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Minutes

Committee Hearing, March 5, 2008

Philadelphia City Council Committee HearingsMar 5, 2008

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COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE ON COMMERCE AND ECONOMIC DEVELOPMENT - - - Room 400, City Hall Philadelphia, Pennsylvania Wednesday, March 5, 2008 11:25 a.m. - - - PRESENT: COUNCILMAN W. WILSON GOODE, JR., CHAIR COUNCILMAN DARRELL L. CLARKE COUNCILMAN BILL GREEN COUNCILMAN CURTIS JONES, JR. COUNCILWOMAN MARIA QUINONES-SANCHEZ COUNCILWOMAN BLONDELL REYNOLDS BROWN BILL 080023 - An ordinance amending Chapter 17-1500 of The Philadelphia Code, entitled "Annual Disparity Study and Participation Goals"... RESOLUTION 080052 - Resolution authorizing the Committee on Commerce and Economic Development to hold hearings to review the annual City contract participation... - - - V A R A L L O Incorporated Litigation Support Services Eleven Penn Center 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 2

Councilman Goode

Good morning. We're ready to begin. This hearing is called to order. This is a public hearing of the Commerce and Economic Development Committee on Bill No. 080023 and Resolution No. 080052. My name is W. Wilson Goode, Jr., Chair of the Committee. I note that a quorum is present. To my left is Councilman Darrell Clarke, also Councilwoman Maria Quinones-Sanchez, and to my right is Councilman Bill Green. We expect to be joined shortly by Councilman Curtis Jones. The title of Bill No. 080023, amending Chapter 17-1500 of The Philadelphia Code, entitled "Annual Disparity Study and Participation Goals," by requiring certain additional information to be included in the Finance Director's required annual report, under certain terms and conditions. 3 3/5/08 - COMMERCE - BILL 080023 The title of Resolution No. 3 080052, authorizing the Committee on Commerce and Economic Development to hold hearings to review the annual City contract participation goals released by the Finance Department pursuant to Title of The Philadelphia Code. 9 Our first witness is Rob Dubow, 10 Director of Finance. 11 (Witness approached witness 12 table.) 13

Mr. Dubow

Good morning, 14 Councilman Goode and members of the 15 Committee. My name is Rob Dubow. I am 16 the Director of Finance for the City. I 17 am here to testify today in support of Bill No. 080023 pertaining to the Chapter 19 17-1500 of The Philadelphia Code which details the content of the Annual Disparity Study required by Section 6-109 of the Philadelphia Home Rule Charter. The bill amends Section 17-1503 by requiring a ranking of City departments and agencies by percentage 4 3/5/08 - COMMERCE - BILL 080023 levels of DBE utilization. The Administration supports this amendment. The City's annual participation report currently includes a compilation by department and agency attainment. Ranking by percentage would offer an additional analysis, provided there is a recognition that department-by-department expenditures are not equal and some departments, like the Department of Public Health, expend much of their annual budget with not-for-profits. The City's annual participation report at this point only measures for-profit activity. The City at this point cannot certify non-profits because they're a corporation and, by definition, has no 19 owners. I do believe, however, that ranking would be useful for assessing an individual department's commitment to business diversity and the inclusion of DBEs in their contracts and purchasing. The Committee is also considering Resolution No. 080052, which 5 3/5/08 - COMMERCE - BILL 080023 authorizes hearings to review the annual City contract participation goals released by the Finance Department pursuant to Title of The Philadelphia 6 Code. At this time, I would like to note 7 for the record that the City retained 8 Econsult Corporation to assist in the 9 preparation of this year's disparity 10 study and to make recommendations for 11 devising FY2009 participation goals. 12 This report should be furnished to my 13 office before the end of May with 14 recommendations for next fiscal year. In 15 addition, at the request of Councilwoman 16 Reynolds Brown, throughout this year's 17 budget hearings as Council begins its department-by-department review, information on each department's contracting participation rates with disadvantaged firms will be part of the testimony and we'll also have it as part of the PowerPoint presentations we're giving this year. Through the budget hearing 6 3/5/08 - COMMERCE - BILL 080023 process, as Council and the Administration work together to craft the '09 Operating and Capital Budgets, we welcome Council's review of this information and perspective on what the '09 participation goals should be. The Administration has begun a comprehensive review of MBEC and the City's programs to promote minority, women and disability businesses. We believe that a robust program should include several City agencies in addition to Finance, including the Commerce Department, which should provide technical assistance to local businesses, the Office of Procurement, which must ensure that disadvantaged businesses have the opportunity to compete for City contracts, and the Law Department, which will ensure the contractual obligations are met. Concurrently with assessing our current programs, we are investigating the best practices in areas of business 7 3/5/08 - COMMERCE - BILL 080023 certification, performance goal setting, and compliance evaluation. In this regard, the December 2007 report by Econsult provides some very useful information regarding these procedures in other cities and states. We look forward to working with Council to make our City a national model in creating and nurturing locally based disadvantaged businesses. Thank you for the opportunity to testify. This concludes my testimony, and I'd be happy to answer any questions you may have. And in addition, we have representatives from MBEC and Econsult and the Law Department here today to help in responding to any questions you may have. Thank you.

