COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING AND PUBLIC MEETING BEFORE THE COUNCIL COMMITTEE ON COMMERCE & ECONOMIC DEVELOPMENT - - - Room 400, City Hall Philadelphia, Pennsylvania Tuesday, October 27, 1998 2:15 p.m. - - - Resolution No. 980734 - Authorizing Council Committee on Commerce and Economic Development to hold investigative hearings on the performance and compliance of Kvaerner Shipbuilders and the Philadelphia Shipyard Development Corporation with the participation goals of minority and female businesses and contractors on the rehabilitation of the Philadelphia Naval Yard. PRESENT: COUNCILMAN MICHAEL A. NUTTER, Chairman COUNCILWOMAN AUGUSTA A. CLARK COUNCILMAN DAVID COHEN COUNCILWOMAN ANNA C. VERNA COUNCILWOMAN DONNA REED MILLER COUNCILWOMAN MARIAN B. TASCO COUNCILMAN ANGEL L. ORTIZ COUNCILMAN FRANK DICICCO COUNCILMAN RICHARD T. MARIANO - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center, Suite 600 Philadelphia, PA 19103 (215) 561-2220 2 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 I N D E X Anthony McNeill . . . . . . . . . . . . . . . Deputy City Controller 5 David Volpe . . . . . . . . . . . . . . . . . 19 6 First Deputy City Controller 7 Anthony Fullard, President. . . . . . . . . . 31 KKAJ Inc. Steel Erecting & Fabricating Company 8 Steven Henderson, President S&W Contracting 45 9 Joyce Bridges, Principal. . . . . . . . . . . 54 10 Bridges Contracting 11 Anthony Leonard . . . . . . . . . . . . . . . 62 Former Kvaerner Employee J. Pierce Barnes, Jr., Executive Director 77 United Minority Enterprise Associates Minority Contractors Association Jihad Ali, Committee Chairman . . . . . . . . 85 United Minority Enterprise Associates William Hankowsky, President. . . . . . . . . 105 Philadelphia Industrial Development Corporation Richard Ryan, Project Manager . . . . . . . . 105 Kvaerner Gary Thompson . . . . . . . . . . . . . . . . 105 Project Director of Construction, Kvaerner Tore Sjursen . . . . . . . . . . . . . . . . 106 Vice President for Yard Development, Kvaerner Ronald White, Esquire . . . . . . . . . . . . 106 Counsel to Kvaerner Jessie Merrill, Structural Engineer . . . . . 189 U.S. Department of Navy 3 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 (Index, cont'd.) Trina Woodson, President and Founder. . . . . 192 Scoops Promotional Nancy Santana . . . . . . . . . . . . . . . . 193 Nancy Santana's Cleaning and Maintenance, Inc. Latino Contractors Association Philadelphia Hispanic Chamber of Commerce Dwayne Ming . . . . . . . . . . . . . . . . . 193 Chisholm Electrical Contractors Louis Cruz, Cruz Construction . . . . . . . . 194 Jerry Stein, M.F. Stein Corporation . . . . . 196 Tyrone Reed, Berean Institute . . . . . . . . 206 John Thomas, Private Citizen. . . . . . . . . 209 4 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 P R O C E E D I N G S
Good afternoon, ladies and gentlemen. This is the City Council Committee on Commerce and Economic Development for a public hearing on Resolution No. 980734. My name is Michael Nutter, and I'm the chair of the committee. With me presently is Councilwoman Tasco, who was appointed as a member of the committee for today's hearing by Council President Street. We are anticipating other members of Council who are members of the committee to be present, they are on their way. But we would like to get today's proceeding started and respect everyone's time. Let me read the title of Resolution 18 980734. Authorizing the City Council Committee on Commerce and Economic Development to hold investigative hearings on the performance and compliance of Kvaerner Shipbuilders and the Philadelphia Shipyard Development Corporation with the participation goals of minority and female businesses and the contractors on the rehabilitation of the Philadelphia Naval Yard. 5 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 Before we get started, one, Councilwoman Donna Reed-Miller has joined us here at the table. Two, my colleague, Councilwoman Tasco, who introduced Resolution No. 980734, has put together -- as is generally the responsibility of a sponsoring member -- an agenda for today's hearing. I will conduct the hearing as the chair, but Councilwoman Tasco has put together today's agenda. If there are individuals who wish to testify who have not already notified either my office or Councilman Tasco's, you should you see Miss Brenda Frazier or Miss Debra Johnson who are over on the side. We wish to hear everyone who is here today and we will do our best to keep the hearing moving. We understand that some people have time constraints, but we do want to fully explore and examine the issues that have been raised by the resolution. Lastly, joining us at the table is Councilman Ortiz, a member of the committee. I believe that Councilwoman Tasco wishes to make an opening statement, and then we will start with our testimony following the agenda 6 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 that was provided by Councilwoman Tasco. The Chair recognizes Councilwoman Tasco.
Thank you, Councilman Nutter. Good afternoon, everyone. And I want to thank you for coming out to the hearing today. During my first term on City Council, I chaired this Committee on Commerce and Economic Development, and I've never lost my concerns for the issues that impact on economic development of this city. And specifically, I am committed to ensuring that everyone who is eligible has access to every and all opportunities that are created in the city. My interest in participation by all citizens of Philadelphia goes back further to the days when I worked as Philadelphia Urban Coalition as the task force coordinator and had the economic Development Task Force, and our concerns are not far from the concerns then as are the concerns today. We are still fighting for participation in the economic growth of this city, and it was 7 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 very difficult in the early seventies to foster that kind of participation. Some people in this room who will testify today worked with me back in those days to gain some assurance that all citizens of this city would participate in the economic largesse of this city. I'm very disappointed that we are here today. It's like an "I told you so" hearing, because in December, when this legislation was brought to us in a briefing in the City Council chambers, we all -- and I specifically expressed interest and concern about the inclusiveness of this contract -- of the contract and how women and minorities would participate in this $400 million project which consists of public dollars. No matter how you identify them, the dollars are taxpayers' dollars, mine included. The dollars may come from the federal government, they may come from the State, and they may come from the City. But in the end, the dollars come from the taxpayers. As a taxpayer, I am interested that my dollars are spread around in a diverse way and that no one is excluded from 8 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 participating. The National League -- and I remember this so vividly because the National League of Cities was meeting here, and were at a meeting over at the National League, and we were called into Council and told that we had to vote on this legislation, it was very important, and I agree. Developing and bringing the Navy Yard back is very important to all of us. We want to see jobs. And because of our concern for the employment and economic development around that project, we voted. We were asked to vote without even reading the contract, and we said no. 15 So we're here now because at that time, our concerns, I believe now, were valid, because we began to get complaints from individuals who had sought participation on that project and were not given access. So we had a meeting with staff of PIDC and with some of the contractors and in particular with other Councilmembers just to get a feel for what was happening. And we really weren't too happy -- at least I wasn't -- with the results of that meeting. 9 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 And that's why we introduced a resolution to have these hearings so that those people who believe that they have not been given an opportunity to participate in this effort could come forth and put it on public record, what their concerns are. And hopefully, we will come up today with some resolution. We know that -- I have been told that the Mr. Radahl, who is the head of Kvaerner, could not be here today, but we did not to postpone these hearings. We wanted them to go forward. We will ask him to come, and we've been given a date of November the 16th. We will ask him to come. And at the same time, we want the Pennsylvania Ship Development Corporation to come forth because that is the board that we were told would oversee this project. So we will have the testimony today.
And for those people who have just come in the room, our agenda is such that we will have testimony from business people who have tried to gain work on this project, and then we'll go to the agency and Kvaerner representatives. 10 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 Thank you so much, Mr. Nutter. And, again, we thank you for coming out to broken your testimony.
Thank you, Councilwoman Tasco. The first witness this afternoon is Mr. Tony McNeil, Deputy City Controller. (Anthony McNeil comes forward.)
Please identify yourself for the record and proceed with your testimony.
Thank you, Mr. Chairman. My name is Anthony McNeil, and I'm a deputy in the City Controller's office. Thank you for this opportunity. I'd like to read a brief statement. I've provided copies earlier.
Thank you. In early September, the Controller's Office was contacted by numerous parties alleging a whole host of discriminatory bidding practices at Kvaerner Philadelphia Naval Shipyard. Some of those allegations included out of over 100 million in bid openings to date, with 11 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 almost 70 million awarded, only four MBEs and WBE firms have been awarded contracts as subcontracts, for a total of $1,740,000. KPS prequalified bidders, created an improved list of five to six prime contractors. Based on this process, qualified MBEs and WBE firms are not privy to information and, hence, allowed to bid as prime contractors. Most bids are not advertised. MBE/WBE firms cannot purchase plans or specifications for the bids in order to submit timely and competitive prices. OHCD and the City Department of Labor Standards employees who are responsible for monitoring the expenditures of federal funds and contract compliances at KPS were banned from the site and from attending all bid openings and from informational process meetings. According to the letter, according to a letter from a former KPS planning and scheduling manager, high-level KPS executives have made inclusion of MBEs and WBE firms in the process was given a very low priority. One KPS executive was quoted as 12 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 stating, "I don't care what the contract says, we will do what we want to do in this project. It's Kvaerner's business, not the City's. And all we promised in the contract was an attempt to involve minority companies. We are not contractually bound to do anything. And by the way, this conversation does not leave this room." The former KPS employee letter collaborates the information provided by other interested parties. He states the contracts have been open bids, and that MBE and WBE firms have not been notified of upcoming dates for various contracts. KPS has signed a document that requires them to take steps to use good-faith efforts to arrange for competitively-situated MBEs and WBE business enterprises to have access to bid documents and opportunities to bid on contracts. Based on the information presented to the Controller's Office, KPS has not been complying with contractual requirements to utilize minority- and women-owned firms. Hundreds of millions of dollars of public monies are included in this project. KPS 13 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 has a duty, under the master agreement, to use the best efforts to arrange for MBEs and WBE firms to be engaged as subcontractors and I believe prime contractors as well. If they are qualified, to date, KPS has not lived up to its responsibilities. With the hiring of the Greater Philadelphia Urban Affairs Coalition and a renewed partnership with the appropriate City agencies charged with monitoring the expenditures of public funds, I am hopeful Kvaerner will change its ways and become a good corporate citizen it has the reputation of being. To foster this effort, KPS should broaden its outreach efforts to include MBEs and WBE firms as prime and subcontractors. The Philadelphia Shipyard Development Corporation should also consider the placement of a representative of a WBE and WE contractors community on its board. I will be happy to answer any questions you may have. Thank you.
Thank you very much for your testimony. 14 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 First, just a bit of housekeeping. You are testifying in your capacity as Deputy City Controller.
And does your testimony reflect the concerns, if not the position, of the City Controller?
Okay. I've been intrigued for sometime about the statement -- and I've heard this before -- on .
That's been attributed to one KPS executive and the quote as you read it into the record. Do we know who made this particular statement?
Yes. We received a letter. And when I say "we," I mean the City Controller, Mr. Saidel, received a letter from this employee. I have that letter here as 15 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 documentation.
Anthony Leonard, who was a previous department manager at Kvaerner.
He's the person that wrote the letter relaying the alleged conversation?
Okay, all right. Any other questions for Mr. McNeil? Councilman Ortiz.
You say that he's a former employee. What was the reason for leaving?
I don't have that 16 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 information right now, sir. Well, it says here in this letter that he had some false charges against him when he was terminated. He's filing suit.
I'm sorry. He was terminated for some false charges. It didn't elaborate on it, but he's filing suit presently against Kvaerner.
Councilman, it's my understanding that that individual is actually here and will be testifying in the first panel.
I was told at a meeting that we had with PIDC that we had no 21 authority to be able to audit the Kvaerner contract. And I would like to find out what is the extent of the authority of the Controller's Office. And you are speaking for the Controller's Office, right? 17 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
What is the extent that we have to be able to audit the overall working of Kvaerner as it is at the present time? And is it limited to the amount of money that the City now contributes to the overall grant that was given Kvaerner?
We are researching that. Our authority to audit Kvaerner is very limited. We're researching the possibilities up to the administration to invite us in so that we can do the necessary proper auditing processes.
What is the limitations that you presume to have at the present time? What are the parameters that we have currently as seen by your office?
Well, I'm going to try to -- basically as our guiding force, basically it limits us to auditing outside projects where monies are federal --
I'm sorry, I'm sorry, forgive me. Can you hear me now? 18 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
Okay. We were told that basically the federal government -- 'cause the majority of the money came from the federal government -- needs to do this audit, or proceed to do that. But we're very limited because of the Home Rule Charter.
When that contract was before us in Council, we were told we were partners in the process. I just want to establish what the limitation -- there are limited partnerships in the corporate world, and I want to establish what limited partnership we have, if possible. And I would like you to be able to be as specific as you can as to the limited partnership that the City has in the whole aspect of this contract. And how can we be sure that our money is being spent correctly at this time?
Okay. Well, then, like I said, we have to research that, and we'll do that and come back with an answer at a later day. But I know we're limited by the Home Rule Charter. We really can't go in and do a full-blown audit like 19 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 we do with the school board.
Do you have an idea, because, let's say, since there is state money, and can we as a legislative body, for example, and maybe you have this answer, maybe you don't. But if you don't, I would like you to bring it back to us. And if he cannot, Mr. Chair, I'd like the City Solicitor to give us an answer.
Since we are limited -- the City's limited and you don't have an answer to that, also, what is the role, the auditing role -- or can we ask the Auditor General, for example to audit the whole Kvaerner contract? And what are his limitations, if any, that you know about? (David Volpe comes forward.)
Mr. Volpe has joined me, who's the Chief Deputy in our office.
Mr. Volpe, please identify yourself for the record. Do you wish to 20 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 try to answer Councilman Ortiz's question?
Thank you. David Volpe, First Deputy City Controller. Certainly, we all know that there is three components to this -- there's the state money, the federal money, and our funds, and which are really the federal funds. We, a number of years ago, sent a letter to the administration in the formative stages of this partnership with Kvaerner, stating that we wanted to have full audit rights. The administration came back and said, Well, we don't have a problem with that in terms of the federal monies that are involved, which went through PIDC and the Kvaerner Philadelphia Naval Shipyard, the organization that was set up. So I believe we could audit the federal funds. The state monies, as far as I know, Auditor General Casey has noted that he'd like to perform certain audit testing on those funds particularly related to the use of steel and also some of the bidding issues pertaining to some of the larger contracts.
So what are the road 21 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 blocks that are being put forward to prevent us from following up on what you're talking about?
To my knowledge, none. I mean, we have not attempted to do a full-scale audit of the funds. Basically, we got the initial allegations in from a couple of different parties, followed up on those, met with PIDC, talked to the responsible City parties who have been monitoring the project related to the bidding requirements from OHCD, from MBEC. And we have found that certainly -- and we all, I think would agree -- they haven't been following the contract and the management agreement in terms of the goals that were set and the responsibilities we believe they have in terms of notification of vendors to get on subcontractor and prime contractor bidding lists. And that's basically the extent of what we've done. We haven't gone past what we found on the lack of follow-through on the bidding.
I would definitely like, Mr. Chairman, the Controller's Office to get together with this committee and maybe structure a 22 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 process in which an auditing process can be put into place so that all of the information that we may not be getting willingly or voluntarily will be forthcoming through the audit, if possible.
Councilman, I'll make that request as well as your earlier request was for the City Solicitor's Office to make some determination as to what is the official and authorized role of the City Controller with regard to this particular project.
Yes. This question is for Tony McNeil. In your statement on , at the bottom, the last two items. When you make reference that most bids are not advertised and MBE and WBE firms cannot purchase plans, would an audit -- does your audit also deal with contract compliance? Because I would believe that because 23 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 there's public money, that these two items should not have happened. Am I correct or am I off-base?
Lastly, Mr. McNeil, on that same point, are you saying, without it being written, that the MBE/WBE firms cannot purchase plans -- this is your testimony -- purchase plans and specifications for the bids in order to submit timely and competitive prices? Are you also saying that non-MBE/WBE firms are able to purchase plans and specifications for these bids?
Can I answer that if possible. The way they've structured the project, you have a prequalification of certain bidders for certain types of job, so they'll pick -- they'll solicit input from five, six -- let's take that number -- prime contractors that they believe firms that are prime contractor type of firms. How they get to that determination if they are a prime versus a sub, I can't say. 24 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 But they'll solicit input and qualifications from those types of firms and they will negotiate with those firms. And then they'll follow up on that or not follow up on that with those types of firms in terms of trying to find subcontractors who, generally speaking, would be minority type of contractors or WBE or DBE type of contractors. So what we found was, the process they're using inherently limits the number of potential bidders, some of whom would be MBE/WBE.
