Good afternoon, everyone, especially to City Council. I do not how to run a municipal corporation, and you do. We need you. 040977, 041014 patience and interest with us. My name is Deborah Cobb. I need to thank God. Professionals and intellectuals say leave God out of it, but the sun is still shining, we still have air to breathe, even though the Delaware River is polluted with oil and wildlife is dying and we have an unwanted war, we still need to be grateful and do the best we can with what we have. I have been a volunteer and special assignment assistant with the Pennsylvania Prison Society, a volunteer for the Free Library of Philadelphia, the Dixon House, Mayor Street's 1999 and 2003 Mayoral campaigns, and I have acquired a wealth of experience volunteering. My interest and concerns are law, public policy, administration and environmental protection and conservation. I am a political science major at Temple University. I have acquired meticulous status with the assistance of Director Michael P. Williams of the Minority Business Enterprise Council. 040977, 041014 Williams for his commitment, compassion, and vital assistance in my pursuit of higher education and environmental business affairs. In the months I have grown to know Director Williams, he has enhanced my life tremendously with his professionalism and kindness. He works hours a day and 8 days a week. He is 9 a great mentor and inspiration to me and I am 10 sure to many others. 11 I would also like to thank Mayor 12 John F. Street for his commitment to public 13 service, his love for the City of 14 Philadelphia, and his wisdom to have appointed 15 such a gifted and compassionate citizen as 16 Director Michael P. Williams. Philadelphia is 17 truly blessed to have him here as a public 18 servant helping to direct our municipal 19 corporation. The director's life experiences 20 with humble beginnings and of victorious 21 future truly shows the power of God and what 22 he can do in someone's life. 23 Director Williams' initial 24 appointment to the Minority Business 25 Enterprise Council started out with confusion. 040977, 041014 However, Director Williams strong work ethics and courage laid the foundation. Director Williams is a multitask and talented personality and I knew the endeavors he took charge of would work out fine. I support Director Williams and all his endeavors because he cares about people. We have the same goal and it is the common good. Thank you. Before I go, I'd like to say especially to Councilman W. , I've had to come to your office on two very important occasions. One, I was able to get my diploma in like four days when I had been trying to getting it for almost two years. And recently, I had sent a 9-page, 15-picture proposal to the Minority Business Action Team. And six weeks went by. I called, no one had logged it in. I had to come to your community director, Mr. Steven Bain and acquire within maybe a week. The pictures were of plastic going down in the sewer. I would like to start a recycle business with plastic. 040977, 041014 here with the Director Dougherty -- he may be a fine man, however, he had files in front of him and it kind of reinforced if you had to restructure anything, don't do MBEC. Find out what's going on at MBAT because I'm working the poor and a student, the disenfranchised and disadvantaged. The pictures that I had were pictures of plastic going in the sewer. I took these pictures before in my neighborhood blight. About five months later when people just had flooding, FIMA is funding everyone because it's nothing but mostly plastic and trash in our sewers backed up in the pipes and everybody's pipes bust. So we can have little business, big business, but if we don't take care of our environment, we're not going to have no business. And I just love ya'll. I'm very grateful to be here. I did not know what to expect or what this hearing was about.
But I just acquired meticulous status with the help of the Director and also some hard work myself. 040977, 041014 be here. And I wouldn't want to live with ya'll, I really wouldn't. And thank you.
Thank you for your testimony. Ms. King, please state your name for the record and proceed with your testimony.
MY name is Tina King. I'm with Lloyd's Moving Company, Inc. We are one of the oldest black moving companies in Philadelphia. We were featured in Philadelphia Business and Entrepreneurs Magazine as being three generations. The percentage of that is like 1 percent in the United States. I'm here today because I am certified with MBEC. I think you have the letters in front of you. I have additional. This is December 4, 2002. It was addressed to Mr. James Roundtree, Minority Business Enterprise Council. Subcontractor of City of Philadelphia election machine transport. "Dear Mr. Roundtree, since meeting with you and Charles Thorp and the prime contractor Father & Son and Storage on 209 12/15/04 - COMMERCE - RES.040977, 041014 September 13, 2002, our concern surrounding this contract has not been resolved. We would also like to take this opportunity to seek clarity from you on the role of MBEC and resolving such issues. More importantly, as we have reviewed Executive Order 193 surrounding MBEC bids and contractual requirement, it is our understanding that MBEC as a rule in overseeing situations of MBEC involvement in bidding, planning, staffing and daily management, participation range A-5 and MBEC deriving substantial benefits from an arrangements same as above. "We initially and continuously continue to question the efficacy of a 30 percent administrative fee which was not initially discussed or presented to us by the prime in our planning meeting. Major decisions involved hiring consultants which impact the overall administrative cost from the project. We were not discussed with us prior to inquiring these cost. "In August we were notified from the prime that $4,000 was being withheld because 210 12/15/04 - COMMERCE - RES.040977, 041014 payroll costa were not properly submitted. When we contacted the prime, we learned that we never received proper form to submit payroll certification. Yet we were penalize with the payroll withholding. We have not been paid for this outstanding balance of $3,342.41 due on the contract for the election machines transport. And the remaining balance, see copy memo." I just sent that to you. "According to these terms of this contract the prime is in now in default for non-payment of our last invoice. Since these issues remain unsolved following our meeting, we choose not to continue with this contract into the general election. The 30 percent administrative fee along with the prime unwillingness to raise the cost of each per machine move essentially cost us out of the primary election portion of this contract. We have since learned that the subcontractor replacing us was offered a lower administrative fee and a higher rate per machine for this move. It is our 211 12/15/04 - COMMERCE - RES.040977, 041014 understanding that the replacement of subcontractor is not MBEC certified stipulated as required in the RFP for contracts, according to the Executive Order 193. We understand that the prime was responsible to maintain an MBEC firm throughout this contract and that changes must be reviewed and approve by MBEC C-2 responsibility. "It seems we mistakenly believed that MBEC would serve as an advocate for small business in matters where unfair business practices are suspected. If that is not the case, we are now questioning the advantage, if any, in seeking maintaining MBEC certification. We are also receiving the impression that you do not feel MBEC has a role negotiating with these issue or enforcing the terms of the order created by the agency. "Please advise as to MBEC's role, if any, in attempt to resolve this issue." And on the other form we went to Mr. Gamble.