Councilman Goode

Thank you for your testimony, Mr. Dubow. We're going to limit questioning at this point strictly to the bill, and then we're probably going to take action on the bill 8 3/5/08 - COMMERCE - BILL 080023 and then have a broader discussion on the resolution, if that's fine with you.

Mr. Dubow

That sounds good. Thank you.

Councilman Goode

I only have a handful of questions. The first is, how are the overall DBE goals communicated to departments?

Mr. Dubow

I'm going to ask Carolyn Nichols to come up and explain that. (Witness approached witness table.)

Ms. Nichols

Good morning, members of Council. My name is Carolyn Nichols. I'm the Acting MBEC Director. The overall goals are communicated in a number of ways. The report is online and published and given to each Commissioner. We also work with each department separately on their departmental goals as well.

Councilman Goode

In testimony yesterday the Director of the Capital 9 3/5/08 - COMMERCE - BILL 080023 Program Office was not familiar at all with the City's overall goals. Is there another way that we can make sure that everyone who is responsible for any level of contracting is notified?

Ms. Nichols

Yes, Councilman. I will go back to my office immediately and make sure that, if need be, send out an e-mail blast again to each and every Commissioner, call them personally, whatever it takes.

Mr. Dubow

In addition, we now have weekly executive team meetings that include all the Commissioners, and we have management committee meetings once a month where we have Deputy Commissioners, too, and we will make sure that these goals are communicated at those meetings.

Councilman Goode

Because the point of this bill, while it's a simple bill that simply presents a ranking within an annual report, my belief is that every department should be held accountable and every department should 10 3/5/08 - COMMERCE - BILL 080023 share its burden of diversification, and essentially if they don't know what the overall goal is, that presents a problem down the line. The next question is, there are goals set by department and does that include every department?

Councilman Goode

Yesterday within testimony as well the Capital Program Office said that there were goals set for professional services contracts, but no goals set for public works contracts. Can you explain why that is?

Ms. Nichols

Well, the way the goals are set, the goals are set MBE, WBE, DSBE, and within that, the professional services and public works. Each department may operate differently within the contract categories. So CPO not setting a goal -- now, we don't tell people don't set a goal within those categories, but, of course, depending on the work of the department, the category, 11 3/5/08 - COMMERCE - BILL 080023 contract work, will differ, but it's true that they should set a goal in each category.

Councilman Goode

Mr. Tustin suggested that the goals were given to him and that he was told to have a goal of about percent professional services 9 contracts, but he was not told to have a 10 goal for public works contracts. 11

Ms. Nichols

Well, if that was 12 the case, there was a miscommunication. 13 What we do is, we work -- according to 14 the Executive Order, each department 15 should set the goal in consultation with 16 MBEC. Some departments feel more 17 comfortable about setting goals than 18 others. But we will certainly review 19 that situation. That sounds like a 20 miscommunication. We don't dictate, you 21 do 25 percent of professional services, 22 you do this, you do that. It has to be 23 an interactive process that makes sense 24 based on the contracts that are 25 available. 12 3/5/08 - COMMERCE - BILL 080023

Mr. Dubow

It was clear from yesterday that there were communication issues and that we need to work on those to improve them, and we will.

Ms. Nichols

We will remedy those communication issues.

Councilman Goode

How many departments met their goals last year?

Ms. Nichols

I have the ranking of the departments here. I would probably have to go back and do an analysis, Councilman, to get all of the information exactly who met the goal and who exceeded the goal. We see certain departments -- I see two, Treasurer's Office and Camp William Penn, that had 100 percent in W/DSBE goals, but I have to go back and do an analysis to figure out which one met what, which one exceeded. Looking at the list, the top five, the Treasurer, Camp William Penn, Public Property, Law Department and Department of Licenses and Inspections.

