Thank you, Councilman Nutter. Councilwoman Blondell Reynolds Brown.
Surely. Good afternoon, everyone. Hello. VOICES: Good afternoon.
On the last page of your testimony you state, and I quote, at pre-bid meetings, vendors are encouraged to seek minority participation and are introduced to minority businesses. We know we can't require them, so how do you encourage them that that's the right thing to do?
Well, we tell them it's the right thing to do, because the City has a chance to make sure that everyone gets an opportunity to take part in the process. And we encourage everyone, regardless if there's minority companies or majority companies, that they should, in a good conscience, go out and solicit other vendors and help them along the way. One of the things that we try to encourage is that it's incumbent upon all of us, when we include everyone into that process, rather than excluding them, in that the bottom line is that we may get better prices by exclusion rather than --
We may get 609 Operating Budget - 3/9/05 better what?
So, we try to encourage it. And we'd let them know that we'd like for them to participate in it. And we hold them accountable when there are ranges that are set. In most cases they have to comply with it.
And in those ranges, they... We make sure that... Well, MBEC makes sure; we don't. MBEC makes sure that they're in compliance.
And if they're not in compliance, then we do not do business with them.
Okay. And that is... How is that officially communicated? Is it a document or a letter that comes from Procurement or is that a letter document that comes from MBEC? I'm speaking as one who's still learning, trying to get my arms around the relationship and the support piece that happens between Procurement and MBEC. So who officially informs them?
Well, what happens is that when the bid comes in... Well, when a bid comes in, when it goes -- getting ready to -- When we're preparing to go out on the street, MBEC will determine the goals or ranges for those particular contracts or bidding opportunities. They will -- Then we will send them out. And then when the bids are returned, we send them their information, their documentation, which MBEC looks at to 611 Operating Budget - 3/9/05 determine whether or not a company is in compliance or not.
They will notify us in writing with the determination of whether or not the company is responsible or not.
If they're not responsible, then we in most cases do not award them the contracts. And when I say "most cases," there may be extenuating circumstances where there may be a gap of, let's say, a hundred million -- well, not a hundred million -- a lot of -- substantial amount of money that the City will lose as a result of it. So then we make a determination of whether or not it's in the best interests of the City to proceed with that bidder or go to the next bidder or rebid it.
Okay. All right. The following sentence here says, Procurement will continue to partner with 612 Operating Budget - 3/9/05 MBEC and training programs. How does this happen, to educate minority vendors about the bidding process?
That we attend with them with MBEC. And we go and explain the process to minority vendors and majority vendors.
So that they understand the process, and what the opportunities are, and how you can do business with the City.
Over the next year, can you just forward to the Chair those dates? I'd be interested in coming to one, to learn and to be more useful and helpful to MBE's and WBE's that come to me with questions about how government operates in their interests, when it comes to doing business.
Okay. 613 Operating Budget - 3/9/05 My final question is, earlier in your tenure we passed the... what's called the Cooperative Purchasing Agreement Bill and referendum that allows us to take advantage of contracts negotiated by other government agencies. And I may very well be answering my question, because you talk about strategic sourcing, and the contract you have with the state around the Dell contract you have with the state. Correct?
So, it's clear that you've taken advantage of this agreement. In addition to the one stipulated here in your testimony, are there other examples which indicate that the City has saved money as a result of the Cooperative Purchasing Agreement Bill?
Well, we're in the process, Councilwoman Brown, looking at the office supplies contract with the U. S. 614 Operating Budget - 3/9/05 communities, to determine whether or not that contract will save us money, compared to our current contract we have. We have -- We have been -- It's been a slow process, from the standpoint that there is --
Is it principally because it's a new phenomenon and you will --
It's new, but also we're having discussions with the Law Department, and their interpretation of what competitive bid means versus what we think competitive means.
Because what happens, for instance, with U.S. communities, they send out bids or send out quotations. And then at the end of the day, what they do is that they take the lowest bid. And then they negotiate it downward so that they get a better price. Our Law Department feels that that's not according to our City Charter, that we 615 Operating Budget - 3/9/05 can take advantage of that. So, we're in the -- in discussions with them to try to resolve that issue, so that we'll be allowed to utilize those contracts that have what they consider to be negotiated contracts.
Interesting. Is that happening -- the Cooperative Agreement happening across City departments at all yet?
Okay. So would the School District be another, since it's not "the City" in the pure sense of the word?
Right. That's -- That's -- That's possible, that the School District could -- we could utilize the prices that the School Board or the School District get, if they're better than our prices.
Any opportunity 616 Operating Budget - 3/9/05 yet where that's happening? Have you had any dialogue or discussion with the --
And she and I are exploring opportunities where we can do so.
Okay. Well, I and others will look, I'm sure, with interest to see how far along or what progress you've made a year from now with that. Because there's some in government -- And I agree. I believe it was... Could be mistaken... Phil Goldsmith or maybe is predecessor, who saw the value in doing this, when it comes to saving or looking for creative ways to save money.