These would be bids on structural steel, for example, or the crane, the demolition. They did-- on the architecture, they did pick as a partner contractor, a minority firm in addition to the prime contractor they selected for the architectural. 25 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
Mr. Volpe, you audit the -- this is a hypothetical. You audit the Kvaerner deal, and you find that there is no 7 compliance, a little compliance to the City's MBE requirements, the state requirements, and the federal requirements, what happens?
To be perfectly honest, Councilwoman, I'm not sure. We'd obviously report that, and we're in the process of telling you what we found to date on the bidding and procurement side. In terms of the City's ability to do anything about it, I'm not sure what the City's ability is. The managing agreement, the way it's written, they are structured as goals. They are not firm set-asides in any way where 15 percent has to be the case. It does say "best efforts." Now, certainly, what we found is that the best efforts have not been there. I don't think they have exercised best efforts in the process to be inclusionary. But in terms of action to take, COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 recognizing they're not meeting the goal, I'm not sure what the resultant action is.
Who pays the bills? The money flows into what coffer? Do we receive all the money in the City and then -- or where does the money go, all of this money, where does the City money go? Where does the federal-money dollars go, where do the state dollars go? Who pays the bill?
So the money goes to the shipyard Development Corporation so they have the financial responsibility for paying the Kvaerner.
Mr. Chairman, this is to one of the controller's people here, Tony or David Volpe. Are either of you familiar with the 27 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 Philadelphia Convention Center's oversight board when that was being built?
I'm vaguely familiar -- generally familiar with the process that occurred in terms of oversight for the Convention Center.
In a far-range process, if we have a problem with the process that seems to be a bone of contention for a lot of people in Council right now, would the Controller's Office recommend something like the oversight board that was on the Convention Center? I mean, that was a long time coming and that happened and we got it built. My main concern here is to get this thing built and not offend anyone and make sure everybody gets a chance to bid on the contracts. Some of the preliminary names that I've been seeing are people that I actually worked with when I was an electrician in the building trades. I don't want to say their names to disqualify them from anything, but they are people that are qualified with all the City agencies and being minority-business electrical contractors. They're telling me that this thing has 28 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 been slowed up. Would that be any help, do you think? I mean, I just want to throw out something positive here.
I'm not really sure if that would help or hinder the situation. You don't want to do anything that -- this is fast track, the project is, and you don't want to slow it down. But at the same time, you want to make sure that the entities are complying with the management agreement requirements. So I'm sorry I can't answer that question directly. I'm not sure if --
Could you officially ask the Controller to respond to me in writing about that if possible?
See, I mean if it's farfetched, it's something. I mean, we want to get this going.
Thank you. 29 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
Good afternoon. I'm concerned about the pre-qualifications process. Do you know if minority-women and disabled business firms were prequalified as prime contractors?
Are you saying that you don't know what the prequalification process is that Kvaerner uses? Do you know that?
Well, I think it's been evolving certainly up until. Not too long ago, certainly, there was a very limited prequalification process. At least for the primes, there was a structured process. As for the smaller firms and traditional minority firms, we're not sure how many were included in, that if any. As Tony said, someone from OHCD might be in a better position to 30 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 answer that.
I need to know what process is used. Then I want to know how many people survived the process and how they're doing? Is there anybody in the room who can answer that, do you know?
Councilwoman, I believe that there are individuals who may be able to answer that. They are on the list I have from PIDC or --
That tends to be my concern, Mr. Chairman. I don't mean to take your witnesses out of order but I wish to have that question answered. Thank you.
I understand. Any other questions for these witnesses? (No further questions.)
Gentlemen, thank you very much. Again, Councilwoman Tasco's office put 31 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 together the witnesses as panels, as I indicated earlier. If there are people who have not been in touch with Councilwoman Tasco's office about getting on the witness list, please see Debra Johnson or Brenda Frazier. The first panel is Anthony Fullard, Steven Henderson, Ronald Bridges, and Anthony Leonard. Would those individual please come to the witness table and begin their testimony. (Above panel comes forward.)
While those persons are coming to the table, let me recognize the presence of Councilman DiCicco, who is a member of the committee, and Councilwoman Verna, the majority leader. Can we have everyone identify themselves for the record as you begin your testimony and proceed in whatever order you've worked out amongst yourselves. If you haven't developed an order, we'll start with the gentleman in the striped shirt. Proceed, sir.
My name is Anthony Fullard. I am the president of KKAJ Incorporated 32 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 Steel Erecting & Fabricating Company.
Could you please state your name and where you're from, please. I didn't hear that.
Mm-hmm. My name is Anthony Fullard. I'm from KKAJ Incorporated Steel Erecting & Fabricating Company.
We have shown great interest in the Kvaerner project, and we have been in contact with the OHCD Department. Hanford Jones had been a great help to us to try to acquire as much information that we could to begin the bidding process for our company. As we pursued that information, we -- normally, we are given the structural drawings in 33 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 order to bid a project. We, up until this date, have never received any drawings whatsoever, nor have we been directed where to even purchase any drawings, if any. We were told that it was a it was a as-built project, and that there were no 7 drawings to be obtained. Now, the information that we did receive was --
Mr. Fullard, I'm sorry to interrupt you. What -- I'm not too expert in the construction industry. What does that mean?
It means that whomever is bidding the fabrication and the erection of this building would have to come up with some designs of what they consider of, you know, how this building or how this structure could be built.
Based on -- I don't know. Normally, they have some type of template for you to go by of what the owner wants to build there, okay? And, as I said before, we had never received any drawings or anything of that 34 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 magnitude so that we can give any kind of a quote of what we could do on the project.
And how did you learn about these buildings? Or how do you know that there is an building opportunity?
OHCD -- Hanford Jones has been giving us information on this project to extent that he had that we could bid this project. And this is what I have here.
Okay. So when you found out about that, what did you do next? Who did you try to contact in order to be able to either get some drawings, find out more information? What was your next step?
Okay. My next step is I did receive a prime -- a still prime contractors list. 35 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
From Hanford Jones, OHDC. And we looked through these prime contractors on whom we felt comfortable to bid from. So I contacted numerous fabricating prime contractors.
Okay. And the only one that responded to us was S.M.I. Owens Fabricating Company. And they did send us some information, and this is the information that I have on the project. And the information basically had the total weights of each building that had to be built.
Now, this company that sent you information, are they somehow involved in the project?
Now they have been awarded the project. They are doing a joint venture with Havenstill and S&M Owens (ph).
So they have responsibility for building the building.
And what would your 36 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 company do as it relates to their project to build the building? What part of the business are you in?
We are in steel erection, so we would be the company that would pursue to install the steel that they actually would fabricate.
So somebody else fabricates these pieces, and then your company comes in and you erect them.
So once we learned that they had won the project, we contacted them again, and I spoke to a Mr. Brown, and he said that they had already awarded the project. Well, I'm a little ahead of myself. We did submit some bids to them, okay?
But only on the information that we had. We never seen any drawings. We just gave them a per-ton price because that's all that we had. 37 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
So we came up with what we could handle, and we submitted them a price per ton because that's what they asked for.
And then once we learned that they did -- when the fabricating bid -- well, the whole package, they subbed out the total erection package to Cornell, who is a sub to Owen Steel now. And so they told us to get in contact with them to see if there was anything that we could obtain from them. And that's where it is at this date.
Cornell had asked us to call them within 30 days because they had not had a signed contract, nor did they have any drawings for us to review. So they asked us to get back in contact with them in 30 days.
All right. So, I 38 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 mean, based on your testimony, I guess what I'm taking away is that you were told by various people that no one seems to have anything that you need to be able to submit a responsible bid. But then somehow, some way --
-- somebody apparently get the information that they need, they submit a bid, they get a contract, and then you're told to go talk to the next group from whom you cannot get any information in order to be able to submit a bid for your type of work. Is that --
Exactly. And this is the first time that we've -- and we've been on a lot of major projects throughout the city, and this is the first time that we ever was not able to obtain, even if we had to purchase them, to submit a competitive bid.
You've done work either on city or other governmental projects?
City-funded, okay, okay. 39 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 Any questions? Are you MBEC-qualified?
At the risk of extending this here, I missed a little bit of what Councilman Nutter said. You do structural steel?
So what do you do exactly? You buy it from one of the steel companies? Do you hire iron workers? is what I want to know.
Possibly. So your thing here is that you're not on the list? I mean, you're not getting information to see what specifications you need from Corning or one of the guys that supply the iron?
I am -- as of -- 40 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
No, we were not on the list to receive anything. We contacted OHCD and other entities that was in charge of this project to help us to obtain some information.
How about if I tell you that I have a list with eight structural steel contractors that are recommended subcontractors for Kvaerner and you're one of them? KKAJ, Incorporated, 7500 Germantown Avenue, Anthony Fullard, 753-0280, that's you?
You're on the list. Are there any other structural steel guys on here that may have not received the information? You know, it's some list that I got from someone that I know at Kvaerner.
Okay. That may be the miscellaneous steel list that you may be reading from because I've just learned that we were on 41 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 that list, and the --
'Cause you've done some really big projects from what I understand. I mean --
I'm getting to that, I'm getting to that. Yeah, if you could tell us some of the projects that you've done in Philadelphia.
Right now we're doing the Marriott Hotel, which is concluded. We have the stair project as well for that. We are doing the south work --
Could you put a dollar sign next to the projects, how much money is the project for and so on?
Okay. The Marriott project was -- the dollar sign was approximately $700,000. With the stair project, which is over 300,000, actually brought our contract for that particular project over a $1 million.
So Mr. Fullard, I 42 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 mean, you've done significant work on government-sponsored projects.
Just to respond to that list that he may be reading from, as I said, it may be the miscellaneous steel list that you may be reading from, but the initial list was the structural steel list, which we are not on as well.
Councilman, if you would be so kind -- 'cause I don't have the list -- could you share a copy of the list with the other members? And then we can all read from the 43 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 material.
My point here, Councilman, is, if you'll indulge me for a minute. I mean, he's certainly qualified.
I just can't see -- somebody's not telling us something here. And I -- all the good intentions of the world are here, everyone on the committee, certainly you and the Councilwoman, and everyone up there, and all the people we hear.
But them iron workers aren't working yet. I want to see them working. I want him to make money, I want them to work. I don't want 'em to miss November, December and January because of something we do.
You know, they tell me the path to hell is paved with good intentions, and I think there's great intentions 44 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 here. I think they're personally paved with intentions of elected officials that want to do the right thing but keep them iron workers from working. And, believe me, them iron workers have all sizes and colors, I know them. I know the people that run the union, I know people in the class. They actually have American Indians in that union, correct??
Not to take any gunshots away from anybody today, but the man's -- you're obviously on some list that I happened to get my hands on.
Councilman, I think -- I think what we've found, though, is -- I mean, you can be, obviously, on a million lists. 45 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
But is he getting in his flow chart? That's my next question.
The bottom line is that the gentleman is not participating in the opportunity, and so whether they're on the list, off the list, no list, for his testimony here today, it really doesn't matter where he may be because he's obviously not getting contact and relationship direct with the people that he needs to.
Has anyone that would be in his business have been contacted?
Well, we'll hear as go down the list, and we can go to the next gentleman unless there are any other questions. But I appreciate the information.
My name is Steven 46 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 Henderson. I am President of S&W Contracting. We are primarily an asbestos abatement, lead abatement, interior demolition. We also are assigned with Local 542. We supply equipment, heavy equipment, equipment operators, and we can supply equipment. We were working at the Navy Yard during the summer. When we went over to PIDC, we called them to ask them for work that was going to be upcoming to see if we could get a jump on some of the GCs or primes that would be awarded the jobs. We never got a response. The first time I heard about an actual bid going out on the Kvaerner Shipyard --
Who did you call and did you talk to anyone when you called?
Yes, yes. We called and left a message for a William P. -- I think it's Hankowsky?
Hankowsky, yeah. We had left messages for him. We got his name initially from 542 when we asked who should we contact as far as the conversions from the Navy to 47 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 PIDC with different properties at the Navy Yard.
And we left numerous messages with him and we never got a response. The first response I got from him was at another meeting that we had that I attended with Council in one of the rooms here, and he gave me Julie K. Van Norstrum's card, and we called her, and we still haven't got a response. This was all -- we did this prior to contacting him, and we got this card from him at that meeting. But the first time I heard anything officially about the Kvaerner Shipyard was when Hanford Jones contacted my office a day before a pre-bid meeting and told us to come down and attend a meeting. We came down and attended the meeting, and the meeting was not productive for MBEs at all, in my view. It was an afterthought, after everything was already told to all of the other prospective bidders. Nothing other than there was some goals for MBE contractors. And as a result of that and as a result of not being able to get in on some of the work 48 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 that we do as far as asbestos abatement, we sent information on our company to every prospective bidder that attended that meeting. We informed them that we are signed with the laborers and that we could supply laborers to work under their supervision. We informed them that we could supply equipment, we gave at him rates. We informed them that we were signed with Local 542, and we gave them list of the rates and all the things that we could supply. And we sent that list out and we cc'd Kvaerner, and we never received a response or anything about the project at all.
That meeting, I think it was in August. I attended it at the request of Handford Jones.
We've heard this name, Hanford Jones. Who is Handford Jones? What role does he play in this? 49 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
Well, he assists the minority business -- I'm certified with the Minority Business Enterprise Council. And when there are goals involved on City-funded projects that we are not directly told about from the primes or the GCs, we usually find out through him that the project is actually going on, and then, you know, we should go to the meeting. A lot of times, we are not even contacted or even know about the job or that it's going to come about. And most of the times, we've gotten most of our leads from Handford Jones.
This particular bid that we went on that job, I think it was called "the concrete package." And because we had missed the environmental package, we suggested that we would supply some equipment operators and possible equipment to help augment the work that would already be ongoing on without interfering with anything. Since we were told it was fast-pace, we figured this would be a way that we could still 50 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 get in and get a small piece of the work, since we're capable of doing that, and we received no 4 response. And we sent the -- we obtained the list at that meeting from every prospective bidder that attended that meeting. We got a list after the meeting, and we sent that information to every prospective bidder on the list, and we cc'd Kvaerner with the same information.
So, may I ask, if you feel you are behind the schedule as a result of not having heard from anybody, what is it that you would consider success at this point? What do 51 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 you want to happen for you?
There's still an opportunity because when we come in with the supplying of equipment operators and equipment, that can be done at any phase of the project. There's still time left for that to happen.
They have other contractors on the site that they've awarded work to have those needs. And they could fulfill some goals, if any, by complying with that.
So your greatest problem right now is that you feel invisible; nothing you do gets you any response.
Let me ask you a question. When you bid -- let's go away from the 52 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 Kvaerner project for a moment -- and you are bidding with other contractors for other work in other areas, and you put in a bid or you write them, do you normally get a response from them, the prime contractor?
We did Building 101 at the Navy Yard -- that was the old marine barracks. And we were contacted by a consultant to come bid on the project. We put a number in on the project, and we were contacted. Sometimes I'm actually told whether I've re -- what I -- we always find out where we came in. The bonding companies that work with us want to know, they want to see the result. So we have to go after the results to find out. If not contacted, we contact them to try to find out what's going on, because they would like to see the results. But in this instance, we got no 21 response; we wasn't even contacted at all. And we sent information on the company -- rates, who were signed with, the associations we belonged to, and we got no response.
You never got any 53 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 information about the scope of work for the project, right.
Exactly. So we thought that we were being ingenious by at least, at that point, not having any specifications, not having anything to go on, supplying equipment rates and equipment operators.
And during the time your company was in business, did you and other representatives of your company develop a sort of sensitivity as to when somebody was cooperating 54 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 with you and when somebody was seeking to exclude you?
Based upon your experience in the past, what conclusion have you arrived at with respect to Kvaerner?
At this point, I have even -- I went after contractors that have done work with the Department of Transportation, and I've been able to, through numerous letters and working with their affirmative action people in the DOT, SEPTA, I've been able to get somewhere. This is the first time -- we don't even have an exchange of letters, we don't even have no 16 response at all. I mean, I've had to fight for a lot of contracts, but I've been able to get some headway, but this is the first time we've gotten nothing at all.
Yes, my name is Joyce Bridges. I'm sitting in for business partners, 55 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 Ronald Bridges and Donald Abney from Bridges Contracting.