Councilman Goode

This is 13 3/5/08 - COMMERCE - BILL 080023 actually a list done by my office. I guess my question is, was there a goal set for 100 percent for some people and a goal set for zero percent for others, and does this listing actually reflect goals that were set and how many departments actually met their goals or didn't?

Ms. Nichols

The ranking doesn't reflect the goals that were set. What it reflects is what the participation was. That's what this reflects.

Councilman Goode

Let me ask this question: The City's overall DBE goal is what?

Ms. Nichols

The City overall DBE goal, MBE, ten WBE, two DSBE. 19

Councilman Goode

So it's 37 20 percent? 21

Ms. Nichols

Yes. 22

Councilman Goode

So according 23 to this list, only six departments 24 exceeded that goal and the rest fell 25 short. 14 3/5/08 - COMMERCE - BILL 080023

Ms. Nichols

That would be accurate.

Councilman Goode

According to this list, roughly departments were in 6 single digits. Do we know if their goals 7 were set in single digits? 8

Ms. Nichols

Most of the 9 goals -- and, again, I'd have to look 10 through each goal in the report -- would 11 not be set in single digits. So we can 12 look at that and see that they probably 13 did not meet the goals. But I would like 14 to go back and do an analysis one on one 15 looking at the departments, but that's 16 what it looks like in looking at it. 17

Councilman Goode

If you could 18 just forward that to the Chair and I'll 19 distribute it to the Committee. 20

Ms. Nichols

Yes, Councilman.

Councilman Goode

Any questions? Councilman Jones.

Councilman Jones

Thank you, Mr. Chairman. 15 3/5/08 - COMMERCE - BILL 080023 How many staff do you have within your department?

Ms. Nichols

Nineteen. Actually, 20, because one is actually an Airport employee.

Councilman Jones

And how are they broken out, deployed?

Ms. Nichols

We have six in certification; five in bid range evaluation; five, I believe, clerical; and then that would be -- the final group would be myself and the three deputies. I hope I got everybody. Oh, and also three others that work with compliance enforcement outreach. So that's how it's broken out.

Councilman Jones

Help me to understand. There are how many that look at pre-award bid evaluations?

Ms. Nichols

That's only five.

Councilman Jones

How many people look at post-award monitoring, for lack of a better term?

Ms. Nichols

The same five. 16 3/5/08 - COMMERCE - BILL 080023

Councilman Jones

The same five?

Ms. Nichols

Yes. And what we've done to remedy that in response to the Controller's recent special report of 2007 and many other inquiries that have come from this body and many others is to work very closely with the Controller's Office with individual compliance issues, because we just don't have, as you've just stated, we don't have the staff or even the training and the background, because you really need the auditing training to really do this effectively. So we've been working with the Controller's Office on individual compliance matters, and also the Controller's Office is helping us develop a compliance model that we can utilize so that each contract needs to be reviewed on a system-wide basis. The way it is now, we don't know what's going on unless a contractor comes to us to complain. So it's all complaint driven. It's 17 3/5/08 - COMMERCE - BILL 080023 troubleshooting, and that's not effective compliance. There should be a compliance system-wide system that's in place. We're working with the Controller's Office to get some help in that regard, and now with the new Administration, there are other things we're looking at to get the technology that we need, systems like web-based diversity management software like B2G Now. The answers are there. We're trying to put all of that together so that we can effectively manage the compliance and review these contracts, working with Law, all of that.

Mr. Dubow

One of the things that's clear to us -- I mean, it was clear to us coming in and clear from looking at these numbers is, the way the system is now isn't working, and that's why we want -- we are doing a thorough review and analysis of how it can be structured to work better.

Councilman Jones

How many 18 3/5/08 - COMMERCE - BILL 080023 bids are let by the City of Philadelphia every year, roughly, approximately?

Ms. Nichols

Roughly, about 500, I believe.

Councilman Jones

Five hundred?

Ms. Nichols

In that neighborhood. That's rough, as I recall.

Councilman Jones

That's in construction only?

Ms. Nichols

Well, it's public works and SS&E. Procurement manages public works and SS&E. Professional services, as you know, is --

Councilman Jones

So total with supplies, services and equipment?

Councilman Jones

Total?

Ms. Nichols

That's total, 500 total.

Councilman Jones

And what about professional services? Is that --

Ms. Nichols

Professional services is much larger, closer to, I 19 3/5/08 - COMMERCE - BILL 080023 believe, 1,500, I believe.

