Committee Hearing, December 15, 2004

I was told yes.

So why would the lawyer for the company -- this is a quote from David Zalesne. "At the time of purchase nobody realized it was zoned residential. There was no bad intention. The company thought it was doing the right thing by going through the Mayor's Office." Why would he say that if we already 68 12/15/04 - COMMERCE - RES.040977, 041014 knew it was residential prior to the purchase?

I can't address that, Councilman. I don't know what he was thinking or saying there.

Well, is he right or is he wrong?

I can't speak to that. Like I say, I knew it was residential, and that information, I instructed our people to relay that because that is a critical piece.

Your earlier statement was -- with your hand up in the air -- industrial and residential don't go together. You said that.

Correct.

You knew the property was zoned residential?

Correct.

Why did the project move forward and why was there further assistance provided by MBAT?

I was speaking there 69 12/15/04 - COMMERCE - RES.040977, 041014 from my experience.

Well, you had the same experience four years ago, right?

Again, I was not involved directly in that. If the community and the Councilwoman or Councilperson in any particular district are comfortable with some of these things, then it's not my position to give it a yea or nay as to whether the project moves forward or not.

The Councilwoman said she didn't know about it.

We didn't know about it until it got to zoning.

Secondly, beyond all of that, the Department either has a view or perspective or even a philosophy or a policy with regard to these kinds of uses so close to each other or not. Now, it may be your personal opinion or your personal view, but it would seem to me as a serious public servant that I know you to be, that someone would say, why are we helping this industrial business go to a site across 70 12/15/04 - COMMERCE - RES.040977, 041014 from the residential. It's not so much a yea or a nay, it's just a part of the deal. It's what we do.

Again, Councilman, I have never known in my years of any such 7 policy. Again, perhaps the Councilperson -- 8

At a minimum 9 it's a concern. 10

Absolutely. And I 11 will unequivocally state that the Councilwoman 12 should have been brought in this particular 13 case from the get go. 14

That's a given, 15 but it didn't happen. 16

Exactly. 17

Who was the 18 zoning lawyer on the case when it finally went to zoning?

Councilman, I don't remember. Councilwoman, do you remember?

Does the City have any money in this project? Do we provide any financial assistance, any financing or 71 12/15/04 - COMMERCE - RES.040977, 041014 anything?

I do not believe so, Councilman.

But you did do the environmental?

We did, to the best of my knowledge.

And the cost of that was?

A phase one usually costs a couple thousand dollars.

We're flushed with cash, so what difference does it make?

Well, there's a pot of money out there that can only be used for such things.

Did you only do a phase one or did you do a phase two also?

I don't believe a phase two was done.

Councilwoman Reynolds Brown raised this, and I was kind of stunned by the comment, that you could not get them to respond and so you then walked away. 72 12/15/04 - COMMERCE - RES.040977, 041014 How is it possible that as government servants that would be the response as opposed to, they are not doing what we want them to do and therefore I'm going to contact L&I, the Law Department, the Commerce Director, the Managing Director, if not the Mayor's Office and say, we helped these people get to a certain stage. They are now jerking the folks in the neighborhood around and not being responsive, and therefore, in the same way that we tried to help them, now we will bring the weight of the government down on them to stop them from destroying this community? Why wouldn't we do that?

Again, Councilman, at that time I believe Councilwoman Tasco had taken all of these steps.

I'm not asking you what Councilwoman Tasco was doing. She's going to do her job and she's going to do it in the way that she can. We're all in the same government.

I agree.

Councilman? 73 12/15/04 - COMMERCE - RES.040977, 041014

Yes, Mr. Chairman?

Thank you, Councilman. Mr. Dougherty, of course at some point we're going to recess this hearing and continue again, probably at some point in January. At that point I'm sure Councilwoman Tasco and other Members of the Committee will probably want the Commerce Director and anyone else here who's going to respond more directly. You can just state for the record whether you believe this statement is true or not. The reason why you didn't pursue it is because you considered the business to be your client, and so you no longer had a client when the client was not responsive. Is that not the way the MBAT system works, that you take on a client and you close a case on a client when you're done with that client, and in fact the business was your client?

Correct.

The business was 74 12/15/04 - COMMERCE - RES.040977, 041014 your client?

Yes. The business no longer wanted our services.

There was nothing more you could do for the business, the business was not responsive to you, so you no 8 longer had a client at that point?

Correct.

Thank you. Any other questions of this witness?

Yes. I think because we do have the other hearing schedule and we will come back with this issue in January, we will recess this. As I look at the article in the paper -- because we were not involved from the very beginning. It says, "The company operated two years before even going to the Zoning Board to get permission to use it for industrial purposes, and then they faced no 22 penalties." So what we're going to do when we come back, we will bring in some other forces also. I think what we'll do is ask the Chair 75 12/15/04 - COMMERCE - RES.040977, 041014 to recess this hearing so that we can move forward with the MBEC hearing. But we will be prepared to come back to further have discussion with this. In the meantime, what I suggest you do is that you go back to your office and you all figure out what you're going to do about relieving the problems of these communities over there and helping those neighbors, because they're clients also. Because they pay your salary. I want some action taken to deal with this issue with Mutual Industries and the neighbors. We're not having any more meetings. You know what all the problems are. You heard what the people have said the problems are. You and I have met about these problems. When you come back, I want some action to have been taken against Mutual Industries for what they're doing. They're illegal. And also a plan for helping restore this neighborhood to what it might have been. (Applause.)

I'd like to 76 12/15/04 - COMMERCE - RES.040977, 041014 recognize that Mr. Nicholas Brown came in. Mr. Brown, we'll have you testify at the next time. Thank you very much.

Thank you, Mr. Dougherty. We will now consider Resolution No. 8 040977. I'll ask the primary sponsor, Councilwoman Tasco, if she has some opening remarks before calling her first witness.

Good morning. We would certainly like to thank the witnesses who have come here today for this hearing on MBEC, the Minority Business Enterprise Council. Thank you for your patience in waiting. We did need to get that issue on the record so that we could get some action taken for the neighbors that we represent in the 9th District. Today we're here to discuss the Minority Business Enterprise Council and the City's effort to improve participation levels and utilization goals for minority, women and 77 12/15/04 - COMMERCE - RES.040977, 041014 disadvantaged businesses in City contracting and procurement. We're here to discuss these issues because these businesses are woefully and severely unrepresented in City contracts. According to the recent disparity study completed by D.J. Miller and Associates, minority-owned and women-owned businesses only receive 2.3 percent and 1.8 percent respectively of the nearly $3 billion in contracts awarded by the City between 1998 and 2003. In a City where people of color represent 55 percent of the population and 14 percent of the businesses, this is 15 unacceptable. 16 Considering this information, we can 17 no longer be content with the status quo, but 18 must take action to address this problem. 19 In 1969 we had the Secretary of 20 Labor, Art Fleischer introduce the 21 Philadelphia Plan. That plan was used to some 22 measure to enforce equal opportunity and 23 business opportunities for minority businesses 24 pursuing government-funded contracts. I have been working since 1972 -- 78 12/15/04 - COMMERCE - RES.040977, 041014 and I say this all the time when there's a hearing -- the Philadelphia Urban Coalition, now the Greater Philadelphia Urban Affairs Coalition, to engage more minorities in participating in the business in the City of Philadelphia. It wasn't any good then, and it's no better now. We look at the leadership in this City, including the Council and the Administration, and we have not done significantly any better in this City. At this point we have no plan here. Considering the current status of the City ordinance and the executive ordinance 15 pertaining to minority participation, we have gone from the Philadelphia Plan to no plan for Philadelphia. At this point no plan is no 18 longer acceptable. Accordingly, we will use this opportunity and subsequent hearings as a means to develop a plan to resolve this problem so that all Philadelphians have a fair and equal opportunity to do business in the City. We'll call these three panels. We'll call John Macklin and the National 79 12/15/04 - COMMERCE - RES.040977, 041014 Association of Minority Contractors. Then we'll call Bruce Crawley and Anthony Fullard of the African American Chamber of Commerce. I saw Ms. Wong -- she may have left -- and Nick Shenoy from the Asian Chamber of Commerce. Then the other people who are here, individuals, we'll cal them as panels of three or four. First we'll have John Macklin and Roscoe Murphy come forth with their testimony. We have Councilman Ortiz here who would like come forward now. Councilman Ortiz, would you approach the witness table? Good morning. Identify yourself for the record, please.

Good morning. My name is Angel Luis Ortiz, citizen. I'm grateful that you allow me to speak. My son gets out of school at 12:30 and I have to pick him up. It's an early day. This is a subject that we've been 80 12/15/04 - COMMERCE - RES.040977, 041014 talking about now for eons and eons and eons in this Council. It's a pity that the highest percentage of contracts that the City has ever given out to minorities came during the tenure of Wilson Goode. Under the directorship of Wilson Goode, this City reached a high percentage of 36 percent at one point in terms of the dollar amounts that were given out to minority contractors. Compare that to the disparity report in 1998 that said less than 3 percent, really a very shameful decline that has taken place. Over 10 years this Council dedicated itself to really look into the functioning of MBEC, because we knew that MBEC really wasn't functioning. In the '90s and early parts of the 21st century we have seen that minority participation and contracts and employment in the construction trades in the City has really not improved significantly from the numbers that we had in 1968 when the Philadelphia Plan was instituted. 81 12/15/04 - COMMERCE - RES.040977, 041014 In 2001 we published and this Council approved the report, The Illusion of Inclusion, that detailed the participation of minorities in four construction projects in the City, and found that either the participation in the skilled trades, minorities were not participating at all or the percentage was really insignificant. We passed an -- I thought -- in April 2003, I thought -- and Wilson smiles because he thought and I thought -- that we had passed legislation that really reorganized MBEC. The Daily News the other day had a column in which they had 10 suggestions about what to do in the City of Philadelphia. And number 10 was, they suggested that we scrap MBEC. Well, as Councilman Goode and Councilwoman Miller and Blondel Reynolds and Michael Nutter and Councilwoman Tasco and Councilman Rizzo understand, we thought we had scrapped MBEC. Is that so, Councilman Goode? 82 12/15/04 - COMMERCE - RES.040977, 041014

That's correct.

We scrapped MBEC. So we achieved the 10th recommendation of the Daily News. The only time I was ever invited to a bill signing ceremony on the second floor -- and I still have the pen that the Mayor signed the bill with -- we were invited and we had a very extensive ceremony in which over 150 people, black contractors, attended. We signed a bill into law. We thought we were on the way at least to giving MBEC the necessary powers and authority to be able to perform its duties and begin increasing the percentage of minority contracts that are given in the City of Philadelphia. To find ourselves in this position in which we have no executive order and no bill really befuddles one in terms of, are we living in the reality of the 21st century or not. I wonder if you remember this, Councilman Goode. Owen Thompkins was the executive director of the MBEC in Baltimore. 040977, 041014 there is a Mayor that has the political will and supports the director of MBEC in terms of the goals that are established, you don't really need legislation. Maynard Jackson did not need it in Atlanta. Harold Washington did not need it in Chicago. Wilson Goode achieved it under the threat of continuous lawsuits in federal court. He achieved under great duress a high level of 36 percent. Because we had another legal opinion admitted when we were discussing our bill, these opinions were not given to us at that time. But it says what usually the City always says, whoever the City Solicitor is, that Council overextended its authority. Well, the issue is, if Council does not set the parameters when there are no 20 parameters that have been set, someone has to set them. Someone has to take the lead. 040977, 041014 be it the new hotels that are going to be built on Delaware Avenue if gambling comes up, it is no longer tolerable that minorities, blacks, Puerto Ricans, Latinos, women, do not make up a high percentage, not only of the workforce, but of the contracting companies that create and build these edifices. So I implore you, Mr. Chairman. I think we have a bill. It has to be implemented. If necessary, I think you should sit down and negotiate. But the political will is what's missing. The time for excuses really is over. There should be no excuses about implementing goals that are really acceptable. The excuses that they used to have years ago, that we don't have 18 qualified companies and contracted 19 individuals, that's over. We have those. We 20 have law firms that are owned by Latino and blacks and women. We have consulting firms. We have carpenters and electricians. I think what Mr. 040977, 041014 politics of the City of Philadelphia interfering with those decisions. I think if this Committee finds out why that has not occurred, I think that's the issue here. One of the interferences and political maneuverings that take place that are not permitting this from happening, I don't understand it. I don't understand it. We work very hard. We took a lot of shots to be able to pass and really investigate these bills. I remember when Councilman Nutter spoke to the issue of that we had over a 100 trainees -- because Ernie Jones was sitting here -- and over 100 trainees had gone through the aspect of getting trained to go into the building trades as apprentices. None of them had gotten hired. Councilman Nutter asked, are there no phones? People were not being called. We have to find out. I think we need to have a census. I think we need to be able to demand and I think this Council is in that position to be able to do that. 040977, 041014 the hearings that we had are sufficient because I think the data is there. It's recent enough. The year is 2003, all of that data is available. I think with that data that we have on the record we should be able to go ahead and implement a policy that really begins increasing the contracting from and percent hopefully to the 36 and above that we had under Wilson Goode. 36 percent today looks huge.

