It just comes out of 130 040048, 040145, 040414 - 6/2/04 the census --
You referenced also Progress Plaza in your testimony and indicated -- Well, you implied that there was some issues with respects to ability to access financing for the project. And that's not my understanding. Can you help us --
Yeah. We had been in a conversation with the people at Zion Nonprofit Trust, who manage and own Progress Plaza. And they had given us the very clear perception that they needed to have more assistance, in order to carry out their redevelopment strategies at Progress Plaza. And we thought that given all of the focus on Center City redevelopment and development, that, certainly, that icon location should get at least the same 131 040048, 040145, 040414 - 6/2/04 kind -- commensurate. You're not going to get the same levels of investment that you get for a building for Comcast, but a commensurate investment in Progress Plaza at the neighborhood level, especially given the historic economic significance of that location. So we got that from the people -- Mr. Bracey at Zion Nonprofit Trust. And talk to him -- If you talk to him directly, he would probably tell you precisely what he thinks he needs.
Yeah. I mean, we've had numerous conversations with them. And we have put what I thought to be substantial financial incentives on the table, both on the City -- State Senator Kitchen has put a commitment from the DCED on the state level. And it was my understanding that it was more of an issue with respects to certain tenants, as opposed to financing issues, but --
Still when he talked 132 040048, 040145, 040414 - 6/2/04 to us, he still stated his concern.
Okay. All right. I'll follow up on that. Couple of issues. Listening to your testimony, and having had an opportunity to talk to you and Anthony in particular on some of the problems associated with contracts, the construction trade, we have... I've reached out to your organization on a couple of occasions when I've had major projects in the District, and personally had difficulty in identifying minority contractors, prime contractors to participate. And you've been extremely helpful in identifying those. And I know one is an example most recent was the Temple Hospital Ambulatory Center which was a 73 -- Well, it is a $73 million project. And I understand that there was real good dialogue between the Chamber. And we were going to be in a position to have a substantial amount of participation in that goal in that particular project. 133 040048, 040145, 040414 - 6/2/04 My question is: Understanding that from it -- It will be difficult for every Council member every time a project came into place to call the African American Chamber of Commerce or a similar organization and sit down and try and negotiate a deal -- And that's kind of, frankly speaking, what we're left with, can you give us some recommendations as to how we can take that process and fold it into a policy on a City-Wide level, so we wouldn't have to enter into every specific project and sit down and negotiate every specific trade and every specific goal as it relates to a particular contract on it, some of these major projects.
You know, short of having every T crossed and every I dotted, I would just say to you that if you could move to something that is akin to what the people in Chicago appear to be doing right now, if you could move to something that's akin to what the School District of Philadelphia appears to be committed to 134 040048, 040145, 040414 - 6/2/04 doing right now, then everything that you did would be covered. And it wouldn't take long. The big problem is, the reason that you have these kinds of very tedious discussions with the individual developer project by project is that the developers, in the absence of a solid policy, in the absence of a comprehensive policy at all or absence of any kind of a statement of commitment, assume that they've got room to move around in. They assume that they don't have to do it. They assume that they can get away without doing anything at all. And so, then you have that kind of dialogue. So, I mean, I think conversations with people in Chicago, conversations with Paul Vallas and others who have done this successfully will lead you very quickly. I know the rumor always was coming out of Detroit that people simply didn't even imagine going to Detroit to do business without having at the back of 135 040048, 040145, 040414 - 6/2/04 their mind the firm knowledge that they would be expected to have minority inclusion in their contract proposal. They didn't even think about it. It wasn't something that was written down. It wasn't something for which people could be sued. It was just the policy and the style of that administration. And I think that once that word gets out, developers understand that pretty quickly, and they begin to do it differently. In Atlanta, for example, as we said, for the first two years there was vocal and aggressive resistance to Maynard Jackson. And then after a while they realized that this is the way things were going to be, and it began to carve the pie up in a different way. Began to look at development opportunities in Atlanta in a different way. In the absence of having a stated policy, people will do whatever they can. I remember when the Republican 136 040048, 040145, 040414 - 6/2/04 National Convention came here. And we were at the Chamber trying to push for more African American involvement, business involvement, in some of the contracts, the catering, and all of the related kinds of things that we thought the Republican delegates would need. And we found out at the end of the day that one of the reasons that we were having so much of a problem in negotiating with the people who were putting that convention together from the Republican National Committee's perspective was that that committee was advised by somebody at the very highest level of the City government that they didn't have to worry about minority participation. And the Republicans came here thinking that there would have to be some because of course they had this convention in other cities. Isn't the first city they've ever had it in. So they came here and said in a side conversation, what do we have to do? What 137 040048, 040145, 040414 - 6/2/04 is expected? What is the style? How have people been included. And the people at the highest level in the Philadelphia government said, you don't have to do that. Don't worry about it in Philadelphia. So we wound up having to fight every battle one by one because there was no 10 blanket commitment or by policy that would say that people were expected to include people when they come to Philadelphia. So that has to be addressed, because again, every developer you talk to is going to try to do as little as he possibly can in that regard.
One of the issues about the numerous apprenticeship programs -- And I've had some concerns about the fact that we are providing assistance to people and putting them in programs, and at the end of the tunnel there is no job. I've recently introduced an ordinance that addresses the City's 138 040048, 040145, 040414 - 6/2/04 procurement process, in terms of apprentice, because I understand that the Constitution, i.e., amendment -- the First Amendment talks about race-based and gender-based requirements, you know, with the Bechtle [sic] ruling so it's deemed --
You brought it up. One of the things that we looked at was changing this whole structure around apprenticeship because that's not race based, it's not gender based. And I think it could potentially, you know, withstand constitutional muster. We looked at a situation in the trades in particular. They have these ratios. And depending on the trade it, would be five to one, five journey persons per one apprentice, three to one. And we said, we probably need to look at that as a possibility of creating opportunities for apprentice. And we that 139 040048, 040145, 040414 - 6/2/04 given the high number of apprentice coming out of these various programs that it would be possible to have access to that program. And we were looking at a three to one figure across the board. Do you think if we were in a position to implement that particular law, that it would enhance our opportunities for getting our apprentice in this City contract?