And so if it is an opportunity that works, then it behooves us to seize the moment and work it out with other governments like the School District.
That's what we're in the process of doing. 617 Operating Budget - 3/9/05
Thank you, Madam Am president. Good afternoon, Commissioners, Deputy Commissioners.
Commissioner, as you know, the Water Department has been holding up on the letting process for about seven months. And that has probably caused a problem with a lot of the contractors who do business with the City. In fact, a lot of their employees who really depend upon this type of work are out of work because of the budgetary constraints that led to this problem. Now, I understand -- I had a meeting with the Water Commissioner today. And he is finally -- They finally approved the budget 618 Operating Budget - 3/9/05 for him and the appropriation necessary to get this on track. Now, to me it's up to the Procurement Department now to expedite those bids for that type of activity to go out. And I would like to know if I can encourage you to expedite those bids, that letting process. I think it's important. I also want your opinion. One of the recommendations that I received from the Commissioner is that the lettings be increased from seven to ten. Is that possible? Would you be willing to sit down with the Water Commissioner and his people to see if we can do that? This will expedite a lot of work out in a timely fashion. And I think that one of the things that's going to do is going to keep people on the payroll that you don't have today.
Yes, Councilman, we will work with the Water Department, Water Commissioner, in making sure that takes place. 619 Operating Budget - 3/9/05
Does that make sense to you, that an increase from seven to ten would be something that you would look at?
And it would be possible to do that? Because I think that's very critical to the people that are working on our streets today. Not only that, but it will make it a heck of a lot safer because of the infrastructure of the Water Department throughout Philadelphia. I think we're going to have a lot of -- We need this work done, and we need it done as soon as possible. So if you could do that, that would be work with the Water Department and the Water Commissioner, to do this, I think would be a win situation for everyone concerned.
Now, another problem that I have -- and you touched upon it with Councilwoman Brown and Councilman 620 Operating Budget - 3/9/05 Nutter. I'd like to know who's responsible for investigating the legitimacy of minority vendors? Is it you or is it MBEC or what?
I'm sorry. Would you mind coming up to the witness table so that you could respond to the Councilman's question, please. Mr. Gamble, you could stay there. I know you're anxious to leave. (Laughter.)
Good afternoon, Madam President. Good afternoon, Councilman. Good afternoon, Councilwoman.
Please identify yourself. 621 Operating Budget - 3/9/05
Michael Williams, Deputy Finance Director, Director of Minority Business Enterprise Council.
Candace Hitchcock, Deputy Director for Operations, Minority Business Enterprise Council.
Mr. Williams, I have a question. Of course, in my other life I was in the procurement business. I was a buyer for probably one of the largest electrical manufacturers of electrical equipment for the transmission and protection of electrical energy probably in the country. But being in that position, we were always under the gun because we had federal contracts, and we had guidelines to go with. They were always interested in getting minority contracts. There was a percentage of contracts that we had to give out to minorities. And as a buyer, you're instructed to do whatever you could to increase that or to at least make up our quota. 622 Operating Budget - 3/9/05 Now, I have had people in my office who come in, and they have either a woman or two women or they come in with an African American or two. And they're saying these are the... This is the owner; this is the president of the corporation or whatever. And really, the work is being done by the contractor's been doing it all along. And that's probably a white male dominated contractor. And they do it. They set up these little... private little firms, if you might say. They incorporate. They do a lot of things around just to qualify as being a minority; where, in all -- in every sense of the word, they're not. They're just a middle man. Now, this has been going on for years. And it's going on today. If you pick up the paper, and you can see someone being investigated today is a woman. It was a black woman who set up a company and is being nothing more than a middle man. She sends in invoices that are 623 Operating Budget - 3/9/05 probably 30, 40, 50 percent higher than what she should have been receiving for the work involved. And this is the problem that we're facing, that not only do we pay more, but it's not going to minority companies at all. I have a friend of mine who has a company in North Philadelphia. Now, he's not a minority, but yet he has hired -- he has hired over 100, 150 minority people to work in this company. And he pays them very well. And they get full medical benefits. And they are no longer on welfare. They're being productive people in this City. These are the people, in my opinion, we should be really looking to give City business to. He doesn't do any business with the City, but that's beside the point. Who is responsible? Are you responsible for investigating to make sure these are truly minority companies?
Do you have the 624 Operating Budget - 3/9/05 arm? Do you have the resources to do that? Do you have the people to do that?
Well, Councilman, we have the authority to do that. Frankly, we don't have, I think, enough folks to do that. But we are working through the City's hiring process to get more.
See, that's the problem, Mr. Williams, as I see it. We always pass these laws. We always do this or do that. And we're always being one-upped. We're always getting somebody that looks around, and they can find a way to get -- to get the contract, to get more money. And they pay off some people, and we're back to square one.