The Board of Education seems to be doing a good job of it, so I don't see why the City of Philadelphia cannot do the same. I think part of it is political will, and I think that's where it resides. Thank you, Mr. Chairman.

Thank you for your testimony, Councilman. (Applause.)

You're right. Part of the reason that we've been called here today by Councilwoman Tasco is to review the status of what was Bill No. 030125, which was a very good bill and was signed ceremoniously 87 12/15/04 - COMMERCE - RES.040977, 041014 In preparation for this hearing, Councilman Nutter actually requested an opinion on it because we heard that the Administration considered it to be unlawful. I'm actually going to read part of that opinion into the record. It basically says that Bill 030125, referred to as the MBEC Ordinance, "raises significant issues under the Home Rule Charter, namely whether City Council has the power to direct the activities of MBEC and the other City agencies that receive direction under the ordinance. Consistent with longstanding views of this office, in my view City Council does not have such powers. Decisions when, with whom and how to enter contracts are generally part of the Administrative and executive power of the City vested in the Mayor." So clearly if things are not being done, they're not going to be done by the Administration in this regard. The Administration also says that Council has no 25 power, or powers not acknowledged in this 88 12/15/04 - COMMERCE - RES.040977, 041014 regard. We are seemingly stuck. I will just ask you for a quick response to that.

In terms of contracting and employment, I think we held hearings over a seven-month period in which the bill was given to the Administration. We did have a City Solicitor opinion that did not -- or else the Mayor would not have signed it, as you well know, with all of the ceremony that went into it. You know that if they had had those issues at that time, this bill would not have been signed. The issue that has to be brought up is why wasn't it brought up during the hearings that we had. We had hearings here until 9 o'clock in the evening in terms of these issues. So the fact that they're bringing it now has to make you wonder, is there a will to really implement a contracting policy that is fair. Really, you always can find an excuse to not do something. The issue is we've been at this thing now for 37 years, since 1968, '69 with 89 12/15/04 - COMMERCE - RES.040977, 041014 the Philadelphia Plan. The faces that used to look at the witnesses from that were usually white. The faces are now Latino and African-American and some white. I don't think there's any more excuses that the citizens of this City, specifically the minority members of the citizens, can accept that this cannot be done. It has been done in other jurisdictions. In Atlanta they did it way back under Maynard Jackson. Wilson Goode did it, as I said before, years ago. I don't 14 understand why in the year 2004, 21, we cannot 15 get minorities in the building trades. We 16 cannot get minorities under contract and give 17 them contracts in the City and go above 3 18 percent. 19 It is shameful, as Janice Davis 20 stated when she testified here last year. She said she was ashamed of the record that had been established. Well, it is shameful. The record is shameful. I think this Council has really done the job that's needed to be done over the last 90 12/15/04 - COMMERCE - RES.040977, 041014 three years. I think now the ball is on the other side of the court. Public policy is implemented by the executive. The executive has to implement it. You really don't need legislation in order to do that. Thank you.

Thank you. Are there questions or comments from Members of the Committee? (No response.)

We'll have Roscoe Murphy and John Macklin.

Good morning, Chairman Goode, Councilwoman Tasco, Councilwoman Miller, Councilman Rizzo, Councilman Ramos and Councilwoman Brown. I appreciate you giving me this opportunity to share with you what we think needs to be done. My name is John Macklin. I'm retired from this Council President's office as a minority opportunity officer from April 10, 2000 to November 30, 2003. Prior to coming to Council I spent 18 years at the Minority Business Enterprise 91 12/15/04 - COMMERCE - RES.040977, 041014 Council in various capacities, such as minority business specialist, minority business coordinator, special assistant to the director and legislative regulatory affairs monitor. While at City Council I assisted Councilman Ortiz in preparing new legislation to address the disparity study findings. The City and nine agencies paid D.J. Miller and Associates $1.6 million to complete this study. The study began in 1996 and was completed in 1998. The findings showed these agencies lacked policy and procedures. They arbitrarily awarded contracts with little or no participation at all. This report was suppressed from the public for five years. In late 2003 the City awarded the same firm over half a million dollars to update this report. The findings were worse. This report was also suppressed from the public. This last report was found to recommend goal setting, changes in procedures and practices, enhancement to the MBE program, non-discrimination policy and business 92 12/15/04 - COMMERCE - RES.040977, 041014 development assistance. March 21st of 2003, City Council's Economic and Development Committee held hearings on Bill 020816, increasing the Economic Opportunity Task Force. Bill 020827, amending Title of the Philadelphia Code to 8 improve compliance with certain participation, 9 affirmative action and reporting. Bill 10 030125, repealing Chapter 17-500, goals for 11 the participation of minority, female and 12 disabled-owned business in City contracts. 13 Also in 2003 many were especially 14 proud of the 13 members of City Council 15 signing a declaration of economic inclusion 16 which committed their support to a more 17 inclusive approach to development to ensure that no project comes through this City ever again unless there is a comprehensive plan for minority, female and disabled business inclusion. This hearing is to examine efforts agency officials are making to correct widespread problems of inclusion. The more things change, the more things stay the same. 93 12/15/04 - COMMERCE - RES.040977, 041014 Week after week we read the agencies are still excluding what Council put in place for inclusion. An article in the Daily News on December 8th of this year entitled, "Mayor's Office Averts Clash Over Minority Hiring," states that agencies continue to willfully ignore or intentionally circumvent rules involving the goals of using minority and women-owned businesses on contracts. This Body must call these agencies in and ask the question why. Another article reads the School District is implementing its MBE program and has increased its participation of minority and women business goals for the past two years. If they can, why not the other agencies? Just before I retired, I was elected president of the Philadelphia Chapter of The National Association of Minority Contractors. In June of this year we hosted the 35th annual conference with the National Association of Minority Contractors at the Lowes Hotel. The 94 12/15/04 - COMMERCE - RES.040977, 041014 theme was Building a New Alliance. Changing the old mindset and working together, creating a relationship, partnership, joint ventures and mentoring. I hired an executive director, and he will tell you what historical event has taken place in the last three months. I present to you Dr. Roscoe Murphy.

Thank you, Mr. President. Good morning, Members of the Committee. My name is Roscoe Murphy. If the Chairman will allow me 30 seconds to digress briefly. It's been years since I've been 15 in this room during the Cable Awards, 1984, 16 and I must say this is a beautiful Chamber 17 compared to what it was then. 18 Additionally, and to just the ladies 19 on the Committee, Ms. Blondell and Ms. Tasco, 20 we have not had a conversation since the San Francisco National Democratic Committee in 1984. Also, Mr. Goode, your father was there when he was mayor. I'd like to say he's also my neighbor across the street. 040977, 041014 But it's been years since I've been here. I was looking for Fran Rafferty because I haven't had a good fist fight in 20 years. But I see he's not here. Thank you for that 30 seconds. My name is Roscoe Murphy. I'm the Executive Director of the National Association of Minority Contractors, Philadelphia Chapter. I recently returned from a 10-year humanitarian stay in South Africa wherein I built 15,000 houses for President Nelson Mandela, among various development improvement projects since I left Philadelphia in 1994. I just got back. Upon my return in June of this year, I was immediately confronted with the same problems from 30 years ago regarding inclusion or the lack thereof involving minority exclusion in the participation of City contracts. For 30 plus years, we have been fighting in the federal, state and City courts for remedies that have led to various levels of stalemates and little, slow or no progress. 040977, 041014 realize that if you can't beat them, then you must join them. In other words, all sides must come together and participate in areas of things we have in common, such as, but not limited to, capacity and resources. I have handed out a news article that states the essence of new thinking and directions. Please allow me to illustrate a scenario that is self explanatory. A visitor comes into your office and states that you have just been awarded a $10 million City contract, which you, the company owners, acknowledge as being true. The visitor then proceeds to demand that you, the owners, share at least 30 percent, or $3 million, with them in the performance of that contract. Of course, the company owners inquire as to who are you and why should they share anything with you. The visitor's reply is, because I'm a white and I am poor and I have the law on my side. How do you think a minority owner should respond? 040977, 041014 Consequently the visitor is shown the door and the law is challenged in court. Meanwhile, the contract is stalemated and/or the visitor is excluded from meaningful participation. Notwithstanding the good intentions of affirmative action goals, set asides, good faith, best efforts, non-discrimination ordinances, policies, regulations politics and the law, this scenario has now created adversary positions for all concerned. Therefore, the question begs for admirable solutions, and I affirmatively personally believe capacity and resources is the first and only answer. Mr. " The General Building Contracts Association represents 300 construction firms and others in Philadelphia. Mr. " The Associates of General Contractors represents 33,000 construction firms and other in America. In order for our benefits' feasibility, the National Association of Minority Contractors, the Philadelphia Chapter, is seeking the cream of the crop, so to speak, of minorities, women and disadvantaged businesses to be included in a minimum of 10 percent participation regarding 100 percent of City contracts. The National Association of Minority Contractors, Philadelphia Chapter, believes that the level of 30 percent and above participation is too high and not realistic in most contracts. The results can lead to scams and fronts that may not get paid at the end of the day.

The process should be based on the capacity and resources for all businesses to perform with skills, integrity and responsibility. 040977, 041014 participation, meaning, to borrow a phrase, just because you have a pick and shovel does not make you a demolition expert. In the event of new, small, flowering businesses who cannot demonstrate the criteria required to perform within the ranges as determined by the Minority Business Enterprise Council, the National Association of Minority Contractor's recent partner agreement with the Association of General Contractors and its new membership in the GBCA is in a position to provide education, training apprenticeship, mentor prodigy programs and consulting service to its members. In conclusion, the National Association of Minority Contractors is about building bridges and crossing barriers in a pragmatic approach for a new day in Philadelphia. 040977, 041014 complaining and complaining and complaining, as Mr. Ortiz did today, and I'm sure many of the witnesses who followed, about what has not been done and why not. Well, we have created adversaries, in my view, of why it can't be done. When you walk into a guy's office and say you got a $10 million contract, I want a million bucks of that because I'm black or I'm a woman or I'm disabled, you could say, get out of my office. What are you talking about? But the law is on my side. But do you qualify? Do you have the capacity and resources like we did when we came up? Like, we had to go to apprentice schools. We had to get education. We had to get training. That's what we should doing. That's what the minorities should be doing also. I'm not speaking about the ones that qualify and don't get the contract. That's a different fight. I'm talking about the people that are making the most noise. The people that are excluded today. 040977, 041014 people. Then you have a genuine fight of not creating problems where there doesn't have to be a problem. We are members of this GBCA, the General Builders Contracts in Philadelphia here. We agree with them that it doesn't matter what color you are. It doesn't matter what gender you are. If we're building a skyscraper and we have to get bonding, then let's bring you up to speed on that. You can't come in brand new and say, give me a piece of that job because of who I am. You must go through the process. That's what we must really consider if we're going to change this thing around. How can the Mayor or the Administration or this panel support the minority program if you're dealing with people that don't want to do the same things as the people that have those jobs are doing? 040977, 041014 to do this. Both sides that I'm associated with have agreed to change their thinking. The black people on my side have agreed to change their thinking that's plausible and palatable to the minority guys and majority guys that can make it work. Thank you.