Our problem is that the apprentice -- the movement from apprentice to journeyman is purely arbitrary.
Would you be able to designate that it would be a minority apprenticeship that would result in a journeyman's position?
You can't do 140 040048, 040145, 040414 - 6/2/04 that because it's race based. But the issue is: Right now, given the level of apprentice, first of all there's no requirement on the City side of having -- We just essentially go by the union regs.
But what we're talking about is creating a number that will essentially be percent of 15 apprenticeships on all City contracts. And 16 it was my thought, first of all, because 17 it's not race based, it's not gender based, 18 so the Constitutional issue goes off the 19 table. 20 But if you created a high level of 21 requirements for apprenticeship on the job, 22 you can enhance your ability to get these 23 numerous apprentices that we have coming 24 out of the various apprenticeship programs 25 as a side discussion. 141 040048, 040145, 040414 - 6/2/04 And I probably shouldn't even bring this up because this probably will come back to bite me. But traditionally, when we do these types of ordinances as a side, we have certain provisions, in terms of where the apprentice can come from. As an example, when we passed a law in Council to require prevailing wages for properties that -- I think it was above ten houses that were done in the City of Philadelphia, as a result of CDBG and other government funding, that there would be a requirement to pass -- to do prevailing wages. I introduced an amendment that would require any particular contractor that took advantage of that provision will be required to do -- to hire -- participate in an apprentice program. We talked about Topwin, Congresso and DEP [sic] at the time. That's in the law. It's probably not being enforced. But as a result of the change in that 142 040048, 040145, 040414 - 6/2/04 language, we were able to instill that information. So I think that possibly we can create similar language in the bill if we get it passed, to require that they participate in some of those programs.
Our great concern is not so much for apprenticeship. Our great concern is how we are able to get people transitioned from non journeyman status to journeyman status. There are people who have been members -- We have a guy who was a member of the Emerging Contractor Program that said he was a member of 332 for years. 17 And he said that he had worked for a 18 number of contractors over all that time, 19 and had never worked for a black 20 contractor. And now he was a prime contractor and he was -- he's still black. So he was very proud of that. Our problem is that we don't want to continue to put people in this limbo 143 040048, 040145, 040414 - 6/2/04 apprenticeship status. We know that the labor unions have not had a great problem in putting white journeymen on the table if they've been able to demonstrate an ability to do the work. As I said, they make them on the spot on construction sites. You know, they say, sign the paper or we'll close you down, right? They make them on the spot. But for African Americans there is this nebulous status, this apprenticeship status which continues far longer than anybody can afford to stay. And what happens is that over time, as they are no longer able to feed their children and provide for the money that -- for the mortgage or for their rent out of an apprenticeship salary, they drop out of the program. And so every year you have the building trades in a position to say, we had X number of minorities in our apprenticeship program, and unfortunately 144 040048, 040145, 040414 - 6/2/04 we don't understand why, but 47 percent of them dropped out. They can't afford to stay in.
Let me understand you, because I thought I heard in your testimony that there was some concerns that we were -- we had people in the apprenticeship program; that there's a program but they never got an opportunity to get on the job. And let me because I --
What you're talking about -- (Councilman Clarke and Mr. Crawley began speaking simultaneously, not reportable.)
-- seven years as apprentices. We want them on the job with union cards.
I'm asking you a specific question about an issue that I've heard is problematic, is that... I agree 145 040048, 040145, 040414 - 6/2/04 with you that people will stay in the apprenticeship status too long. But I've also heard, talking to people, that there is an inability to get apprentice on the job. And what I'm trying do is to come up with a strategy that first I get them in the door. And then I agree with you that once you get them in the door on the job, then we can fight to get them journeyman status.
If you're going to move something to get more apprentices on the job...
...I think simultaneously and together, there should be some formulative way to ensure that we get people out of the school systems and into card-carrying status, and transition out of the... We've got people who are members of 332 who should be on some kind of a fast track ability to transition into the skill trades. There's no path for 146 040048, 040145, 040414 - 6/2/04 doing that.
You've been in 332 for or years, you shouldn't have to go 10 into an apprenticeship program to get into 11 the carpenter's or the electricians or all 12 those other. 13 You should be able to, with a 14 special program, be able to make that 15 transition. You're already a union member. 16 But there's no accommodation to have 17 that done. These things are being done to 18 delay and stymie our access to journeyman 19 status in the union. 20
It's not a program. I'm not -- 147 040048, 040145, 040414 - 6/2/04
-- institutionalize further apprenticeship without the consideration of when you move out of apprenticeship to journeyman status.
Mr. Crawley, Councilman, I want to make sure that we address every issue that we can that's in the letter to the Mayor. But I also want to make sure specifically, although we want to continue this hearing, that we also keep a focus on minority business development. And we'll also have other people testify, including Della Clark from the Enterprise Center. So I'd like you to focus questions very quickly for this panel. I'm hoping 148 040048, 040145, 040414 - 6/2/04 this panel can stay around. Then I want to bring Della Clark up to testify. But I want to keep a focus on minority business development. And we can discuss other issues that are contained in that letter.
Okay. I'm not sure if my next question falls within that category.
Thank you. Good afternoon, Mr. Crawley. Just to follow up real quick, one of the ways that I think that Councilman Clarke's concern and yours about people having a track that takes them from apprenticeship to a journeyman is to develop more African American with a capacity of African American businesses. Because I had a young man that I was working with. I got him in one of the trade unions. My major problem... And this was just my first and my test case. 149 040048, 040145, 040414 - 6/2/04 My major problem for that young man was to find a company that would sort of direct him, guide him, and use him because in the beginning he ended up being with five or six different companies. And then, when -- And I'll call the name -- Larry McCray -- because it was a project going on in my District -- and I called McCray and got him hired there. Ever since then it's been much easier. So, I think once some of our African American and minority companies grow, then they can take on more credits, and keep them there until they become journeymen. And I think that's one way, that that would be very helpful, particularly dealing with the apprenticeship issue.