We're not really helping the minority communities by doing that. I think we really have to investigate, to make sure they're really qualified to do it; they're not just a front 625 Operating Budget - 3/9/05 for some other business. That's my problem.
It's going on. It's been going on. And it's still going on evidently, from reading the newspapers. And I don't know... I'm putting you at, I guess, a disadvantage here.
Oh, no, not at all. I completely agree with you. That is just a horrible misuse of this program under any of the Executive Orders that have been passed throughout, to monitor -- to create MBEC and to monitor this. We have a continuous fight for companies who get smarter and get more wilier. And they understand that, at least before I came in and created the enforcement unit, that MBEC did not have enough folks. Currently we have a deputy of enforcement, compliance and monitoring and two compliance officers. Their plates from the day they walked in are filled. We are -- will be asking in the next 626 Operating Budget - 3/9/05 budget year for another compliance officer, and asking our folks who are there working now, to do more investigations. It just takes a lot of time. And we just don't have enough folks to cover everything that we'd like to cover.
What percentage would you say is being investigated of any certain type?
We get investigations after we hear a complaint. So we monitor -- After we go through the clarification process, we vet the companies. But if we hear a report after that, because people -- You know, we look at -- Candace, can you run through the certification process, just very quickly?
Yes. The applicants apply to the City for a certification as minority, woman or disabled business. They submit an application, and they submit supporting documents that all support the fact that they are, in fact, the person who holds themselves out as the minority or 627 Operating Budget - 3/9/05 woman business owner and has control of the company, either by share ownership or outright hundred percent ownership, depending upon the company structure. We review all of these documents. We review their financial information. And all of this, in fact, supports a recommendation that the person is, in fact, a bona fide minority, woman or disabled business. That's basically the process.
So we start that vetting process at the beginning. But if we receive a complaint that a company is actually a front, after we've done an investigation, we will go back and do more investigating, with that complaint in hand, to see if this is true, that there was something that we were misled the first time. And if we do find that there is someone that actually did mislead us through our initial investigation and certification process, we'll hand that over to the District Attorney's Office.
Yeah. But who 628 Operating Budget - 3/9/05 would do the complaining?
And as far as the ownership, I could understand; but do you do a little deeper... deeper investigation to see how many minorities that are actually working there or...
Okay. That's what I wanted to know. Thank you, Madam President.
Thank you. I just wanted to ask a question. MBEC is presently doing the certification?
Okay. 629 Operating Budget - 3/9/05 Because I think last year they were looking at another process.
Well, last year, Madam President, we were looking at many processes when I fist walked in the door. After I got here, realized that out sourcing it would be probably cost prohibitive to the City, particularly in its budget straits, and that were we to simplify our process, truncate it and streamline it, it would be a lot easier for not only the vendors but for our --
-- department as well. And right now we have an application and a policy that's in a lot of our department being vetted. We would hope that we can move that along in the Law Department as quickly as possible, so that we can come out within a month or two of having a new certification process. 630 Operating Budget - 3/9/05
Thank you. How long does it take for one to be certified?
It actually depends. We would like to get folks at... Currently, for about maybe 90 days. However --
We would like to have -- For 90 days. That's our standard. However, that standard comes in the face of we being understaffed, very much understaffed, and that the application process comes back and forth. For example, someone sends an application, and they don't have all the documents. Well, we have to send it back to them and request documents. And that goes back and forth and back and forth. Then we have to do an on site visit with them and try to schedule that. So sometimes certifications will lag because of that. And we're also two certifying units. 631 Operating Budget - 3/9/05 We do certifications for the City and for the Unified Certification Program which is the statewide entity we talked about yesterday, the federal program.
Have you made your need known to the administration for additional personnel?
And so far we are still trying to fill in the folks that were budgeted for last year. We have maybe five more folks to hire?
About five more folks to hire. The hiring process in the City, I think, can use some tinkering itself. Like I said yesterday, we had approval to hire all these folks in July, but we're still going through the hiring process to get them -- to get them on our payroll.
So you will be hiring at least five more people. 632 Operating Budget - 3/9/05
And they will be helping you out with the investigations?
Thank you. Okay. Are there any other questions from members of the committee? (No response.)
The committee will stand in recess until Tuesday, March the 15th, at 10:00 a.m. Thank you all very much. (Public hearing concluded at 3:58 p.m.) 633 CERTIFICATE I HEREBY CERTIFY that the proceedings and evidence are contained fully and accurately in the stenographic notes taken by me upon the public hearing of The Philadelphia City Council, taken on March 9, 2005, and that this is a true and correct transcript of same. _____________________________ DAVID A. DEIK, RPR and Commissioner of Deeds (The foregoing certification of this transcript does not apply to any reproduction of the same by any means, unless under the direct control and/or supervision of the certifying reporter.)