Bridges Contracting currently has a very large contract that we're doing at 12th and Market Street, the old PSFS building, where we're employing over 115 men. We're associated with various unions in the City of Philadelphia, Local 332 being the largest union that we are affiliated with and employing their men out of that local. We're also employing operators, cement workers. Other projects that we're currently working on is down at Fourth and Washington, the Southwark project, 20th and Nedro, Champlost Homes, Abbott's Fort Housing Project, along with the Richard Allen project. In the past few months, we've had projects at the Reading Terminal, working with 56 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 Central Salvage Corporation; at the Mellon Bank at Broad and Chestnut, Central Salvage and Pepper Environmental; and a number of other projects.
Yes, we are, thank you. Total to date, as of now, we have 150 men and women on our payroll. As far as Kvaerner is concerned, we made contact with Kvaerner back in the middle of June because we received information, again from Mr. Handford Jones's office, and -- excuse me -- advising us of a project that was being walked through the day, the next day. Our business -- my business partners attended that walk-through and received -- they walked away with a list of all the companies that were at that walk-through at the naval base. Everyone has a copy of that as the first page. After the walk-through was over, we were contacted by Kvaerner. We received from them a list of contractors that they elected to provide to us as being prequalified or those who were prime contractors in their view, and asked that we 57 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 contact them to establish a relationship if we so desired to do business down at the naval base. Using the list that Kvaerner provided with Bridges Contracting, along with that list that we had to come home with, which basically was more information than what they gave us, we sent out letters introducing ourselves, along with giving a brief background of the various projects that we were working on, our qualifications, our bonding capacity, along with just a general background of how financial secured we were. All of our union dues are paid, all of our taxes are paid, so we are a company that are in good standings financially and have a strong backing, and we're able and willing to go out and do the work. Out of the number of contractors that we did make contact with, we received no 20 information from them. We went a step further and sent a letter to Mr. Gary Thompson at Kvaerner, thanking him for the information that he provided to us, also giving him a background of our company and asking that they consider us also. No 25 information has come from that. So we decided to 58 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 do a follow-up of our letters. Just to go back, number one, we needed to find out whether some of these prime contractors that we made contact with have actually received a contract from the shipyard. We don't know what contracts are out there so we are trying to do our homework and some follow-up steps to try to identify what contracts were out there, who were bidding on these contracts, who had secured contracts, and we got absolutely no 12 information. I would sit down and call Kvaerner. And I called the number -- I think it was -- I'm pretty sure it's 785-2600. I've called it so much, I remember the number. And to me the question asked is, What sense do you get of this person being willing to assist you and deal with you? In calling Kvaerner's office at the naval base, my sense of dealing with them is that their first line of against is the administrative assistant who answers the phone, who knows nothing, who has no 24 information to give you, who will take your name and number and promise to pass it along and have 59 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 someone call you back, and that phone call is never returned. So when you call a company and you're asking, What is the name of the person that I can talk to get some information so that I can receive information on the bids that are coming forth that you have up for bid that will be coming up for bid soon? and person cannot give you information and that person cannot transfer you to anyone, you're at a standstill. I have called that number a number of times and asked for a face-to-face meeting. I would like to come in and meet with someone, develop a relationship. I know from past experience that you simply cannot go down to the naval base and walk in an office somewhere. So these phone call are very important when you do not have the name and title of someone that you can just call and say, May I speak to Mr. John Doe who handles X-Y-Z project? That information does not come forth.
To even ask for a list of people in the organization, you do not get that information. So -- 60 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
Miss Bridges I'm sorry, excuse me. You said wrote to a Mr. Gary Thompson. I have a copy of the letter -- Kvaerner Philadelphia Shipyard, Inc. Who is Gary Thompson?
Gary Thompson is the person who faxed a letter to Bridges Contracting, along with the second page that you have identifying a list of contractors. The letter is pretty short. I didn't have enough copies to give out so --
No, I understand. Do we know what his title is or what his responsibilities are?
Project director of construction. And then when I call and ask for Mr. Gary Thompson, I'm told that he's not there, I get no information.
I have not had one phone call returned, and I've made at least 15 phone calls requesting information, trying to get various information faxed to me or sent to me 61 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 through the mail on the various bids that were up for bid.
Have you received any answer to these letters that you sent out?
Miss Bridges do you know of any other firms that has received information or had questioned answered, any other small firms?
Not from Kvaerner. The only information that comes down to the minority company comes from the city agencies that are trying to help the companies, the minority companies gain some work. No information comes forth from Kvaerner itself.
And do you have any information on non-minority firms receiving information?
We do have information of plans that have been purchased by majority companies. I personally myself cannot name those companies; my partner is in contact with them. So they are able to get the information when you call and identify yourself. 62 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 And so the strategy now is to call and I'll change my name. You know, I'm sure the gate keeper there knows Joyce Bridges by now so I'll go as a/k/a and try to go in without identifying myself, you know, as a company trying to get on their minorities bidders list.
Okay. Any other questions? (No further questions at this time.) (Anthony Leonard comes forward.)
Mr. Leonard, there was information, and you stood in the back. I just want to make sure I understand what your situation is. You are former employee of Kvaerner?
Please identify 63 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 yourself for the record.
My name is Anthony Leonard. I was previously the department scheduling manager for Kvaerner Philadelphia Shipyard.
My responsibility, when I was hired May 4th, was to develop the entire project schedule.
Okay. Now, is it my understanding that you have since been discharged and that you have a pending lawsuit against your former employer?
Is the suit strictly between yourself and your former employer? Are there any other parties that are --
Correct. And also one of 64 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 our Kvaerner subsidiaries, so it is primarily Kvaerner.
Okay. I'm not sure what your testimony is. And to the best of my knowledge, I don't have any written testimony in front of me from you. I do want to strongly caution you that given the nature of the fact that you have a pending lawsuit against your employer, we do not want to get into the issues that are detailed or that may be detailed in that particular lawsuit.
If you have other information that you'd like to share with us, we're more than pleased to hear it.
But I will again strongly caution you about getting into issues between you and your former employer in this public hearing.
Basically, the testimony I'm providing is, I was brought on with Kvaerner 65 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 to develop the planning reconstruction schedule for the shipyard. That test commenced May 4th, and I was given a four-week deadline. So, basically, I worked day and night and got the schedule issued June 1st of 1998, which was accepted by PIDC, the Kvaerner management, as a workable base line schedule for the engineering procurement and construction efforts, all encompassing for the redevelopment of the shipyard. Now, after that was issued, during the course of June and July, the main focus of my point, which I raised to the vice president of the yard construction, a Mr. Tore Sjursen, was what I was noticing with the exclusion of minority participation. And I already raised the issue that basically the reason I took this potion was because I grew up in this area, and this job brought me back to this area with the hopes of bringing economic stability back to this tristate region. So I thought they understood that. Now, during the course of my conversations with the vice president, Tore 66 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 Sjursen, repeatedly, when I approached him with these questions of minority exclusion, he found a way to sort of lay it to the side. Don't worry about it Tony, it's being handled, it's being covered. A few times, persons of the management team would make jokes. Well, should we grab the telephone book? And from my standpoint, I didn't find that too humorous. Now to go further on, in a management meeting, I raised the question again -- and this was a management meeting of all management participants relative to the shipyard, and it was the week of July 17th. And I directed the minority exclusion inference that I was seeing directly again to Tore Sjursen. His direct statement to me was, point-blank, "This is our project, not the city's -- Kvaerner's project, not the city's. I don't care what the contract says, we are not contractually bound. We are only contractually bound to involve minorities." And that pretty much put us at odds at that point. And I sent a letter to Jonathon 67 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 Saidel stipulating the same essence of his quote directed toward me. Now, this was July 17th. No, I'm sorry, this was earlier, it was during the week of July 2nd.
Mr. Leonard, I assume that those issues must be the heart and soul of some part of your --
Well, again, I'm very concerned about where we're going with your testimony.
Again, if there are general issues that you want to put on the record about minority participation --
Just from a general standpoint. 68 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
-- I'd be glad to get into that. What I don't want to entertain is a "he said/he said" conversation.
Okay. Well, from the standpoint of minority participation, there was minimal. It was a low priority. It was questioned many times. The documents from May through August stipulate that. I raised the question to the management at Kvaerner many times, and nothing was done.
Now, in quick, concise terms, that was it. Minorities were put on the back burner. There was not a fair playing ground. It was more of a chosen field of people who were known by other people at Kvaerner, which did not stipulate a fair, competitive bid ground. And it was made harder for individuals in this region, along with minorities and WBE businesses to get information to purchase, or to get advertised bids. I created the schedule, all the bid dates were there. They were all known in May. All the packages were defined from May through '99. 69 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
So -- I'm sorry. So should I take from your testimony that you are essentially verifying or corroborating the previous testimony of at least the three witnesses that we've heard so far?
I have a question. You mentioned that the process was open only to those people who had an inside track. Were there other non-minority groups who were not given an opportunity also to participate?
Not that I was aware of. There was specific instances of, for example, the structural steel package that I became aware of. A pre-bid meeting was entertained, and bidders came in. However, following that meeting, there was a sort of more detailed meeting that Kvaerner had with one of their Malaysian subsidiaries, which I vehemently opposed. And the management team tried to tell me, It's none of your business. And I informed them that it is my business. You hired me to do a 70 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 job; the contact says 20/10, and what I'm seeing you do is a attempt to take a $50 million structural steel package overseas.
So it was not -- the regional companies, whether they were minority or non-minority, were not prime -- prime --
Were there majority companies, as well as minority companies, who were excluded from the process also?
This was only one specific instance where it involved an attempt to do a total exclusion. However, on other bid packages, it was more of an exclusion of minority and WBE companies, which I opposed.
I have a question. Mr. Leonard, were you a part of the management team?
So do you know -- you know, we've been asking this question for a 71 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 while, and we haven't really received an answer -- not just today, but a couple meetings ago. Do you know what the pre-qualifications, specific qualifications are?
So who makes that up? I mean, who says, Well, you qualify and you don't qualify?
All right. And I have one other question. How did you get your job at Kvaerner?
I've been with Kvaerner for five years. I was with another subsidiary of Kvaerner.
About 50 miles away, in Bridgewater, New Jersey, Kvaerner Process. And through the president of construction for Kvaerner 72 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 Process, after a split between -- well, I don't want to get into that because that gets into another issue, okay.
But that's the realm of where it came. It came from the president of construction for Kvaerner Process, who I'd worked with hand in and hand and had done quick jobs for all over the nation. He found out about the shipyard and he saw myself as fitting the bill 12 perfectly.
How does Kvaerner in New Jersey handle minority participation?
Yes. I just want to have it very clear for the record so that the 73 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 aspect of minority exclusion from the bid process was not one that was unconscious; it was a conscious effort, they knew about it, and they just disregarded the -- or they did not make any attempt to include and be inclusive of minority participation.
I can best answer that as, brought it to their attention numerous times.
Getting to a final conclusion, based upon your experiences at Kvaerner, what conclusions have you drawn with respect to the good-faith efforts by Kvaerner to employ minority firms or women-based firms?
Relative to the shipyard? 74 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
I have seen no good-faith efforts at all. And that's what brought me basically head to head and in contention with the management team of Kvaerner.
Could you repeat the beginning? I didn't get the first part. What is the conclusion that you arrived at?
With respect to your general experience with Kvaerner over the five years you worked for them, what conclusion did you draw with respect to the company's approach to --
Councilman, hold on. Councilman, you would probably make out better if you clipped the mike to your tie. 75 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
As long as it doesn't interfere with the pattern on my tie. (Laughter.)
No, I don't think so. It's black, it goes with everything, don't worry about it.
But, sir, could you tell us, based upon your work experience with Kvaerner --
Relative to the other divisions I've been in with Kvaerner, I've spent maybe 80 percent of my time on special assignments in the field resolving problems of projects that were in trouble -- cost overruns and delay. And relative to their good-faith efforts there, I've had no problems. I've raised 76 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 some issues, but it has not been to the extreme measure that I have seen when I came to the shipyard.
Thank you. Thank you all very much. The second panel is comprised of James Barnes, John Simon, Ellen Ryan, William Tyler, and Charles Ang. Would those individuals please come to the table. (Above group comes forward.) (Councilman Cohen addresses Councilman Nutter off-mike.)
I saw a letter from the president and CEO saying they were not available. Are there present senior members of Kvaerner hearing this testimony that have some power in the company?
Councilman, it's my understanding -- one, I can see that Mr. Hankowsky from PIDC is here. It is also my understanding that there are some representatives from 77 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 Kvaerner. Mr. Rafdal could not be here, but it's my understanding that a fairly senior Kvaerner person is here. And according to the schedule, as put together by Councilwoman Tasco, they will have an opportunity after the business owners and contractors to respond to questions and respond to the testimony that's been given.
Gentlemen, I'd ask to you introduce yourselves to the record and proceed with your testimony. I would only mention to you that only in the interest of time, you can get right into your issue. I think a fairly decent foundation of some of the problems, in fact, have been laid out. If you have some different situations that you'd like to share with us, we'd certainly be pleased to hear them. Please proceed.
Well, we will attempt to 78 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 be brief.
Would you admonish all the witnesses to speak directly into the microphone, holding it as close to their mouths as possible, because the acoustics otherwise is very bad in this chamber.
I'm sorry, Councilman, I couldn't hear you -- no. 16 Go ahead.
I'm sure you'll hear me. To the Honorable Chairman and other Councilmembers, I'm J. Pierce Barnes, Jr., Executive Director of United Minority Enterprise Associates Minority Contractors Association. And on proceeding, I'd like to read into the record a brief statement and then get right into our details as our concerns.
Do we have your 79 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 statement, Mr. Barnes?
It has always been the goals of United Minorities Enterprises Associates to represent minorities and females and disadvantaged and disabled business to provide access to the community resources and facilities that address the needs of the families and the community at large and those who ask for our help in representation. UMBA was the initiator of the amendment to the 17-500 for the City of Philadelphia, establishing minority and female participation. To that end, we come here today with a multitude of concerns that will affect our participation in the expenditures of public and private funds in the projects around the City of Philadelphia going into the 21st century. UMBA initiated a letter written to the City Controller, Jonathon Saidel, addressing our concerns with Kvaerner and its practices. Number one, Kvaerner Ship Building of 80 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 Philadelphia has been contracted to establish facilities here in the City of Philadelphia to the former naval yard, with an initial contract that will exceed more than $450 million in the next decade. Under the master agreement with the City of Philadelphia, United States Navy, HUD, OHCD, the Delaware River Port Authority, and others, a somewhat comprehensive but inadequate plan has been drawn that do not meet the inclusion of all the members of the City of Philadelphia. I, therefore, request an organizational breakdown chart of all the entities concerned in the participating master agreement, their dollar budget, names, addresses and telephone numbers of the department directors and the decision-making executives. I also call for an up-to-date copy of all Section 3 reports tendered to date. We found out after our initial meeting with Harald Rafdal several weeks ago -- he's the president of Kvaerner Shipbuilding -- that our concerns and proposals to include MBEs, WBEs, and DBEs has yet to be taken in what we feel to be a serious and representative light. 81 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 We call for the same opportunities to negotiate with Kvaerner as was expended with the unions, the majority contractors, and others to establish a working relationship on contracts and agendas in light of the invoices and direct documentations of expenditures of monies to date to set up the contracts and the cross-training of personnel to accommodate acceptance of their agreement. We would further request a copy of those documents which would allow for waivers of the Buy America Act and Buy Pennsylvania Act that subsequently allowed Kvaerner Shipbuilding to purchase its crane outside of the United States and all of the amendments that would allow for its payments using public funds. I further question the following awarded contracts of records that lack minority and female and disadvantaged business participation. , has been awarded $2,932,565 in contracts. No minority, W 82 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 or DBE participation. We have adequate certified contractors capable of dealing with this portion of the contract, and you previously heard from some of the representatives. I won't recall them in consideration of the time. P. 6 million. To date, Hannah & Son has received a 5 percent contract, totaling $80,000. Demolition and site, including site paving and caps, which was discussed previously by KKAJ, you are aware of. And without minority participation, these contracts continue to proceed. , $2,292,836 to date. No minority participation. And in this particular contract, we will not settle for just the supply end; we want work on that job. We have adequate certified contractors who are able to deal with the demolition and the reinstallation of the 83 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 electrical work on the job. So just to award us a supplier consideration is not going to be acceptable by UMBA. Continuing on, you previously heard a reference to the structural steel. To date, Havens Steel has been awarded $48,253,000.