And logically... It 150 040048, 040145, 040414 - 6/2/04 should be logical that the more would be given access to --
And I just wanted to comment on your testimony. And you know, we've met -- we've met with Anthony a number of times. I guess I wanted to know the status of your recommendations. And where is it at this point? Councilman, did I hear you say we're going to send a letter out?
Oh. Okay. Because just to say that your... the big idea of this proposal, and then the best practice in Atlanta, what are we going to do with that? It's good information here. 151 040048, 040145, 040414 - 6/2/04 One of my concerns since I've been here is the lack of minority participation or the level of minority participation with City government contracts, and public funded contracts. And it's very frustrating, as you know, an elected official to constantly deal with that. When we met, I talked about the fact that we just can't really review, monitor, et cetera. And I know that that's one of the services that Anthony and the Chamber said that they can help us with. But what is the status of this recommendation? Where are they right now?
Well, on most of the recommendations having to do with the county and region first, we are moving, as I've mentioned earlier, to set up meetings with the Greater Philadelphia Chamber of Commerce, to begin to bring them to the table. We've met yesterday with another private sector company. We've met with two others, two other large private sector 152 040048, 040145, 040414 - 6/2/04 entities in Philadelphia. We want them to be the nucleus of a group of large corporations that will put out the call to their peers, together with the Greater Philadelphia Chamber of Commerce, so you can, one, do the procurement summit; and grow out of the procurement summit the creation of this public/private entity, where we would be able to pull in Council people, state reps, state senators, and hopefully people from the administration, who would work as a public/private venture, to ensure that there was continued ownership of this. I mean, we can't go from City Council hearing to City Council hearing. The last time this issue was discussed in any need was about a year-and-a-half ago in City Council. City Council brought it up. And there was a great furor about it. Everybody talked about it. And then, you know, it went right back in line with the rest of the very important issues of the 153 040048, 040145, 040414 - 6/2/04 City. Somebody has to own this. Somebody has to take responsibility. And it has to be done jointly with both groups of people who let the contracts. And as we said before, nothing else matters if our people can't participate. We create 3.5 percent of the jobs in this City, even though we get 2.3 percent of the contracts. So we're doing more than our share of job creation. We would love to do more, but we can't do it unless that impediment is removed. So we're moving already. We're going to be hopefully coming back to the people in Council and people in administration, to get them to join up with us as we go after these private sector entities. But we're feeling a great responsiveness from the private sector. They seem to be -- seem to be understanding of the issue. The issue of diversity, the issue of inclusion seems to be something 154 040048, 040145, 040414 - 6/2/04 that they're just looking for some guidance and support in. They understand the importance of the subject.
All right. Thank you. I just wanted to make sure -- And again, you did say that the last time we talked about this was a year-and-a-half ago, that there was something that was actually going to happen, and that it wouldn't lay dormant until something else comes up. So... And if Atlanta has the best practices, if that's something that we -- And I think that when we first met with Vallas in July almost two years ago, you know, and he talked to us about the minority participation in Chicago, it kind of made me feel a little bit ashamed that a city such as Philadelphia is not really practicing things that way. So I'd be interested in the follow-up and having information. And I'm sure everybody on the committee -- You can 155 040048, 040145, 040414 - 6/2/04 just give it to the Chair. And I'd really be interested in knowing what's going on. Thank you.
Let me clarify for the record. The last time this issue came up in a major way in Council, it was because of legislation proposed by Councilman Ortiz, that I thought was excellent legislation. An executive order was patterned after that legislation. There was a whole signing ceremony of the bill and executive order. Then the bill -- the ordinance and the executive order have not been implemented. So I think a year-and-a-half ago Council took the action they thought that they should take, in terms of passing a new bill, trying to revamp what would exist. And we did what we were supposed to do legislatively, but that bill has not 156 040048, 040145, 040414 - 6/2/04 been implemented.
In fact, the executive order has expired, from what I understand.
Thank you, Mr. Chairman. Thank you, Mr. Crawley and the Chamber, for taking time out, and the people here that are sending a very clear message to us, of where you stand on a number of issues. As you all know, Mr. Crawley, and probably a number of you out here in the audience, that before my -- before I became a -- before I came on the payroll of the people of Philadelphia, I happened to be a laborer in my career. I'm very proud of it. And I still maintain my membership in the Laborers Local 332. So I know firsthand about these issues working out -- 157 040048, 040145, 040414 - 6/2/04 working as a laborer. I really didn't want to go join another union in the years that I spent in the field which was around years because 6 I learned a lot and developed certain 7 skills to be able to stay working, and to 8 be able to keep a family and pay a 9 mortgage, and so forth. 10 And then I came to the government in 11 the year 2000, and Mayor Street -- And I am 12 very grateful that back then he appointed 13 me Director of Labor Standards. 14 Sometimes I had the title of 15 Secretary of Labor and Deputy Mayor. But 16 my main job there was to enforce prevailing 17 wage laws. 18 And I was very surprised in my 19 tenure there that my biggest problem in 20 enforcing prevailing wage laws and having minority inclusion happened to be the government. And I, as an outsider, as an activist as well during my life, I said, wow, you know, the problem here happens to 158 040048, 040145, 040414 - 6/2/04 be the government. You know, it's tougher for me to get these things done because people in the government have all these roadblocks. And I can probably say that in the three years I was there, I was able to help about seven, eight minority contractors come into prevailing wage jobs. The one law that I do know exists is called the Davis Bacon Act. And that law does say that people that work on public works projects have to be paid a prevailing wage. It's like a minimum wage that's above the regular Federal minimum wage. And I did to the best of my ability enforce that law. But one thing that I realized was that certain City departments were my biggest obstacles. and I've said this publicly. I can say it again here. MBEC was a problem. And Procurement was a problem. And then, as I... you know, as my time went by, and I was able to help a handful of people, I said, well, I need 159 040048, 040145, 040414 - 6/2/04 then to bring in any new and minority contractor that would come to work for the City, that I would bring them into my office, show them the process. And I start to -- Believe me, the paperwork is so overwhelming with our people, that they just want to forget about it. But if you take time, and you streamline -- It's called streamlining, right? Where you reduce the amount of paperwork, that you could actually help people come into work for government. And we need more of that in government. ) -- high level decisions of this government. 160 040048, 040145, 040414 - 6/2/04 I think that's a very commendable thing. ) After being here and going through the budget process, I realized that our departments sometimes reflect the building trades. There's a couple departments that have a lot of folks that look like you and I, and then there's quite a few that have people that don't look like you and I. So in the process I realize that we had City departments that had -- Well, one department had one Hispanic, a few blacks; in another department, two Hispanics, a few more African Americans, right? That we need to also in government be able to integrate government so that -- so that when business folks from minority communities come, you know, and want to be helped, that we have people, we have an integrated work force here in those particular departments that know of the importance to spread the wealth around, spread the work around, and that those things are just as important. 161 040048, 040145, 040414 - 6/2/04 And I have already addressed this issue.