Thank you. I actually have a few questions. First to Mr. Macklin. Mr. Macklin, the bill you helped Councilman Ortiz draft, 030125, was based on the Baltimore model, I believe.

Somewhat.

And the Baltimore model was working?

Yes, it was. It was working because the Mayor had the commitment to make sure the agencies made it work. That's why it was working.

In our bill that was drafted, it refers to annual participation goals. Do you believe that there should still be annual participation goals established on 103 12/15/04 - COMMERCE - RES.040977, 041014 an annual basis?

Sure.

You believe it should be by industry?

Sure.

I ask this question to Mr. Murphy too, because you stated that you believe 30 percent is too high and you reduced it to a number of 10 percent. But isn't it true that that number actually should vary based upon capacity? I think this new thinking you're talking about is to have our work based upon capacity, so I would take issue with the fact that it shouldn't necessarily be 10 percent or 30 percent, but based upon capacity, which means that in certain industries it may be above 30 percent and in other industries it may be below 30 percent, above or below 10 percent. But I'm curious about your new thinking beyond what you've stated so far in terms of how we should actually set these participation goals. 104 12/15/04 - COMMERCE - RES.040977, 041014

Yes, sir. The operative word is a minimum of percent 4 across the board in all City contracts. Of 5 course they would use best efforts and good 6 faith in order to increase that. 7 Also, where there might be a sole 8 proprietor, wherein you cannot get that 9 participation, it can be parlayed with another 10 contract that would be higher, but it would balance out to at least that.

I will accept that to the extent that I think we need to move to some other witnesses. But I will also say that your characterization of a minority business walking into a majority business asking for a piece of the contract, I believe is somewhat flawed and excuses MBEC, excuses the role of the Mayor and everyone else. It is in fact our role to the extent that we can legislate, and the Administration's role to the extent it should be creating policy, supporting legislation, enforcing that legislation, annual policy, to walk into that majority 105 12/15/04 - COMMERCE - RES.040977, 041014 business on behalf of that minority business. So it should not just be a matter of someone trying to get that participation on their own, although I support community-based efforts and organizations, such that you represent. But what we're here to discuss is also what role we can play in terms of policy and legislation. I hope we're going to have some discussion about basically that bill that you helped draft, Mr. Macklin. I believe it did actually lay out a process that was workable, that was based upon capacity. It was based upon studying previous utilization. It was based upon setting goals for which is pretty much a data driven process.

It's also participation on availability. Ready, willing and able. If the agencies, if the agencies, would adhere to your order as it relates to the ordinance, and if the Mayor made sure that those agencies adhere to your order, then we wouldn't have the problems that we're in today. It's a matter of educating those 106 12/15/04 - COMMERCE - RES.040977, 041014 agencies that want to do. We have some good agencies, some of them want to do, but were not allowed to do. I've been in this Administration for over years. I know the phonies that we're 7 facing with and I know the ones that are 8 sincere. But they're limited because of the 9 fear of their job because of the orders from 10 up top. Nothing is going to work in this town 11 if it doesn't from the top. It has to come 12 from the top. 13

Thank you. 14

Mr. Chairman, if I may. 15 I agree with your comments on my 16 testimony here. I don't have a problem with 17 that. My purpose is to look at both sides of 18 the coin. Since my absence from the City in 19 10 years, I have matured a lot and meddled a 20 lot, as some people might have seen. 21 Mr. Ortiz stated earlier, why are we 22 still in this dilemma? Why is this still happening? I say we must look at why they are doing to us what they are doing to us. One of the reasons is that we must have the same 107 12/15/04 - COMMERCE - RES.040977, 041014 resources and qualifications and capacity that they did to get the job in the first place. And if we don't, then we can be put in the position where we can gain that.

Well, the law actually called for annual participation goals, based on but not limited to the present availability of quality DBEs, utilization of quality DBEs on past contracts awarded by the City, a forecast of eligible contracts to be awarded within the fiscal year, and an update of disparity analyses of businesses in the Philadelphia area. I think we want the same thing, but the issue I'm actually raising is that what's being rejected, not so much by majority businesses or minority businesses, but by the Administration, is a data driven process that actually shows what is there.

I understand. It's a resistance to change we have to overcome, and that is understanding all sides. That's my purpose. Thank you. 108 12/15/04 - COMMERCE - RES.040977, 041014

Councilwoman Tasco. Thank you for your testimony.

Mr. Chairman, I have a couple questions.

Excuse me. Councilman Ramos.

Thank you, Mr. Chairman. Mr. Macklin -- and I heard this from the former witness -- are you implying that the problem is that Mayor Street does not have the political will to make this work?

Well, he's been saying this for the last eight years almost. He came to our association's conference stating that he was going to give the director all the necessary tools to make sure that this happens. But what I'm reading is just lip service, is what is really happening.

Are you saying that Mayor Street has only given lip service to this issue of minority inclusion?

Well, if you're 109 12/15/04 - COMMERCE - RES.040977, 041014 talking about certain individuals. I'm talking about the masses that are out here struggling that are trying to make this happen, and the agencies that want it to happen, but aren't given the direct order, or they're given it, but they're still not given the respect that they're supposed to be in order to make this happen. They're not respecting this Council. These agencies aren't. And the Administration in some cases is not respecting this Council.

Are you saying that the African-American Mayor of this City, John F. Street, does not have the political will to make this happen so there will be minority inclusion --

No. I'm not saying that. He has the will. He has the power to do it. I don't know if there's somebody else that's keeping him from doing it. But he has the power and the will. He's the Mayor.

Didn't you say that the will began at the top? You made that earlier statement. 110 12/15/04 - COMMERCE - RES.040977, 041014

Yes, ma'am.

I agree with you, Madam Tasco. Both you and the former witness referred to the mayor, the late, great Maynard Jackson, and the mayor of Baltimore, the late, great Mayor Harold Washington from Chicago. So you seem to be putting it in the Mayor's office, putting it on the Mayor. So I just wanted some clarity on whether you think this African American Mayor is our problem. I don't tend to agree with that.

I'm not saying that. You're trying to put words in my mouth.

I'm just looking for an answer.

Councilman, if he's not saying it, our next witness will.

I'm not saying that.

You're the Chairman. I will always refer to you.

But he has the power to do it.

Okay. Thank you.

Councilwoman 111 12/15/04 - COMMERCE - RES.040977, 041014 Miller.

Thank you. Good afternoon, Mr. Macklin. How are you? I was just wondering when we talk about City agencies, are there any agencies that do a better job than others? Were you monitoring that? Like last week there was an article 10 about PIDC. Is there any agencies that really stand out?

Well, one agency that I know is PCDC, not PIDC. PCDC. Curtis Jones' shop. The report and the study. The findings in the study showed that his agency more so than any other agency in this City was more in compliance than the rest.

Okay.

His agency. PIDC. RDA. The other eight were not so.

Thank you, Councilwoman. Thank you for your testimony.

Thank you very much for your testimony. 112 12/15/04 - COMMERCE - RES.040977, 041014 Bruce Crawley and Anthony Fullard from the African-American Chamber of Commerce.

Good afternoon.

Good afternoon. Would you identify yourself, please, for the record?

My name is Bruce Crawley, Chairman of the Board of the African-American Chamber of Commerce.

My name is Anthony Fullard, the Director of Business Development for the African American Chamber of Commerce.

Thank you. You may proceed.

Thank you very much. As an organization, the African American Chamber of Commerce has, since its inception, been committed to the concept that the City cannot hope to expand its economy, create jobs that are at a competitive level with other municipalities or generate much needed levels of tax revenue unless it discovers a way to include all of its potential businesses in the process. 040977, 041014 We opened our doors for business years ago. We believe that Philadelphia has for far too long toiled under the damaging misconception that minority business inclusion is something that only so-called minorities have to be concerned about. With the collective mindset that has been stuck firmly in the 1970s and the 1980s, Philadelphia's business and political leadership have not made diversity or inclusion the priority that has been assigned at some of the country's most successful corporations, in some of the major cities and indeed in the global economy. Regrettably, local mainstream media have also not contributed significantly to curing this problem. Couching discussions about minority business inclusion and language that recalls affirmative action set asides, and at the same time editorially pleading the case of aggrieved mainstream business owners -- who, by the way, have walked away year after year with 98 percent of all City contract revenues. 040977, 041014 That of course leaves just 2 percent of City contract revenues for businesses owned by people of color. Given that outrageously disproportionate contract participation, our Chamber of Commerce is dedicated to advocating for full inclusion of African-American businesses in that equation. 8 of the City's businesses. 7 percent of City contract revenue. Not 7 percent. 7 percent. Not even a full percentage point. 9 percent of the $88 billion in the City-wide gross receipts. What Philadelphia has clearly been doing in this entire area is shooting itself in both of its economic feet. 040977, 041014 faces its own most recent fiscal crisis, how in the name of God can we reasonably address the problem if we continue to relieve 56 percent of the population that is comprised of people of color, including 43 percent that is comprised of African Americans, from the responsibility to create jobs, the responsibility to grow the economy and the responsibility to contribute to the tax base? That's been our premise. That's been the basis of our mission. The City's response to this critical problem over all this time has been to offer us MBEC, to structure it in such a way as to guarantee its futility, to provide it a budget that has never been sufficient, to move the needle and to staff it with people who didn't have the skills or the commitment to get the job done. In the private sector, where I come from, that's what large corporations do to a line of business that they think is unimportant. 040977, 041014 department or from a service that is lacking in potential. And in MBEC we have gotten just what we have paid for and just what the City government has always expected, which is not very much at all. Indeed, the results that Philadelphia has produced in the area of minority business inclusion in City contracts provides ample evidence of three things: One, that MBEC has never been effective in achieving the mission of minority business inclusion; a lot of papers shuffled, hundreds of long awaited certifications, virtually no business. Two, even when the numbers reported by MBEC were greater than they are now, it was simply because the minority inclusion number was never really calculated as a percentage of all the business done by the City, just that small part of the overall procurement that was always shown to the MBEC staff. That number has always been misstated. That number has always been inflated. It was always absolutely wrong. 040977, 041014 I hear people comparing what is happening in the Street Administration to what happened during the Rendell Administration.