We have the letter. 212 12/15/04 - COMMERCE - RES.040977, 041014
Well, just for the record, you have the letters. One of my concerns or recommendations for MBEC -- I have worked with MBEC, I think, since '95 when we had bid for the PHA, which that's whole other order of not getting paid. But anyhow, a suggestion would be if you have a subcontractor, I feel that the subcontractor should have a contract with the prime stating that you'll get paid in 30 days, something should be in writing. So we would have something legal to deal with the prime contractor then plus MBEC should be or be able to monitor this. So that's why I'm here today. I know it's '02, but we still haven't gotten paid our money.
Maybe you need to talk to them now and see if you can get it resolved. Mr. Roundtree is not there. 213 12/15/04 - COMMERCE - RES.040977, 041014 But that comes through the Procurement Department. Have you talked to the Procurement Department?
Well, I had just -- if you have that letter, that was addressed to William Gamble.
And that was in '02. And I haven't heard anything from that since. I got a little excited when I saw -- anytime I see anything about somebody moving, antennas go up. I would love to be a part -- I understand Pennsylvania Barnes is moving. I want to know how, as a moving company, is MBEC going to be involved in that or subcontractors, prime contractors is going to be involved. And the same way with Comcast towers, antennas go up. My father built this business in 1929. Of course, antennas will go up. So this is to the Council of how small businesses can acquire bids for these big projects that City Council have approved for these different companies. Thank you for hearing me. Thank you 214 12/15/04 - COMMERCE - RES.040977, 041014 very much.
Thank you for your testimony. Any questions from the Committee? (No response.)
Good afternoon, Councilmembers. Thank you for the opportunity. I did not think that I would be able to get here today, but I'm going to take a few moments. I understand that each of you have received my five or six points. During my discussion on points, I'd like to see if there are any questions you may have pertaining to these points. I'd like to just give a little background.
You might want to give a copy of these points to MBEC.
I have. 040977, 041014 I am the founder and CEO of Robbins Industrial Building Supplies, Incorporated. In 1985, I formed this company with my then 76-year-old mother because I had the understanding that African-American men cannot bid well if they do not buy well. I come from a very diverse background and a little unusual for a woman that's an entrepreneur at the age of 43, now 63, with a 95-year-old mother. As I started with Reverend Leon Sullivan in the little jailhouse where we were training individuals for sheet metal, brick masonry, carpentry, all of the areas that historically, even today, are absent of people of color. I have also been the systemic director for the Governor's Office of Human Relations where I look at class action lawsuits. I interviewed and investigated major corporations for systems of discrimination. 040977, 041014 businesses that would stay in the community and be models for our citizens and young people coming up. I'm here to say after 5 years, 20 years of meeting every requirement 6 the City called for -- in the '80s you said 7 commercially acceptable function, you must 8 have a warehouse; we bought a warehouse. You 9 said you have this, we did that. The program 10 was challenged in '89 causing us to lose over 11 $30,000 worth of materials that only the City 12 purchases because now it was open back to the 13 open market because AGC challenged the 14 set-aside program. 15 Here we are in 2005. There are very 16 few creditable legitimate suppliers. If you 17 look at the statistics of the major 18 corporations, they have not increased their 19 representation of African-Americans in their 20 workforce. We continue to give projects to developers, construction managers, general contractors who do not employ us in executive, professional, and technical positions. We are not looking at mentor protege programs that will build the capacity. 040977, 041014 MBEC, unfortunately because of their weak criteria, have allowed bogus minorities and women to be certified and do business in this City. Many of them aren't even based in the City. Robbins Industrial, after years, 8 may have to close its doors. But we have 9 maintained our integrity, as we believed that 10 companies were looking to partner, team with, 11 credible firms. MBEC is not charged to look 12 at joint ventures, to look at the bottom line 13 of joint ventures, to look at teaming 14 agreements. There are Council sections of the 15 City where there are certified businesses that 16 had full-time jobs for the last 15 years, 17 full-time state jobs for the last 15 years, 18 and they're certified as minority businesses. 19 It didn't happen overnight. It doesn't change 20 overnight. But many of us know what we can do. One of my recommendations is that there be a strong advisory committee to work with MBEC to give them what is happening in the field day-to-day. 040977, 041014 being passed. There is land being given to developers of which there is no requirement for local minority business. How dare you. How dare you. I pay more taxes. I pay more insurance. I pay a price to stay in the ghetto. And I'm not leaving. I am not leaving, but I charge you and I challenge you to turn this around. We've been talking for decades. Talk is cheap. Proof is in pudding. There's going to be over 100 million dollars worth of business in West Philadelphia alone. What are we doing to build the capacity for there to be contractors not just for these jobs but for the future, for your future, our future, and your daughter's future. I stand ready. I have the knowledge. I've been in the trenches. My daddy wasn't a masonry contractor. My daddy wasn't a paving contractor. Isn't it very interesting that you will have a contractor who owns a supply company, manufactures asphalt. Where are there opportunities? You allow for pre-qualifications on just bondability and finance capability. That's it. 040977, 041014 that, you get it.