As you well know, I am -- I'll take a piece of the work and I'm going to run with it. This is an area of tremendous concern of mine, as well as my colleagues. And you and I have talked about this. We've got some things that we're going to be working on, to make some -- you know, to make some strides in this area. And our business community cannot expand, our minority business community, if we don't have the support from within, and we don't have the support from up top. Because it takes leadership to say... I go into my office sometimes, and my good staff tells me but Councilman, but Councilman, but Councilman. I said, I don't want to hear it. Make it work. So that type of leadership and message of make it work needs to happen, but we also have to have the support that you bring from the community, from the 162 040048, 040145, 040414 - 6/2/04 outside, but also from the inside, that we have people from our respective minority communities in positions to be able to be of help.
Councilman, you hit on a very valid point. We have had an experience of having an African American business move out of the City of Philadelphia, not because they couldn't get through the procurement impediments that we've been discussing all morning, but because of the bureaucratic problems he was having with the people who regulate retail and vendor relationships, and retail and vendor government relations in the City of Philadelphia. And this guy... And I'll give you his name. His name is Obadiah Robinson. And Obadiah Robinson walked up to me one day and said that he understood that we were with the African American Chamber of Commerce. And he just wanted to let us know that he was leaving Philadelphia. He had 163 040048, 040145, 040414 - 6/2/04 come up from Texas to start a barbeque business. And he had a big ole open pit barbeque thing that he did. And he did the whole cow. So this guy was good. And he was from Texas. And he said that every time he set up his grill, people from City government harassed him, told him to shut down, treated him as if black folk were not permitted to do business in the City of Philadelphia. He got so tired of that that he started looking for other cities in which to do business. And he wound up in another state. That state was Mississippi. Obadiah Robinson, who is a graduate of Princeton University, moved his barbecue business to Mississippi. And he said to us as he left, people in Mississippi welcomed us with open arms, and there's a more racist business environment for black people in Philadelphia than I experienced in Mississippi, and so I'm gone. 164 040048, 040145, 040414 - 6/2/04 (Moans from the audience.)
That's a horrible thing. And so when you say that we need to make sure that the people inside the government who touch the people who do business need to be sensitized, you have hit a very vital and sensitive point. And I wish you just could have gotten there before Obadiah Robinson left Philadelphia.
Thank you for your testimony. We're going to excuse this panel for the moment so we can bring on the second panel. (Applause.)
Ms. Clark, will you please approach the witness table. Good afternoon. 165 040048, 040145, 040414 - 6/2/04 One of the things we're trying to do -- And I want to make sure we drive this point home -- is that of the recommendations of this Minority Business Development Subcommittee report, we're trying to increase gross receipts of minority businesses from 2.2 percent to 6.6 percent as a start. We want to triple the amount of gross receipts. I've been very impressed with your work, particularly reports you did around accelerating minority entrepreneurship. I invited you specifically to give testimony around the capacity of minority businesses within this region that I know you're very knowledgeable about. So could you please state your name for the record, and then proceed with your testimony.
Yes. Thank you, Councilman Goode. My name is Della Clark. I'm President of The Enterprise Center, which is a 15 year-old nonprofit organization 166 040048, 040145, 040414 - 6/2/04 located in West Philadelphia. I've been involved with the organization for 4 years. 5 And I do not have a written 6 testimony today, but after my comments if 7 you'd like me to write it up I will and 8 present it to you. 9 But I wanted to make some comments 10 around -- 11
Yes. And I want to commend Bruce Crawley for his comments and his remarks. And I respect a great deal what the African American Chamber of Commerce is doing. I echo a lot of his comments, so I'm not going to repeat some of the facts or data that I know as well because it's pretty much in parallel with what he discussed. But I do want to make some additional comments around minority entrepreneurship in this City. 167 040048, 040145, 040414 - 6/2/04 And I broke it down into primarily two areas, the first one being entrepreneur assets. As you look around the City of Philadelphia, in terms of infrastructure, help minority businesses get started. This City is lacking in that. And if you think about how a business starts out, it primarily goes through three stages to get to that mature stage, kind of an infancy stage, adolescent and mature. Well, when a business starts out in the City of Philadelphia in its infancy stage, there is not infrastructure in place that helps them get through that infancy stage in a very accelerated process. Often time minority businesses are stagnated in the infancy stage because of some of the things that was discussed earlier today, but also access to capital, the infusion of capital coming in in a timely manner. So, I've seen a lot of businesses 168 040048, 040145, 040414 - 6/2/04 over the years that remain in the infancy stage far too long; whereas, if they had more infrastructure assets in the City, they would move to that process very quickly to get to that mature stage. And so, by working in an incubator world, we've seen a lot of businesses incubate far too long because of some of the problems that exist in Philadelphia that we've already mentioned today. I definitely think it affects the incubation stage of start-up companies. And if you think about start-up companies in this City, we need to look as a City, how do we strategically increase the business formation rate of start-up companies, knowing that initially we might have some short-term failures; but over time the success rate should increase. And as a City, if you look at business formation rate, we lag behind all other cities of same size and population of minorities. So we really need to put forth an effort to increase our business 169 040048, 040145, 040414 - 6/2/04 formation rate. Some of the other comments around entrepreneur assets we need to look at is that we really need to take a look at proposal and bid writing services for small businesses, to help them be able to bid more often on contract opportunities, not only as the City but the Federal, state and private sector. We also need to look at how do we help minority business with networks and client development as a City, to do a much better job than that, to help them get there faster with that. And also, too, it has been proven that companies and start-up companies who have assets, I mean, who have equity available to them start faster and accelerate faster than those companies who have deck [sic] And while deck [sic] is a form of capital that most people are familiar with, in the minority community we have a lack of equity. 170 040048, 040145, 040414 - 6/2/04 So I'm proposing that as we look at the City and what some of the things we can do to improve, that we take a look at an equity program along with a deck [sic] program, to help minorities, particularly in their infancy stage because equity would definitely help them grow faster. Another area that I also would like to recommend that we look at is the strategic communication and learning process. Entrepreneurship need to be elevated, particularly in high schools as a career option, as we do have other counselors and other people come in talk to public school kids. But entrepreneurship is not put up there as a career option, as other occupations. And if we want to improve entrepreneurship in this City, we also need to go down and start younger and begin to begin the early introduction of entrepreneurship.