They've never shown the numbers from the Rendell Administration. Those numbers were falsely calculated. You can't even compare whether any progress has been done. The only numbers that we have that are viable are those that came from the disparity study. I'm sure that if we applied the same disparity study techniques to the Rendell Administration, we'd come up with the miserable response. The third thing we learned is that the Administration that has managed MBEC from its inception, up to and including the Street Administration, clearly have never made minority business inclusion a high ranking priority. The Finance Director, the Procurement Director and the department heads always knew it, and they responded accordingly. 040977, 041014 beyond a shadow of a doubt, that it should be eliminated and replaced by a new agency or by a comprehensive policy that will be designed to produce the broad economic benefits this City so sorely needs, all at the same time nurturing and including all potential businesses in the City, regardless of color, regardless of gender. We need a procurement policy that recognizes the need for us as a City to both acquire high quality goods and services and grow the small and minority businesses that are even now the largest job producers in this country. Even nine years ago we pointed that out to Mayor Rendell. It was from a study from Michael McGill at Southern Methodist University. He reported that nearly 75 percent of new private sector jobs were being created by firms with 50 or less employees, and that 47 percent of those jobs were being created by firms with 20 or less employees. That's the profile of minority businesses. 040977, 041014 business. We're not doing anything to develop them or assist them. Regrettably, MBEC is an acronysm (sic). It is outmoded. It has outlived its usefulness as currently constituted. It's an upright typewriter in a laptop economy, and we shouldn't be surprised that it can't help us get the job done. You see, MBEC was designed on a faulty premise, that is that all prime City contracts should continue to be let to businesses owned by white males, and that the way we would achieve so-called minority participation would be to attach a few small businesses owned by people of color to the white male's contract. The assumptions, of course, were to follow: One, that only white males would ever be qualified to win a prime contract with the City of Philadelphia. 040977, 041014 that produced unfairness for the always supremely qualified white firm. Three, that firms owned by people of color therefore were either less qualified than whites or wholly unqualified and undeserving of being prime and often times undeserving of being subcontractors. Four, that only certain City contracts, a small percentage of them, should ever be subject to even the flawed MBEC-related procurement process. For example, no professional services contracts were ever processed in conjunction with MBEC, never either did they include an inclusion mandate. Finally, it is constituted risky politics for elected officials, especially those with white constituencies, to advocate for an inclusionary municipal economy. 040977, 041014 from white companies, who clearly deserve to have it all, every single dime of it. If you only take away one key point from my testimony this morning, please let it be this: The outcome of your hearings should not be how we save or restructure or refinance MBEC, but rather how we achieve a series of tangible improvements in a City-wide inclusion strategy. We offered a list of such types of improvements to the Mayor on April 13th, 2004, shortly after his announcement of the current MBEC director. They included, number one, working with the private sector to achieve minority business contract inclusion at large corporate entities. Number two, establishing 35 percent minority participation goals for the City's professional services contract.

Number three, unbundling City contracts to facilitate small business inclusion. 040977, 041014 minority inclusion in skilled trades unions as a prerequisite for public works projects. We know that the skilled trade unions have systematically excluded African American people, Hispanic people, Asian people. We know that as a fact. Yet this government says that there are public works projects that are funded by public monies that should be set aside and held for the private inclusion of skilled trades members whose memberships range from 90 to 95 percent white in a City that's 43 percent black, 10 percent Hispanic, to percent Asian. Improving minority contract participation report formats to make them more timely, frequent and accurate. Ensuring that neighborhood residents have access to at least percent of 20 construction jobs and public works projects in 21 their communities. 22 Establishing a City funded 23 initiative to support the development of 24 African American retailers and a firm policy 25 in support of black vendors. 040977, 041014 Establishment of a City government-related initiative to develop a policy to minimize the impact of gentrification on homeowners in African-American and other historically ethnic communities. We never believed that MBEC itself has been the root of the problem. No, in our opinion, the true problem in addressing minority business inclusion starts at the very top of the government, from the Mayor's Office and from those who make the laws by which the City is governed. In fact, we believe that if there is a solid commitment to a culture of economic inclusion, then that will be a factor in assessing the job performance of the Finance Director and the Procurement Director. We believe if the Mayor clearly sends a signal that he will hold his direct reports and department heads accountable, then we will finally see action in this area, MBEC or no 23 MBEC. 040977, 041014 to the Members of Council, we acknowledge his agreement to establish a joint African American Chamber/City Procurement Task Force to renew municipal procurement practices. I quote from my letter to the Mayor back then as we started that task force, "As we understand it, the task force will have two primary goals; one, to review the City's procurement procedures to ensure that they do not restrict by policy or by practice full contract participation by small, African American and other minority businesses; and to recommend the most effective way to segment within major contracts, small component that could be reasonably managed by African American and other minority business. 040977, 041014 President Street. That letter also is available in the packet of information we provided. Following an 18-month task force review, we submitted to Messrs. Rendell and Street on July 22nd, 1998 the report of the African American Chamber of Municipal Contract Task Force. That 14-page report identified 9 major barriers to African American and other 10 minority business inclusion in municipal contracts. It went on to offer 13 recommendations to the City for addressing 14 those issues. They included reducing the 15 relegation of African American and minority business subcontractors status a review of the City's onerous, anti-small business insurance and bonding requirements, leveraging banks and City agencies to help with cash flow for minority businesses. 040977, 041014 contractor has always been. A recommendation to have MBEC move to universal certification process, which I think has just occurred in the past year. A recommendation to hold City departments accountable for minority inclusion on their contracts, which for the most part were let without MBEC participation. A greater inclusion mandate for City contracts let to non-profit organizations, which to my understanding, is still an issue even to this day. A wider circulation of municipal RFPs was also recommended.

Most of these issues were ignored by government until the African-American Chamber became directly involved and advocated for them. As we mentioned earlier, however, the gross under-utilization of minority businesses can't be unilaterally addressed by the public sector. 040977, 041014 August 29th, 1996. A copy of that letter is also in your packet. I quote -- this is to Mayor Rendell -- "You agreed that a signal should be sent to the private sector to encourage its component businesses to proactively seek contract opportunities with African American businesses. That signal will take the form of a public statement by you on the subject of minority business growth, minority business participation and the benefits they generate for the local economy overall. Accordingly, you suggested that a small group of African American Chamber board members accompany you during your scheduled November meeting with the Greater Philadelphia Chamber's executive meeting. 040977, 041014 him, nor has there ever been a tone set by his successor, John Street, that would move us as a collective business community to inclusive procurement practices. In our opinion, you will find in these hearings what we have always known about this issue. One, that MBEC has finally and definitely proved its ineffectiveness and should be eliminated. Two, that inclusive procurement practices are a function of the commitment at the top of the corporation or at the top of the government. We have an expression in the public relations profession that says, you can't have good PR if the CEO doesn't want it. We at the African American Chamber of Commerce believe that statement also holds true for inclusion and diversity programs. 040977, 041014 CEO of Blue Cross, wants it. The Philadelphia School District has clearly shown a dramatic improvement in its minority procurement because Paul Vallas, the CEO, wants it. People talk about having to turn around a big ship here to get things done in the City of Philadelphia. Paul Vallas went from 9 percent minority participation to 25 percent minority participation in just one year. We've been talking about all of this dating as far back as 1995, and we've been at 1 percent all that time. In closing, while you may know that the African American Chamber of Commerce took great exception to the appointment of the current MBEC director, we did so because in appointing a well-meaning person with no 19 qualifications to head a troubled agency during a monumental crisis, the Street Administration was sending the signal that the City's CEO didn't want to have meaningful progress in this area. 040977, 041014 merit, and we feel even more strongly about it today. On behalf of the 9,285 black-owned businesses in the City, on behalf of the 9,000 employees they have in Philadelphia and the 15,400 black employees that black businesses support in the regional area, I would point out that if you aggregated those 15,400 employees at black-owned firms in the region, they would constitute the second largest private sector employer in the region behind only the University of Pennsylvania. Comcast, Aramark, all of them have a smaller employment base. I think we get upset as a City, as a government, when one of those large corporations don't have an ability to maintain their payroll in Philadelphia. We have 15,400 jobs at risk in the region from black businesses and 9,000 at risk in Philadelphia, and we don't have meaningful follow-up on any of this. 040977, 041014 to being an inclusive economy and an inclusive, less antagonistic society. In closing, I would be remiss if I also didn't encourage each of you to visit the African American Ethnic Holiday Mall right across the street. Even though this is not an MBEC-related project, it is a project that creates jobs for 40 primarily African American vendors, and they're right across the street. They'll be there until December 31st. We have a reason to build retail capacity in our community. Retail creates jobs.

It's an entry to wholesale, an entry to ownership. The person who started Bank of America started out as a fruit vendor selling fruit on the streets of San Francisco. So much cash flow he had to lend money to his friends in the Italian community. Leverage that became a banker, and the rest is history. Bank of America is right here in Philadelphia. I think we would be remiss not to invite you. Thank you very much for this opportunity. 040977, 041014 you might have.

Thank you very much. Thank you for your testimony. I just want to ask, the recommendations that you made back in 1998, have any of those recommendations, through the previous MBEC leadership now or even through that Administration, the Rendell Administration, this Administration, has any action been taken to include any of your recommendations or has anything changed in any of the Departments relative to your recommendations?

It hasn't happened for the most part. Most of it has not happened. The only thing that really has happened is that the Administration has begun, I guess over the past year and a half, to look at the role that the Department heads play with procurement. As we pointed out, most of the procurement activity that goes through those departments in the City do not go through MBEC. All the private sector, all the 133 12/15/04 - COMMERCE - RES.040977, 041014 professional services procurement does not go through MBEC. They started now to try to build a system to capture that data so that they would know, first of all, who is getting those procurement contracts, and then they're beginning to move, I think, to having a mandate for inclusion in all of those. We recommended at the Chamber that there be a tech-related firm to go in and be able to monitor that, because the City told us they were incapable of tracking that information. There was no IT-related system in the City government that would allow them to tell us whether minorities were getting contracts or not with the Department, whether they were getting contracts or not with professional services. If we had such a system, the company that we recommended, the African American-owned company that we recommended, could do that, and they would obviate the need to do the disparity study because we would have the information on a day in, day out, week in, week out, year to year basis at our 134 12/15/04 - COMMERCE - RES.040977, 041014 fingertips. We wouldn't have to spend $1.6 million for disparity studies. We'd know as we moved along. So I know that piece is being done. Relegation of African American and other minority businesses of subcontractor status, the Chamber came to the City about two years ago and recommended the Emerging Contractor Program to start to move minority contractors from the perennial subcontractor status to prime contractor status. With the NTI program, you may recall that the people at Hill International, who are functioning as construction managers on NTI, told the City that they couldn't find African American prime contractors who could do demolition contracting. So all the African Americans who were working in that project up to that point were working as subcontractors. Our program has produced 21 black prime contractors who are capable of doing that. They have financing provided by banks that we assembled and they are able now to go out and compete for that work. We still don't 135 12/15/04 - COMMERCE - RES.040977, 041014 though, have a free flow of contract opportunities to those African American contractors. Our last class was 44, the second class of graduates from the Emerging Contractors Program. Of those 44, three were Hispanic, two were Asian-owned businesses and the balance were African American, and we are waiting still for the notification to proceed, the order to proceed on the contracts in phase three. We're being unduly delayed in that process. And again, these are small business owners who just want to be able to participate in what has been thousands of demolition projects and contracts that have been let by the City since the initiation of NTI.

Councilman Ramos.

Thank you, Mr. Crawley and Mr. Fullard for again appearing here. Since I've been here, which has only been almost a year now, you've been to many committee hearings, and I sure appreciate your insight and your commitment. I know that you 136 12/15/04 - COMMERCE - RES.040977, 041014 do in fact represent African American businesses through the African American Chamber. The issue that we want to take a look at here today, we have been taking a look at for awhile, is the function of MBEC. It seems as though at the beginning of your statement, you left some room that maybe there is something that can be done to save MBEC. But towards the end, you sounded as though you're emphatic that MBEC can no longer work. I know you have been addressing this issue for a while, particularly the bigger issue, minority participation. You have documented that very well for us. If you're stressing that MBEC needs to be replaced, I would want to see what you would replace it with or how that structure would be. I know that in principle you talk about strategies and so forth, and I can understand that part of it. So if you can just talk to me a little bit about, is there things that you could recommend that we can listen to? I'm sure MBEC will be open to it, 137 12/15/04 - COMMERCE - RES.040977, 041014 for ways to make it better. If not, has the Chamber determined this is not the way to go? What do you recommend?