Councilman Jones

So there are 1,500 contracts issued by professional services?

Councilman Goode

Councilman, we want to restrict the questioning now to the bill rather than the resolution.

Councilman Jones

All right.

Councilman Goode

Councilman Green.

Councilman Green

I just have a couple of questions. They sort of relate to the chart Councilman Goode put together and your report. The Capital Program Offices, which you mentioned, I see the departmental total there is $23 million and the M/W/DSBE total is three million seven, 16 percent. Councilman Goode's question was why are the contracts let by the CPO Office for renovation of buildings, et cetera, all the prime contracts we were discussing at yesterday's hearing, why they're not 20 3/5/08 - COMMERCE - BILL 080023 given a goal for that. It appears that that's not even being measured, the percentage of those contracts that go to -- I just wanted a clarification. Are we supposed to be measuring that or is that something that's not currently within your jurisdiction?

Ms. Nichols

Well, we're supposed to be measuring participation in all three categories, professional services, public works and SS&E, but as I've stated, each department may or may not work out of all three categories. Capital Program Office by its nature deals primarily with professional services and not public works. Public works goes through the bidded process.

Mr. Dubow

And each public works project has ranges set for it.

Ms. Nichols

Correct. Each public works -- as I explained in my answer to Councilman Jones, the Bid Evaluation Unit would handle each public works bid and put ranges on it. 21 3/5/08 - COMMERCE - BILL 080023

Councilman Green

But what I don't understand is, public works projects look to be only 2.48 million for the entire Fiscal Year 2007. That can't be right.

Ms. Nichols

You're looking under CPO?

Councilman Green

Yes.

Ms. Nichols

Well, look on the summary page. Public works is 307 million.

Councilman Green

Oh, I'm sorry.

Ms. Nichols

That's probably being managed by CPO if you're looking in the CPO box. There's a summary page. I believe it's . See ? That's the summary page. Public works. See 307 million? That's total.

Councilman Green

Okay.

Ms. Nichols

What you were reading, you were looking in the departmental box.

Councilman Green

So is that 22 3/5/08 - COMMERCE - BILL 080023 the answer to Councilman Goode's question, that for each public works project or each contract that they're letting with prime contractors, that that's set individually by contract?

Ms. Nichols

Correct.

Councilman Green

And that's why they're given no overall percentage?

Ms. Nichols

Correct.

Councilman Green

My next question relates to the Board of Pensions and Retirement. A lot of their or some percentage of their -- I don't know what the percentage is, but some percentage of their money managers are minority, women.

Councilman Green

They have a zero percent in this report and I was just wondering why that is.

Ms. Nichols

Well, we do have investment commission bond consultant fees. That's also on the summary page.

Councilman Green

But it's not under their department. 23 3/5/08 - COMMERCE - BILL 080023

Ms. Nichols

They may not have had -- let me look in the back. Sometimes we have pensions under a separate --

Councilman Green

If you go to Board of Pension and Retirement, it's zero percent.

Ms. Nichols

Look on . There's a separate -- because the manager fees are a separate entity and they don't go through the procurement or the contract RFP process, what we did was we listed them separately on .

Councilman Green

But that department should get credit for them.

Ms. Nichols

Yes, it is. It's reported. It's right here.

Councilman Green

Well, not on --

Councilman Green

I see where that is.

Ms. Nichols

Manager funds and consultants. But it looks like this year 24 3/5/08 - COMMERCE - BILL 080023 they didn't have MBE/WBE participation this time.

Councilman Green

There are absolutely --

Ms. Nichols

They didn't have any participation this fiscal year.

Councilman Green

Some of their money managers are absolutely minority. It's not zero.

Ms. Nichols

It looks like --

Mr. Dubow

You're right. I think there's an error in the report.

Ms. Nichols

It looks like a list of firms, but for whatever the reason, it didn't carry over.

Councilman Green

Right. And also each department, in theory, it's easier to look at to get -- I've lost the page you showed me, Councilman, that had that originally. So basically I guess what I'm saying is, it's not clear to me that you're capturing all the participation that exists and that it's probably a 25 3/5/08 - COMMERCE - BILL 080023 higher percentage for the City as a whole and for many departments than you're leading people to believe with this report, and I'm just wondering --

Mr. Dubow

That's clearly correct from this page. This page is clearly understating participation.