We also need to improve our 171 040048, 040145, 040414 - 6/2/04 communication among a campaign of getting the word out, particularly in the private sector. There are about dominant 6 clusters, industries in Philadelphia. And 7 of those 17, 9 are very dominant. 8 And in all due respect to 9 construction, construction is one of those 10 sectors that is used in all of the dominant 11 clusters. But we need to do much better 12 job in connecting minorities to other 13 targeted opportunities in our City. 14 As an example would be 15 pharmaceutical. Pharmaceutical happens to 16 be a very large dominant cluster in our 17 region. 7 percent. So locally, if you look at pharmaceutical being a highly concentrated 172 040048, 040145, 040414 - 6/2/04 dominant cluster in our region, we have very few minorities that participate in that arena. Also another dominant cluster in our region is in the chemical areas. In our old days, we had Arco. We still have some remnants of that and have other large chemical providers in this City. And minorities participate very ill in that arena as well. So, one of the things I'm proposing is that we have businesses start up in some of these targeted opportunities and connect them early on. And the City could play a major role in facilitating those discussions and connect with a dominant cluster because every private sector view what the City is doing in their role in this arena to dictate what they going to do. So I think the City needs to step up and take more of a leadership role, when it comes to facilitating relationships between the large companies and the small 173 040048, 040145, 040414 - 6/2/04 companies. And I think you will see the bigger companies start to follow or at least take on a more leadership role. And one of the best ways to do that would be a campaign. Very seldom... And I think Bruce alluded to this in the Inquirer... that you pick up and see successes being talked about in the Daily News or the Inquirer. And we need a lot more stories because the more stories we put out there around successful entrepreneurs, the more other entrepreneurs will see that and want to emulate that level of success. Another area that I wanted to bring up is that in this City we have two different type of sectors, one called trading activity, and one called local serving. A lot of minority business in this City are around what we call local serving. About 65 percent of businesses are doing what they call local serving, which means they're doing business in the City of 174 040048, 040145, 040414 - 6/2/04 Philadelphia. One of the other ways that growth has come into a region or community is that if you can get businesses doing what they call traded sector, doing business outside of the local community and bringing in those dollars. I know we talked about the Motorola story, but we need to figure out how do we get the larger companies to do business with us in the minority community that brings in these jobs so that the minorities can count those jobs. And oftentimes the way contract opportunities is set up, minorities are not able necessarily to count those jobs in their contracts. And I want to give you an example that one of my entrepreneurs encountered just recently. He has a contract. He's in the construction business. And in his contract he was working on a job where the firm asked him to increase a contract because they needed to improve their 175 040048, 040145, 040414 - 6/2/04 numbers. And once he did that -- And they probably sent in their reporting. They did a change order downstream and changed that contract so that the minority had to take that out of his job. But I'm sure if we go back and check the record, they reported the minority participation at a much higher number than what they actually fulfilled on the job.
And so time after time that happens to minority businesses, in terms of the primes using them to get their numbers for reporting, but not actually using them in terms of actual construction on the job. Another example is... in terms of minorities is, they go after bids on contracts but they are dictated the gross margin that they have to receive on the job, if they want to participate. And that is very, very difficult for a minority business to put together an action plan for growth because the growth is typically around their gross margins. 176 040048, 040145, 040414 - 6/2/04 And when their growth margins are dictated in advance what they have to receive in order to get a job, it puts them in a very awkward situation. So most minorities are not able to accelerate their growth in a very short period of time. And what I mean by that is, to take a minority business from a half a million in sales to three million in sales, to five to ten million is all driven around not only sales, but the margins and cash flow that is derived from that. And oftentimes in the minority community that is stagnated, and they're not able to drive that process as well as they'd like to. In working in the start-up world, we've seen minorities come to us with primarily three barriers, that I am hoping the City will begin to address. The first one is capital. Capital needs to come in, an infusion that goes through the infancy stage, adolescent, and mature. 177 040048, 040145, 040414 - 6/2/04 And oftentimes capital comes at the adolescent stage, after they've gotten some contracts. But what has happened is they've kind of dug themselves a hole. And it's hard to get out of that hole unless you have capital at the early stage of infancy. The second one that most minorities come is little collateralization of a loan. We talked a lot about banks, banks making loans, having programs for entrepreneurs. But if minorities don't have the capital structure of asset based, then it's very difficult to get these loans. And it takes a long time to build that collateralization. And no one wants to put up their personal home for a business loan. So we need to look at new ways that we can help minorities get access to capital without pledging their personal assets or putting their personal assets on the line for a business and making it very difficult, if the business fails, to be able to resolve 178 040048, 040145, 040414 - 6/2/04 their situation. And then lastly, this City has not done a very good job in helping minorities get on the learning curve. In all of their areas they need to, in having their business. For a City of this size, we do not have a minority business kind of education program. We've had some early discussions with Wharton, Temple, and other higher education university. But it just seems to me that we should be able to work with the higher education institutions here and put together a program similar to executive education programs in other cities that can bring together minorities, CEO roundtable type, and take them through different levels of educational training, and give them certificates and things that hopefully that the banks and other -- and the other business institutions in the City will recognize. And I know we talked a lot about 179 040048, 040145, 040414 - 6/2/04 training. But I'm also a proponent that training needs to continue, but higher levels of training need to continue with the business, not always keeping minorities in the start-up mode, but taking them through the progression of all of the training that's required. And so we need in the City kind of a CEO training program for minorities that bring together other CEOs so they can share ideas, share collaboration, share their client development and their networks, to actually accelerate the growth and development of these businesses. I took a trip in September of last year. C. and met with three successful minority entrepreneurs his.