One, MBEC hasn't done it. We're not blaming the current Director of MBEC. It has never done it. So we think this process, the structure of MBEC is flawed. Again, the premise that MBEC's role is to ensure that white contractors get the prime contract and that the role for minority participation should be as a subcontractor on a contract first let to whites. That's why we get the ongoing antagonism. That's why we get articles in the Inquirer that talk about a man named Graham who has an insurance company, who complains that a minority insurance company has been forced on him as a shotgun wedding every time there's a contract let. Those kinds of things are not what we think make sense. We clearly have a generation of African American and Hispanic businesses that are qualified to serve as prime contractors. That's not the way MBEC is structured. That's 138 12/15/04 - COMMERCE - RES.040977, 041014 not its role. That has to change. If MBEC can't change that structural imperfection, then we don't need it, because we're well past the point when the only way that minority firms, so-called minority firms, can participate in doing business would be as a subset to a prime contractor that's always stripped of the profit margin out of the contract. We can't do that anymore. You just saw the crisis down at the Lincoln Financial Field. One of the contractors was Louie Cruz, who's walking around the room right now. Louie Cruz was involved in being a subcontractor at that site and people didn't want to pay him. What we get a lot is minorities who are participating at the sub level, whether it's in the construction trade or whether it's in the delivery of goods and services. We get forced together with a prime white contractor who doesn't want to do business with us, who assumes that he's being put upon by the government, who's forcing this relationship, who assumes that he has manifest right to 139 12/15/04 - COMMERCE - RES.040977, 041014 every contract that comes out of the City government. Why? Because I'm a white male. This is my contract and you shouldn't be in and I don't like the fact that you're in it. I'll pay you slowly. I'll pay you so slowly that I hope you go out of business before I have to pay you the balance of the contract. I'll pay you so slowly that I hope your bank will foreclose on you, before you're able to finish the contract. I hope your crew will quit before you're finished the contract. This is what our people are faced with. And so we would rather have them be not relegated anymore with subcontractor status. If that is the premise for MBEC's founding, that's the premise for how they do its business, we don't need that. That doesn't work.

Can I proceed just a little bit more, Mr. Chairman? I know that your statement right now is nowhere in writing in the MBEC guidelines that only white contractors will be awarded the status of prime contractors. But you're 140 12/15/04 - COMMERCE - RES.040977, 041014 saying --

Did you see the disparity study?

Yes.

Did you see how many black prime contractors there were in the City of Philadelphia?

Yes.

There were none.

Listen to me. What you're saying is that in reality this is what's going on; is that correct?

Absolutely. Because that's the way it's set up. A contract comes up ready for being drafted. An RFP process comes into play. And they say, okay, do you have some small minorities that we can attach to this contract before we approve it. Not, let's let it to a black prime. Not, let's unbundle these contracts so black and Hispanic primes within their size capacity can compete among themselves for a reasonable size of that contract. No. Let's bundle it real big so 141 12/15/04 - COMMERCE - RES.040977, 041014 that we leave out the prospect of any minority being able to participate as a prime, and then let's ensure that the only minority participation is done at the level of the subcontractor. We don't need that anymore.

What has been your contact with MBEC and your discussion along these lines since your letter that I remember reading back in April?

Councilman, let me try to clarify the record. I can ask Mr. Crawley a question. You are in fact saying that we don't need participation goals. You are saying that essentially we don't need a minority business program. What we need is a procurement policy that removes barriers for people of color and women.

We also need goals. We specify that goals are necessary. I gave the example of Independence Blue Cross. Independence Blue Cross at one time -- and you can talk to G. Fred DiBona about this. At one time Independence Blue 142 12/15/04 - COMMERCE - RES.040977, 041014 Cross did $700,000 a year minority participation. Today their minority participation contract dollars runs about $30 million. They don't do it because of a government mandate or because the City made them do it. They did it because they found competitive businesses to provide contract opportunity to. They do it because G. Fred DiBona is the CEO and his board supports that initiative and that's the policy of that company. That company has been very profitable over the past several years. It has not impeded their ability to find good work, to provide good service to their subscribers. The same thing is apparently happening with the Philadelphia School District. I just saw an article in the front of a magazine called Diversity, Inc., with a profile on the CEO of Time Warner, Mr. Parsons. In that article -- I can send you a copy of that article -- he points out that one of the keys to the success of that company is 143 12/15/04 - COMMERCE - RES.040977, 041014 being able to provide contract opportunities to the community that buys the cable service that he provides. We seem to think that there is something fundamentally wrong with minorities wanting to do business in this City. We've got to first change that mindset. I think that mindset starts at the top. We have not talked directly with the people at MBEC. We've been in meetings where MBEC people have been, but we think MBEC is not the problem in and of itself. We think the structure of MBEC is outmoded. It needs to be drastically changed or it needs to be eliminated altogether. We think the impotence for that will come from the Mayor's Office. If the Mayor says, we've got to do it, it will happen. If he doesn't say it, if he doesn't put enough emphasis behind it, nothing will change. Nothing will change. After all, the person who is the Director of MBEC works for the Finance Director. The Finance Director works for the Mayor. 144 12/15/04 - COMMERCE - RES.040977, 041014

So you're saying that Mayor Street is not putting enough emphasis right now on this matter?

I'm saying that the number was less than 1 percent when he got in and it's less than 1 percent today. You tell me what that means. I've heard a lot of speeches.

I know you're throwing the question back to me. That's what I do on this side. But I know what you're saying. I'm not going to belabor the point. You've made a very good argument, like you have before. I think that more people in this City need to get more involved. Mr. Roscoe made some very good points in his testimony, that more people need to get involved. This is a very serious issue. You and I both know, and probably most of City Council that came here -- I think those that are here right now came up as activists. We started making the changes from the outside and pushed. And this is one issue 145 12/15/04 - COMMERCE - RES.040977, 041014 that we still need more people from the community to get more and more involved and say, this is something that has to be resolved. There are many, many other means besides the government, going through government and forcing administrations and elected officials. That's what I have confidence in, that will continue to grow. We have to make sure that this is addressed in a much more steadfast way very, very soon.

Councilman, that's why we point out that the public sector alone is not the solution to the problem. Once the City is finished paying all of its various pay rolls, providing for all of its benefits packages, the City has about $500 million a year to spend to spend on goods and services. As we pointed out, the private sector spends about $88 billion a year in the City of Philadelphia. If we spend all of our time just focused on the City -- and we've got to focus on the City -- without focusing commensurately 146 12/15/04 - COMMERCE - RES.040977, 041014 on the private sector, we've wasted a lot of time and we've missed the ball. The real game is in the private sector. But the public sector has a responsibility and a role to play in all of that. The tone that's set in the City comes out of these halls, comes out of the Mayor's Office. If those people in the private sector feel that it is what the government wants them to do, and that it is good for the economy overall, then I think we'll begin to see some movement by the private sector. The private sector has not seen that signal. There is no sense that it is the right thing to do, that it is good for business, that it is good for the strength of the overall economy to include minority businesses. The attitude now is, if I include minority businesses, it is an aggravation to me. Why do I have to do this. How can avoid it and evade it. It has not been put to them as a thing that this City government would really want to pursue. And until the City government does that, we will be taking our eye off the 147 12/15/04 - COMMERCE - RES.040977, 041014 bigger ball. If the City government wants to go to the private sector and make its case, the private sector is going to say, well, what have you done first? What you are doing to demonstrate that you have a commitment to what you're saying yourself? We're already doing what you're doing. We're already doing less than 1 percent, is what the private sector will say to the City.

Thank you, Mr. Crawley. Thank you, Mr. Chairman.

Thank you, Councilman. Mr. Crawley, can you update us on where your relationship with the Greater Philadelphia Chamber of Commerce is? I know at the last hearing we had related to this matter in the spring, the Chamber had sent testimony, but did not appear and was not here to actually answer questions.

We have continued to have meetings with the Greater Philadelphia 148 12/15/04 - COMMERCE - RES.040977, 041014 Chamber of Commerce, especially around the report that was produced by the African American Chamber, the Hispanic Chamber and the Asian American Chamber of Commerce in February as a part of the 21st Century Review Process. We, as you know, broke off a minority business development subcommittee of the overall Economic Development Committee. In that report we suggested strongly that the private sector and the public sector come together to form a public/private economic strategy council, not just for the City, but for the five counties in Southeast Pennsylvania. And we pointed out what the advantages could be. We went over and explained that to the people at the Greater Philadelphia Chamber of Commerce, and they said they wanted to work on that with us. Mr. Fullard, do we have any upcoming meetings on that?

No, we do not. We did meet with one of the representatives. His name was Mr. Frye. We have been speaking with Mr. Frye to work on some of those corporations 149 12/15/04 - COMMERCE - RES.040977, 041014 that they were going to identify to begin building that coalition, and we're still trying to get that done with them.

One of the things that came out of the report was that we've simply established a policy, City and region procurement first. The Greater Philadelphia Chamber said that they agree with that, but the action has not been taken. When Mr. Williams from MBEC comes up we will question him again about whether the City can and will adopt a City and region procurement policy. Any other questions from Members of the Committee? (No response.)

Thank you very much for your testimony. Councilwoman.

We'd like to call on Mr. Nick Shenoy. Thank you for coming. Would you state your name for the record, please.

Hello. Good afternoon. I am Nick Shenoy, representing the Asian 150 12/15/04 - COMMERCE - RES.040977, 041014 American Chamber of Commerce. I am the Executive Director. Unfortunately, Julie Wong, the chairman, could not be here. She had to leave.

Yes, she was here. We want the record to reflect that Ms. Julie Wong was here.

Yes, ma'am. Ladies and gentlemen of the Committee, thank you for inviting us to speak a couple of words on this issue. I think Bruce Crawley probably covered most of the issues affecting the minority businesses. We do want to make a couple of suggestions in this regard. The executive order, which was written by the Mayor last year, basically limits MBEC's power to that executive order. Presently MBEC is responsible for subcontracting work and monitoring and certifying the agencies. But there is a gap of the prime contracting, as Bruce mentioned. In order for the program to be really successful, we need to look at how do we 151 12/15/04 - COMMERCE - RES.040977, 041014 develop minority prime contractor. And the present program basically focuses on the subcontracting. We do not have a plan to take one step ahead and provide the opportunity for the subcontractors to be a prime contractor. There are very few minority prime contractors. If you look at the Federal Government Small Business Program, it has a good program, which it takes a minority contractor from subcontractor and makes him a prime contractor. It has been a very successful program. There are avenues available within the City where small contracts, task order contracts, can be set aside for the minorities to participate. This way we can have a minority prime contractors participate in the main program. Also, the Department of General Services of Pennsylvania has a minority business development agency program. So these are the kind of programs we have to look at, how do we take a minority contractor and make him a prime contractor. I think that's the 152 12/15/04 - COMMERCE - RES.040977, 041014 focal issue we would like to address. I'd like to be brief. If you have any questions, I'll be glad to answer.

Well, you don't want to abandon the subcontractor either because some small contractors will never be --

Of course not. I think MBEC is doing a good job. I think that's something we need. There should be an awareness in the community that there is right now not enough participation. We are looking at beside MBEC. MBEC needs more power. They have the authority or they have the access to identify the small contracts, but it could be converted to a task order type of contract the City can pre-qualify minority contractors to participate in the program competitively. It's something the federal government does and it has worked very well. I have also participated in the federal government program, which has really helped me to become 153 12/15/04 - COMMERCE - RES.040977, 041014 a prime contractor.

Thank you very much. Thank you very much for coming. Mr. Luis Cruz, Hispanic Chamber of Commerce.