Ms. Nichols

Yes. And it's also clear from the disparity study, the DJ Miller report and the most recent Econsult report as well that in the data collection report that I presented to Council -- the new members may not have a copy. I'll make sure that you get it -- it talked about --

Councilman Goode

It's within the packet.

Ms. Nichols

Oh, it's in the packet. Okay. It talked about how the information was gathered. You can see that there are going to be gaps. We're trying to correct that, but it's true that there's probably underreporting of 3/5/08 - COMMERCE - BILL 080023 the City's utilization of M/W/DSBEs. I totally agree with that, and part of what we're trying to adjust is to kind of upgrade the reporting capabilities. Absolutely.

Councilman Goode

Underreporting and overreporting.

Ms. Nichols

Overreporting, underreporting.

Mr. Dubow

Inaccurate reporting.

Councilman Green

Inaccurate reporting.

Councilman Goode

Essentially the reporting now is based upon contract dollars, not necessarily contract dollars received.

Ms. Nichols

It's only at award, at the time of award. As you know, I've totally fessed that up. I'm not trying to hide that fact. All we have is award information. In other words -- I see Councilwoman Blondell Reynolds looking at me -- we're only 27 3/5/08 - COMMERCE - BILL 080023 reporting what happens at the time of award. So if Carolyn Nichols, MBE, gets a contract in year one, all we're reporting is what happens at award time. What happens if there's an amendment to the contract? What happens at renewal time? Where is Carolyn Nichols in year two, year three? We have no mechanism to report that. Or if Carolyn Nichols is a sub.

Councilman Green

Whether or not she's replaced, right.

Ms. Nichols

Or whatever could happen. We don't have that data, and that is just fact. And we know that it's a huge hole, and we're trying to remedy that. That's clearly the fact.

Councilman Green

A paperless city government will enable you to track that far more closely.

Mr. Dubow

Good point, Councilman.

Councilwoman Sanchez

You haven't heard that before, right? 28 3/5/08 - COMMERCE - BILL 080023

Councilman Green

Just for the record, where is City Council in terms of percentage? I don't see it here.

Ms. Nichols

City Council is not in the report. City Council is an independent legislative body that could do its own -- I mean, we could include City Council in the report.

Mr. Dubow

If you'd like to be in the report, we can work with you.

Councilman Green

I had heard our participation was zero. Somebody told me that. I thought maybe somebody was tracking it.

Ms. Nichols

You didn't hear that from me.

Councilman Green

Okay. Thank you.

Ms. Nichols

Thank you.

Councilman Goode

Questions from other members of the Committee? (No response.)

Councilman Goode

Is there anyone else to testify on the bill, which 29 3/5/08 - COMMERCE - BILL 080023 deals specifically with departmental ranking?

Councilwoman Brown

Mr. Chairman, if I may, I do have a question. You want me --

Councilman Goode

On the bill?

Councilwoman Brown

I'll wait.

Councilman Goode

Is there anyone to testify on the bill? (No response.)

Councilman Goode

If not, we will move from our public hearing into a public meeting to consider Bill No. 15 080023. The Chair recognizes Councilwoman Reynolds Brown, Vice-Chair of the Committee, for a motion on Bill 19 No. 080023.

Councilwoman Brown

Mr. Chairman, I make a motion that we move Bill No. 080023 out of Committee with a favorable recommendation and further move that the rules of Council be suspended so as to permit first reading 30 3/5/08 - COMMERCE - BILL 080023 at the next scheduled session of Philadelphia City Council. (Duly seconded.)

Councilman Goode

All in favor? (Aye.)

Councilman Goode

Those opposed? (No response.)

Councilman Goode

Bill No. 12 080023 is reported out of Committee with a favorable recommendation and suspension of the rules to allow first reading at the next Council session. We now move back into our hearing on Resolution No. 080052. The Chair recognizes Councilwoman Reynolds Brown.

Councilwoman Brown

Thank you very much, Mr. Chairman. Given the work that's been presented that speaks to the participation by departments, what would be your perspective, what would be your 31 3/5/08 - COMMERCE - BILL 080023 take given the numbers reflected here?

Ms. Nichols

A lot of work needs to be done. And I think it goes to exactly what Councilman Goode said. It's about accountability at the departmental level. You heard Councilman Jones ask us about the size of the MBEC organization, at least as it is now. Certainly it is not adequate to marshal and monitor and push the case to get the participation levels to make sure that they're met. It has to be at the department level. That's where the contracts are created, that's where they're developed, that's where they're managed, and that's where it's got to be. It can't just be an MBEC. We're putting a number on pieces of paper and talking about it annually.