Why don't you begin to ask them is there diversity within your own workforce. Reward people who have employees on their workforce. I will stop on that note. I will ask to see if you have any questions. There are experts that have been in the trenches that know all the tricks of the GCs and CMs. I can tell you many. I can tell you many. I have not been paid for the Eagles stadium. I have no not been paid for a state prison. Those two jobs alone can close me because my margin is so low because they can find other members that will do it for one and a half percent. You go to your bank and ask them for a loan with a 92 percent cost of goods. And what will you hear? " We stand ready, Ms. King and there are others of us. There are many who are afraid to sit in front of you. I was told, don't do it. I and a woman Retta Johnson (ph), in 1989 we testified. We were the only two black women in the City to testify. She's out of business, and I'm almost behind her. 040977, 041014 am moving towards 64. I watched when the only thing African-Americans did in this City was protest Tastykake, and that's when OIC came about because blacks stopped buying Tastykake. I say to you politicals, stop passing the buck. Give MBEC some teeth. Look at the law and the Executive Order and make a difference in '05. Thank you very much. I'm open for questions. )
Thank you, Ms. Robinson for your testimony. I will read you part of opinion from the Administration in terms of passing the buck. It says that the bill that we passed last year, 030125, known as the MBEC ordinance, "raises significant issue in the Home Rule Charter, namely, whether City Council has the power to direct the activities of MBEC. The other city agencies has received direction under the ordinance. Consistent with the longstanding office views of this office, in my view, City Council does not such powers. Decisions when, 221 12/15/04 - COMMERCE - RES.040977, 041014 with whom, and how to enter contracts are generally part of the administrative and executive power the City vested in the Mayor." So, in fact, the Administration has said regardless of what it has or has not done, City Council cannot even legislate on this issue. We have passed a law that will put a number of things in place I think that would change things. We look at the capacity that's out there, we look at the contracts that have been done in the past, we look at the opportunities that are available on an annual basis and set participation goals. It has not been enforced. We've been told that the law is unlawful and will not be enforced because we don't have the power to do it.
I thank you for that. I'd like to get a copy of your statement if I might.
I believe that we may have a vehicle to assist you. 222 12/15/04 - COMMERCE - RES.040977, 041014
We would hope that you -- you know I've known you for many, many years. I hope you will stay. We're going to have the Administration come forth now. Many of the issues raised, we want them to address. One of the reasons we're having this hearing today is to give Mr. Williams and his staff an opportunity to see what will be different, and also to discuss that opinion that you have there because right now they seem to be operating illegally or not IN existence at all. Thank you. Is there anyone else other than Administration to testify on this Bill? (No response.)
Mr. Williams, will you come forth, please? Good afternoon. We certainly appreciate the fact that you've been here all day to hear the testimony from the people who 223 12/15/04 - COMMERCE - RES.040977, 041014 you serve who live and work in this City and who we have heard from before last year when we had hearings on the sixth floor -- or was it the year before last? Year before last. The room was full. The issues were the same; haven't changed. We submitted and passed a new piece of legislation, and we're told now that it is not legally binding. We have your testimony. We would appreciate it if you would summarize. And if you want to expound on any of the comments made by the public here today, please feel free to do so.