Good afternoon, Councilwoman. My name is Luis Cruz. I'm the president of the Hispanic Chamber of Commerce, and also the owner of Cruz Construction, a Latino construction company here in the City of Philadelphia who employs and empowers our people from our community. I'm here because I believe in my colleague Bruce Crawley's statements about MBEC, but also don't feel that we need to get so drastic to the point of disbanding or dissolving MBEC. I think we definitely have to restructure it, though. I think we need to go back to the foundation of it and get the support of all of our Councilmembers to begin with. And make sure that they're on board about what MBEC's mission stands for, along with, obviously, the Administration. One of the reasons that they're 154 12/15/04 - COMMERCE - RES.040977, 041014 powerless is we have no executive order. That is the number one problem. If someone chooses to challenge it, we're done. The mission of MBEC is -- and being involved with the City structure -- to me it's the balance. Because if it's a private entity, sometimes it gets involved. We have a lot of agencies and a lot of organizations that do monitoring, do oversight, but unfortunately, they're representatives of owners, they're representatives of an agency, which that's who they have to look out for. They're not looking out for the businesses. That's what my understanding of MBEC always has been. Do they need to have things changed? Absolutely. I am very disappointed in the way things are happening with MBEC. I think that's one of the reasons I find my company personally and other companies like mine in financial problems because they don't have the teeth to be able to go and do things. They're part of Finance. You know what? That's a good a thing because they can hold people's money up until they do the right thing. Funds 155 12/15/04 - COMMERCE - RES.040977, 041014 get stopped. Immediately. But that doesn't happen. In fact, it has become a political tennis game, and I have a problem with that, a serious problem. I think Mr. Crawley from the African-American Chamber touched upon these things. When MBEC had originally been structured, it had been structured to have representation from all the different chambers, from different organizations, from all the different alphabetical agencies we have so we could come to a room, find out what's going on and make the proper changes and then move the process forward, so we wouldn't have the situation that we're in now. But after the challenge in the Supreme Court, everything just fell to the wayside. There has been nothing else, other than the Director of MBEC and whoever their employees are have any involvement or know what's going on.

So you haven't had any of the meetings of this Economic Opportunity Task Force that was supposed to have been part of the executive order? 156 12/15/04 - COMMERCE - RES.040977, 041014

When Mr. Ruliens (ph), the existing Director, came on board, we had a couple of meetings about moving the organization forward, but nothing to the extent that the original order was for, that all the organizations would be part of, the different chambers would be part of, we would have current dialog. The procurement process is one of the most critical processes that we need the involvement for and to be able to have the representation from the different chambers there so we could be able to funnel that down to our membership. Mr. Crawley's statement of us not having the opportunity to have general contractors that have participation in major contracts is because we've been worrying about just getting our people crumbs instead of a slice of the pie. That's what builds capacity. That's what will get us to the point where we can be able to have contractors that are general contractors, and evolve to the point where we don't need to have to be holding a baseball bat over a construction 157 12/15/04 - COMMERCE - RES.040977, 041014 manager's head to do the right thing. Because that's what happens. The construction managers, the general contractors in our City don't do the right thing. The little bit that they do is because of whatever pressure is put on them. So we do need to look at evolving our businesses, not only in construction, in all the other trades, in all the other business sectors for us to have majority participants in this multi-billion dollar City of ours. All these beautiful things are happening, the river front, the water front, Center City, and there are not a lot of people that look like us. We make up over 60 percent of this City. So there is a big problem. I think that it's very commendable of the Chair having these hearings because I think we need to start getting participation from the City and from the different organizations that represent minorities and people of color because it's very important. We're very proud to have Councilman Ramos here. He's our Councilman. 158 12/15/04 - COMMERCE - RES.040977, 041014 We need more Hispanics as part of MBEC. For many, many, many years there were no Hispanics that were a part of MBEC. Our people are a touchy-feely kind of people. When we go there and a misgiving statement is said to them, we get excluded because of that. So we need to educate our people as well. How do you do that? By having someone there who understands that generation, that ethnic group and starts including them. That's basically my statement to this. I think it's important that everyone also knows that there's a Hispanic Chamber of Commerce out there. We're doing really great. We have positive things that are happening. We need this executive order signed. We need to have all of Council participating and involved in this and to believe that this is very important for us. That's the only way that we're going to be able to demonstrate and show all the people that are coming out to Council and saying, we like this incentive. We like that incentive. Can you cut our taxes if we do this? Can you give us this extra 159 12/15/04 - COMMERCE - RES.040977, 041014 funding? Can you have RDA give us this and that? We do that every day, but yet we're forgetting the businesses that could participate because of our involvement there. Thank you.

Thank you very much.

Councilman Ramos.

I had stepped out for a minute. Did anyone ask the question of the money that's owed him? We all read in the newspapers, and I have been in direct contact with you. I know all of my colleague were appalled by what they were doing to you and other contractors. Some of us got on the phone and started inquiring, you know, why was this going on. Have you gotten your money.

Unfortunately not, Councilman. I guess they're going to wait until after the playoffs to then twist their arms. Because it makes a lot of sense.

I had gotten information that it was being worked out and 160 12/15/04 - COMMERCE - RES.040977, 041014 there was a commitment from the Eagles and maybe one or two of the prime contractors -- two of them -- that they were going to make good and pay their bills; is that correct?

That's what was said to us, but from your mouth to God's ears to Turner Construction's checkbook.

Are you confident you're going to get paid for the work that you did, that you had to take out of your own account to pay workers a more than fair wage? Are you confident you're going to get paid?

Like I said, from your mouth to God's ears, Councilman. The fact of the matter is that we paid practically all of our suppliers. We paid all our union benefits. We paid union wages. Everyone has been paid. All of our bills paid. Unfortunately, the bank isn't very happy with me because I used all that money to pay them. Because of that I've gotten myself in a financial crunch because of it. This is where I go back to saying there's issues that 161 12/15/04 - COMMERCE - RES.040977, 041014 need to get dealt with with MBEC. I went to MBEC's offices back in May and said, hey guys, I need help. It got lost in the shuffle. And until just a couple of months ago -- we're in December already -- I had to come out and go public and the Councilman had to go out, and our district Councilperson had to come out. Councilwoman Blackwell had to come out. This isn't new. I've been telling people back in May. Since then I've been accruing all this additional interests and penalties on my loans and debts. So this is why I was saying it's so important that we understand it is broken. But we don't just throw it away. We need to try to fix it.

Thank you. Councilman, there is a separate hearing on that that will be rescheduled. Although it encompasses this hearing, we probably do want to question MBEC about it. But there's a separate hearing to be scheduled in that matter.

Yes. Thank you, 162 12/15/04 - COMMERCE - RES.040977, 041014 Mr. Chairman, for reminding me of that. Just this last point. I was very, very disturbed and continue to be very disturbed with your situation and all the contractors because it sends a bad message to minority contractors. They see your name out there. Those of us that are hearing your testimony of the hardship you're going through right now at this moment, other minority contractors will look up and say, I don't want to take a chance and get involved with that and then get burned. I know for a fact that this has happened, not only to you, but other minority contractors that come into supposedly the big game, they get in and down the stretch they get screwed. That's a bad picture. I'm quite sure there were minority contractors out there after they read what had happened to you, they said, well, I was going to go over there, but now I'm not because I sure can't afford to lose my business. So this is something that I continue to pledge my support to you and to the other 163 12/15/04 - COMMERCE - RES.040977, 041014 contractors to make sure of that and do whatever it takes to make sure that the responsible parties pay their bills. It's just outrageous that the people that were being targeted were minorities. I have a bigger problem with that. Thank you, Mr. Chairman, for bearing with me.

Thank you, Councilman.

Thank you very much. The reason we asked the contractors to come forward first to present their testimony -- Mr. Williams and his staff are here -- was so they can hear the concerns that are raised by the contractors as they move forward to deal with many of these issues. That's why we're having you come first, rather than have Mr. Williams come first and make his statement. He is here to listen.

Thank you, Councilwoman. Just in finalizing out, that's the 164 12/15/04 - COMMERCE - RES.040977, 041014 reason I had mentioned earlier that it's so important for us to participate in that oversight of MBEC, because then you're getting this information monthly, quarterly, and not waiting until Council convenes hearings to deal with 10,000 issues. It gets brought to the table and dealt with right away. Thank you.

Thank you very much for your testimony and thank you for coming down. Mr. Eddie Chisom, Chisom Electrical Contractors. Are you here, Mr. Chisom? Come on over. Next is David Grace, Jerry Stein, Ernest Best, in that order. Good afternoon. Would you state your name for the record, please?

Good afternoon. My name is Eddie Chisom, and I'm the CEO of Chisom Electrical Contractors. Our electrical business was established in 1968. It's a business which I 165 12/15/04 - COMMERCE - RES.040977, 041014 established in 1968. I'm an electrical contractor and I've been located in North Philly all that while. Basically, I agree with all the testimony that I've heard and that I've experienced as a contractor, as an electrical contractor. Basically, I've been a subcontractor. My one area of problems has been getting paid and getting paid on time. In fact, I have several contracts that I have now, one has been two years and I'm still doing retaining without contracts. And whenever you call the general contractor, he just basically tells you he hasn't been paid yet.

This was City work you did?

Yes. Philadelphia Housing Authority, Redevelopment Authority work. Pretty much I do a lot of residential work, like new homes. Whenever you submit a bid, 10 percent of your business is withheld. Even though your work is complete and there has 166 12/15/04 - COMMERCE - RES.040977, 041014 been no complaint against you, you're still not getting paid. Also, I have five contracts now with the Philadelphia Housing Authority. The work is complete, and also again I get over $100,000 of retainage (sic). For the most part that's over the year. And I'm experiencing too much payments, 90-day payments. Right now I'm unable to take on another contract because of this. My hands are tied. I'm not able to go to a bank because they look at my receivables, so they say, we can do nothing for you or we don't know whether you're going to get this money or not. So it stops me from working. I'm a member of an electrical union, which I've been for the last five years or more. Since then I haven't been able to get any work to amount to anything, just small jobs. Before that, I'd get over $3 million of work before I joined the union. Again, I see the union as a problem. Basically, they just wanted my men. They took my whole shop in. Now I only have one worker 167 12/15/04 - COMMERCE - RES.040977, 041014 that's with me right now of the men I came in the union with. Because the union looked at the residential work as being a source of work that they were going to get involved with. Before that, the union never bothered with residential work. But now it's a big thing with the City. A lot of houses are being built. The union pretty much took that over. Since I've been in the union I haven't done that much work in that field, which I specialize in. And they give you a lot of promises. So far, with no money, I cannot work. If I was offered a contract today I wouldn't be able to take it because of that.

So what recommendation do you have?

Well, it seems to me if someone is putting these contracts with PHA or the Redevelopment Authority, the contractor must pay you on a Thursday basis. It has to be stated, whether they get paid or not. For the most part they tell you, well, we haven't been paid yet. If my work is 168 12/15/04 - COMMERCE - RES.040977, 041014 done and there are no complaints, to me it shouldn't be over 90 days that I receive that money unless they can show me a cause that my work has been defective or something. Two years ago I did the DMI project in West Philly. Two years I'm still waiting for some money. That job has been completed. They are having some problems with their basements, flooding and foundation work. That doesn't have anything to do with electrical work. But I'm also being penalized because they are having problems. I just talked with the general contractor a couple of days ago. Again, he said, we pay you when we get paid. This is the problem I'm having, in addition to getting work. I mean, I don't know what is enough for rules and regulations. I hear some good testimony here today. If this was implemented, I definitely would benefit because our company has the experience to do any work. I can be a prime contractor. My best experience has been in the 169 12/15/04 - COMMERCE - RES.040977, 041014 federal programs, in the ADA Program. In nine years, that was the best program -- I made money during those times. I had no problems. I completed all my contracts. I got paid. The problem that we hear here today, I've been experiencing for 36 years. Hopefully things will get better. I'm still waiting.

Thank you very much for coming down. We appreciate it.

Mr. Eddie Battle.