This is a joint venture, and they have no WBE or MBE participation. On the steel pylons, a $20 million contract was awarded to Agate, a construction company. No minority participation to date. And they have 7500 pylons that have to be driven. And I'm sure that we have minority contractors capable of providing services on the preparation, digging, and evacuation concerning these 7500 pylons that they're going to be installing. On the concrete bid, Madison Construction has won. I'm not sure of the dollar-amount. But, again, they have no minority participation to date. It is a local firm. They've done work over in New Jersey, which required them to have minority participation. They're well-aware of the requirements in the area, yet they still choose to 84 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 ignore minorities and the law. And we are calling for a reconciliation and identification in this aspect. Continuing. Former representation of a small minority business should be -- I'm sorry. Former representation of small minority business concerns should be addressed through a representative, advisory or oversight board of which United Minority Enterprise should be a voting member with direct communications with Kvaerner Shipbuilding, majority contractors and such, concerning the percentage participation of M, W, DBE participation. In closing, I call for an investigation of the Eighth and Market Street contract, which will be coming before you shortly for funding. Again, there is no minority A and E firms that have been included in this project, and we have our concerns. I will, as well as UMBA, make myself available for any follow-up successful negotiations concerning these matters of interest. In proceeding, Mr. Simon has forgone 85 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 his participation so that we could present Mr. Jihad Ali, who is a committee chairman from United Minority Enterprise Associates, also dealing with directly with the questions concerning Kvaerner. Mr. Ali? )
Thank you. The sergeant-at-arms will distribute them. Please identify yourself for the record and proceed.
I'm Jihad Ali. I'm a member of the United Minority Enterprises Associates.
I'm Jihad Ali, a member of the United Minority Enterprise Associates. And it's an honor to be here today, Mr. Chairman and other members of the committee.
Pull that mike down a little bit, a little closer. 86 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
It's an honor to be here today, Mr. Chairman and members of the committee, because we're still struggling. And I take that as an honor because in the history -- when I focus on the history of Black American people in this country, we've struggled to get everywhere we are today. That legacy is still passing on. It's been 10 generations before us in our community that have 11 been here, and we're still fighting that 12 struggle. 13 And when I look back at my lifetime, in 14 the 41 years that I've been here, I look back and 15 I see the great struggles such as Cecil B. , and others that have 17 existed in this city. So it's really an honor to 18 be here today to continue that struggle because 30 19 years ago, at 33rd and Dauphin, they were talking 20 about jobs; 30 years later, we're sitting right 21 here still talking about jobs. 22 Because this whole thing, this whole master lease, this whole set of exhibits that's attached to the master lease, it all talks about jobs. That's the number-one payout for the city. 87 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 And, in fact, that's the thing that we need to focus on. So it's not so much as Kvaerner building those ships, but the payoff for us is in jobs. Chairman Nutter and members of the committee, I appreciate the opportunity to appear before you today to discuss the rehabilitation of the Philadelphia Naval Shipyard and Kvaerner Shipbuilders and their equal-opportunity responsibilities. Some of the matters discussed today are similar to matters happening on all of the major construction projects occurring in Philadelphia being financed by the City of Philadelphia. Mr. Chairman, to begin with, I would like to discuss the financing that was extended to Kvaerner Philadelphia Shipyard, Inc. I believe that it is important to see where the money came from and what laws apply. There is little doubt about the importance of Kvaerner Shipbuilders to the City of Philadelphia. Nearly 1,585,577 people call Philadelphia their home. Over the past year, $429,500,000 of taxpayer dollars has been 88 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 channeled to Kvaerner Philadelphia Shipyard, Inc. primarily in the form of housing and urban development 108 loans an special-purposes grants. Two of the HUD 108 loans are identified below. It is a $30 million Tax Increment Financing Grant financed by PIDC through a loan of HUD 108 loan funds. A $10 million PIDC loan, which is also a HUD 108 loan. Other loans and special-purposes loans are as follows: A $182 million investment authorized by the Commonwealth Capital Budget Project Itemization Act for 1996 and 1997. A $25 million loan from the Commonwealth Discretionary Dislocated Workers Fund. A $20 million PIDA loan. A $19 million Economic Conversion Fund interest-free loan to PSDC for the benefit of Kvaerner. A $65 million grant from the Delaware River Port Authority. A $50 million grant from the United States Department of Defense. 89 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 A $25 million grant or grants from the National Reserve Account Job Partnership Act. And $3 million in savings to Kvaerner through utility discounts from public utility companies. Above are other sources of funds as indicated in the master agreement. "The problem that we have is that in all the loans or grant documentation is a clause that reads: The borrower shall comply with all state and federal laws prohibiting discrimination in hiring or employment opportunities. " 90 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 There are other clauses that should be incorporated in all these long documents that are missing; most notably, from the 108 loan funds, are the Section 3 clause. These loans are a direct advance of the future community development block grant entitlement receipts. These are some of the obligations that Kvaerner is ignoring. While Kvaerner Philadelphia Shipyard, Inc.
has only been there a short time, they have awarded several major contracts for construction of the yard. This blatant disregard for existing laws and regulations of state and federal requirements is being passed through to the contractors that Kvaerner is contracting with because these rules and regulations are not a part of the bidding documentation. These problems have been exacerbated by the failure of our local city government to correctly give responsibility for compliance to the Office of Housing and Community Development. Because of the federal dollars that gives jurisdiction to them, in addition, others chosen by Kvaerner Philadelphia Shipyard, Inc. has recently been contracted to obtain minorities 91 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 involvement have taken an adversarial role. We hope to have a meeting with our attorney and also parties involved to solve these problems at this stage of the development. Mr. Chairman, I hope you can see that Kvaerner Philadelphia Shipyard, Inc. has not been fair in the construction process. The hiring of prominent African-Americans will not put a happy face on what has been occurring. We will need direct oversight of this committee to put this construction-letting process back on the right track. Because, as of now, Kvaerner Philadelphia Shipyard, Inc. has done all the wrong things. , Kvaerner has been like an animal caught in a net. The more it struggles to get out of its predicament, the more it gets entangled. The time has come for all of us to work together to help Kvaerner Philadelphia Shipyard, Inc. get untangled. That is why we're here today. I suggest that our organization and our attorney, Mr. Michael Davis, be invited to any follow-up meeting to address this issue. 92 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 What we would like compliance with Section 3 and other federal laws. We'd also like an open bidding process. We'd like documentation of all minority outreach efforts until the project is completed. And we'd like access to the those records. Perhaps the United Minority Enterprise Association can assist in these monitoring efforts. The controller earlier, David -- I didn't get his last name -- he asked one of the Councilwomen -- the Councilwoman asked him what could be done when we find out that they're not in compliance. As I've indicated through the documents that I saw that were a part of the master agreement, but they weren't signed, so I can't say legally that that's what they signed. Because when you look at that issue of documentation, when you go to the mayor, when he submitted the bill before the Council, at the time he sent the master agreement, and he said contemporaneously, the agreement was going to be placed in the chief clerk's office. It's still not there today. I went there today before this hearing and it still is 93 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 not there. I looked at the file. That document has been in existence for over a year. It consists of over 500 pages. I would ask the Council, in your capacity, under your rules and regulations, you have the ability to get outside counsel. Because, obviously, there's going to be a conflict. You're represented by the City Solicitor, then they represent PIDC. If we're going to look at legally what can be done, I want you to have the right information. Perhaps you can obtain outside counsel.
And the other thing before I close is, there's a concern by one of your other Councilman about -- his focus was on union work. Well, there's a lot of people that I know that aren't in the union. I would want everybody to be in the union. However, there's going to be sometimes when people have the skills but they really don't have the ability for the union. As things exist now, we need to know if there was a project agreement signed, waiving the requirements of disadvantaged people to work on 94 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 this job. Because if that's the case, then that's going to mean that this is going to be a 100 percent union job, which is quite in contrary to Section 3 regulations. And we need those types of answers answered.
Just one item for the record. The City Solicitor's Office does represent a number of -- represents all of the City departments and some of the agencies. I do not believe, though, that the City Solicitor's Office represents PIDC. I believe that PIDC has their own legal counsel, as they are a quasi governmental agency.
Yeah, I go along with what you're saying because, going down the listing of organizations, we've had -- we've had a few meetings with PIDC and the Hispanic Chamber of Commerce. And within that, there have been several contractors and representatives of the Hispanic Contractors Association. And as of this time, I do not know of anything that has gone in terms of a pre-bid or a bid proposal or RFP to the Hispanic Chamber of Commerce or to the Hispanic Contractors 95 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 Association. And we actually said that the Hispanic Chamber should be the instrument that they use to be able to get involvement. And after this time and so it's -- and I agree with you in terms of contractors and construction workers and electricians. They would be very hard to find within the building contractors union and so on. So in terms of participation, in terms of jobs, it becomes a problem in terms of diversity and minority representation, both African-American and Latino and women.
Just in answer to you, it's not a problem for the other guys, but that is a problem for us. And as long as we're on point and this committee takes a stand, this stuff can't go on. Today in the paper, they quote that there's going to be $2.7 billion worth of construction in this city. And if you don't stand up now, then you might as well just kiss all of that money good-bye. And everything that we to today affects all these young brothers that we bury every night 96 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 out there. Because they're not selling drugs because they inherited that, that's nonsense. It's the easiest opportunity that they have. They have no idea about the kind of money that's involved in construction. And, I tell you, it is my responsibility to come down here today, to stand up, to tell you that we, as UMBEA, is going to do everything within our power to stop this project within the law, because we owe it to ourselves, we owe it to our children, and we owe it to you our ancestors. (Applause.) (Charles Ang comes forward.)
Chairman and people of the Council, I appreciate the opportunity today to come here and air the concerns from the minority and the women's business sector.
My name is Charles Ang. I'm president of Ang Associates, which is a consulting engineering office, and also a small construction 97 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 company named Innovative Construction Systems. My concern is pretty straightforward. This Kvaerner job, I believe we are not getting enough information for the minority and WBE sector. Attest to that, I have a letter here that shows a follow-up to an ad in The Inquirer regarding -- well, this came out from the Philadelphia Shipyard Development Corporation. And the people, the contact person there, is Bob Benko. And the letter here I had is when this ad came out looking for project management consulting services, and I addressed to them to Mr. Benko, and this is following a very -- it's just a very regular, normal procedure. And I quickly mentioned about my company, and I'm a certified minority business enterprise and I'm interested in offering my services. In fact, I did mention, because our company, a minority company. Not too many have grown to be strong enough to be a prime. And I have stated right here I'm only interested to go in as a sub to the primes. In the letter here, I ask them to keep our company informed of your short-listed firms so that we can 98 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 network with them independently. And I gave him my number, telephone number, my e-mail number, but I got no response. In fact, I followed up with several telephone calls and I never got a return call.
Did you get past the administrative assistant? (Laughter.)
You heard Mrs. Bridges. Did you get past the administrative assistant?
This wasn't the Kvaerner piece, okay. This was with the Ship Development Corporation, and you wrote to Mr. Benko 'cause he is -- this corporation, we were told, was going to be the oversight board to make sure that everything went all right. And you got no response from him?
No response from him. 99 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
Let us say that we have given Kvaerner and its entities untold opportunities to communicate and establish a working conduit with us, and they have directly, callously and with aforethought avoided any opportunities to deal with any minorities. As included within the package that I gave you, there had been also the concerning testimony by Mr. Leonard. And every sense of the operation that we have tried to make this thing work prior to coming here and voicing our concerns has been received with total disregards to the community in which they are located. And when you're paying out of your pocket, you expect to at least hear the music if you don't even get to a dance to it. They're not evening hearing us.
Let me ask you a question. Have you made any contact with PIDC or PSDC? Has your organization contacted both of those agencies? And what was the response?
Again, inquiries have been directed to Mr. Hankowsky ad his office.
Did you get a 100 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 response?
It's status quo. The status quo is to avoid. If you avoid us long enough, maybe we'll go away. Well, we're here today and we're here to tell you that we're here for the long run.
There has been phone calls and I do believe those letters. At least two letters that I'm aware of have been written. I have no response to those letters. Unfortunately in my rush to get down here today, some items were overlooked for inclusion in this package. However, I shall make it my duty to get that to you before the end of the week, Mr. Chairman and other members.
We had proceeded in giving them a variety of proposals and packages concerning our cross-training and participation 101 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 with the minority community, of which I believe Dr. Spencer and others will discuss in their follow-up after we leave the podium.
However, we thank you for allowing us an opportunity to bring forth our concerns. And as Mr. Ali has just proposed, that we're here for the duration.
Thank you, Mr. Chairman. This question can be for any one of the three. You know, we all went down to meet with the president of Kvaerner.
And since that time, I've received correspondence, and I think at the meeting, Jim Roundtree was there, so I think things started to be worked out where OHCD and MBEC were now going to participate actively. 102 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
Has there been any change in information flow? Have communications opened better? Or what?
To date, no, it hasn't changed. And I say this with a jaundiced eye because there are other entities that have been further included into it that does not communicate or represent the minority community. However, I notice by a letter that I received dated October the 13th, which is included in the last four pages of the package, which kind of offhandedly just dismisses us and says that these entities have been awarded contracts to establish a communication and contact with the minority community. And I don't feel that all of it is representative of the needs that we have espoused here.
Yesterday, Handford Jones 103 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 from OHCD, HE called my office, and I did have to say this, that we were able to see some principal people down at Kvaerner yesterday. And I was able to present my credentials and brochures and seems to be receptive. And I hope that kind of spirit should be kept up and someone else can follow up. And we were only two parties, went down to together with Handford Jones. So I hope that that kind of activity can continue on and bring up more interested people in there to be involved.
I just wanted to add that Handford Jones is doing his job. And sometimes when you do your job -- (Applause.)
-- people don't like it. Regardless of what it says paper, they don't like it. And he's one that's going to need protection from the chairman and rest of the members of the board. And the only way things are going to change is through the efforts of this board sitting right here because you have the power to 104 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 change it. You can always get everybody's attention when you stop the money.
Right, okay. Thank you, thank you very much. (Applause.)
Ladies and gentlemen, after consultation with Councilwoman Tasco, the prime sponsor of the resolution, given the substance and the weight of the testimony that we've heard from two panels, we will make a slight deviation. We believe at this point in time, it is appropriate to have representatives from PIDC Kvaerner Philadelphia Shipbuilders, Inc., and Mr. Hankowsky and Miss Van Nostrum come to the witness table. (Above group comes forward.)
Thank you for your presence here. If we could have initially each individual at the table identify themselves, your agency, your connection to the project. And then I will assume that you have worked out amongst yourselves, if you have a presentation, please 105 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 make the presentation. But we would certainly ask, and I know you've been here from the start. You have heard the testimony of many individuals who have, apparently with good faith, attempted to be involved with this project. We would like direct and forthright answers or explanations to the statements that have been made. And so if we could start with Mr. Hankowsky and go around. If everyone could just identify themselves and their agency or employer.
I'm William Hankowsky, the President of the Philadelphia Industrial Development Corporation.
I'm Richard Ryan, the Project Manager for Kvaerner for the Construction.
My name is Gary 106 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 Thompson. I'm the Project Director of Construction for Kvaerner.
My name is Tore Sjursen. I am Vice President for Yard Development for Kvaerner. And I would like to convey Harald Rafdal's apologies for not being able to be present personally.
I understand. Unfortunately -- could -- I'm sorry and I apologize. Can you say your name again and spell it.
I'm Ron White, Mr. Chairman and, I'm here as counsel to Kvaerner. IDENTIFIED AUDIENCE MEMBER: I didn't 107 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 hear you.
My name is Ron White, and I'm counsel to Kvaerner. Is that okay?
Okay. Let's try to have decorum and respect for all of the witnesses. I appreciate it if anyone didn't hear it; they now heard. Is someone making an opening statement or presentation on behalf of Kvaerner? Don't everybody jump up at the mike too quickly. We can just go around then.
Mr. Chairman, I do have written testimony. I'm a little more used to this format.