Thank you very much, Councilwoman. Good afternoon, Councilpersons, Members of the Administration, and all City workers present and distinguished members of the public. I thank you all for attending this hearing. 040977, 041014 and recognize Councilwoman Tasco for calling for this hearing for her tremendous leadership and work and for the words and wisdom and advice she's given me since I've been with MBEC. I'd also like to thank all City Councilmembers who have been kind enough and interested in MBEC enough to have worked with me, sat down with me and given me advice and who have been generous with their time, advice, contacts and encouragement. I particularly would like to thank Councilwoman Blackwell for her guidance as we sit together on the University of Pennsylvania Economic Inclusion Board, Councilwoman Reynolds Brown for inviting MBEC to participate in PHA Procurement seminar and for her unwavering support for MBEC and for minority businesses, and Councilwoman Reed Miller who worked with me the most, particularly on issues of workforce composition. A special thanks to Councilwoman Verna's office, particularly Mr. 040977, 041014 economic opportunity plan issues. This is our time. This is the mantra I have bought to MBEC, the mantra I have spread throughout my department and the mantra I have spread throughout our certified vendors and to almost every person to whom I speak. We need no more task forces, no more surveys, no more excuses. What we need is for people to do the right thing, period. City department heads need to hear the Mayor loudly and clearly when he demands that they adhere to the City's minority, women, and disabled business enterprise participation ranges and goals. Private sector businesses need to hear the Mayor loudly and clearly when he asks them to utilize MBEC certified vendors and minority, women, disabled-owned businesses. And all Philadelphians need to hear the Mayor loudly and clearly when he tells us that when minority, women, and disabled-owned businesses grow and prosper, it is a good thing for all Philadelphians. Yes, there is much to be done. However, to my mind, this is the optimum time to address this issue. 040977, 041014 Before I came to MBEC, the organization, despite Jim Roundtree's staff efforts, was stuck in a quagmire of disorganization. Mayor Street brought me in to put MBEC's ship back in order and to move beyond its original mission of certification and monitoring. My goal was move MBEC from a certification-based department to a constituent services-based department. My view is that while certification is extremely important and we should be extremely vigilant processing certification applicants, that the certification process was too burdensome for applicants as well as MBEC staff, particularly as MBEC has been historically understaffed for years. Therefore, we come to you today ready to unveil a streamline certification process, and it will be unveiled as soon as the Mayor signs an Executive Order which will allow us to legally implement this new streamline process. 040977, 041014 special projects unit. Both these deputy directors of each unit are here today to tell you more about what they've done and what they will do. I'm absolutely thrilled with their work and MBEC's work and so are many of our constituent vendors. Let me make this very clear, and hopefully once and for all. MBEC does not make contracting decisions. City department heads make contracting decisions. My completely reorganized staff is here today to let you know instead what MBEC does and what MBEC is going to do in the future. I am here with my staff for many purposes. MBEC is not a faceless organization. It is a department with folks who have served the City admirably for years and who have just started and who are off to a terrific start indeed. We first and foremost and always are a team.
This team is dedicated to its mission of serving to the very, very best of our abilities to serve our certified constituent vendors. All and all, it's been a great eight months. 040977, 041014 for eight months. For someone coming into this MBEC quagmire when I did, I sit here today and tell everyone here that I am proud of what I've done so far and what this department will do. In that time, through my concerns and Councilwoman Reed Miller's concerns, I have become involved in a cooperative and collaborative effort to remedy workforce composition issues. I firmly believe that no 12 City contracting dollar directly or indirectly should be spent or projects or contracts that do not contain workforces that reflect Philadelphia's diverse population. Now, I'm sure there are those who will jump up quickly and say that MBEC is no 18 authority to become involved in workforce composition issues, and they have a point. What's right, however, I feel is my response to Councilwoman Reed Miller's call about a construction project in her district that clearly had no diversity in its workforce at all. 040977, 041014 aren't MBEC's mission. I instead responded by immediately meeting with her, and I've been working with her since regarding this issue. Again, all of this will not be easy. MBEC can do, is doing, and will do its part. However, we cannot do this alone. We need the Administration. We need City Council. We need majority-owned contracting entities and private sector businesses to do their part as well. Only then will minority, women, and disabled-owned businesses be able to prosper and grow. Make to no mistake about this, ladies and gentlemen, the changes I've made and will make are meant to be systemic changes. My hope is that others will follow so that together we will move to, once and for all, permanently ensuring that minority, women, and disabled-owned businesses receive their fair -- and truly and specifically mean fair -- contracting dollars. 040977, 041014 Enforcement Compliance and Monitoring; David Calabraci is the newly hired Deputy Director of MBEC's Special Projects Unit; Candace Hitchcock, my Deputy Director for Administration and Operation who have served the City faithfully and honorably for over 8 years. 9 Thank you again, Councilwoman Tasco, 10 for allowing the new MBEC to come before this 11 Committee to tell you who we are, what we're 12 doing, and what we plan to do. Thank you very 13 much, and we're ready for questions. 14
Thank you for 15 your testimony, Mr. Williams. Let me start 16 with the status of Bill 030125 and your 17 opinion. Is it lawful? Are you following it? 18 Has it been enforced by Administration? 19
Well, sir, I can't 20 express a legal opinion to that. I have read the ordinance, and I feel that the way that I've restructured this department and the way that --
Why can't you offer a legal opinion? 231 12/15/04 - COMMERCE - RES.040977, 041014
You are, in fact, a lawyer who is head of MBEC; is that correct?
That's correct. But I don't serve in this purpose as an attorney, sir.
I was informed by my enforcement deputy that I'm under the City Charter and I cannot express an opinion on that. I am director of the this department. Legal opinions have to come from the Law Department. That's my understanding.
Let me ask you which provisions of Bill 030125, whether lawful or not, you would agree with if actually offered by the Administration? In other words, what parts of the, 232 12/15/04 - COMMERCE - RES.040977, 041014 quote/unquote, Ortiz Bill or the MBEC Ordinance should be incorporated into a new Executive Order and into new legislation? What is the status of a new Executive Order and new legislation?
I feel that the spirit of the ordinance will be contained in the new Executive Order. I am not privy to what that Executive Order is at this point.
How familiar are you with the actual components of Bill 030125?
Are you familiar with the portion that relates to annual participation goals?
At section 17-505 reads as follows: "Annual participation goals. Council shall, by resolution, establish annual City contract participation goals for DBEs after solicitation and recommendations of Minority Business 233 12/15/04 - COMMERCE - RES.040977, 041014 Enterprise Council." Is that something you would agree to allowing Council through resolution to establish annual participation goals after consulting with MBEC?