Councilwoman Brown

How long have you been in that leadership post?

Ms. Nichols

Just since May of 2006.

Councilwoman Brown

And given your time there, what one, two or three 32 3/5/08 - COMMERCE - BILL 080023 recommendations would you offer the new Administration given these numbers?

Ms. Nichols

The first thing to increase the participation was -- Mayor Nutter set some very aggressive goals in terms of participation -- is that the question of inclusion has to be at the front of the process, not at the back of the process. The way it is now, MBEC receives a bid to evaluate or to set ranges on RFP. That's literally the last thing before it goes out on the street. So all of the thinking, all of the developing -- if you want to increase inclusion and really meet the 50 percent goal that this Mayor has set, it can only happen if inclusion is at the front of the agenda. Some contracts would do better being set up into smaller pieces for participation to be maximized. Others, strategic sourcing may work.

Councilwoman Brown

So who makes that type of decision?

Ms. Nichols

That's what I'm 33 3/5/08 - COMMERCE - BILL 080023 saying. It's at the department level that those kinds of decisions are made. When we get it at MBEC, it's already done. We're just putting ranges on it; that's it.

Councilwoman Brown

I see.

Ms. Nichols

So the thinking has been thought. And when you're looking at it and you can look at it and see, it's not going to -- you might look at it and see, well, this is the same contract that has been let time after time. You know the participation is going to be low, but the structure is in place. We've got to penetrate the structure of the contracts.

Mr. Dubow

Let me just emphasize again, we understand from looking at this information and we knew before that the system the way it is now isn't working and that we have to do a full evaluation of it and to figure out how it can work better, and one of the things we want to do is work with Council 34 3/5/08 - COMMERCE - BILL 080023 during that process so that we can work collaboratively on improving.

Councilwoman Brown

Okay. So that's one recommendation. We've heard from Councilman Green regarding the need to go high tech and you mentioned that --

Ms. Nichols

You know I've been a big advocate of that in front of you. I'm going to beat it to death. But that is the number one way to get certification moving in the way that we all expect. We've set goals of 90 days for new certs, 60 for recerts and one week for reciprocity, which I'm handling personally, by the way. Everybody has to get their fingers in this pie to make this work. The Controller has actually set goals of 60 days for new certs and 30 days for recerts. There's no prayer of coming near any of that without the proper technology. We've got to have that in place so people aren't running 35 3/5/08 - COMMERCE - BILL 080023 around chasing folders with their bare hands. This is the 21st century. We're kidding ourselves if we think we're going to get anywhere with basically a manual system. And we've been in -- Rob has been working closely with us, as the new Administration has been very, very supportive of this, whatever the new structure will be, working with MOIS. We've identified a system. I know I keep saying B2G Now, but that's the system that we would like to take a look at, and it would resolve a lot of the problems. The constituents coming to your office, it would resolve a lot of that. The tracking, letters go out automatically, the tracking, so people aren't tracking things manually in their own Lotus Notes. They're out and then -- you can't do business that way. You just can't.

Councilwoman Brown

Then, finally, you recall we had testimony here led by Chairman Goode with 36 3/5/08 - COMMERCE - BILL 080023 representatives from other cities. For the benefit of my new colleagues, give us the one or two cities in talking about the part of the country that gets it in terms of best practices.

Ms. Nichols

Well, Houston is my number one, Houston, Texas. Houston is a little bit larger than Philadelphia. I've been contacting -- the Houston Director has been very supportive with me. She's been sharing a lot of intelligence. That's how I found out about the B2G Now system. She dug her certification unit out of a 400 file 16 backlog with that system. So these things are tried and true. She's given me all kinds of other tips in working with compliance. Her office works directly under the Mayor's Office, so she is the perimeter of the Mayor in doing things. She reports directly to the Mayor. And that's another thing. And it's a matter of having the staff. She also has a larger 37 3/5/08 - COMMERCE - BILL 080023 staff, a staff of 34.

Councilwoman Brown

Versus?

Ms. Nichols

Versus 20. So you've got to have the people. You've got to have the people, the resources. You've got to have the technology to get the job done. And you've got to have the accountability at the department level.

Councilman Green

Point of information.

Councilman Goode

Councilman Green.

Councilwoman Brown

Surely. Thank you.

Councilman Green

What's the name of the system that they're using in Houston? B2G?

Ms. Nichols

The letter B, the number 2, the letter G and then Now, N-O-W. I'll be glad to send the Chair information about it so that it can be distributed.