I could quickly go through it if it's the pleasure of the Chair. Good afternoon, Mr. Chairman and members of the Committee on Commerce and Economic Development. I'm here today to testify on the resolution before the committee. I would like to begin with some background information. As you know, we have been 108 COMMERCE & ECONOMIC DEVELOPMENT - RES. S. Navy announced its plans to close the facility. This search been extremely difficult and, at times, seemed hopeless. Last year, we completed a two-year effort to put together a transaction to induce Kvaerner to reestablish shipbuilding. This is perhaps the most complicated project we have ever done, involving numerous branches of the federal, state, and local government. The agreement with Kvaerner was signed December 16, 1997. Without going through the entire agreement I would just outline the structure of the transaction. The Philadelphia Authority for Industrial Development, (PAID), has leased a 114-acre site from the United States Navy. PAID, in turn, has leased site to the Philadelphia Shipyard Development Corporation, or PSDC. PSDC has entered into a master agreement and lease with Kvaerner Philadelphia Shipyard, Inc. (Kvaerner). Kvaerner is designing and building the shipyard and will operate the 109 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 shipyard. Included in the master agreement is an MBE/WBE program, which is Section 118 of the agreement, which Kvaerner proposed and agreed to. The first contract awarded for construction was the design contract. This contract was awarded to a joint venture, The Pennsylvania Shipyard Engineering Group, in April of this year. This $5 million contract includes percent MBE and 5 percent WBE participation. 11 Actual construction contracts, beginning with 12 demolition, began to be bid and awarded in July 13 and August of this year. 14 I first became aware of the concerns 15 about the implementation of the MBE/WBE program in 16 September via correspondence from the Controller's 17 Office and members of Council; in fact, members 18 who are with us today. I contacted Kvaerner to 19 share these concerns and asked that the issues 20 raised be addressed. 21 I met with Kvaerner and PSDC on 22 September 28th to specifically seek a plan of 23 action. And, obviously with Kvaerner here, I 24 think they can enumerate on it themselves. But my 25 understanding is that Kvaerner has taken a series 110 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 of actions to ensure the implementation of the plan. These actions include the hiring of the Greater Philadelphia Urban Affairs Coalition and Ron White, Esquire, to provide assistance to Kvaerner; meetings with OHCD and MBEC to enlist their assistance in participating in the plans implementation; in the inclusion of the MBE/WBE goals and the bid packages and contracts with contractors; and meetings with prime contractors to stress the need to work towards fulfilling these goals. In addition, I have clarified on behalf of various parties that the agency which will monitor the plan on behalf of the City would be the city's Office of Housing and Community Development. Obviously, PIDC is not a direct party to the Kvaerner master agreement. However, I share with City Council the serious concerns that all provisions of the Kvaerner agreement be adhered to. I've decided to use my influence to make sure that all the appropriate parties work 111 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 towards an effective MBE/WBE program and I will continue to do so. The proof, obviously, will be in the results. And, therefore, I plan to stay involved. This project is a critical one for the city's future economic well-being. Its benefit should be felt throughout our entire community. I would be pleased to answer any questions. I'd like to take Councilman Nutter up and the chairman up on his request that perhaps if I address a couple of the items that have come up in the comments.
So if I might just for a minute try to answer a few of the questions that were raised. One, there was a question raised with regard to the auditing rights vis-a-vis Kvaerner. The right to audit the project in a financial sense -- I think I've clarified that the MBE/WBE monitoring would be done by OHCD. But in a financial sense, the auditing rights are embodied in the master agreement, and those rights are therefore PSDC, who has the right to review the bills and the finances and the expenditure of the funds that are in the transaction, and then to 112 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 provide those reports to the various governmental entities -- federal, state, local -- that are signatories to the agreement. There was also -- I just want to point out that a couple of the firms that have been made comments this afternoon -- for example, there was a -- one of the firms discussed Building 101 at the shipyard. That, in fact, is a PIDC project that they participated in. The PSFS building, the Mellon project, so that there have been projects where we've sought to make sure that there were MBE/WBE plans that they were working. OHCD has been the monitor of those plans. And so I -- the spirit of the hearing is something that we share, not just specific to this transaction but generally. I have to be honest with you. I will simply apologize to one firm, S&W Asbestos, because I'm sure if they called me, I believe I sent all of those calls, firms looking for information, through a process that should have gotten a response back to them, that we were advising them, we were passing the information on, etc. Because, obviously, we're not directly in 113 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 the bid cycle. If that did not happen, that should happened and I think has happened with other firms as we have received this information. And we'd be happy to provide a chart. Someone requested a chart to show sort of how this deal is organized. I briefly mentioned it in my testimony, but we can show sort of which players are handling which portions of the transaction. I think probably, as Tore mentioned, Harald Rafdal, the president of Kvaerner, ha conveyed to me directly and in person his commitment and his concern -- I'm sure Tore will amplify -- that to whatever degree there have been mistakes or omissions in getting this program off the ground, that there is a focussed effort at this point to get it back on track. That doesn't satisfy the fact that, in some instances, there may have been misinformation or miscommunication in the past, but I think there is an effort currently to try to get this operating the way we are used to having MBE/WBE plans operate and projects that we finance and work on. Perhaps with that, I'll end my 114 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 testimony.
Well, let me ask this question, Mr. Hankowsky. I mean, who at this point, within either PIDC, PSDC, or Kvaerner Philadelphia Shipyard, Inc., is directly in charge and responsible by their job duty description or title for the implementation and adherence to goals for MBE/WBE participation?
I think the answer to that question is that the implementation and adherence is a responsibility of Kvaerner's. I think that falls under Tore and his group as the construction development group.
And that the monitoring of their performance is a responsibility of OHCD.
Well, I mean, it is Kvaerner. I think it is Tore's group, I think he can confirm that.
So Kvaerner is ultimately responsible for implementation and 115 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 adherence to these goals.
To monitor that performance, like they do in other projects.
And if, for some reason, they might be deemed out of compliance, who would they be deemed out of compliance by?
OHCD does. And what is OHCD's power, once they've been deemed out of compliance, to do anything either about getting them in compliance, or what other penalties come with being out of compliance?
OHDC would do what they have done in other transactions, which is, they would notify -- in this particular transaction, they would notify the city administration, PIDC, PSDC; in other words, the parties to the 116 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 transaction. And we would then raise that with Kvaerner and seek that it be addressed.
Well, we would continue to -- I mean, again -- then parties would have to decide what is the appropriate next step.
What is the final and ultimate penalty for noncompliance?
Well, it is not -- the plan is a plan, as it is in many development agreements, that is there, it's an obligation of the party to the agreement. Noncompliance is -- does not terminate the agreement, so it's not -- I mean, if you go through sort of the legal parts of the agreement, it's not an event of default under the master agreement.
It is a default that needs to be corrected. Then the other place that it comes up is in the loan documents that are between PIDC and Kvaerner. We have not closed that loan. So at 117 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 the moment, we sort of -- we haven't disbursed any of those funds, none of the TIF funds have been disbursed I think all of the funds disbursed. I think, in fact, all of the funding that has been disbursed to has been state in origin. I'm pretty sure that's accurate. PSDC will know that for sure.
Well, let me ask this, then. If, for some reason, Kvaerner never complied -- and maybe some parties had no 12 intention of complying or they just acted inappropriately or by delay or by other strategies and tactics -- but there was never, ever compliance, does it mean that the project would still, in fact, take place?
I'm -- I'm not trying to be evasive or obtuse. I'm not sure it's a simple yes or no because I think the various parties to the transaction would independently make a decision about what their actions should be vis-a-vis that circumstance. So --
The parties to the transaction being PIDC, PSDC and --
The Commonwealth of 118 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 Pennsylvania, the Delaware River Port Authority, the federal government. And, as I said, there's always --
Why is OHCD the monitoring agency, and who made that decision?
When we have put HUD 108 funds and development projects, because their origin is HUD in its ultimate origin, OHCD has done that for the hotel projects that we've undertaken. And so we have a protocol in place where they've done that on behalf of those loans. Because there's a 108 loan in this transaction, I felt it was appropriate that we have a direct party such as OHCD's office involved in that. That's Kevin Brooks and Handford Jones that were mentioned earlier by certain individuals. And so I basically said that's who I want it to do it on behalf of us.
Okay. 119 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
Mr. Hankowsky, just to follow up because you say it doesn't require -- it doesn't have a simple yes or no answer. I just signed a contract with a contractor to rehab my house. If they don't comply, there are some penalties; just as if I don't comply with the payments to them. There are some penalties. I think the Councilman asked you very specifically, where in the contract, where in that huge contract is there any clause that goes to if Kvaerner does not comply with the MBEC, WC, all the way down the line? These are the penalties that will accrue along those lines. Obviously, the answer is no, there is nothing in there to really force Kvaerner to comply with these clauses. And there is nothing within the contract. And so the answer is no 24 again because I don't think there's anything in the contract that will stop the money to flow to 120 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 Kvaerner if the answer is no to these questions. Isn't that so?
Well, I obviously -- I mean, you are an attorney by practice so I want to careful I'm not giving an illegal response to an attorney by practice. But the distinction I'm making is to your first point, which is, is there a specific penalty clause for noncompliance; you know, pay a fine or, you know, or in a monetary effect or whatever that you might see in a transaction. There is not, that's accurate. There is a provision in the loan documents, for example, that a borrower cannot discriminate. If the determination was that there was discrimination, then we could say we're not loaning the money. I mean, that is a proviso in the HUD 108 loan documents.
First you have to have a legal term and then you have to prove intent and all of those other things.
I don't disagree with that, Councilman. I just want to be responsive to the question. 121 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
Mr. Hankowsky, The documents that we're talking about -- and I know Councilwoman Clark wants to jump in. The document that we're talking about, is this the same document that on the day of the final deal -- which I believe took place in the chambers here -- is this the same document that there was a significant amount of discussion about members wanting to see this document prior to voting on the bill to approve the Kvaerner deal? And was this the same document that we were told at the time we could not have a copy of that document because of the sensitive nature of the negotiations that were taking place simultaneous to the Council hearings; but we were encouraged to trust in the good-faith efforts of the people who were negotiating the deal and the documents and that everything in the end would be to our liking. Is that the same document that we're talking about?
Okay. 122 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
And I think earlier again this afternoon -- I mean, we did file t with the city clerk, and I believe we provided full sets to every City Councilperson. If it's not there, we can clearly provide one. There's no 7 attempt not to have it available. It is a matter of public record.
Thank you, Mr. Chairman. I want to follow up on the sanctions question. Mr. Hankowsky, what happens if Kvaerner -- and I don't want to go to intent. If for whatever reason Kvaerner never took one tiny baby step to implementing any of the minority business and disabled business, what happens? What sanctions are there? Where in the document, what language do you rely on to implement what sanctions? That's why we contracts now. This is not who's a good guy and who's a bad guy. These are the provisions of a written contract. Where are they? Show me the language 123 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 on which you rely that would give me some assurance that I don't have an illusory promise. Where's the language in the document?
Again, I think, Councilwoman, as Councilman Ortiz asked in his question, there is not a specific penalty provision that is specific to nonperformance of this section of the contract. The contract -- and, again, I speak to an attorney by practice so I want to be careful I'm not making a legal analysis. But if the contract is an entirety and the parties sign it and both are to perform accordingly. So if there is a total default of the agreement, clearly the parties might make a decision to simply say, We believe you're in default, egregious default, and we're not proceeding, we're not disbursing, we're not --
Let me interrupt you. Because sometimes a remedy like that is illusory. What is the likelihood, if we can't find language on which to rely, where will we sue on? Where is the good-faith effort. Now, you and I had this discussion. 124 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 This is about what, the third or fourth time? At some point, somebody is going to have to recognize that there is a population in and about Philadelphia that cannot rely on good-faith effort and "trust me" and any of those other "cutesy-tootsies." We're going to have to have some language on which you can sue out, Ron, on which to say, Here's the standard, and you've fail to meet the standard by more than an insignificant degree and, therefore, we believe that you're in violation. We have nothing now. Mr. Chairman, we absolutely have nothing on which to base our assertion that this company is not in compliance because there is no 17 standard that requires them to do it. And you say on the four corners of a contract that's got as many dollars, as many jobs and as much emotion wrapped in reactivating the naval shipyard, if we can't get your commitment now when you've got the new buildings up and the cranes and the hardware and the people in hard hats going to work, that just turns us into the bad guys when we say, "Let us come to the party 125 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 too." So I need you to insist. I'll even be willing to sit with you and help word the provision we cannot rely on your willingness to do it. There is not one example in all of recorded history that permits me to rely on the haves willing giving to the have-nots. There's just no 9 (unintelligible). And I've told you this, I've told you this. You said it plainly, you said it clearly, you said it with insistence. I do not accuse you of bad fait. I think you're a well-intentioned man, but I do not have any language on which to rely.
I understand your point totally, Councilwoman. And I can't -- I obviously can respond to the facts are that we have today. I can also say that it is -- which may provide no 19 comfort to you, I appreciate this, that it may provide no comfort, but it is analogous to what we have done in prior transactions where MBE/WBE plans were components of those transactions, where parties were responsible to execute them but where there weren't specific -- and I'll again use the term "penalty clauses" related to that. 126 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
Use "sanctions"; don't use "penalties." Sanctions are a much better contract term. What are the sanctions for failing to comply? There is no standard for compliance. There's a kind of good faith, "Well, we're going to do what we can when it's convenient." But that's not what we're talking about, okay? And I remind you that in your capacity, that you represent all of us so that you can't (unintelligible). You have to represent all of us, including those of us who represent all of these people. And sometimes I'm not persuaded that you understand the severity of this situation to us. Maybe we're being too polite about this. I don't know what has happened in here. (Applause.)
Well, I hope civility is not a sin. I do understand my responsibility to represent the role I have as it may be all of the city, and I take that seriously.
We have 127 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 Councilwoman Tasco and then Councilwoman Miller and then I'd like to get back to the Kvaerner people.
Mr. Hankowsky, when we met in the caucus room in a briefing prior to bringing the legislation to City Council, you heard the sentiments around the table by many Councilmembers about this whole issue of minority, women, and disabled participation in this project. And you assured us that you understood our concerns, and just like the Councilwoman so passionately has spoken, we talk to you about this all the time. And we don't seem to get your ear. I'm not sure that PIDC understands what they should be about in terms of representing us in the economic development field. What is your minority participation on your board? And do you have a minority, women, disadvantaged business component as a part of your board? Or is there any discussion about it in terms of what PIDC does?
Yes, there is in fact, Councilwoman. I will apologize for not quickly 128 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 being able to tell you what it is on my board. I have a 30-member board, and I'd be happy to provide it to you, I just -- would almost need to do it quickly on a piece of paper. But there is both minority and female participation and female and business participation. We also, as I mentioned a moment ago, have sought to make sure that there are MBE/WBE plans on projects like the various hotel projects we've been seeking to do the same in our -- in all our activity, understanding again that that is -- at the moment, I just kind of -- well, not kind of, but that's independent of the Kvaerner activity that we do at the shipyard. So to the degree we are designing a building, we are looking into the professional-service sector for that.
If I could, Councilwoman, I really would appreciate just another minute. And I've taken that to the point of, for example, on projects, looked at -- because professional services, in fact, are a very 129 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 discretionary area versus when you bid, when public law may have certain requirements. And we have done scenarios where we have only solicited professional services proposals from minority or female firms to ensure that there's representation. Just earlier this calendar year, in fact, I've started an effort to revisit own MBE/WBE program. And I hope to have that wrapped up by the end of the calendar year because there's been just a lot that has happened in terms of different funding and different activity and making sure that there is a plan that is responsive to sorts of where we are today in terms of what we do and how it works. And I'd be happy to share that with Council as a draft before and clearly after. So, again, it may not satisfy you today, but I am not, from my own perspective ignoring or not trying to pay attention to the issue. I believe it is an important issue.
I will just say for the record that I've been here and I was chair of the Economic Development Committee my first 130 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 term. I've heard that answer for the last eight years, and we haven't gotten anything from you regarding your agency about minority participation since we've been here. You're always looking at it, you're always working on it, but we don't get anything, okay? We don't get anything. (Applause.)
Councilwoman, if I could, just for the record 'cause I at least want to get the record --
We submit one annually, and I'll be happy to share it with you and prior copies of it. I don't -- I'm not sure where it all goes but I'm happy to do it.
Well, I think you ought to give it to each of us. In Mr. Jihad's testimony, he states that in the master agreement -- and you can agree or disagree with this, I don't have the master agreement here -- that it reads that the borrower 131 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 shall comply with all state and federal laws prohibiting discrimination in hiring and in employment opportunities. And in the event a borrower is not in compliance with nondiscrimination clauses in his contract or with any such laws, this contract may be terminated or suspended in whole or in part, and borrower may be declared temporarily ineligible for further City contracts, and other sanctions may be imposed and remedies invoked. And he further states in other clauses that he has, he refers to the master agreement in each of the footnotes here that the contractor shall actively recruit minority subcontractors and women subcontractors or subcontractors with substantial minority representation among their employees. You talked about PSDC auditing the Kvaerner project. In auditing other than for the expenditure of dollars, do you and do you plan to do a performance audit in relationship to the terms of the master agreement?