What steps will you take to make that happen as part of the Executive Order or as part of new legislation by the Administration?
The Executive Order is being written by the Law Department Administration. MBEC has no role at this point in crafting that legislation.
In the establishment of these annual participation goals, the legislation further reads, "Criteria. The annual participation goals must be based on but not limited to the present availability of qualified DBEs; B, the utilization of DBEs on past contracts awarded by the City; C, a forecast of eligible contracts to be awarded within the fiscal 234 12/15/04 - COMMERCE - RES.040977, 041014 year; and D, an undated disparity analysis of businesses in the Philadelphia area." Let me ask you at this time, is MBEC in a position from a technical standpoint to take that type of data-driven approach?
Absolutely. In fact, when I sent letters out to all the City department heads in May, we sent ranges of participation goals that were consistent with the availability and all the other things you mentioned.
And in the future, you would actually allow that to be submitted to Council for adoption through resolution?
We received a letter from the City Solicitor that said that Bill 030125 is invalid. And if that is true and that the Executive Order 1-93 was repealed in 2003 and Executive Order 1-03 expired in 235 12/15/04 - COMMERCE - RES.040977, 041014 2003, under what legal authority do you operate?
Councilwoman, to answer that question honestly, when I first came to the department, I knew that the Executive Order had expired October in 2003. So my guide at that time was the ordinance 9 from Council. It wasn't until some months into Council that the City Solicitor's opinion came out. So at this point, technically, we're under no legal authority. The actions that we take, particularly in our monitoring and enforcement, we're taking because we think it's the right thing to do. We are certainly hoping that an Executive Order is signed and allows us not only to continue the work that we're doing but to do work in the future. For example, our certification process, we have streamlined that down to three pages. We've removed some of the, what we think, burdensome, onerous restrictions that were there in the certification process before, but we can't do that without some sort of legal authority. 236 12/15/04 - COMMERCE - RES.040977, 041014
Well, the Mayor signed the ordinance. And we were not notified. Normally, they would write us back and tell us, "I can't sign the ordinance 6 because the Law Department tells me it's illegal." Do you have any knowledge whether or not the Mayor was notified that there was an ordinance.
I apologize, I do not have any knowledge of that. I wasn't here when it was signed. And when I found out, again, some months into my tenure here, that's when I knew the opinion of the City Solicitor. I had no privy to the communication between the Solicitor and the Mayor.
Well, in the Executive Order 1-03, there was to be an economic opportunity task force, and I think Mr. Cruz mentioned that. Since you just found out that the ordinance was illegal, what was your understanding of the purpose of the Resource Council and did you move to -- was a Committee put together? 237 12/15/04 - COMMERCE - RES.040977, 041014
Yes. Initially when I came in and read the ordinance that expired, my mind at that point was that even though it had expired, there are still things that I should be able to do. There should actually be a task force. I initially had two meetings with various folks. Many people didn't show up. The African-American Chamber didn't show up. The Hispanic Chamber showed up. The Asian-American Chamber showed up. Mr. Esposito who is here showed up. Various people from the community showed up. I tried to craft together some sort of Committee. When we sent out notices for the third meeting, we only had, I think, two responses to that. And after that, there seemed to be -- people just seemed not to be interested in doing that. What people were interested in was me going out and talking to their membership and their constituency group, something that I had been doing continuously since I started working here.
You said the new Executive Order is being prepared by the 238 12/15/04 - COMMERCE - RES.040977, 041014 Law Department?
The Law Department and Administration, my understanding, are still working on it.
We had input we put in maybe a month and a half ago. I don't know where that stands, where our input stands, frankly.
I would say that we had input. I haven't seen the product since I put the input in there.
What was the extent of your input into the Executive Order?
I put something in about workforce composition directly. This came out of my discussions with Councilwoman Donna Reed Miller. I also looked at it to make sure that some of the goals and -- the goals that we wanted to take care of now were in there, particularly with our monitoring and 239 12/15/04 - COMMERCE - RES.040977, 041014 with our special projects unit, our marketing and with responsibility for City departments to make sure that they are in this document, because I do believe that it's -- I think it's not in 1-93, but that in this document it holds City departments responsible for contracting.
Mr. Williams, two quick questions before I return to Councilwoman Tasco. One, from what you know about legislation, the Mayor would not sign an invalid ordinance if he believed and the Law Department believed it to be invalid? In other words, the Law Department reviews all legislation before it is signed by the Mayor, so when the Mayor ceremoniously signed it, the Law Department obviously believed it to be valid; is that your understanding?
And secondly, there was significant disparity between what was in that bill that became law and what was 240 12/15/04 - COMMERCE - RES.040977, 041014 in the Executive Order. So interestingly enough, the Mayor ceremoniously signed a law which was legal at the time, did what was supposed to be a parallel Executive Order, which is not parallel at all but, in fact, very different, and then said the law is no 8 longer in effect or legal and for the sole reason that Council does not have the authority, not because anything was actually in the legislation itself. So I guess the question is, following what Councilwoman Tasco said, were your recommendations in terms of Executive Order, aside from other things you came up with in conversation with Councilwoman Miller or whoever, were you recommending that this bill that was passed by Council be incorporated into the Executive Order on behalf of the Administration?
