better pricing. We had at least three vendors where we were not satisfied after a year that their performance met the requirements of the contract. So we're going back out again. It's much easier to cancel a contract at our sole discretion versus pursuant default of 97 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 a vendor. Bar for default is much higher and more difficult. So it is a good management tool for us to say Fine, we just don't renew, aside from the fact that, as you correctly noted, 40 percent of our contracts, approximately 40 percent of our contracts, have renewal options. Probably if you went back -- this is not something that's new. For at least the last twenty years, the Procurement Department, on its service supply and equipment contracts, has had renewals. It was not new in the prior administration. It has been a normal part of business, because there are certain things that you acquire. Heavy maintenance of facilities of HVAC systems require the vendor to make a large initial capital investment to start service. They do look at our history of renewals in determining how much time they can anticipate for amortization. So we do -- my point was, it is not -- we do cancel, not renew contract 'cause it's our sole discretion that we have vendors who get upset when we choose not to renew because they say, Wait a minute, I had a renewal option. It's at our 98 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 sole option, at our discretion.
Well, I would like you to make it our sole discretion, like all of us, the whole government, not just one element of the government, but the other part of the government that is responsible by virtue of our constitution, our charter, to be responsible for the expenditure of taxpayers's dollars. Somehow in this whole discussion, that philosophy gets lost, that somehow this is other people's money. It's all of our money and we have a responsibility to have oversight relative to its expenditures.
And what I can comment on is that the Procurement Department conducts its business in accordance with the City Charter and public bidding law and as directed by legal opinion from our City Solicitor's Office. And the Solicitor's office has approved and condoned that we are not in any way in violation of the City 99 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 Charter with the one-year contract and optional renewals.
He's your lawyer, not our lawyer. Technically he's ours; realistically he's yours so -- Councilmember Nutter was next. I'm sorry.
Yeah, really quick, 30 seconds. The statement that you made that you've never thrown out a bid, I believe that's what you said.
Where there's no 20 political input. What about conversations before the fact, when you may know that there's a particular vendor that is recommended to you? They don't get any consideration?
No. Okay, once again, do we make mistakes, do we inadvertently have a 100 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 specification that may favor one vendor? Yes. But I can assure you, it is one of the things that I have worked hardest on and Commissioner Applebaum worked hardest on is that to be sure that the entire vendor community knows that our bidding process is an open and fair one and that we are looking to maximize competition. We do not allow departments to say, "I only want this guy." We scrutinize those specifications, we'll go out to competitors, we'll go out to associations to be sure that we're establishing specifications that can be met by the general vendor community. So I guarantee you, it's never happened that, you know, there's been a favoritism, no, but it's inadvertent. We certainly are not sitting down with "Joe Blow Vendor," saying, Okay, John, tell me to write this.
You have to have blue trucks or something like that. Okay, got it. Thank you. Thank you.
Thank you, 101 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 Mr. Chairman. Miss Berkowitz, just a couple of questions. Let me go back for one moment, though, to something you said, which I thought was intriguing. At the earliest part of this hearing, you made reference to the process by which many of the departments reauthorize contracts or it's kind of the crunch time of negotiation, and you started that part of your statement by saying basically well, you know that Council doesn't approve the budget until March and that that somehow creates somewhat of a burden on people trying to deal with the contracting process. At least that's the way it came across. And I guess what intrigued me about that is that until about nine years ago, I think maybe for the history of the body, the budget wasn't approved until May, which is when the Charter says it must be approved by.
I guess I didn't understand how our approving budget in March, which is a process that was started in 1992, 102 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 somehow negatively impacts what the departments do. If anything -- I mean, I'm not saying that a couple months makes all the difference in the world, but your statement confused me.
First of all, it was not meant to be denigrating with reference to City Council, because anybody who's been involved in this process, the before and the after, knows that the passage of the budget in March is a tremendous improvement over the --
I thought that's what you wanted to say. I just wanted to give you that opportunity.
And has actually allowed the department to expedite their contracting, but there is still a crunch because the workload is tremendous.