A performance audit? I'm -- 132 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
-- where they say they're going to spend them, and you have a budget and you have to spend the dollars.
But do you look at the performance in terms of participation?
All right. Well, based on this information provided to us, if it is a part of the master agreement, and you find that Kvaerner is not in compliance, do you believe that this part of the master agreement gives you the authority and the power to take some action against Kvaerner?
Well, first let me just 133 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 make a point of clarity and then I'll answer the question.
I know it refers to hiring and employment opportunities, but it also addresses contractors.
Yeah. I believe the provision that was read -- I believe this is accurate -- is a provision that is in the loan document between PIDC and Kvaerner. I do not believe -- and I didn't have time to sort of go through the whole time agreement back and forth -- that it's in the master agreement per se. So I believe that should a party fail on the provision you read, that the effect of it would be that the loan -- I guess the ultimate effect would be that the loan could be cancelled or not funded or terminated. I don't believe it's an event of default under the master agreement. Again, I don't want to say that categorically and give a legal opinion.
Does the master agreement precede the whole agreement with PIDC?
The loan agreement is 134 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 an attachment, Councilman, to it as an independent document 'cause it's an -- it's an -- it's a --
Is there a provision in the master lease, Mr. Hankowsky, that if there is any default in the various attachments, including the loan, that there is any effect on the master lease?
I just can't cite that off -- I'm not saying there is or there isn't. I would have to sort of read the agreement in its entirety.
I understand. It's estimated that most, if not all of you, are going to be back here in a couple weeks.
So if you could get us answers to those particular questions, I'd appreciate it.
Sure. I'd be pleased to do that. 135 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
Let me try to move to the representatives from -- I'm sorry. Councilman?
Mr. Hankowsky, there's a chart up there, and I have it here in this chart. And it says: "Contractor Vendor Selection Flow Chart," and it has an approved bidder list distributed, and then it has 1, 2, 3, 4, and then it stops at 4. Send approved bidders list to African-American Chamber of Commerce. And we had met -- the Hispanic Chamber of Commerce, we had met, and one of the things that we had talked about was RFPs, bidders and bids and so on that would be sent to the Hispanic Chamber of Commerce. I don't see that list in this flow chart.
But you were supposed to communicate at Kvaerner. That's the understanding that we had at the meeting.
Right? It's not here. 136 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
All right. Mr. Richard Ryan, you are the project manager of construction for Kvaerner; is that correct?
I'm located at the shipyard, at Kvaerner offices. 215-875-2711.
Okay. And, Mr. Thompson, I didn't get your title. Who are you in the whole scheme?
Project Director, construction. So on the organizational chart, does Mr. Ryan work for you or do you work for Mr. Ryan. 137 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
2707. And I'm very sensitive -- if you have a last name like mine, you're really sensitive to other people's names. (Addressing Mr. Sjursen.) Is it "Tore"? Okay, can you say your last name again for me, please.
2630, okay. Now, Mr. Sjursen, there is one matter that I need to try to get some clarity on with regard to you, and then I have some questions for all of you. In the letter from the City Controller to Mr. Hankowsky, dated September 18, 1998, there 138 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 are comments that are attributed to you that read as follows, in quotes: "I don't care what the contract says. We will do what we want on this project. It's Kvaerner's business, not the City's, and all we promised in the contract was an attempt to involve minority companies. We are not contractually bound to do anything. And by the way, this conversation does not leave this room." Did you say that, Mr. Sjursen, in a meeting? (Mr. Sjursen briefly confers with Kvaerner counsel, Ron Brown.)
As you're aware, when Mr. Leonard testified, we are in a lawsuit with Mr. Leonard. And I, therefore, would respectfully decline to answer that at this stage because I believe it's relevant to that lawsuit.
Okay. Is that somewhat tantamount to taking the fifth? (Laughter.) (Mr. Sjursen briefly confers with Kvaerner counsel, Ron Brown.)
My counsel is advising me 139 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 that since this is in litigation, it would not be appropriate for me to answer that. I'm sorry.
Okay, I'll accept that. Let me ask you so that you don't have to respond to comments made by someone else. Why don't you share with us your perspective on what this project is about, whose project it is, what your relationship is and the nature thereof with the City of Philadelphia, what your responsibilities are to the citizens of this city, if not the surrounding county. And why don't you put on the record what your perspective is as it relates to this project and our involvement in it.
Well, I believe that we have the responsibility to build a state-of-the-art shipyard. And I believe that in doing that, we will provide jobs, long-term jobs for the citizens of the city. I believe that it is our responsibility to give a fair chance, a fair chance to all members of this community to both bid the contracts we're giving out, we're letting out, and 140 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 to seek employment within the organization.
And can you describe to me the methodology and the program plan that you intend to use to accomplish the goals as you have stated them?
Yes. If I may, I would like now to read the letter that I have submitted on behalf of Mr. Rafdal, which I believe addresses those questions.
As you may know, Kvaerner Philadelphia Shipyard, Inc. has plans to transform the former Philadelphia Naval Shipyard into a state-of-the-art facility. One of our most important objectives in our efforts to do so is to start actual construction of our first ship by next summer. This objective is most critical because if achieved, Kvaerner will be able to attain the further goals of, A, meeting the objectives set in our agreement with the Commonwealth of Pennsylvania and the City of Philadelphia; and, B, creating jobs and getting people back to work. 141 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 The achievement of these goals is heavily on our need to use the fast-track approach to complete the construction of the shipyard. Here at Kvaerner, we are very enthused by the fact that our plans for the Philadelphia Naval Shipyard will encourage many businesses and employment opportunities for the Philadelphia communities at large. We strongly encourage the inclusion of minority-owned and women-owned business as well as employment opportunities for these groups in our construction plans for the shipyard. To ensure our good-faith efforts to arrange so that these inclusions are met, we have established a cooperative with the Minority Business Enterprise Council, the Office of Housing and Community Development, and the Greater Philadelphia Urban Affairs Coalition to monitor our directives to include minorities and women in our shipyard project. We also have an existing relationship with the Philadelphia Shipyard Development Corporation. The above-mentioned minority organizations are an integral part of Kvaerner's 142 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 contract bidding process. To that extent, organizations such as MBEC and the PSDC are incorporated to (unintelligible) selection criteria which is used to establish our potential bidders list. Once we have established an appropriate business list, that list of approved bidders will be forwarded with adequate to the African Chamber of Commerce, MBEC, and OHCD.
And, certainly, the Hispanic Chamber of Commerce will be added to that list. This will also keep the necessary contract information flowing through the contracting process, we believe. We will also give all the interested parties an opportunity to participate in the contracting process. Enclosed in this letter, you will find a flow chart that outlines the various stages of the contracting process. (I believe that's now shown there.) For future reference, please be 143 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 informed that we are working in collaboration with MBEC's Mr. Jim Roundtree to consult with us in our efforts to identify quality minority and female subcontractors and to ensure that information regarding contracting opportunities are disseminated amongst all those that are interested. For reasons of efficiency, we have asked that he be responsible for providing information of this sort to the appropriate persons. I hope this letter addresses any concerns you may have about the Kvaerner Philadelphia Shipyard project. And also Mr. Rafdal encourages you to call him if you have any further questions regarding the matter.
Well, I may have a few but there are probably some people in the audience who may have even more questions. They might want to call him.
I appreciate your reading the letter into the record. And in light of what Mr. Rafdal 144 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 indicates by way of interests and intentions and what you plan to do, could you shed some light on why we heard the type of testimony that we heard earlier? You were in the audience. If everything is apparently in place to make the process flow smoothly, get information out, why do we have so many disgruntled people?
Well, I believe, obviously, that this progress, while it has been in place, does not work the way we intended it to work.
I think there might be several reasons for that. I think maybe we need to explain the bidding process more detailed, in a more detailed way. And if I could, I would like to take the opportunity to do that.
That would be good. Can you tell me, though, before you explain it to us, what's been done in the past to get the information out. Why do apparently, again, so many people or organizations seem not to know what's going on? 145 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
Well, this process that we set up has been in place since the beginning of the project. It has been changed and amended in some ways, which I can explain after I --
Can I just ask, what process are you talking about, the process you just read in the letter?
If you're pointing to the vendor selection process as "the process," what was the mechanism or system to get that information out to people so that folks could understand it? I mean, are you saying that you handed people this chart and then expected them to follow this chart to get to the money?
Yes. The chart was established -- in June? 146 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
Is there any written material to go with it? I mean I'll just -- I mean, I'm not a contractor; it's probably fortunate that I never built anything. But I'm about -- I'm fairly lost after about the second level here, and I wouldn't know where to go, so I'd probably go seek another project. Who -- what individual -- Mr. Hankowsky said that Kvaerner's responsible for the implementation of an MBE/WBE program. Can you tell me what individual by name title, location and function is specifically in charge of the implementation of the goals of this project?
The specific person in charge of implementation of the MBE/WBE goals is Mr. Gary Thompson. And working for him as the project manager, Rich Ryan.
And so when people have concerns and questions, is it your testimony now and direction that they be in touch with those 147 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 two individuals directly?
And also they should in touch with a gentleman called Jason Carr.
Mr. Jason Carr is working in our organization under Mr. Mr. Gary Thompson, and he has been responsible for receiving information from potential vendors and in establishing a supplier data base within our organization.
What's Mr. Carr's title, what is his job, and what was he doing before you guys got to Philly?
Mr. Carr worked for Kvaerner Construction, and he is now -- his title is -- he's got dual responsibilities; he's also a cost manager.
A cost. . . ? 148 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
He's maintaining the data base of the vendor input we get from the marketplace, and he logistically gets involved in getting the pre-qualifications sent out and --
He deals with contractors, he knows the contracting business, he's the person that someone who wants to do business with you, they should be able to talk to Mr. Carr.
And they'll get past the administrative assistant and talk to Mr. Carr? I mean --
Yes. He gets hundreds of calls a day, and he talks to hundreds of people a day in corporation and --
He's back at the 149 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 shop?
Okay. I know that there must be some questions by my colleagues and I know Councilman Cohen has a time issue, but Councilwoman Clark beat him to the punch. Councilwoman.
If you don't mind, Mr. Chairman, I'll defer to Mr. Cohen, who has to leave. Then I would like to follow up.
Earlier I raised the question as to who from Kvaerner who is here present today has power to make decisions? Is there anybody?
You believe you do. What kind of assurances can we have from this day 150 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 on, you will take whatever steps are necessary to maintain the closest contact with the groups that are represented here at this hearing and address the problems; that they will feel welcome; that when they have questions, you will go out of your way to make sure they have answers so that they can do what they're prepared to do, which is to undertake very responsible work on behalf of Kvaerner, an behalf of the City of Philadelphia. What assurance can we have from you today that that will happen?
I think the best way that we can assure that this will happen is that we now make the procedures that we put in place in order to keep everybody informed, everybody up to speed and give everybody the opportunity, that we all work together and make that procedure work. I think that's the best way of making sure that these concerns are addressed.
I mean no disrespect but I have to tell you, that kind of answer says nothing. The kind of answer I'm looking for that would give me confidence would be your statement 151 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 flat-out that you're going to undertake that responsibility, and that you will report regularly to the City Council, and that your phone will be available to us as well as to all of the folks that are here in case the system doesn't work right.
Well, I can definitely give you my assurance that that is what we will do.
I would like to state that if this is perceived not to work, then I would very much like to know about it, and I will do what I can in order to rectify any problem.
Well, is there anything you cannot do? If you're responsible at the Kvaerner operation, can't you give us absolute assurance that we'll never have another hearing like this where people come to us and say, We call on the phone and don't get and answer. That we 152 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 don't get the information we need to compete fairly. All of them, they impressed me with their honesty, their integrity, and their ability to do the kind of job that we understood Kvaerner was interested in doing, and that was a job of excellence. And all of us believed -- you know, we took Kvaerner in good faith, and we went out of our way to reach that kind of a conclusion. This is not news to you, right? Mr. Hankowsky?
No. We want to deal fairly and honestly and openly. We would like to have it made clear that if there's any problem whatever, City Council and the groups represented here will have quick access to you so that you can take steps to correct everything. That isn't asking for very much, is it?
And I think you're going to have the best kind of operation if you cooperate fully with them. 153 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 Mr. Chairman, I'd like to suggest, before you're done, that it would be very good if we could have continuing reports, maybe even continuing hearings until everybody -- by continuing hearings, I mean once a month to get reports on progress, because I understand Kvaerner's moving forward rapidly. It wants -- I understood that from the testimony before, that they have a quick timetable. And we would like to feel very confident, you know, that the confidence we placed in you is fully earned by Kvaerner. We want nothing but real success for Kvaerner and real success on behalf of the folks that have testified here, and we think both desires are fully compatible. (Applause.)
I would like to say that we have no objections at all in providing you with the information you seek. We have contracted with GEP, the Urban Coalition, to provide reports to us. And also OHCD and MBEC are involved in our process and will get information on how we 154 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 proceed. And I'm sure they can also provide you with that type of information.
Well, I think the last touch that's needed is our confidence that you will be available on a hands-on basis to deal with any problems that may develop so that this whole process can go forward to everybody's advantage.
Thank you, Mr. Chairman. I have several thoughts here. I'm having difficulty with the fact that Mr. Rafdal, who is the President and CEO, finds it inconvenient for himself to be here. And the one person in the corporation who has a direct hands-on responsibility for monitoring minority, disabled and women business opportunities is not here either. 155 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 Now how can it be that you didn't anticipate that we would need to hear from the person who sets overall company policy and the person who has implementation responsibility exclusively? How can it be that those two people are missing? And then in the light of those two very glaring omissions, you ask me to take your word that you're going to make it better? I mean, that worries me. That lack of performance on your part worries me. Now we might have asked you some esoteric question that the person who would have the answer to it might not be here. But the only reason you came here today was because we had conveyed way in advance our unhappiness with the assurance that minorities, women and disadvantages would be handled in a fair way. I can't see you came here without people who can speak firsthand of what the process is and what the progress is toward achieving the goal. How can that be, sir?
Well, first of all, when Mr. Jason Carr's name was mentioned, it was in 156 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 response to a question regarding who minority companies should call in order to get an opportunity. I firmly believe that all of the people present here have a hands-on responsibility for --
No, sir. No, sir. Any job that's everybody's job is nobody's job.
I want to know who in your company on an organization chart charged with the direct responsibility of monitoring and reporting up the chain and down the chain what the progress is, and what the sanctions for failing to meet are? And if you don't even understand the significance of having one person responsible and having that person in the room to answer for the company, how then would you expect me take the rest of your representation?
Well, I do believe we have that person here who is directly responsible for the implementation of these programs, and that's Mr. Rich Ryan, the project manager. 157 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
Okay, you've asked a number of questions, and I'm not trying to be evasive. This chart set up here very is difficult to read admittedly. The reason why the chart was set up was to control the bidding process. It wasn't not deliberately meant to be exclusionary, that wasn't the intent. The intent behind the chart was to get the best contractors and to get involvement of them and WBE firms. In the absence of this, let me just tell you, we got many almost 1,000 contracting firms in our data base. You can imagine, with the amount of work that's available in the city, everybody wants a piece of the pie. That has to be controlled. The only way to control that process with regard to the master agreement is to put together a matrix where we can filter out the correct firms. Now, I'm sorry if I didn't answer your question directly but that's the background to the chart.
Let me tell you 158 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 what's wrong with it, sir. And I do not in any way mean to impugn your motives, please.
You say to me that this is a very complex chart in order to make sure that everybody has an opportunity. That's not what we're here for today. You need a chart that specifically lays out the plans and steps that you will take to be inclusive. How will you find these people? We found -- they found you and they can't get their telephone calls answered. We don't ask you to be (unintelligible) and find them. We say, Answer your telephone calls. Don't do anything special for them, just don't construct a new barrier for them to hop over.
Agreed, agreed. I guess what I'm saying is this chart addresses different organizations at different level.
Excuse me. In 159 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 response to our questions, you introduced this chart. This is a poor chart under any circumstance.
That's subjective, but if I could just continue for a moment, please. The chart is meant to handle contracting organizations at different levels. And what I mean by that is, all these good people who sat here today -- and there are different levels and sizes of contracting organization -- they all have an interest in the job. But Kvaerner, the interest they have is represented on a different level. For instance, one organization may be a subcontractor, one organization may be a prime contractor. The intent of this chart is to try and filter out into the correct position the prime and the subcontractors.
I know, but you're being far too basic and you're missing the point that I'm trying to make (unintelligible) understand the concept of prime and sub. We've been at this a very, very long time, and some of these guys are primes and some of these guys are 160 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 permanent subs.