I did not recommend that. It does not mean that I can't recommend that now because the ordinance is still floating around. But I certainly can.
I'm going to try 241 12/15/04 - COMMERCE - RES.040977, 041014 to say this as politely as possible. Are you actually familiar with how different the bill 4 is from the Executive Order?
And so you know exactly what needs to go into the Executive Order that was not in it before?
Are you stating for the record that you will make a formal recommendation to the Administration that the components of the bill be incorporated into the Executive Order?
And you can forward that communication through the Chair?
My concern is that you've heard testimony from contractors and vendors who have tried to do business with the City and who look to the City to provide them support and enforcement of situations that come about, particularly when we're using public funds. I would be interested to know 242 12/15/04 - COMMERCE - RES.040977, 041014 if any of those issues raised today you feel should to be incorporated into the Executive Order to give you the teeth to enforce some of the many issues that have been raised here. One particularly I talked about is the payment to subcontractors from the majority contractors to not pay them. What do they do? Timely payment.
Absolutely. This is one of the issues that makes me the angriest because when I came in the office here, for whatever prep I got, no one prepared me for non-payment issues. This has been a huge burden. To me, this is the burden that cuts off any type of participation goals and ranges at all because if people aren't getting paid, it doesn't matter how many people are on the contract. One of the reasons I brought Ms. Staton in and the enforcement unit in and the compliance officers who are sitting back here, is to vigorously track down these issues and to solve them. As you will see later on in the 243 12/15/04 - COMMERCE - RES.040977, 041014 testimony, we've been pretty successful in doing that without an Executive Order or an ordinance. And I'm not saying that because we don't need it; I'm saying that because I keep thinking that at some point someone's going to come back to us and challenge us because we don't have anything. We took one firm who didn't pay two African-American female vendors their money. What happened is that these vendors contracted with the prime contractor who then contracted with the City. The City did not like their work and at one quarter didn't pay the subcontractors. And we said, "Well, you have to pay them because they did the work. Nothing was wrong with their work." They held a contract out to us and said, "Well, we have this in the contract. They don't get paid until we get paid." We think that is absolutely wrong. We asked the Administration, we asked City Council, we asked anyone to look at these issues and to make this thing right. What we were able to do was to threaten these folks with debarment. Now, we did not have any 244 12/15/04 - COMMERCE - RES.040977, 041014 legal authority, I don't think, but we did it anyway. I didn't know what was going to happen, but I did it anyway. I thought that was the right thing to do. They eventually paid these vendors under the threat of debarment. So we'll use that anytime we can. My point is that some of this stuff is systemic. You have to go into contracts. You have to look at how we're contracting. On the other hand, inside the City, when I was at the Economic Development Summit, I kept pressing in all these little groups and focus groups, I kept pressing that there should be a 30-day guaranteed payment from the City. Why should people out in the private sector -- why should they pay their folks on time if we can't pay them on time? That has just been a very frustrating issue. I have personal stories about vendors of ours who have come to us in the last minute and said, "Our business is going to close down today unless we get paid." And we've had to work through the day through various City departments just to get their payment moved 245 12/15/04 - COMMERCE - RES.040977, 041014 just to get them paid. And that is ridiculous. People have to be accountable for that. My frustration is that going after City departments and having people tell me one thing and tell me another thing, talking about invoice issues -- MBEC is going to put together seminars to tell people about invoice issues. We still have to have the City departments paying people. That's the only way we can force and we can actually go to the private sector people telling them we can get paid. I apologize, I get a little bit emotional about this because this is the issue more than -- I mean, everything is important about what we're doing over there and what we're trying to do, but the non-payment issue has been sticking in our craw for a while because it seems to be there's no way to move this, no way for anything to go. And I think the only way that it can happen is either in an Executive Order and an ordinance.
It was in Bill 246 12/15/04 - COMMERCE - RES.040977, 041014 030125. It would have been if the Administration acknowledges the ordinance as being legal, which it is. It would be Section 5 17-507 which deals specifically with contract payments to subcontractors. And the only reason the Administration gives us for why this ordinance is not being implemented as it should be is because they claim that Council does not have the right to pass legislation on City contracting, which is ridiculous. Councilwoman Reynolds Brown.
With regard to the issue of timely payment, which I heard ad nauseam since I've been here, please tell us how does MBEC reward good performance around timely payment and other factors and how does MBEC treat poor performance when it comes to contractors who don't honor up.
Councilwoman, I wish there was a way I could tell you that we could reward or punish. I would wish there was. I would like to have a system instituted where people who actually make payment on time, that factors into responsible and responsiveness. 247 12/15/04 - COMMERCE - RES.040977, 041014 That's part of the contracting. That's in the City Charter. You have to give the lowest bid to the most responsible and responsive bidder. I think -- my wish is that responsible and responsiveness also includes paying people on time. And if you don't pay people on time, you shouldn't be considered for a bid. I think that should be instituted. Right now, MBEC does not have the tools to do that. It doesn't have the authority to do that. I wish that we could. I wish that we could find a way to do that.
Is that to suggest then that no one in government has the tools or authority to not reward prime contractors who are not paying people? What is at the government's disposal then?