All right, thank you. I appreciate you clearing that up. Let's talk about -- I mean, it seems to me that a lot of this revolves more around the 103 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 issue of having access and some level of involvement in a process to some amount of information, which, quite honestly, is probably more narrow than it is broad. I don't think that many of the contracts that you were talking about specifically with regard to human services and the other 8 million contracts that you guys may work on or don't work on, which I have no idea the nature and complexity of, are probably not even, quite honestly, within the realm of what the primary interests that the Councilman may have. He can certainly more than adequately speak for himself, but I kind of don't get the impression from a lot of this back-and-forth that anyone wants to really sit sand monitor what DHS is doing in the provision of services to children or something like that. It seems that a lot of this revolved around the higher-profile, somewhat more discretionary contracts that attract a fair amount of attention and, you know, may have a fair number of well-known interested parties paying attention to them. You know, we again rarely get lobbied about, you know, DHS contracts. I think most of 104 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 the usual suspects are not even involved in that side of the business. So in that context, it would seem that if we have a particular need for more information, at a minimum, there should be some effort, I think, to try to address that particular concern. And then I know we get closer and closer to a legal line or, you know, who's doing what to whom line, when you start getting into do you get to approve, do you get to see the actual documents, because technically, if it's not more than a year, not only do we not approve it, I think generally we probably don't even get a copy of the contract automatically, unless we ask for it or have a public hearing about it or something like that. Now, I had some experience in this a while ago and it's continued for some time, specifically with regard to one of our health-care providers, Rite Aid. And as far back as probably 1993, I've had concerns and raised issues about that particular contract, which was technically a one-year contract, which at the time had three one-year renewal options. Now, would you happen to know who our 105 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 prescription provider is today?
Our prescription provider for the district health centers?
Well, I believe it's a network. The network is managed by Advanced PCS.
Mm-hmm, and we're still dealing with the Rite Aid company, or we have been for some time?
And that was in essence a one-year contract, which I think started out with three one-year renewals and then we went back out in the market and did whatever we did and somehow magically we ended up with the same company with a multi-year contract. And I think it really kind of goes back 106 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 to an item that was raised earlier, which is, I would also be interested in some of those types of contracts where it has been one year with multiple one-year renewals. And I would also be intrigued to know how many of those were not renewed, because I think what you have in reality -- it may not even be, you know, an insidious, conspiratorial thing that someone's trying to create, but the reality of what we see is, ten years later, we're still in essence dealing with the same company because it becomes convenient, maybe they do something with the price or we try to build in price protection, although that one, the price actually went up every year. We had difficulty in the beginning even finding out when the one-year renewal period was going to start or did other companies have an opportunity to approach the City, because I understood that it was at the City's option, but if the City is not interested in having a discussion with anyone, they can just go ahead and automatically renew. So, I mean, some of this is in the realm of what's the real spirit and intent of 107 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 Charter provisions and how do these things not only work on paper, but what's the final result of what happens out of it. And I would venture to guess that in that situation -- we have a present situation, which I've expressed concern about, which happens to regard the School District, but it's the proposal that we approve a one-year contract with nine one-year renewals but an up-front payment of $45 million. I mean, if we're going to give the School District the money, which I support, I mean, we should just have that hearing and give them the money. But it is -- I mean, I respect the Law Department and others who worked on this. I mean, it is a complete ruse of what it is that we're really trying to do. The Mayor made certain commitments. Many of us would like to help not only the School District but support the Mayor in having made those commitments, but to sit around here and the back-and-forth on that one, I mean, if you're really, you know, intrigued and want some interesting nighttime reading, you should read the notes of testimony from that hearing. I mean, to try to defend that as 108 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 anything but what any average person can figure out, it's a ten-year contract. There's no doubt, there's no question about it. I don't know why we're doing it. And I think ultimately it doesn't even accomplish the purpose for which it was created. But, I mean, to try to convince us that that example, a one-year contract with nine one-year renewals, an up-front payment of X-amount of dollars to cover a certain time period is anything other than a ten-year contract, I mean, it is an insult to any of us who learned math in first or second grade. I mean, 1 plus 9 still equals 10 every day. So I think, you know, in that regard and under that circumstance, you know, we wouldn't necessarily have a right to, you know, the contract documents and what does it say and who does what. I mean, why are we dragging ourselves through all this, I guess, is one of the questions.