One was doing 40 million in revenue, one was doing about 30, and one was doing about 60 million. And I asked all three of them, what do they attribute to their success. And they all said that in their early days, having access to public sector 180 040048, 040145, 040414 - 6/2/04 contracts helped to get them to that next level. Now that they were at that level, what was keeping them in business was the private sector. So it was the public sectors that got them to that scale, but it's the private sector that has kept them in business and gave them the continuation of the business. So it seems to me that we need to figure out a way to put together a program to use the public sector contracts to launch and get businesses started, to improve their capabilities, improve their balance sheet, improve their cash flows in a way that makes sense, and then take them to the private sector, and then help them get to the next level. Because in this City we need a lot of businesses doing 30, 40, 50, 60 million dollars. And that's one of the ways we will address the employment rate, because those businesses will be the ones investing 181 040048, 040145, 040414 - 6/2/04 in the communities, in an infrastructure. )
Thank you for your testimony. One of the things I said that we we're dealing with here today is the major goal of trying to triple the gross receipts of minority businesses within the region. Can you tell me, from the research that you've done, do you believe the capacity exists right now to triple the gross receipts of those businesses?
I think the desire is there. I think we still need to build some more asset base in this community, in terms of entrepreneurship. There's still some lack in there. But I think in terms of having entrepreneurs that exist, who want to take out loans, who want to get access to 182 040048, 040145, 040414 - 6/2/04 capital through equity, who want to participate in the procurement of both private and public sector, that exists. But I think we need to bring the private and public sector together to match up with the desires and ambition.
I guess the question I'm asking is... I think you've probably documented in some of the research you've done the capacity exists, but it is in fact the underutilization of that capacity that exists or do you believe the capacity will only exist as we expand into other business clusters?
I think we need to expand into those other business clusters as well, because if we don't we're missing an opportunity. That's the private sector, and those are the dominant clusters in our region. So we would need to figure out a way to connect our businesses to those dominant clusters early on, and bridge those relationships early on, because otherwise 183 040048, 040145, 040414 - 6/2/04 we're missing an opportunity. I think that's the innovation that exists in our community. And we would be remiss if we didn't connect our entrepreneurs to those existing clusters of industries.
Can you describe for me the type of services The Enterprise Center offers clients, in terms of procurement?
Yes. Our services are evolving and changing. Effective January 1 of 2004 we were awarded a contract from the U.S. Department of Commerce to operate the Pennsylvania Minority Business Development Center. As a result of being awarded that contract, we are evolving and changing our services to accommodate more high-growth firms than what we did traditionally in the past because the contract dictates that. 184 040048, 040145, 040414 - 6/2/04 But some of the services we offer is not only besides space, but... And coaching and hand-holding, but we are now bringing together the public and private sector around procurement. This morning, for instance, we had a seminar on doing business with the government at the Federal level. One of the things that has taken place at the Federal level is that the government is outsourcing more of their professional services. An example is there's an RFP out right now for the Federal Government to oursource all 8-a certifications which is now comprised of about 80 to 100 jobs in the Federal Government. Well, as of July 15th, there's a possibility those 120 jobs could be put in a private sector's hands. So, I'm hoping that a minority firm in this City or in this state will go after that contract, as an example of what's being transferred at the Federal level. 185 040048, 040145, 040414 - 6/2/04 At the private sector level, I think, Councilman, we need more people calling on the private sector, to get them to pay more attention to minority entrepreneurship. There are a lot of programs in the private sector on having a diversity program. But I don't think the CEOs of those companies have put enough teeth into their procurement departments around diversity programs for the managers who operate those programs. And oftentimes they using the excuse that they put something out to bid and they didn't get anybody to respond. I just don't think the bids are being distributed in a way that gets them the response they should have.
So you would agree that if we could bring the City of Philadelphia together with the African American Chamber of Commerce, and the Greater Philadelphia Chamber of Commerce, and others chambers of commerces, that we 186 040048, 040145, 040414 - 6/2/04 should establish a public policy of county and region first, in terms of procurement, and then beyond that, specific goals for utilization of minority businesses?
Okay. Thank you. I have no further questions. Councilman Nutter.
Good afternoon, Miss Clark. I apologize for not being in the room when you started, but I wanted to be here for your testimony. You made mention just a second ago of some of the companies in the City who maybe are... given the issue of minority participation and regional access to Philadelphia firms, more weighed or being more upon responsive than some others. Can you tell us some of the companies, from your experience, who are actively trying to promote contracting opportunities for minority businesses, that you might be aware of?
Verizon is one that has 187 040048, 040145, 040414 - 6/2/04 put together active programs, and where a lot of the minorities I have worked with have benefited from Verizon and their programs with minority participation.