We know who we are, we don't you knowing why we are. In response to our question, what is your plan, you drew up an unintelligible chart which doesn't answer the question. Now I need you to go back and develop a chart that says how will you access these and others like them who are qualified. At no point did I ask you to hire anybody in terms of what they look like or what their gender is. But if you are going to put this chart up this obfuscates, this confuses and confounds. It does not make it plain that you have the intention to include people who are historically and systematically excluded. And because there is no regular way of doing it, we're offering you a process that's about 30 years old. Some of us have been involved in it. You don't have to take a block of wood and turn it into a wheel; it's been done.
If you have any advice on how you'd like the chart to be structured -- 161 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
There's no 7 question about do I have advice. I've been trying to give it to you as long as you've been trying to get here. (Applause.)
Now, my direct question is this: Is it true that $80 million worth of contracting has already been signed into agreement? If so, how much contracting is left and what's left for these people except to watch other people go to the banquet?
We have signed -- I don't know the exact figure, but we have signed approximately that amount of money. A structural steel contract was mentioned of $48 million, and we have -- although not signed it yet, we have a pylon contract for practically $20 million.
Approximately $20 162 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 million.
I think the important thing for us, and this is part of the strategy that we chose initially to involve minorities is that the minority contents of those contracts have not been finalized. We are on a very fast-track schedule, and this is why I initially wanted very much to be able to explain this procedure because I think it's relevant to describe our efforts and our strategy for involving minority companies. I think, we, in order to reach another important goal of the master agreement to start shipbuilding next summer, we have needed to go out and get contractors on board based on very little information. Some of the gentlemen that previously testified mentioned that there weren't drawings available, etc., and this is true, this is part of the enormous challenge that we have because we're trying to both decide and buy and construct this project in parallel. I can tell that you just two weeks ago, the structural field drawings were just issued. Yet we had to contract with a structural steel 163 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 supplier in order for him to place a mill order with the different mills already in July.
How do you do that without the specifications being available? And how did he come up with the dollar figure for the project and the scope of work without having the plans? (Interruption from unidentified member of the audience.)
Sir, sir, sir, you are out of order in the back. You are out of order, you are not at the table. Thank you. You will have an opportunity to speak.
This is again part of our challenge because this is not a normal way of doing it, we realize that. But the basis of the bids that these people have given have been based on unit prices and a general description of the work typical.
Well, what happens if they come in under or over, how do you just 164 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 adjust for that?
It's a unit-priced contract, which means that when the actual quantities can be from the plans, the contract price is adjusted accordingly.
And it's -- it's -- it's -- it's not uncommon on fast-track projects to use this type of. . . If I could please --
If I could please continue. And, therefore, since we have in a way been, in my belief, since the schedule that we're under has required that we employ this type of a bid process, we have included the goals, the minority- and women-based enterprise goals in each of the prime contractors -- prime contractors' contracts. And so we are trying to have these prime contractors as the process moves on, as they 165 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 receive more plans, more drawings, we require them to go out and receive bids from subcontractors. And we have -- and that's why also we have asked the Urban Coalition, on our behalf, to follow up on contractors and to report back on the type of job that they're doing.
Right. I want to ask a question on that, but Councilwoman Clark has a final comment, and Councilwoman Miller has to get in a comment as well.
Sir, in my grown-up live before I came in government, I was in affirmative action and in affirmative retention and hiring and contracting. And I can tell you, based on being a member of three of the affected classes -- being black, female, and over 50 -- that it doesn't happen just because you say it's going to happen. There has to be a sanction and you really have to hold somebody's feet to the fire. Unfortunately, you may have to sacrifice somebody to prove that the bill has teeth. And that's what we're missing. All of the language -- if you go back through this transcript 166 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 today, all of our questions have said, in essence, And what is the "or else?" Comply or else; or else what? Or else the manager will not invite you to tea? Or else I will call you in default of your loan agreement and that the entire unpaid balance is due and payable immediately with sanctions? Now that's teeth. I will tell you that if your goal to include minorities, women and disabled was equal to your goal of opening your shipyard by a date certain, unless you care that much and unless you are that strong in insisting you'll meet your opening date and you'll give us a reason how come you almost made it and didn't. It cannot be done as an afterthought. And this is the last clear chance you have to make all of your primes and subs understand that you're serious about it. And we're in these hearings trying to insist to you how serious we are. We are on the same team. I have nothing to gain by being a part of the a cabal that kills Kvaerner Shipyard. Nor do I have anything to gain by watching another group of people go to a banquet while I hungrily 167 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 press my nose to the glass and watch other people eat. That's why I'm very serious about it, and I want you to know that we offer you help. We're not daring you to succeed; we are offering you help to help you succeed. But you have no 8 give us some process that's dependable. Going back, then, what is your prequalification process? You've got to work that out, you've got to transmit that to us. And these guys who meet it are in, these guys who don't meet it our out, and the rest of it doesn't matter. Thank you.
Councilwoman Clark did make some comments that I wanted to make. I just want to add that I believe the prequalification requirements need to be written so all of us are very clear what that is. I'd also like to know if you have a written policy that can describe your good-faith 168 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 efforts, the term "good faith," 'cause your interpretation and, say, my interpretation of "good faith" could be totally different. And, also, one thing I still can't understand, if OHCD was the entity to monitor and you knew that Kvaerner knew it, then how come OHCD reps and minority business reps were not allowed on the base? I can't -- I still can't figure that one out. And I think they've been allowed back on the base since we had that meeting in September, and I don't know whether people knew they weren't allowed. I mean, the security guards would not allow them on the base to do their job. I can't understand that. I'd also like more information on the term "fast-track" because to me, that sounds like that could also be an exclusionary term. You know, I don't know, you have to tell me a little bit more about fast-track. And does anybody there from Kvaerner know anything about the New Jersey operations?
It's going to be 169 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 very difficult for the stenographer a shaking of the head.
No, I don't -- I'm sorry. No, I don't know anything about that operation.
Can you give us some history later written on minority participation at your New Jersey plant?
Yes, I can try to get a hold of that information. I will contact the office in New Jersey and get the information on that.
Okay, minority and women and disabled. Because I think I can recall at our public hearings to discuss this last year, that people asked about the history of Kvaerner dealing with minorities, and I think I remember, and I'm going to read the transcript, but I think I remember that we really didn't get any information. We got the impression that you really just did business -- we only knew about your business in Germany and whatnot. So I'd like to get some of that information too, Mr. Chairperson.
Mr. Sjursen, you 170 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 didn't actually mean to say that you would "try" to get the information in response to Councilman Miller; you really meant to say that you "were" going to get the information that she asked about; is that right?
Okay. What is Mr. Carr's background with regard to monitoring MBE/WBE contracts, compliance, involvement and the like? Has he done this work before?
No. And it will not be Mr. Carr's responsibility to do that; that will be the responsibility of the Urban Coalition, under the direction of Mr. Ryan. Again, I would like to repeat that when you asked me for Mr. Carr's name, I understood this to mean the telephone number that people would call to get information.
Okay. But it's really Mr. Ryan working in conjunction with the Urban Affairs Coalition that will disseminate information. 171 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
Are they here? Are there Urban Affairs Coalition reps here?
Yeah, they're going to testify. That's why I think, in response to Councilwoman Clark's question and for the next hearing, it would be, I believe extremely helpful if -- notwithstanding the chart and whatever you're going to do with the chart -- if there were a written implementation plan that we could see that was in a narrative, laid-out, what you will do, what you plan to do, how you're going to do it, and who is going to do what, and what the various points of contact are. Because I'm taking from your testimony to some extent that you are really almost contracting out the day-to-day responsibility for implementation of your plan. And then Mr. Ryan then has to have the involvement with the Urban 172 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 Affairs Coalition. He ultimately becomes the person, you know, holding the bag, if you will, and will take -- you know, I guess he either gets the praise or takes the hit if things don't go right. But you seem to not be directly engaged in it, as Councilwoman Clark says, as you may be in making sure that you start building ships in June of 1999. This is a part of the larger operation that you're trying to do, but it's really being subbed out to somebody else. Is that a fair characterization?
Well, it's my responsibility to see that we meet all of the goals of the master agreement for the development of the shipyard.
At the Philadelphia Shipyard operation, can you tell me how many on your staff, how many African-Americans or other people of color work for Kvaerner Philadelphia shipyard, Inc.?
Okay. You can provide us at the next hearing, unless you know 173 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 off the top of your head, who those people are, what they do, what their responsibilities are.
Okay. I apologize. I cut across Councilwoman Miller, she was not finished.
Okay. I know we have all these steps that we have to do to get through the construction phase of this, but I want to talk about post-construction, and I don't really know whether this is in the master agreement or not. I guess the 20/10 -- I don't know whether it's for construction or just what. But I'd also like to get information regarding Kvaerner's position on post-construction opportunities for professional services, food services, etc., etc., for minorities and women. I'd like to get that in writing.
Councilwoman 174 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 Tasco?
How many contracts does Kvaerner plan to let by the end of this project?
Well, it varies. We have four goals in our -- we have four goals in our objectives. Minority business participation, women business participation, and also the employment goals.
And so it varies from contractor to contractor. And as I also tried to explain, we haven't really finalized the process with each contractor. But we have a contractor, for example, the dismantlement, they have a minority business enterprise which is called "DCA," I believe. They 175 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 handle hazardous waste. They have an employment content of about 45 percent minority participation. We have --
Workers? MR. SJURSEN? Workers, people that are employed.
We have, for example, in the structural steel contract a women-based company, Cornell from New Jersey, as the steel erector. We have Hannah & Sons, I believe was mentioned on the demolition -- underground demolition, 5 percent participation. We have on the design contract Synterra. I believe that's about 25 percent. And Judy Schiller & Hersch.
Do you report this information to the PSDC board? Do they get this information?
Not on a regular basis, 176 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 but it will be part of the Urban Coalition report.
And how often will the -- is the Urban Coalition going to monitor your projects from now on?
And then you will submit that report to the PSDC board?
What are the differences between the construction and operational phases of the Kvaerner project?
No, just what's the difference between construction and operation?
Yes. Well, in construction, it's obviously building the facility itself.
Operations is when we start building the ships. And during that phase, we will be -- there will be a lot of subcontractors also involved in that operation. I guess that's the main difference. 177 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 It's building the facility and then building -- the shipbuilding itself.
Councilwoman Miller mentioned something about professional services contracts on the business side.
How many professional service contracts have you given out to minorities and women?
Well, for the moment, we have Mr. Ron White who is counsel to the company.
We are now in the process of going out to bid the operations, or we're looking for contractors for the operations part. We really haven't proceeded very far with that. The focus has been on the construction of the yard.
When did you let your first contract? Not professional services; let's go back to construction.
Yes. The first contract was let in May, I believe. Do you remember the bids? 178 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
Okay. What was the next contract and what was the minority participation?
Yes. And they are the ones -- I don't know the exact percentage of the minority business contract on that one, but they are the ones with the employment content of 45 percent.
Of the five 179 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 contracts that you let out, what is the total amount of those five contracts? And what percentage of that total amount is minority female? What's the total amount of the five contracts that they have let out, and what's the percentage of minority and female on that?
And what is the minority and female part of that $80 million percentage-wise.
The female content, there's a $12 million contact with Cornell.
So I will say the total of -- 180 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
So that maybe it would be around percent, something like that. 9
Is that the -- you 10 have one contract -- out of 80 million, you have 11 one female contractor. What about -- 12
What's the total of 15 the overall minority and female of that $80 16 million? 17
I'm very bad in math, I'm sorry. I'm a political science major, so I don't know what's the percentage.
And of that minority, could you break it down for me in terms of how many African-American contractors, how many Latino contractors, how many Asian-Americans, and so on. If you can do that because I'd like to get from you a sense -- "minority" is an all-encompassing word, and I'd like to see how that minority piece is divided up in terms of percentages.
Let me ask you one question. Is Cornell certified as a WBE? Is she certified?
To my knowledge, she's certified with the Commonwealth of Pennsylvania. I believe that she's applying now for certification with the City of Philadelphia.
I, like Councilwoman Clark, supported this legislation because we wanted to bring jobs in and increase 182 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 our economic viability here in the City of Philadelphia. So I, too, have no pleasure in trying to prevent the project from proceeding. I would request that your reports that you submit to the PSDC board be submitted to this committee through the chair so that we can keep apprised of what's going on in terms of this project. I don't know how the miscommunication came about, but certainly, when we had this discussion early on, when this legislation came before us, it was the spirit and the will of this Council that this project include a broad-based coalition of people that represents the diversity of this city, and we still want that to happen. And we're not sure whether or not there is any ability to sanction, but I will tell you, we will look for it.
Mr. Sjursen, there's a follow-up question by Councilwoman Clark.
Thank you for your indulgence. There are people here who have to 183 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 leave, and I need to ask this question while they're here. With respect to training, training for shipbuilding, including some people who are going to be sent to Europe and given some hands-on, almost apprentice kinds of training. How are you doing in finding minority firms and institutions to do that training? Specifically now, I refer to Berean Institute, a very old manual training school. OIC, which was founded by Leon Sullivan and his international school of training the hard-to-hire structural underclass of unemployed. And then there's another group called ITTI Welding. These three companies have come to me on an insistent basis saying, We feel excluded, we can't get in. We've got the experience, we've got the will, and we're not being considered for the training opportunities for Kvaerner. Your words on that, please.
I'm not personally familiar with those companies and I'm not also personally familiar that they have been in touch with us, but I will certainly ask the responsible people that they are to take a look at that. 184 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
Fine. I know that Mr. White and Mr. Hankowsky are aware of all three organizations and can speak of their reputation in the community. We need to be certain that they have a fair opportunity at the training, at the whole training -- not the little icky-picky pieces that are left over. We want them to be able to go into it before the piece has already been allocated. Bill, you know what I'm talking about, don't you? Ron White, you understand what I mean, don't you?
Thank you, thank you very much. And I thank you for your forbearance, Mr. Chairman.
No problem. Mr. Sjursen, I do want to ask very directly that between now and the next hearing, I would ask you to be responsible -- if you have Mr. Thompson or Ryan do the actual work, that's certainly fine with me, but I'm going to ask you to be responsible for follow-up and contact with 185 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 the various people who have already testified and illuminated their issues and their problems. And what I would request is that there be direct contact with those individuals by either yourself or your direct line staff people. That as a part of the larger report that you're going to give us about implementation and the like, that there be a detailed analysis of who made the contact, what was it about, when did it happen, and if there's any follow-up or potential for those individuals to participate, whatever it may be. I cannot tell you whether they are eligible or not eligible, but I think one of the things that has to be rectified out of today is that most of them indicated that they have called someone and could not talk to anyone. And I would ask you to be personally responsible for making sure that those contacts and the follow-up does in fact take place for people who came to this hearing today.
I would like to add in the letter -- 186 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
Well, I would ask you to furnish me with the names and addresses of those people.
I'd be glad to -- I can, one, give you the agenda here, it has everyone's name on it. Some of these people are, I believe -- at least as articulated by one of my colleagues, some of these people are apparently on some lists that are floating around within your own shop, but I'll at least give you the list. I think all of these people can be found. Most of them are still here. And I would anticipate that the moment you walk through the railing there, they're going to be right next to you. So I don't think you'll have to go looking for them. All right?
What I would like, since one group who brought this issue before us 187 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 feels that they are not included in the information-sharing process, we wanted the United Minority Contractors Coalition to be made a part of the information-sharing, that you share with them what contracts are coming up, how you do it through the Urban Coalition, but they'd be a part of the list and not be excluded.
Yes. I think if our intent is that we send all of this information. Both the bid lists and bids to both MBEC and to OHCD and that all that information should be available to them there. And if they need anything else, then they should contact us directly.
Okay. Councilwoman, any other questions for this panel?
No. I thank you very much for your -- I think you've been a very good panel, and I think we got some understanding that in the past we didn't have quite to this level of this detail. I thank you very much.
Thank you very 188 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 much. Now, I believe there are possibly more business owners and contractors to be heard. Reggie Anderson; a representative from Omnitech; Jessie Merrill; a representative from E. Johnson Company; and Jerry Stein, from M.F. Stein Corporation. Those are the only -- And Luis Cruz from the Latino Contractors Association; Chisholm Electrical Contractors; Robert Dickson. If we can start getting all of those individuals up to the table. (Above individuals come forward.)