Well, I hope you can appreciate the fact that I really cannot respond to that; I have not been involved in that, I don't 109 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 know what any of the specifics are, and I'm not prepared to discuss that. But I would like to go --
Under the circumstances, that's a reasonable answer. I appreciate you, you know, crafting that particular response. It's more than understandable under the circumstances, and even if you did have an answer, I wouldn't necessarily expect you to offer one because it's not necessarily the point of this particular hearing. Now, when you mentioned these systems, you talked about -- I don't know, I heard Amos, Famous, Avis --
-- Hertz, National. I mean, wouldn't even know where those systems are, how to access them. If I have a problem about a procurement issue, which I have one presently that I was going to talk to Mr. Applebaum about call, I mean, I just call the Procurement Commissioner. And, I mean, I'm not necessarily looking as a sideline to be a contract officer. But, again, some of these contracts are 110 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 very serious, they are quite high-profile, but also of particular importance to a variety of constituencies out there. The recent situation, which I don't know all of details on, of the voting machines; now, that is something that Council was involved with, we put a question on the ballot, the voters approved of it, there was some process. And as put the bits and pieces together, it sounds like there was a negotiation back and forth between the City and a couple potential vendors. I also get the impression that at some point in time, the discussion stopped between the City and both and proceeded between the City and one, which seems to be very different from the process that we used in the procurement of the 800 megahertz system, which, I'm under the impression, that the City to the last bidder, final day was in discussion with both companies, going back and forth, trying to make sure that we got not only a good price, but good quality and good delivery. As I can, again, best understand it and maybe you can clear up the record today, that negotiation seemed to have stopped at some point 111 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 with both, continued with one, the result of which was an increase in the dollar amount of the contract -- I don't know if the other company had an opportunity to respond based on that -- and an increase in the amount of time for delivery. There is a state statute that does, I think, delineate some time frame within which the City is supposed to have those machines in place, and I don't really understand that.
If I can respond. On the voting machines, you are correct, there were two proposers. There were negotiations proceeding with both. Essentially, both vendors could both provide a good machine, they both had good organizations, and they had essentially the same delivery schedule. The difference was $6 million.
So you have negotiations. They refused to lower their price any further. That was why you then say thank you very much, I am going to proceed with negotiations with this vendor. We always have the opportunity to go back, but there was really no purpose. We didn't have, I believe it was, $25 million for their 112 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 system. They had much --
Okay, I wasn't the lead person on here. I believe the capital budget is around $20 million, I believe.
Is that what was approved or is that what the ultimate price is?
That is with some 16 additional services, but they would have been -- 17
Right. You know, once again, it was determined there was some additional things that were needed. That would have occurred with the other vendor also, so there was no 23 difference in that context. It's just you were starting at a different base point of what your cost was going to be. And there was no way we 113 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 could justify an additional $6 million expenditure. There was not an associated benefit for that cost. So that's why.
I don't -- the -- let me rephrase this. The contract that has been entered into defines the specific products and services that are being received, the schedule of delivery, and their individual cost. Those products and services are authorized once they receive -- "they" being the vendor -- a funded purchase order. If, for instance, next week, they determine that the centralized computer -- the centralized data center down at the voter registration needs another land line, we could, with appropriate funding, add that with a new purchase order. So the contract is not the funding vehicle; the purchase orders are the funding vehicle. So there isn't a maximum amount per se, but it's all predicated on the budget you have. So our budget cannot exceed what has been approved 114 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 and appropriated.
Yes. Don't quote me on 6 the actual number on that line item. Once again, 7 I was not the controlling negotiator on this and I 8 certainly wasn't involved in -- 9
Well, at public 10 hearings, you tend to get quoted a little bit. 11 You say it in the microphone and before you know 12 it, it's on the little paper over there. 13
Mr. Tustin, do you 16 have anything to add to that? 17
Unfortunately, I don't. 18 The Finance Department negotiated that, set the 19 budget for that. 20
I believe -- not negotiated it, but the Finance Department is the department that basically requested the budget for that project. It didn't come to our office. I'm 115 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 sort of the bricks and mortars of the construction, and purchase of equipment like that doesn't come through our office.
Just for a moment. Take this example. It's $20 million in public funds being expended as a result of the negotiation, pretty free-ranging negotiation that the City entered into, the Procurement Department entered into on behalf of the City. What is wrong philosophically with that ultimate contract coming back to us, considering the amount of money involved, the effect that it has on our constituents, which every six months, they have to go vote, considering the fact of the national attention on voting irregularities and voting problems throughout the country in the last election? What is wrong philosophically with that coming back to here for one more go-around just so we can ask some questions, be informed, understand, and move forward together in a feeling that, you know, what we're doing the right thing? 116 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 What's the problem?