You're absolutely right, government should be able to do it. MBEC doesn't have the tools itself to do it. But somewhere, the Administration, the Law Department working together with Council, someone should come up with a method so that we can do this. Even if it's a Charter 248 12/15/04 - COMMERCE - RES.040977, 041014 change, if we have to write something about responsibleness and responsiveness and define that in the Charter so we can reward people who pay and punish people who can't, then that should happen. So you're right, government can do something about this.
To your remarks regarding workforce composition, what impact does MBEC have on those majority prime contractors that do not engage in MBE/WBE contractors?
For workforce compensation employment issues, MBEC has no 15 authority whatsoever to deal with that. I think that's unfortunate, which is why I made a suggestion to the Executive Order to put that in there so that we can start monitoring workforce composition with anything that has a City dollar on it.
So I understand, 249 12/15/04 - COMMERCE - RES.040977, 041014 I'm trying to follow the Councilwoman. Are we entirely talking about prime contractors? Or are you also suggesting the City is a slow pay too?
So are we talking both prime contractors and our own government?
I just wanted make sure, because you threw me off there for a second. I'm thinking I wasn't understanding. Okay, you have concerns about both.
We should be able to fix internally easier than external.
We should, Councilman, absolutely. We should. Even with the different agencies, we've heard that some folks have not been paid by PHA. Our enforcement and compliance teams continually work with PHA to get payment. So far we have 250 12/15/04 - COMMERCE - RES.040977, 041014 not been successful. We've been more successful with prime contractors than with internally in the City.
Just a couple more questions. Philosophically, should MBEC's role be that of certification or building infrastructure?
I think that philosophically there's some basic tenets that we can't ignore. We can't ignore certification because there are people out there who want to get certified and are not legitimate minority, women, or disabled-owned businesses.
Exactly. MBEC has to do monitoring clients. It did not happen. Or if it did, rarely happened and not successful when I got there. We at this point in our history watch what City departments are doing to prod the enforcement deputy to meet with -- 251 12/15/04 - COMMERCE - RES.040977, 041014 she's already had her first meeting. She's having her second meeting to talk about the goals that we set for them and how they're reaching it. We still need the function and do that. I feel that helping with infrastructure is something -- not all of it, but something that our special projects unit will be taking care of. They're charged with marketing our firms and selling our firms not only to City departments but to prime vendors outside so that situations like "We don't have any qualified minorities," that can't happen. The way that I saw it when I first walked in was to put City departments on notice that we're going to get you people, we're going to do outreach, bring people in, we're going to bring in certified vendors who are ready, willing, able and have a capacity to do the work. We're going to set these goals for you so you have to get these goals based on the availability and other factors. After these two goals, the numbers of City contractors should go up. To me, it's not rocket science. They should be able to do it. 252 12/15/04 - COMMERCE - RES.040977, 041014 What I'd like is more support from folks in City government going behind us; I would absolutely love that. I think I'm getting some sectors. Frankly, some sectors I think I'm not getting, but that's still not stopping us from doing it.
Now, you know we can not ignore that without a follow-up question, right?
So let's be a bit more specific, recognizing the sensitivity of the world you're in. What I hear you saying is there are some Commissioners in City government who get it and recognize the expectation of standards you've put on them with regard to the role of MBEC, and there are some in City government, Commissioner level, who don't get it?
Do you believe -- I'll leave that there. We'll have a sidebar off the record. One final question. To this issue 253 12/15/04 - COMMERCE - RES.040977, 041014 of building infrastructure, timely payment when it doesn't happen ultimately impacts a company's ability to build infrastructure, would you agree?
I just actually want to thank you for all your help and assistance that you've been providing to me on the problem that I was presented with, which is something I just want to put on the record. One of the barriers to just a whole workforce composition issue and diversity issue is the language in the contracts. See, I think as far as I was concerned that if we met MBE goals and percentages around subs, then we thought everything would be okay. But 254 12/15/04 - COMMERCE - RES.040977, 041014 then I was presented with an issue where under a Commerce Department contract that compliance was monitored by RDA -- which is a second question I have later when you talk about monitoring. And when I kept driving by the project, I never saw a diverse workforce, which said something is not right here, and I knew we had two minority subs. So what I realized once I called you -- and I called you because remember I said, "Can they sue me if I shut the job down?" But anyway, what we realized was that it's the language that includes the workforce diversity issues that's not included in many of the contracts. However, the contracts that have been written that dealt with our NTI projects sort of have a better wording and does include workforce diversity issues, people that live in a certain zip code, et cetera, et cetera. So I know that that's something that we've been working on, and we're not finished yet. I don't know whether the Executive Order that will eventually come out will deal with how contracts and the language is written, 255 12/15/04 - COMMERCE - RES.040977, 041014 because people -- I believe contractors can still get around the workforce composition and diversity issue if that language is not included in the actual contract. And I know that that's what happened in my case, which means that now we have to stay on stop of exactly how these contracts are coming out. And I don't know that that's been actually settled yet. Now, I do know that those coming out of RDA or through NTI does have that inclusive language, but I'm still not sure whether coming out of other City departments that that issue is being addressed. Because you just can't have a whole workforce working in a neighborhood that doesn't include people that look like those people that live in that neighborhood. It just causes a whole big problem and another whole headache. And it takes good jobs, something that you thought was working really well and it would be good for the neighborhood and it causes all kinds of problems because it's not inclusive. So I think that that's something that the City has to work on. 256 12/15/04 - COMMERCE - RES.040977, 041014 And there's one other thing that concerns me with City contracts, and that is when the contractors ask for a waiver as it relates to the MBE goals. I have a real problem with that. You know, we just had a meeting about a week and a half ago to discuss that whole issue. So those are issues that I think prevent inclusion. And I think we -- I as a Councilmember and I'm sure other Members are very interested in helping to close those loopholes because this is public money, and public means everybody. And I don't think there should be any way that people are excluded from acquiring a part of a contract. And I know that this is a problem that we continue to work on. So I just need you to let us know what we need to do to help you address that issue.