Councilman Green

Is that an electronic procurement process? 38 3/5/08 - COMMERCE - BILL 080023

Ms. Nichols

Yes. It's web-based software. It's called diversity management, because it has modules in every aspect of diversity management and workforce utilization, outreach, contract compliance, certification, everything we're taking about here.

Councilman Green

Does it integrate with the procurement system if you were to go to an electronic procurement?

Ms. Nichols

Well, that would have to be worked out individually. I know that the City was looking at a different procurement system for the City here. So there would have to be some kind of integration.

Councilman Green

Thank you.

Ms. Nichols

I'm not MOIS. I don't know all those details.

Councilman Goode

Councilman Jones.

Councilman Jones

Just out of 39 3/5/08 - COMMERCE - BILL 080023 curiosity, what was the greatest year of participation in the City's history for minorities and female businesses?

Ms. Nichols

I think -- I haven't gone all the way back, but I would think 2005 would have to be, because I think that was close to 9 percent. Oh, your year? I'm sorry. Go 10 ahead. See, I didn't go back that far. 11

Councilman Jones

That's all 12 right. In ancient history, I believe it 13 was 1988 or '87 under the Wilson Goode 14 Administration and there was a young 15 Director of MBE, Curtis Jones. And 16 things have changed radically since then, 17 17-500 lawsuit. I understand that. If I 18 recall, there was a young attorney that 19 was very much involved in that lawsuit. 20 A couple of things, and what I 21 believe was true then and is true now. 22 It is -- when you say Houston is the best example, I would argue that Atlanta is the best example, and the reason, when I went down there to visit them, it is a 40 3/5/08 - COMMERCE - BILL 080023 matter -- when I asked about what types of contracts, what type of software do you use, the one thing that they told me was, political and administrative will to make inclusion a priority. So when I start to look at what we're talking about now, all of it is well and fine, but as the Administration goes, so will the participation. And I sincerely believe this Administration wants to do that. There's a couple of technical things that need to be involved. One of them is boots on the ground. If you are not inspecting at the point of job site to see if there is participation, there won't be. They will use a shell game to -- oh, that person didn't perform well, I removed him from the job, or that was months ago, we didn't get the paperwork in to you to let you know about it. So at some point, you need to have the inspectors that actually go out and look for other things on jobs to make 41 3/5/08 - COMMERCE - BILL 080023 sure that the recreation centers are being built correctly also look for being minorities and/or females or disadvantaged business. And I wanted to know if in fact you work with L&I and/or the Public Property folks that actually go out and do that.

Ms. Nichols

We haven't exactly done that, but what we've done is, we've been working with the Controller, who has the ability to audit, do forensic audits and actually see what's going on on the ground. But on the work utilization piece, I know that the City in the past has hired consultants to do that, go and nose count who is actually there and what's going on at the job site, because clearly we don't have the staff to do that. So that may be a contracting that we can do by contracting to get that expertise.

Councilman Jones

Doesn't Labor Standards go out to look for prevailing wage? 42 3/5/08 - COMMERCE - BILL 080023

Ms. Nichols

I believe they look for prevailing wage, yes.

Councilman Jones

They could simply be trained, tooled, armed to do that as well.

Mr. Dubow

That sounds like a good suggestion, and we'll definitely look into that.

Councilman Jones

How does your office interact with the new, what is it, EO --

Councilman Jones

EOC. How do you work with that office?

Ms. Nichols

The Economic Opportunity Cabinet.

Mr. Dubow

That has not formally started. So it's not there yet. So right now they don't work with them, but they will. It will be very close collaboration.

Councilman Jones

Thank you.

Councilman Goode

Councilwoman Sanchez. 43 3/5/08 - COMMERCE - BILL 080023

Councilwoman Sanchez

Yes. Hi. As we outline setting up these goals, are we holding our quasi-governmental agencies that we set up, PIDC, RDA and PAID, to some standards? Do they have goals?

Ms. Nichols

They do have goals. They do have reporting information. PIDC and, I believe, PHA and PHDC have reporting data in the back of the report. We don't set up the goals and ranges on a per contract basis like we do the City departments, but historically at least the participation in the housing agencies has been higher than, at least from the reports, higher than the participation in the City departments, what we've seen. So we have seen that they've been very aggressive. There's a representative here from the housing. (Witness approached witness table.)

Councilman Goode

Good 44 3/5/08 - COMMERCE - BILL 080023 afternoon. Please state your name for the record.