To have a dialogue on that. I would create -- I would distinguish that that process was a negotiated process. So it is outside of the normal -- our issue is primarily related to those open advertised competitive bids, as defined by the Charter, as defined by public bidding law. Where there is not that outside subjective, I-don't-like-that-vendor --
So would the department support our approval of contracts at that level if removed those that are competitively bid simply on price?
But that wouldn't be as big of a problem, I guess, if we were just doing the big, high-profile ones that were --
Conceptually, but once again, I have to refer back to our solicitor's office is who defines what the Procurement Department may do with our bid documents and 117 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 contracts.
Thank you, Mr. Chairman. Why don't we do this. In that particular instance, 'cause, I mean, I would never even think to want to try to put you on the spot in a public hearing. Well, actually, I thought about it but I chose not to. If you could get us some information through the Chair about some of those particulars. There seems to be a fair amount of information and possibly misinformation about some of the particulars surrounding that matter, which is something that I was directly involved in. I also ask if you would seriously go through the notes of testimony from today's hearing. You've heard a number of statements from the Councilman and other concerns raised by other committee members. There seems to me that there has to be some way to bridge some, if not most, of the gap that revolves around information, involvement and process. I have no particular interest in a, from my perspective, in a day-to-day, watch the ball, follow people around 118 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 with documents over in Procurement on these various projects, 'cause I know that I will basically get in the way. On the other hand, there are projects and contracts that have serious import, not only to the Council but I think to the general public at large. And, you know, in the day-to-day discussion, if not at times jousting over who has what jurisdiction, individual or shared, this is an area where maybe the framers of the Charter thought right that, you know, we'll continue to have a little bit of attention in these areas, but at the same time, to the extent that we can lessen any of that and make sure that everybody just has what they need, we'd probably find things going along a little smoother. Thank you. Thank you, Mr. Chair.
I just want to restate that I came to this hearing not necessarily in support of this legislation, and I'm not suggesting that I am, but it has certainly 119 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 opened my eyes, and made me listen very carefully. I'd like you to describe for me the scenario that will occur in the next few months in reference to -- this is just an example of how we do business. We currently have a company that is called ATX that is a long-distance provider that the City's engaged with. And I'm only saying this because it's been said to me. We know who owns that company. But let me move on quickly. What will be the scenario on the City of Philadelphia bidding, again, for the long-distance service? Will this particular company, ATX, be able to renew without competitive bidding? Will the AT&Ts, the Global Crossings, the Sprints all be solicited to provide the long-distance service for the City of Philadelphia? Or could this particular company, which I believe is being sold as we speak, or has been sold, will continue to do business with the City of Philadelphia? These are the things that get us going when we get these phone calls from various vendors that don't think they have a shot because of a relationships that some people have with this 120 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 government. Could you describe how that's going to go down?
Yes. And also let me say that one of the things I -- literally just before I left my office to come over here, I had to persuade a vendor, a very large vendor, that no, there were not outside influences that were going to be impacting on the award of a procurement contract, that it was open and competitive. There weren't the political influences. So when we develop -- I don't know the specifics around the long-distance contract. I believe that we may be at a point where the contract is scheduled to expire in the next six months, and so, as part of the normal procedure, we begin developing a new bid; "we" being the Procurement Department, in this case, in direct collaboration with the Department of Public Property Communication Division, which as responsibility for all of our phone and telecommunications equipment. We will develop a bid document. We have approximately 12,000 vendors who are already on the City's bid mailing list. That means they 121 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 automatically get a notice when we issue a bid for which they are interested in. In addition, we advertise, we have all of our bids on the Internet; we have had some vendors who come to us as a result of that. So we are not -- vendor participation is not limited to being on our bid list. That's just a convenience. Anyone can respond to a bid document. For those vendors that respond to the open competitive bid, they must first pass what we call a "responsiveness issue." This is strictly black and white, this is primarily laid out in the Charter. They have t have their bid there on time. If they arrive at 10:31 and the bid is at 10:30, it's as though they never showed up, because they were not there for the public opening and reading. They then have to have executed the appropriate bid surety, as also defined in the Charter, signed the document, and submitted their Minority Business Enterprise Council participation form. Once they have passed those hurdles, which is strictly black and white, you know, met 122 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 the rules, then you have a responsibility. That is the assessment of, does this vendor have the experience, competency, and fiscal capacity to do the work that we're requiring in this contract? Once again, once that determination is made, then you strictly go to the low bidder. I don't personally -- one of the responsibility issues can be that a vendor has done prior work for the City and it was unsatisfactory. As a result of that, we would determine them to be, if it's a comparable work, that they are not responsible. They have already proven that while on paper, they may appear to be capable of doing this work, they have not performed to satisfaction. They would be disqualified and not considered for award. So there are a number of processes. Just a for-instance, let me also state that by federal -- we have had inquiries from individuals saying "ABC Company" is in bankruptcy, they're in Chapter 11, you're not going to award to them. Unfortunately, as a municipality, by federal law, we are precluded from disqualifying a vendor because they are in a reorganization 123 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 through bankruptcy. Our disqualification can only be based on their performance.