Another one that is just beginning, and I have seen some light of hope, is Citizens Bank. They recently hired a woman, a Myrna Ferguson, who is putting together that diversity program. And I've seen some short-term successes have come out of that. Don't know what it's going to be like long-term. I've seen Verizon perform more long-term than I have Citizens Bank, but I am pleased with that. But there are some others that I'm not so pleased with. And I would hope that they would begin to demonstrate that. One of the dominant clusters in our region, for instance, is Rohm and Haas Chemicals. And I would like to see companies like that do a better job. 188 040048, 040145, 040414 - 6/2/04 I've heard lots of complaints about Aramark, in terms of participation. While they have some programs, it's not as strong as it should be, and it has not done a very good job. One of the things we want to do is a food incubator. And I have tried to go to Aramark to get them to work with us on that with that food incubator because food happen to be a dominant cluster in the minority community, where a lot of minorities come to The Enterprise Center who want to have a food-related business. But unfortunately, they don't have access to a FDA stainless steel approved kitchen, so they are not able to sell their food wholesale or retail, only with the extent of family and friends and their connection. But if you think about a restaurant today, everything in a restaurant is pretty much a symbol. When you go to a restaurant and you eat bread, most times the restaurant did not make that bread. They 189 040048, 040145, 040414 - 6/2/04 bought that bread from someone else. But very seldom do you find minorities participating in distribution of bread. And that's not to say minorities can't make some of the best bread that people can eat here in the City, but don't have access to that FDA kitchen. So that's just an example of where Aramark could help sponsor a food incubator, and then turn around and produce their next generation of suppliers. For instance, they have the contract at University of Pennsylvania, but I bet if you took a look at that, there's very few minorities in this City who are benefiting from food-related activities with Aramark at the University of Pennsylvania, as an example.
Thank you. Thank you for the information. Thank you for your testimony.
Thank you again for your testimony and for your patience, but we had to actually give Mr. Crawley all 190 040048, 040145, 040414 - 6/2/04 the time he needed to present the report, but these recommendations should be and will be adopted by this Council. But we also thank you for your testimony as well.
Could you please offer some testimony, in terms of a response to the things that you've had a chance to hear today.
Yes, sir. I don't -- I haven't prepared any written testimony, but I'd like to make a brief statement, that... And I apologize for coming in late. I had a meeting with the Mayor at 10 o'clock, and it let out at 11:00. So I wasn't here for most... well, the beginning 191 040048, 040145, 040414 - 6/2/04 part of Mr. Crawley's testimony. But from what I heard, I absolutely agree with his points. I'm very angry as well about the situation internally and externally, as far as minority participation in contracts, not only at a subcontracting level but at the lack of prime contractors. And to the extent that MBEC can't do something about that, we will.
Thank you. I want to ask you two very specific questions, in terms of recommendations...
...made by the subcommittee. First, do you support a county and region first procurement policy? And what steps will you take to see that's implemented?
Absolutely, sir. I think that is a very, very good idea. I understand that at some point there seems to be a tension between trying to save some dollars on one hand, and 192 040048, 040145, 040414 - 6/2/04 trying to increase minority participation. I don't think there should be a tension to that at all. I think if that is --
Mr. Williams, I didn't mention anything about minority participation.
I mentioned a county and region first procurement policy. I'm talking about first buying Philadelphia and then buying greater Philadelphia.
Yeah. That's what I meant, sir. I said a tension between trying to use that model and trying to use another model where you would save some money. That's what I meant. And what I meant is that my emphasis would -- I agree with the fact that we should have a local and regional emphasis on doing that, as opposed to trying to find a best deal where you would, in my opinion, exclude minorities, people of color, from participating in these contracts.
But I'm still not 193 040048, 040145, 040414 - 6/2/04 getting a response, because my second question was actually going to be whether there should be a specific goal set within that policy, in terms of minority business utilization, but I was not talking about minority business utilization yet. My question is really, do you support a county and region first procurement policy, in terms of making sure that more of the things that we buy are from Philadelphians first, and then from the greater Philadelphia area second. And that is actually expanding business opportunities, expanding the gross receipts of those businesses. It's actually building the economy here. And so I can understand that there might be some tension between getting a better deal, but that money is staying here. You're growing the economy here.
That's what I'm saying, sir, that, yes, I do -- I do -- I want to illustrate a point there; but yes, I do support that. 194 040048, 040145, 040414 - 6/2/04
Earlier today before you arrived I asked a question, and I obviously didn't know the answer. And I guess I really should have, now that I look back on it. A major expenditure that the City made -- And it's prior to your time, but you may be aware of it. Because of the recent controversy in the media about the failure of our brand new 800 trunking radio system, we spent over $50 million. So I asked the question. And I'm confident or at least I believe that you might have to get back to the Chair with this information. My question is, when we have a global -- a big contract like this that involves a national/international company, we have maybe three people bid, like 195 040048, 040145, 040414 - 6/2/04 General Electric, Ericson, Motorola Company and another major communication provider, and one of those company wins -- and I can be specific because we spent over $50 million with Motorola to install this new system -- what minority participation, and what did we do to assure that when Motorola got that contract that there was local participation? And I'd appreciate it that you look back into that deal because this deal is still going. I mean, the system is still being constantly worked on, and there's maintenance contracts, and there's all kinds of things associated with this, as you can, imagine $50 million plus expenditure that we made. So I'd like you to comment on that concept of companies that, you know, you have to go to a Chicago-based company to, first of all, do business or a Denver-based company. What do we do when we have these major deals, like when we buy millions of 196 040048, 040145, 040414 - 6/2/04 dollars or lease, which we're heading in that direction I understand, vehicles? What do we do to make sure that we, our local business community is involved in that magnitude of a deal?
Okay, sir. For that particular contract I can't comment on because I wasn't here when it happened, but I can certainly get back to Chair with the specifics of that. In a general sense, MBEC sets ranges for these deals, for any kind of contracting, with that magnitude of anything. And they set ranges. And the folks that they set ranges from are people who are certified with MBEC which are primarily local minority people or firms owned by people of color or women based or disabled based.