Good afternoon. I have copies of my testimony. I was told to say that.

Please state your name for the record and proceed with your testimony.

My name is Eddie Battle. I am president of Eddie R. Battle Associates, Incorporated. Good afternoon to you, Mr. Chairman, and you, Councilman Ramos. 040977, 041014 contracting agencies. For purposes of my testimony, the phrase "City agencies" refers to those agencies that offer contracting opportunities. Staffs of some City agencies and MBEC registered businesses routinely engage in the City contracting process. Both groups have firsthand experiences with what actually occurs and barriers faced when businesses seek City contracting opportunities. These barriers must be removed before improvements can be seen in the City contracting process. First point of contact staff. All City agencies must train and designate a first point of contact staff to initiate the contracting process for MBEC businesses. The staff's responsibilities would include: One, record the names of MBEC businesses that contact the agency. Two, provide businesses with pertinent information about the contracting needs of the agency and what procedures to follow. 040977, 041014 disposition of businesses seeking opportunities. Four, submit the information to MBEC for assessment. The approve procedures will generate a database. From the database, barriers can be identified that impede participation levels of MBEC businesses in City contracting. For example, all discretionary contracting needs of City agencies may not be communicated to MBEC businesses. And the way contracting opportunities are packaged or bundled may limit business participation levels. Once the barriers are identified, they must be removed. Removing these barriers will improve participation levels of MBEC businesses in City contracting. MBEC registered businesses. The experiences of MBEC registered businesses with City agencies must be told, recorded and assessed. MBEC must conduct regular meetings with its member businesses. Businesses would report their experiences with City agencies at these meetings. 040977, 041014 information about barriers. MBEC will use its resources to remove the barriers. MBEC can encourage businesses to meet by notifying them of the meetings, providing a facilitator and meeting room. By drawing from these experiences, MBEC can help businesses strengthen their capacity to meet contracting requirements of City agencies. Telephone hotline. MBEC should establish a telephone hotline to be used by MBEC businesses that encounter barriers when seeking contracting opportunities with the City. The hotline is a quick response tool that enables MBEC to use its resources to help businesses resolve problems. City Council. Barriers not removed by MBEC must be part of it regular six-month report to City Council. Council will then be able to enact ordinances that remove these barriers from the City contracting process. Conclusion. 040977, 041014 One, all City agencies must train and designate a first of point of contract staff to initiate the contracting process for MBEC businesses. Two, MBEC must conduct regular meetings with its members by providing a facilitator and meeting room. Businesses will identify barriers they experience with City agencies at these meetings. Three, MBEC must establish a telephone hotline to be used by MBEC businesses that encounter problems when knew seeking contracting opportunities with City agencies. Four, City Council must remove barriers identified in MBEC's six-month report. Barriers to the City's contracting process must be identified and removed. Only then will MBEC businesses be successful participants in the City contracting process. Thank you for the opportunity to speak to you today.

Thank you for your testimony, Mr. Battle. Thank you. 174 12/15/04 - COMMERCE - RES.040977, 041014 Is David Grace here? Jerry Stein? Ernest Best? James Willis? Barbara Wallace? Ed Jordan? Philip Harris? Please approach the witness table.

Good afternoon Chairman and Councilman Ramos. And also I want to first say I do have copies of testimony that I'd like to submit to the record. Thank you, Councilwoman Tasco, for requesting hearings to examine minority inclusion in City contracts. My name is Phillip Harris. I am President of Financial Integrity Resources Management, a certified disadvantaged business enterprise. I want to share with you a brief history of my experience seeking professional service contracts in the financial and benefits services area, which will include my experience working for my previous company, also a minority certified financial service firm. We became certified around 1995. 040977, 041014 insurance who listed our firm as their minority subcontractor. Prudential was able to cut the rates compared to the then incumbent CIGNA. We thought this was a win/win proposition for the City and the taxpayers, but the City rejected our proposal. And to our surprise and disappointment, the incumbent was re-awarded the contract without minority professional participation. During that similar time, we were successful to obtain contract at the Community College of Philadelphia, AFSCME District Council 47 hired us directly to help them shop for their benefits. And the School District awarded us a contract under the leadership of Pedro Ramos back in 1998, which was our first entity retirement plan contract. Essentially, we had been shut off from participation from the lucrative City-sponsored, taxpayer-funded benefit contracts until recently. 040977, 041014 care plan for active employees. And we were hired in September 2003 as a minority subcontractor with the Hey Group for City-administered benefit consulting services. I have to give praise, thanks and credit to Lynda Orfanelli, Personnel Director, for recognizing our hard work and expertise and, most importantly, opening the door. That is the good news. Next, I want to read an excerpt from my October 8, 2004 letter to Honorable Mayor Street. "Dear Mayor Street, thank you for the opportunity to speak with you after your inspirational speech delivered at the Minority Enterprise Week Luncheon on October 7 at the Wyndham Franklin Plaza hotel. I share your passion and interest to promote economic development through small businesses to help create jobs in Philadelphia and I remain very enthusiastic about your stated goals to quadruple the City's contracting opportunities with Philadelphia-based minority-owned owned businesses. 040977, 041014 "As discussed, my company has been actively seeking business opportunities issued by the Board of Pensions and Retirement and Finance Department for many years. Most recently, we submitted two proposals to the Board, one as a subcontractor for deferred compensation services and one as a prime for the opportunity fund consulting services. We came in second place for the deferred compensation plan behind the incumbent Great West who was rewarded the contract without certified professional contract participation. Our second proposal as prime for the opportunity fund consulting services was awarded to two different firms, one, a newly established Connecticut-based firm and the other PFM Advisors. "As you know, PFM Advisors, a majority-owned firm who acquired Spacnola and Kozak, the original opportunity fund contract awardee. 040977, 041014 the Philippines $4 billion social security fund. Since we were denied this contract opportunity, we have lost two of our local graduates and their jobs. " That's the end of the letter. As a Philadelphia native and current resident and business owner and taxpayer, I do not understand why this City hires so many consultants and brokers located outside the City over their own members of the Philadelphia business community. This is a missed opportunity to creat Philadelphia-based professional jobs and stimulation of the local economy.

Finally, I want to close my comments and talk about community capital, a fundamental core value of firms philosophy is the collective wealth of a community should be put to work for the benefit of that community. The ultimate goal should be to uphold and respect the dignity and diversity of all people. 040977, 041014 core of any democracy that the interaction between society and government define the quality of life of its community. The ability of civil society and government to create wealth and policy to generate local economic development and opportunity for wealth creation has a direct impact on that society's pursuit of sel-sufficiency and a higher quality of life for the citizens in our community. All aspects of civil society must be engaged in this process, especially government as well as private sector. Why is local Philadelphia-based minority business development important? I believe the time is now to demand positive change in the way our City government selects its providers of professional services. It is hard to believe that a major city with over 40 to 50 percent minority population has so little contract participation. 040977, 041014 alternative for our youth to look beyond the corner hangout. Our communities will be safer if our youth have a job to go to after school instead of resorting the violence for after school activities. My recommendation if real change is going to take place, the City needs to simply reject all vendor broker and consultant bids unless they have inclusion of real professional services inclusion beyond the paper or pencil and printing suppliers that are often offered up as a smoke screen for minority participation. Vendors interested in doing business with the City will change and become responsive if the City demands it. I remain optimistic about Mayor Street's passion enthusiasm and desire to make a real difference during his second term as Mayor. I hope other members of the City administration can embrace his passion and goals to build upon what Lynda Orfanelli was able to do. I approached appreciate Michael Williams and told him that he has his work cut out for him. 040977, 041014 government pulls together, we can realize positive change. Michael Williams has opened his office up to me and has committed his help to deliver better results. Thank you for the time and opportunity to share my thoughts, ideas, and experience with you today. I would like to thank all City Councilmembers that have invited me into your offices and have supported small Philadelphia-based minority business development.

Thank you, Mr. Harris. Are there questions or comments from Members of the Committee? (No response.)

Thank you again. Thomas Travick, Linda Chandler. We are waiting for Mr. Travick who is here. Counsel just checked to see if David Esposito is here.

I am here.

Larry Mitchell. Could all three of you just please 182 12/15/04 - COMMERCE - RES.040977, 041014 approach the witness table? Could you state your name for the record and please proceed with your testimony?

Larry Mitchell, Interstate Demolition. I'd just like to thank MBEC for helping me in a very sensitive matter with the African-American Chamber of Commerce in which I tried to sit down and contact a bunch of people far as the Councilman of that district about a problem I was having with the Chamber. After filing a lawsuit against the Chamber, MBEC stepped in and sat down with me with Hill International and it's become to the point where, as Mr. Crawley stated his-self a few minutes ago, I'll quote him as saying that the white contractors don't want to pay the black contractors. Well, now they're in their own background because everything he's saying, they want to pay somebody slow so they can go out of business or whatever. Well, my sum is up to almost $21,000 ever since August. And every other contractor that was in that program was paid. I don't have my money. So 183 12/15/04 - COMMERCE - RES.040977, 041014 it's like what is he stating that MBEC has stepped in now and through MBEC and Hill International there's been some penalties imposed against the Chamber, but without the help of the Minority Business Council, I would still be one who couldn't find a bonding company to go against a bond. Nobody who I talked to knew anything about how to get my money from the Chamber. So it was like a big mystery that I could have went out of business. If I didn't have other money coming from other jobs, I would have been out of business waiting on them to pay me. But every time you turn around, it's somebody from the Chamber explaining how white people is not paying the minorities. Well, they're a minority and I'm in their own backyard and they not paying me. So through the help of MBEC, like I said, and Hill International, I'm finally getting to the point where I'm starting to see a little justice with the way things are getting out of hand. So everything they've done for me has been great.

Mr. Mitchel, did 184 12/15/04 - COMMERCE - RES.040977, 041014 you state in your testimony that you were the only one not paid?

The only one not paid from a job that it must have been different 6 contractors on. And I was on Ridge Avenue. 7 When I went Darrell Clarke office to talk 8 about it, they never returned a call or 9 anything else. 10

Is there any 11 particular reason you think you were the only 12 one not paid? 13

I couldn't say. I 14 had a dispute over -- I had to obtain legal 15 counsel which cost me even more money to come to numerous meetings to sit down with them and everything became a speech for me about the brothers sticking together. Well, I don't have nothing to do with the brother sticking together; I'm trying to run a company. So as far as the brothers sticking together, I hope they do stick together, but pay me first. I don't have nothing to do with that. So it was just -- I graduate from that place the valedictorian. But I would never want 185 12/15/04 - COMMERCE - RES.040977, 041014 anything else to do with --

But my question is, is there any reason you know that you were the only one not paid?

I couldn't tell you. It might be financially. I don't know what the reason I'm not paid. I had a dispute over some fencing. MBEC invited Hill International to come sit down and talk, at which time when went over the figures, it was virtually impossible the figures that they are were trying charge me for doing something they say I was supposed to do. But I was only a sub, I wasn't a prime contractor.

Thank you. Any questions from Members of the Committee? (No response.)

Thank you for your testimony. Mr. Esposito. Good afternoon. Please state your name for the record and proceed with your testimony.