So you're telling me that the Communications Division, if they had a bad experience sometime in their life with AT&T, they could tell the Procurement Department to knock AT&T out of the deal.
No, this is -- you have to have some judgment in the process. First of all, what is the context? Was this eight years ago? All right, that probably is --
Also, you have to take into consideration what was the nature of the problem. If AT&T's problem was, I don't know, laying cable, and this is for cellular service, are they totally different divisions, are they totally different subsidiaries? How do we relate -- consider that? In addition, we have to be sure that -- contract management is so important. The Procurement Department spends a fair amount of time going out to the departments, and we'd be 124 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 more than happy to come to City Council to talk about the process and what you need to do to be a good contract manager, because we need to be sure that if we're not happy with the vendor, we've got to tell them. You put it in writing, you call them, you don't just remain silent and then at the end, say, you know, we're not going to give you a contract, you were terrible.
And this is a perfect example of getting to know how to manipulate government. In the contract --
Let's use the long-distance service as an example. In the deal, there's a way that you can get a credit for a wrong number if you believe that you were connected with the wrong number. The same with the cellular service: If you get a dropped call, there's a paragraph that explains how the City's supposed to get credit for these various things. Well, if nobody ever asks for a credit, you're talking about contract management, that's where we don't do a good job. I'd like to know the last credit, unless it's an automatic credit, that 125 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 we've gotten for a wrong-dialed phone call in this government. My point being is that there are so many phone calls made to members of Council, and I'm only speaking for myself, and this issue, we're watch it very carefully to see, because Verizon of Pennsylvania is in a very few months going to be eligible to provide long-distance service. So they're concerned about companies that are on the other side of the world getting the business that is a company that can provide that service right in our own city. So I'm not suggesting that they should get a leg up on that. Maybe they should, I don't know.
We are precluded from providing local preference. Once again, we will define -- and it is in best interests of the City. We are going to award to the lowest bidder, be that person here. Yes, would I prefer for them, the lowest bidder to be from Philadelphia? Absolutely. But we do not have the opportunity to give local preference. It is strictly an award --
Why? Why if an employer employs a thousand people and pays City 126 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228 wage tax, why don't they get a --
Because the City Charter says that we will award to the lowest responsive and responsible bidder. That would require a charter change, I believe.
Changing a lot of things. So thank you, I appreciate it.
Thank you. This committee will be in recess till the call of the Chair.
Councilman, can I just respectfully submit -- this is Linda Berkowitz. Can I just respectfully submit that the testimonies of the Procurement Commissioner and Richard Tustin be entered into the record?
Since they won't have an opportunity to give it? Thank you . (Copy of Mr. Tustin's testimony not ultimately given to stenographer for attachment hereto.) 127 5/23/01 PUB. PROP. PUB. WORKS - BILL 010228
Well, they will have an opportunity to give it at another date.
Thank you. - - - (Adjourned 12:39 p.m.) 128 C E R T I F I C A T E I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of Wednesday, May 24, 2001, were reported fully and accurately by me, and that this is a correct transcript of same. RE: COUNCIL COMMITTEE ON PUBLIC PROPERTY AND PUBLIC WORKS BILL NO.'S 010228, 010303 __________________________________, JOSEPHINE CARDILLO, Registered Professional Reporter