Maybe I'm not making myself clear. We give a contract to Motorola Company, wherever they may be: Chicago, Denver... From what I understand -- And 197 040048, 040145, 040414 - 6/2/04 I'll, you know, be the first to apologize if I'm wrong -- that many of the people that came here to install the system got on an airplane, stayed at a local hotel for six months, did their work and left. What I want to... What I don't understand is, when we do a deal of that magnitude of a company that's not based here --
Absolutely. That's what I'm talking about. I'm talking about what opportunities did some young engineer and his company get, maybe in Philadelphia or at least in the area, to work for Motorola, as a subcontractor, to install this $50 million plus radio system in our government? I mean, from what I understand, that when jobs -- maybe not this one -- that many people that work for these big corporations travel with them when they install these systems, very little local 198 040048, 040145, 040414 - 6/2/04 work force is utilized. Because, you know... And you have to look at it and say, it is a very specialized area of expertise, where maybe you're not going to find anyone. But I'll bet that even the most technical people have to work for the corporation to understand its work because they designed it and it's their system. But with a $50 million plus deal, I'm curious if you could look back into that to see, and provide that to the Chair, what exactly did Philadelphia benefit of that major, major purchase that we made? Did any of our people get any business at all out of that or did we import everyone that was associated with that work?
Absolutely. I mean, work force development which isn't part of 199 040048, 040145, 040414 - 6/2/04 MBEC's mission -- However, in my eyes it should be. I think it's very important. And when you look at -- I mean, I could take it not from Motorola; just from looking at jobs that are done in the City and seeing that the composition of folks on the work force, it doesn't seem to be -- it doesn't seem to be benefiting folks from communities.
Again, maybe I need to better understand. Are there certain things like this that you can't do what we're trying to do here? Are there some things like this $50 million purchase that trying to get local people to work on the installation of that or is it absolutely necessary for that company to come and to bring all of their own people with them, and live here, and then eventually leave and turn over the system to us? Maybe there are some cases where what we're trying to accomplish can't be accomplished. Maybe I'm nitpicking on this 200 040048, 040145, 040414 - 6/2/04 particular one.
I don't think you're nitpicking at all. I think that sometimes that's on a case-by-case basis. But certainly I think that one of my earlier suggestions that we'll go back and look at the City contracting process until we make contracts like this. We can actually tie in a work force component, so that we can actually ensure more work force development in that contract for local people.
And you know, it's not often that we spend $50 million on a new system. It's not like something we do every five years. This is probably -- The system's probably got a life expectancy maybe 50 years. So this is maybe not the best one to pick out, but it's a good one because it was $50 million that we spent.
The smaller contracts, sure. I mean, a million dollars? I mean, anything that doesn't 201 040048, 040145, 040414 - 6/2/04 benefit Philadelphians, doesn't benefit Philadelphia's work force, I think it's an issue that is legitimate and we should be looking into that and actually doing something about it.
Great. And I'd appreciate it, if it's not a lot of research, to go back and maybe take a look at that, and see whether we did what we were supposed to do or maybe we didn't do as good a job as we should have on that particular contract because that's... Never even thought of it when it was going on, to tell you the truth, because it was such a specialty operation. But I could bet that there were a lot of opportunities for people from this region to support that work.
Thank you, Councilman. 202 040048, 040145, 040414 - 6/2/04 Councilman Nutter.
Thank you, Mr. Chairman. Mr. Williams, first, you mentioned that there was a meeting this morning that caused you not to be able to be with us when the committee hearing started?
The Mayor called together his deputies, and cabinet members, and other folks, to talk about the budget.
By our budget expenditures, about the spending that I want to do for next year about the plans I have for MBEC to expand. 203 040048, 040145, 040414 - 6/2/04
Right. And is there some problem, based on the budget that was just passed the other day?
Well, they didn't talk about that. The Mayor just made some general statements. I made a few statements to some of the folks on the staff that --
I made a few statements to some of the folks on the staff about my -- my concerns about the budget.
That there will be not enough money for me to do the things that I want to do.
I -- I... I didn't get that information, sir. 204 040048, 040145, 040414 - 6/2/04 They called -- He called a meeting, and we came over there. The Mayor made a general statement. I made a statement about my particular budget, and then the meeting was over.
You made a statement to the rest of the cabinet officers, and --
I guess I'm not understanding. You have a budget. The dollars I think you requested are in that budget. What's your concern?
I didn't have a concern. The Mayor called a meeting. We went over there. He made a statement about the budget.
The Mayor talked -- made -- I don't -- I don't remember 205 040048, 040145, 040414 - 6/2/04 everything the Mayor said. He made a general statement about the budget and the process.
Not -- Not by verbatim. He made a general statement about the budget and the process that the administration was going to.
They submitted it already. It was submitted last week. There's a hearing on Monday. So that was it?
Okay. You might 206 040048, 040145, 040414 - 6/2/04 want to keep track of those dates to make sure Personnel knows when you started. It affects when you get in the cycle, start getting paid, all that kind of stuff. So it's April 12th?
Okay. And were you aware when Councilman Goode, who Chairs this committee, introduced one of the Resolutions having to deal with the 21st Century Review Forum Resolution? Were you aware when that Resolution was introduced?
Okay. All right. It was introduced on April 22nd. Have you seen a copy of it?
Okay. Is there some reason why, between then and now, you did not have any testimony drafted or developed in response to either that issue or the two other matters that are in front of us? When you came up to the table you said you didn't have any testimony. 207 040048, 040145, 040414 - 6/2/04
The Resolution 5 was introduced on April 22nd. It has to do deal with minority participation, right?
Okay. Is there some reason why you don't have testimony?
I -- I did not prepare any testimony, sir. The only -- I don't have any reason, except that I was talking back and forth with the Councilman's Office. And I didn't understand exactly what the Councilman wanted me to do for today. And so, I didn't prepare anything; just came to answer questions.
Mr. Williams, I'm under the impression that Solomon Jones from my office sent you a formal letter, as he did all witnesses that were invited. Did you receive a formal letter?
Did the letter ask you to prepare a written testimony one week in advance to the hearing?
I can probably assure you that it invites you to testify, told you what you were testifying about, and asked you to submit written testimony one week in advance of the hearing.
If -- If it did, I'll -- I'll take your word, sir. I don't remember verbatim.