040977, 041014 and I'm with a company called New Age Distributors which is a female and also disabled-owned company. We're housed in Collingswood, New Jersey. We are suppliers of lights and building maintenance, things such his janitorial products. Back in 1989, a group of disabled people worked with Lucien Blackwell and Joan Specter who at that time were in City Council, and they spearheaded an effort of inclusion of people who are disabled in the City's program. At that that, the City program did not include us, but now it does. And with the help also with then Mayor Wilson Goode, which we were very appreciative of. We thought that this would be a good opportunity for the City to become a role model for the rest of the country since it is one of three municipalities in the country that acknowledges the social plight of people who are disabled. And for that reason, we attempted to work with MBEC. I became more involved with MBEC personally back in 1996. 040977, 041014 MBEC in its efforts to find opportunities for our company. Prior to MBEC, our company has sold products to casino industry and to apartment complexes in the New Jersey area. And if one just takes a look at our gross receipts which certainly are available at MBEC and our certification application, I think one would be appalled to see the difference between an organization and a municipality that claims to be proactive toward helping people with disabilities and the amount of gross receipts we have in areas where there is no more formal statutory affirmative action. Already that would suggest to me some major problems with the program and particularly with MBEC. Rather than wasting a lot time with redundancies, I think Mr. Crawley pretty much gave a good overview and so did Mr. Macklin the public policy landscape. But I'd like to suggest is one incident which characterizes the intervention of government and in an ironic twist shows how pathetic MBEC is in meeting its goals. 040977, 041014 Last summer, a bid went out for the City Hall Security Project. J. Electric, to some of the other companies, and I've been selling lights to US Facilities. J. Electric, but it was challenged by Mulhern Electric on a technicality that MBEC did not or hid us from sight even though we had sold lights, which they should have had a record of because we sold to companies that they deal with, but they had no record. And ironically they asked me to give empirical evidence to show that I had sold products. So I had to show them purchasing orders. I had to show them invoices, which they lost three times. I had to show them a number of other kinds of proof like what kind of lights we sell, et cetera, which seemed to be a bit extravagant, but I did comply. 040977, 041014 the behavior of MBEC, but nevertheless sided, and fortunately sided with Mulhern Electric because I had not been technically on the web site for selling lights even though I had sold lights. Well, what was MBEC's solution to this problem when their bid was put out again? Well, it's puzzling to me. I'd say it's a bit bizarre, but I'm sure there's some statutory rationale for it which, if there is, raises some question about the validity of the statute. Well, MBEC's solution when the contract was re-bid was to eliminate disability goals, thereby eliminating me from an opportunity. Interesting enough, though, I went to both companies, and they acknowledged that MBEC did make a rather pathetic dismal appearance at the hearings and that I should feel sorry for MBEC but they would try to give me some opportunity, regardless of which of them won, maybe in some other areas. 040977, 041014 their recreation centers that they're going to be doing. And I thought that that was a publically spirited good thing to do. And again, ironically it's because of MBEC's rather dismal example of advocacy.

When I tried to find out what the rationale was for this very interesting piece of public policy, I spoke to an attorney, Wendy Staton, who told me I should ask Ms. Hitchcock. That strikes me that a situation like that -- well, then she referred me to the Law Department for some resolution of this matter. But the thing that strikes me as very odd about all of this is that I had to ask Ms. Hitchcock, which leads me to believe that at this juncture, decisions at MBEC are made more on the fickle decision-making of an individual rather than something that is policy driven. At this point, I have and I work with a number of disabled folks in the community who have successfully developed contracts with other state agencies in New Jersey and elsewhere. 040977, 041014 number of areas. For example, in the NTI Project, we were hoping to get someone who happened to be both a woman and disabled, and IT specialist, to set up the web site for Hill International in the NTI Project. But that was outsourced to some slick company in Washington. So another opportunity to lose employment. I would have to say that right now it a waste of our time and effort to deal with MBEC, to deal with Mr. Williams. I don't see any reason to believe he's hired a special projects director. By the way, I even proactively offered to help him develop an outreach to the disabled community. That was in May. I have not heard from him since, although I understand he has hired a special projects director. I should also tell you that when I complained about being taken off the list, I called Mr. Williams and I asked him to discuss this matter, and he told me that I could leave the office now but call him at 4:30. And I called him and he wasn't there. 040977, 041014 next day he didn't answer my calls. When I dared to mention that I might look for remedy elsewhere, he and his staff called to tell me that he would not respond to threats and work with me as long as I had the attitude I did. I guess I wasn't supposed to find remedy elsewhere other than MBEC. Tried what I could do from the Mayor's office, and I think it's very revealing. The Mayor's office even refused to listen to my concerns and said, "Well, Mr. Williams knows what he's doing," and they just wanted to continue this stonewalling process. I really have nothing to lose by showing my disdain for MBEC, because to me MBEC is comprised of chronic entrenched bureaucrats. 040977, 041014 quality service out of MBEC. So I guess I'm saying if MBEC were to disappear tomorrow, we'd never miss it. And my hope is if you can find a solution to MBEC, that it comes soon. But I don't share the optimism of anybody who thinks that MBEC is a solution. I really believe that what Mr. Crawley had to say about an overall public policy change through procurement and setting goals with the appropriate CIVIL rights organizations that deal with discrimination being in place, that would serve the purpose. But right now, I kind frankly am proudly renouncing our MBEC citizenship which is called euphemistically certification because I don't believe we can do any worse by going out into the community on our own. So I think and hope that something is done. If MBEC is going to continue, my recommendation is that Mr. Williams and his staff are really under a constant scrutiny of the Council and not just leave it up to the devices of the Mayor to stonewall the community. 040977, 041014 Thank you very much.

Thank you for your testimony, Mr. Esposito. Any questions from the Committee? (No response.)

Mr. Travick. Good afternoon, sir. Thank you for your patience. Please state your name for the record and proceed with your testimony.

My name is Thomas Travick. I'm a former president of TRR Construction. But I've been retired for some years now. My main reason for being here to testify is that in one of our local newspapers, the article reads, "Councilmembers deem MBEC useless. " Going down a little further, this is an excerpt from this newspaper. "Councilman Michael Nutter says that MBEC should be scrapped altogether. " That's the excerpt from this local newspaper. 040977, 041014 I have been a member of 542 Operating Engineers for 35 years and a former member of MBEC for five years. I for one can truly appreciate Ms. Tasco stepping up to the plate on behalf of all MBE's here in the City of Philadelphia. I read your article in the Philadelphia Tribune on this issue. I thank you and support you 100 percent. MBEC is not dead but has been in the emergency room too long. It will be up to you and all supporters to this organization. Considering my experience, I would like to recommend seven steps to save the MBE organization. With Council's permission, I'd like to run through these seven steps briefly. Number 1, to obtain a license, all applications should have at least a high school education and 200 hours of training. That's step Number 1. Before coming over to testify a few days ago, I stopped into MBEC and picked up the application. And in this sixapplication, MBEC put education and training on the sixth page, the last page. 040977, 041014 education and training on the first page. Let's go down to Number 2. Number 2, MBEC director should know the qualifications of each person applying for MBEC. Number 3, MBEC should change the P bidding process for City contracts. My main reason for saying that is because during the five years while I was a MBEC contractor, I presented my bids -- I had my name registered with Conrail, SEPTA, every company that you could think of. But in presenting my bid, my bid was open to the general contractor. The general contractor would pass this information on to other contractors, therefore, the other contractors through my open bid -- that's the only way they could do it -- would bid a dollar or two under my bid, therefore, I didn't receive the bid. Number 4, MBEC members should receive some assistance from suppliers. My reason for saying that is because while I was an MBEC operator, you have -- let me back up a minute so I can explain myself. 040977, 041014 highway and street construction. I don't want to go into anything else other than highway and street construction because that's where I spent my 35 years as an operating engineer. There are two major suppliers in the Philadelphia area, two major suppliers for material to build highways and streets. I went to one of these suppliers while I was in business because I needed loads of sub-base 11 to complete a job on Woodland Avenue. The 12 supplier said to me he would give me one load; 13 once I paid for that one load, he would give 14 me two loads and so on. So that's the problem 15 I run into, the suppliers. 16 Let's go down to Number 5. Number 17 5, MBEC director must face Uncle Tom. Uncle 18 Tom is a name that maybe you don't use much 19 today. But my experience -- I'm 80 years old 20 now. And my experience, first, I met Uncle Tom as a young boy down in Georgia. " That's the first time I heard of Uncle Tom. 040977, 041014 Since I became an operator, I faced Uncle Tom head-on. And anybody that take bread off another man's table, I call him an Uncle Tom. Any man that you can't depend on to do anything, I call him an Uncle Tom. Now, let me say for the record that after I became MBE operator in my church, I gained a contract on Woodland Avenue for $62,000 on 49th and Woodland Avenue to 52nd and Woodland Avenue, $62,000 for track renewal job. I have a couple pictures here I was hoping that I would show you. So I was very proud of that operation. But in my church -- that's track renewal. In my church, I was telling a gentleman in my church how proud I was of this.

So he out with a check for $1500. This is the truth, so help me God. And I'm here to tell the truth and the whole truth. He presented me with a check, he showed me a check for $1500. 040977, 041014 Park Avenue. He was a roofer, this gentleman was a roofer, knows nothing about highways, knows nothing about street construction. So this contractor that he rented his truck to, he needed an MBE in order to do the work that he was doing. Understand me clearly now. So he gives him $1500 to use his name as the MBE. I call this man an Uncle Tom. So I said to myself, if this is so easy, I want to see for myself is this true. No questions asked. So I put on my Uncle Tom suit. There are three fire stations here in Philadelphia. One is at 19th and Oxford Street. The other one is at 26th and York. Another on Rising Sun Avenue. " So I said, "Yes, glad to do the job. " "Yes, but I don't want you to do any work. " So I said, okay, let's see how this work. He gave me $800. 040977, 041014 me $800 to do this, I'd say in the neighborhood of $50,000 job. He gave me $800. So I said, no questions asked, all I had to do was sign a piece of paper. So I'm saying to you all here now, regardless to what you do here and I know from what I experienced you're doing a dynamite job. But what you do here, when it reach out there and highway and street construction, it's lost. It's lost. I'm telling you it's loss. I experienced it's a lost. While I was in business, I received a telephone call. " I went to this office. The gentleman says, "You're registered with Conrail," because he saw my man. " Wow, that sounds. 040977, 041014 put on your suit. " Wow. So this is what I'm saying to Council here. As Council said, make this thing over with a fresh start, because you're facing Uncle Tom out there. And I can tell you as I sit here, in my 35 years, I guess I must have come hand in glove with about 10 contractors. Again, in highway and street 11 construction. And these 12 contractors, only 12 2 that gave the minorities a fair truck. And those two, one was Union Paving Company. I'm sure you heard of Union Paving Company. The other one was Colunaro (ph). That's Pat and Dave Colunaro who did the Expressway, Market street. I would have been the MBE on that job, but I got sick. These are the only two out of the 12 contractors that I had hand in glove contract with that gave minorities a fair shake. So I'm saying to you, Council, without doubt, you have to turn this whole thing around, maybe under new leadership, and head in another direction. 040977, 041014 presidential debate, Senator Kerry was trying to tell us about the loopholes. It's too many loopholes. It's too many loopholes in highway and street construction for it to be successful as it is. Now what, I propose is only a Band-Aid. This is a serious, serious wound if you expect the minorities to have the right to participation here. You only putting a Band-Aid on. Finally, let me say to you, this button on this lapel, it says NAACP. I'm very proud to wear this NAACP button. Going back a few years ago, over a hundred and something years, NAACP found their-selves in a sad, bad condition. , and it was a gentleman down there called Fumo doing well. He didn't need NAACP, but NAACP needed him. He agreed to give up his job in Washington to head up the NAACP. And for this year, not six months ago, NAACP had their national convention here in Philadelphia, 8,000 strong and they're back at the table. 040977, 041014 it, MBEC can do it, but you must turn this thing around under a new direction, and I guarantee you you'll see a change.

Thank you, Mr. Travick.

Thank you for listening.

Thank you for your testimony. This Committee will stand in recess for 10 minutes for a break for the stenographer and anyone else who needs it. We will resume about 10 minutes. (Brief recess.)

We will now resume the Committee on Commerce and Economic Development. Is Deborah Cobb here? Please approach the witness table. Good afternoon, Ms. Cobb. Thanks for your patience. Please proceed with your testimony.