Now, as they're coming up, are there any representatives still here from MBEC or GPUAC? Ladies and gentlemen, I know that you've been here a long time. We appreciate your indulgence, and we think that you may have also benefitted from the break that we took to get in the people who are responsible for implementation, and we respect your time as well. So you can go right into your testimony. We can start with the gentleman on the 189 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 corner. And as go around, please just introduce yourselves and start your testimony. (Jessie Merrill comes forward.)
My name is Jessie Merrill, and I'm an engineer -- I'm a structural construction engineer. And I want to thank Donna Miller, who's my Councilwoman, who had my resume.
Okay. She had my resume for the last nine months. I work at the shipyard. I'm a project manager in construction, and I want Councilwoman Clark to know that one of the questions she asked is called "liquidated damages" when you want to receive money from a contractor who passes time in not doing what he's supposed to do. That's the legal term. At the same time, I'm going to let you know that I'm at the shipyard, and I'm watching. I'm a president of a union, which is mostly minority -- the National Federation for Federal Employees. And we've been giving our applications and resumes to Kvaerner for the last over a year, 190 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 and no response, and that's why I'm here. I listened to a lot of things that were said about the charts and all of this about the bidding process. The bidding process did not work, it hasn't been working. And the reason why is because of what the Councilwoman brought up. I think the Council here has to not only make them narrow that person, they named the person, but really, I don't know where that person is in the chain of command that really has the responsibility to do the things that you asked for. And, one, me being here as the project manager, what I got out of it was very frustrating. The process is not working because, first, it's not organized. And the other thing that's going on is that it's not being worked.
Let me interrupt you for one second. Let me put on this record. And Mr. Sjursen, Mr. Sjursen. If I could just get your attention for one second. I would strongly encourage you -- as you well know, this hearing is being 191 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 stenographically recorded. And I understand that you may in fact leave the chamber, and you have excused from the table. I would strongly encourage you, though, that as soon as the transcript of this hearing is available and prior to your reappearance -- I assume you're coming back on the 16th with Mr. Rafdal. I would strongly encourage you to get a copy of this transcript so that you are fully prepared to respond to the issues that have been raised, there are a lot of issues. And I'm sure you're very good at what you do but it may be virtually impossible for you to keep track of all the issues that were raised in this public hearing, so I encourage you to get a copy of the transcript. All right? If you have any trouble, contact my office, and I'll get you a copy. Mr. Merrill, I'm sorry.
That's okay. One of the things I strongly suggest is that the Council keeps track exactly on the minority hiring, professional people. At this date, Kvaerner has not hired any black engineers 192 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 that I know of. And I'm sitting here with two degrees -- a master's degree in engineering and a license in project management. And I'm telling you now that I haven't heard anything at all, and I'm at the shipyard.
Mr. Merrill, I think you heard me ask the question about the composition of the workforce, and I think it was indicated that there were maybe four or five individuals. I don't know at least who they are or what they do.
Okay. Well, we expect them to follow up with a report to get a detailed update on who the folks are and what they do, okay?
Good afternoon. My name is Trina Woodson. I am president and founder of Scoops Promotional, and I'd like to introduce myself to everyone and go on record to let them 193 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 know that I am a female minority business in Philadelphia that can promotional items, uniforms, and signage. So I just came here to introduce myself to them so that they don't have to look for me.
Very good, great testimony. (Nancy Santana comes forward.)
My name is Nancy Santana, of Nancy Santana's Cleaning and Maintenance Incorporated. I'm here representing the LCA (Latino Contractors Association) as well as the Philadelphia Hispanic Chamber of Commerce, of which I'm a board member of. I have also met with Kvaerner and PIDC a number of occasions. I've sent enough flyers and brochures and introduction letters to wallpaper this entire room. And I haven't as of yet had any return correspondence from them. (Dwayne Ming comes forward.)
My name is Dwayne Ming (ph.), and I'm with Chisholm Electrical Contractors. And I guess I'm one of the few people who did -- was able to get a response from 194 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 Kvaerner Shipyard. I talked to Mr. Ryan in terms of their prequalification package that was sent to us our office. We filled it out and sent it back, and we didn't get any response. So what our family did, I stayed on it, and our family got in touch with Mr. Ryan. And what I came back with from his answer, the way that they qualify -- prequalify contractors to participate in their particular project was solely based on the dollar amount at. Chisholm Electrical, we do approximately 2 million, and presently, we're doing about a million and a half. And we were told in so many words by Mr. Ryan that we don't do enough in terms of a dollar amount to be considered as a prime contractor. So when they look for prime contractors, it's solely based on the dollar amount. And hopefully from this process, things will change and we can all participate. (Louis Cruz comes forward.)
Yes, sir. I'd also like to 195 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 thank the Chair and the Councilpeople for being here till this hour and for having this presentation for us. Also, I'd like to thank Handford Jones. Because of his persistence and information to the contractors in this room and in the city, we have been able to know that there was something happening at the Navy Yard. My name is Louis Cruz. I represent Cruz Construction. We're a contractor here in the City of Philadelphia. We do excavation, demolition, and site development. I also represent the Latino Contractors Association. And for the record, I'd like to verify that there is Latino contractors that can handle all of the trades, okay, noted by Kvaerner and were available to do this. And, basically, we're used to fast-track jobs because, basically, all of the job are fast track.
Okay. You want it done now if not yesterday, right? It's on the fast track. (Laughter.) 196 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 (Jerry Stein comes forward.)
Are there any slow-track projects out there? Just do it whenever you feel like it or what?
Not anymore. My name Stein my name is Jerry Stein. I represent Stein Corporation. We're a structural fabricator and erector in the city since 1923. The problem that I see down at the Navy Yard is that the process for bidding has gotten so complex that between the prequalifying and qualifying of primes, subs back and forth, everybody's getting confused on where we're supposed to be. It's a pretty cut-and-dry situation. I've been on major projects a lot larger than Kvaerner's project here. It's run a lot smoother as far as the bidding process goes. It's not a complicated issue. You put the thing out for bid. Qualified contractors bid on the job. You send financials. You send all your company 197 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 information. You're evaluated within minutes. It doesn't take a rocket scientist to decide if you're a qualified contractor or not. It's summed up rather quickly. In the Philadelphia area, everybody knows it's a small community with contractors. Everybody knows who's legitimate and who is not. On Kvaerner's side, I would say that Richard Ryan has accepted my phone calls and has helped me get in touch with primes after going back and forth. He has helped. The only thing he hasn't helped is getting signed contracts, which is the bottom line, okay? I've bucked heads with the best. I've bucked heads with the Keens, the Driscolls -- they're tough, a lot of tougher than Kvaerner. These people just don't seem to go with the flow. It's not a complicated issue. We're making it all very complicated and it's a simple process. And the more that we get involved in complicating this, the slower this fast-track job becomes.
That's about all I have to say. If you need any more advice on the bidding 198 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 process, I'd be more than happy to enlighten anybody on the procedures. And I've been in this business 28 years and. . .
Just to reiterate -- and I apologize for the reiteration -- but we also received all the information on who the major contractors were bidding the project and were given the project. Although we contacted them several times than the ones that were awarded the projects we contacted didn't seem like there was enthusiasm in them using any minorities, so it's not only Kvaerner, but it's trickled down to the contractors that they're using.
That message has to 199 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 come from the top. I think there's no question about that. If the party that has the ultimate responsibility -- in this case Kvaerner -- sends the message that they are serious about this, then the contractors will get the message. And, you know, unfortunately, it may mean that they not be able to do all of the business they want with their buddies. Nobody likes, you know, slicing off a piece for somebody else. But if we're serious about this, then that is what has to happen. The pie is fairly large. No one's trying to take any food off of anybody else's table, but it's got to be spread around. And that really kind of becomes the bottom line. If they're serious, the contractors will become serious because they want the work, they want the work.
I also want to reiterate the role that the City plays in all of this because the Hispanic Chamber of Commerce had 200 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 two meetings with PIDC, meeting down at the Kvaerner, the shipyard, with a representative of PIDC and the Commerce Department. And where the assurances were given that no contracts, no notice was going to go out without full minority advisement as to how, where, and for how much to be able to bid and participate. And Nancy and Louis, you know, you can give me an answer, but none of the Hispanic Chamber of Commerce has received "nada," right, zero?
And through the -- you know, through the Hispanic and Latino contractors, has received nothing. But the City has a role to play in this.
May I just say on that point, one of the things that since we've been listening today is that Kvaerner right now seems to be just overwhelmed, but there's so many layers of people that are supposed to be having the best interests in doing this. 201 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 It would look like Kvaerner's at that point with the kind of money we have allocated to 'em that they should have one office that they have people that are designated for minority contracts. They should have the listings of when it comes to the contractors -- like this gentleman was talking about, where they have an allocation for a small, what they call "special projects," and you have large projects. Unless they do that themselves, you have too many layers now. You named all these organizations and it's the reason why one hand doesn't know what the other hand is doing.
That's one problem. The other thing is that when you go to the unions, the unions are going to take care of themselves, all right?
And they're not going to look at the best interests when it comes to minority contractors.
I could tell you that 202 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 'cause I know the fight that we've had in the shipyard for years with that. So my suggestion now is that when the Council talks to Kvaerner and the suggestions that you give them, they should have an office that they should be taking care of 'cause right now, they talking about this person, but I really don't think he has full power, allocation or anything. You had the project manager, who's under the director, all right? This guy is the third tier. That's the other thing that I wanted to say. A third tier is not going to help you. It's not going to get what you the goals that you wanted to --
He only collects data. He doesn't make any decisions.
As best I could understand and get out of that is that he was responding to a particular question, but now the central guy seems to be Richard Ryan, the project manager of construction is what I took out of it.
Right, but his boss is 203 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 the director --
Right. And what I'm saying is that the gentleman that they named is the third tier, and he's actually out of the picture. And unless you have a person that's a project manager and his total responsibility is to do the cost analysis, putting the charts together, and making the direction of exactly how these projects are being allocated, you'll never know -- that should be done on a daily basis. He should have people working for him, actually doing schedules on that. So when these gentlemen ask questions, they have a person to go to, that they can talk to every day, and it's a listing that the Council can look at and see a schedule. And you should know what the critical path is, and nobody's brought that up.
They're talking about fast track. I understand what they're saying. No 204 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 one's talk about a schedule. Have you seen the schedule? Not only A&E firms, construction, the planning, the design, all these things have been said, you know, I've been hearing all of this, but none of this -- that chart up there don't even mean anything, I have to agree with the Councilwoman on that.
One thing. There was omission with disabled. Has anything addressed as far as where we're at with the disabled issue?
I don't think that was raised. I'm aware, Mr. Stein, because of other information that I have up here, some letters going back and forth, I think, from you to somebody from the chief of staff to -- I think the path was maybe you wrote to Councilwoman Verna, she wrote to the mayor, the chief of staff wrote back to her to explain what had happened in a particular matter. But you are correct. I don't think 205 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 that issue specifically came up today.
And where are we at? Is it included? It was just language, it was just the wording that wasn't in there? Or is there disabled?
I believe all of our contracts require it. I cannot tell you for the $80 million, for example, that was mentioned -- Councilman Ortiz asked for a specific breakdown of all of the areas, and I believe that we should have that on the 16th or before the 16th.
Sir, that's a good question because on all projects that are allocated that go out, there should be a percentage breakdown on each project, no matter what the dollar amount is.
All right. Are 206 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 there any other civilian, nongovernment or quasi-governmental agency people here to testify? Ladies and gentlemen, thank you for your testimony. And if there is anyone else, regular citizens not involved in the government, please come up to the table and give your testimony. I know you've been here all day and labored through this with us but if you could be relatively brief, we would all appreciate it and, you know, will be commended at an appropriate time. (Tyrone Reed comes forward.)
Good afternoon, Councilman Nutter, Tasco, Ortiz. My name is Tyrone Reed, and I'm here representing the Berean Institute, who's one of the partners with OIC, ITTI, and the United Minority Enterprise Association.
Excuse me, I have to go pick up my child at the after-school program before they close it, pardon me.
Before I give my comment, before I give the written comment that Dr. Spencer, who is the president of Berean Institute, 207 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 wrote for me to deliver to the body, I would just like to personally just make a comment, Councilman, if it's possible. You know, when the vice president, the governor, the mayor, (unintelligible) and the other parties signed that agreement this summer down at the waterfront, one of the things that each one of them said was that this was good for the city, this was good for the state. They said that this was an opportunity to revitalize an area that really needed to be revitalized, that it was an opportunity to bring jobs into the City of Philadelphia. And I'm telling you, I am truly appalled that I have to sit here and say to the vice president of these United States, to say to the governor, to say to the mayor that they have participated in a process that is truly discriminatory. They have contributed over $400 million to a process that is totally discriminatory. And I would like to go on record letting it be known that when we talk about affirmative action, that people has a problem with 208 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 it. When we talk about quotas, people have a problem with it. But still in this country, discrimination is against the law. And for those parties to engage in any process that is discriminatory, that is not only a slap to the my not community, but to the Afro-American community, you know, as a whole. It was said on the agenda that we were going to read into the testimony the agreement that the full body have. But since you already have it, I won't take the time to read it into the testimony because of time.
Mr. Reed, what we can do is if you hand up that statement, all of those statements are going to be handed to the stenographer, they will be included into the record as if they had been read directly into the record, we can do that.
Okay. Well, Mr. Chairman, may I just ask that I deliver this statement tomorrow, the statement for the president, because I don't want it delivered -- you know, I don't want to hand it in in the state that it is in, and I will bring it down and bring it to your office 209 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 tomorrow.
That's a statement from our president of Berean Institute, Dr. Norman K. Spencer.
Then that statement will be added to this record as if it were read into the record.
Thank you, Mr. Nutter. My name is John Thomas. I want to thank the members of Council for the opportunity for allowing all these disgruntled members of the African-American community to come out and voice 210 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 their disenchantment, disenfranchisement with the processes that are going on to -- in my term, it's emasculate the black community, that's what it amounts to. It's economic emasculation, plain and simple. My point, my one and only point that I want to bring forward today is this: I've heard repeatedly members of the Kvaerner organization say that they could not, did not -- couldn't find the time to dispense drawings and plans and what have you. And the only question I have is: Has anyone heard of computer? I mean, we live in an age of computer technology today where information can be accessed via computer, via e-mail all over the bloody globe. And yet nobody, never once did they mention you can access this information via computer. That's all I have to say.
Thank you very much for your testimony. Are there any other individuals who wish to testify?
I'd just like to make a comment. 211 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
The gentleman is right. Inasmuch as we were told during the course of the briefing that the ships would be built by computer and not by skilled labor. So it's interesting that we don't and can't access the plan by computer. Your point is well-taken.
Thank you, Councilwoman. I wish to add to this record these letters, and these letters will be handed to the stenographer as if the letters had been read into the record. A letter from Cheryl McKissack, Chief Operating Officer of McKissack & McKissack, to Councilwoman Tasco; A letter from Salaam Muhsin to Richard Ryan at Kvaerner; A letter from Vallahra Renita El Harre Bey from Omnitech, to Councilwoman Tasco A letter from Mr. Charles Ang to Mr. Benko, from PSDC; There is a letter from Mr. Dickson to Councilwoman Tasco; 212 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734 And a letter from a Donna Wiley to Kvaerner Philadelphia Shipyard, Inc. A letter from Frank Gallo to Councilwoman Tasco; And a letter from Mr. Craddle to -- actually to me, to Councilman Nutter, from Hannah & Sons Construction Company. All of these letters will be handed to our stenographer, and they will be included in the transcript, including the letter --
And the sense of the letters, as I have read them, all are pretty much consistent with the testimony that we heard earlier from people who testified at the table, expressing concerns about the bid process, lack of ability to get information, and other obstacles to participation in this project. All of these letters will be included as part of the record as if they had been read directly in the record. Seeing no other business before us and no one else to testify -- 213 COMMERCE & ECONOMIC DEVELOPMENT - RES. 980734
There are -- I'm sorry -- two last letters. One is from Ramon Rucci, of the Latino Contractors Association, to Councilwoman Tasco; and a letter from Rod Herrera Jr., from RCH Architects and Engineers, to Councilwoman Tasco. There's no further business before the committee at this time. This hearing is recessed until Monday, November 16, 1998, at 1 o'clock p.m. Thank you very much. (Applause.) (Adjourned at 5:30 p.m.) - - - 214 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 Tuesday, October 27, 1998, were reported and accurately by me, and that this is a correct transcript of same. RE: COUNCIL COMMITTEE ON COMMERCE AND ECONOMIC DEVELOPMENT RESOLUTION NO. 980734 __________________________________, JOSEPHINE CARDILLO, Registered Professional Reporter