Mr. Bell

My name is Michael Bell. I'm the Compliance Director at the Office of Housing and Community Development. And the numbers that I see here severely underrepresent what the Office of Housing does. I was reorganized to the Office of Housing in December of 2006 and my duties include monitoring projects for the Philadelphia Housing Development Corporation, the Redevelopment Authority. And also, too, through the Office of Housing, we fund PIDC, PCDC and all those other agencies, and we're trying to get information. But we just submitted a report to HUD for Fiscal Year '07 that included over $123 million in awards, and we were operating at close to 32 percent combined participation. We've been setting goals for PHDC projects at 20 percent MBE, ten percent WBE participation and for the Redevelopment 45 3/5/08 - COMMERCE - BILL 080023 Authority at percent MBE and ten percent WBE, but the numbers are not represented. But we have back-up. We go into the field. We monitor. So we make sure if you're using a contractor, that the contractor is on site. And through the submission of Section 3 reports, we've been monitoring much higher participation. We've been sending our reports to MBEC on a regular basis. So I don't know why the information is not reported. But for Fiscal Year '07 between the various quasi-agencies, we monitor over $120 million in projects.

Councilwoman Sanchez

Thank 18 you. 19 Is that the same for PIDC and 20 PAID?

Mr. Bell

Right. PIDC is more just like a finance agency, so PIDC is not going to fight the fights that we would. PIDC would set up the financing and then -- for instance, in the Eastwick 46 3/5/08 - COMMERCE - BILL 080023 area, there were a number of projects, like Bentley Trucking. You would have other projects --

Councilwoman Sanchez

They're managing a redevelopment of a naval city, and there is a lot of work.

Councilwoman Sanchez

I toured the facility. There was a lot of construction on the ground.

Mr. Bell

Right. We did the Airport Business Plaza out there. There were a number of projects in the Eastwick area where PIDC would do the funding, but the RDA at the time was doing the monitoring for minority participation. And, like I said, we do enforcement. We go into the field. We enforce through the collection of contracts, and also, too, we can hold up you getting clear title at the end of a project, meaning the developer, if the goals are not met. But we do the monitoring while the projects are going on. 47 3/5/08 - COMMERCE - BILL 080023

Councilwoman Sanchez

I'd love to see that data if you share it with the Chair.

Councilman Green

Point of information.

Councilman Goode

Councilman Green.

Councilman Green

With respect to PIDC and PAID, they do have a lot of professional service contracts in terms of lawyers and other people representing them and the financings that they're doing. Is that something that is currently monitored?

Mr. Bell

No. I don't monitor the professional services awards, because by the time we see a project, I'm dealing with a developer. The project is already financed, but we don't get the information for the professional services awards.

Councilman Green

Thank you.

Mr. Dubow

Carolyn Nichols has some information on PIDC. 48 3/5/08 - COMMERCE - BILL 080023

Councilman Green

If he didn't have the information, while he was there, I wanted to ask the question.

Mr. Bell

I'm more in the construction numbers. And we make sure also that community residents are hired on the projects also. But the construction numbers we need to resubmit, because $65,000 doesn't even cover a basic system repair award, and on basic system repair weatherization, PHDC is doing approximately 43 percent minority participation direct awards to certified minority firms.

Councilman Green

Thank you. Thank you, Councilwoman Sanchez. Excuse me.

Councilwoman Sanchez

The other issue, Councilman Jones brought up the issue of political will. Is this Administration willing to also have additional costs related to de-bundling some of these contracts to meet some of these goals? Because as Ms. Nichols was 49 3/5/08 - COMMERCE - BILL 080023 mentioning, a lot of these contracts are awarded large. I guess this is a question for Mr. Dubow. Are we going to be willing to absorb that to meet our goals?

Mr. Dubow

That's an issue, I mean, we haven't had much conversation about, but we're looking at the whole array of issues for how we can improve participation, and we'll look at the trade-off, and if we think it's worth it, then we'll be willing to do it.

Councilwoman Sanchez

Do we have an idea where MBEC is going to end up? I know you're talking about restructuring. Will that happen before the end of our budget process?

Mr. Dubow

Yes, it will. It will.

Councilwoman Sanchez

Okay. In terms of disadvantaged businesses, how many disadvantaged businesses are taking advantage of the preference points of a bill sponsored by our Mayor, Mayor 50 3/5/08 - COMMERCE - BILL 080023 Nutter, the five points City disadvantaged businesses?