Thank you very much. You know, Councilwoman, the waiver issue, as I related to you, blew me away. I did not believe that this was here. The Law Department sent out an opinion that the way 257 12/15/04 - COMMERCE - RES.040977, 041014 our Charter is constructed that we have to have this here. I said, we have to find some way to get rid of it. This makes no sense at all. This is bad policy. I think it's bad for the City to do it. And we have to do better than just make that response. We have to put people on notice that that is unacceptable and we have to find some way out of that. The same thing with workforce composition. One of on my concerns is contracts and the way that contracts are geared so that a prime can pay a sub and then pay another sub and this sub, and these tertiary subs don't get paid at all. There has to be some way -- if we're doing City dollars, I don't see -- and the Law Department may come in here next week and correct me and say, "He didn't know what the heck he was talking about." But in my mind, to me, it's perfectly reasonable to hold that prime to say, "Look, you have to make sure that these people get paid, these people who are minority subcontractors by and large, they need to get 258 12/15/04 - COMMERCE - RES.040977, 041014 paid. They can't float. A prime contractor is a prime contractor because it has the money. That's why they're a prime contractor. If someone withholds payment from them, they can go to another job and they've got reserve. Minority, women and disabled-owned businesses don't have that luxury. They could go out of business if they don't get paid on this job. The fact that the Eagles situation and Phillies situation, which are absolutely outrageous in my view, absolutely outrageous, and should not happen at all. One of my frustrations being over at MBEC is when I first came here, no one took the time to talk to me about the Economic Opportunity Plan Committee until Howard Rye explained it to me. At that time, the Eagles Committee didn't meet anymore. I just have to say when Mr. Cruz did come to me, we did contact that Committee who said they would take care of this, that it's a Committee function. It's the same thing that happened when Mr. Rye and I contacted the Phillies, as we said on the Oversight Committee because we 259 12/15/04 - COMMERCE - RES.040977, 041014 had some board meetings and that they would take care of it. MBEC was frustrated because when MBEC tried to make a move, we were told it was not the proper protocol, that we shouldn't be involved in this. We sat on that a little while and said, "Well, that's okay, we're still going to go after this, we're still going to put pressure on folks to get these people paid.
Let me read you part of the bill that deals with contract payments to subcontractors. "Number One, a contractor must pay his DBE subcontractors in a timely fashion for satisfactory work. "Two, a payment is timely if it is mailed, delivered or transferred to a subcontractor no later than seven days after the contractor receives payment from the City. "Three, evidence of compliance. Beginning with the second pay request from a contractor to the City, the contractor must provide the City with evidence that all DBE subcontractors have been paid out of the proceeds of the prior payment unless a bona 260 12/15/04 - COMMERCE - RES.040977, 041014 fide dispute documented in writing exists between the contractor and unpaid DBE subcontractor. "Four, when the City has paid at least 80 percent of the contract price to the prime contractor, the prime contractor shall be required to return to MBEC a sworn affidavit attesting to the amount of the contract proceeds which have been paid to the subcontracting DBE. If such affidavit is not so returned, Director of Finance shall withhold further payment to said contractor." That was in the bill, signed into law, and deemed illegal just because Council supposedly doesn't have the authority to deal with City contracting issues. Your response?
My response is that I would hope that the Administration would accept this, that provision. My frustration is that people need to get paid. I don't care how they get that, I don't care where it comes from --
This is not a new 261 12/15/04 - COMMERCE - RES.040977, 041014 issue. This is a bill that was passed in April of 2003, signed into law, once again, ceremoniously and assumed to be law when you became Director of MBEC.
So this is a provision in terms of contract payments to subcontractors that was assumed to be law when you became Director of MBEC. Councilwoman Tasco.
Have you been officially notified that you're not to operate under Bill 030125?
I think we had been. We had some communication with the Law Department. They didn't send us an official notice that we weren't.
So until you are officially notified, you can officially still follow the ordinance?
So you can officially follow that section of the bill or any sections of the bill as you see necessary 262 12/15/04 - COMMERCE - RES.040977, 041014 to protect the interest of the contractors?
Councilman Rizzo said, "For the rest of the afternoon." (Laugher.)
So until you get the official letter saying you can't follow that ordinance, you can hopefully go ahead and continue to use the ordinance, which took a lot of time by the Council to draft because of the problems that had been brought to us by contractors and vendors, as they have done today, by Councilman Ortiz. I mean, it just took in every aspect of what we believed would protect the people we represent. So it's going to be interesting to see what the Executive Order has in it to provide that protection. One of the -- we were talking about the quasi-agencies and your effort to try to get the agencies be more proactive in using disadvantaged businesses. Is there new boiler plate language put into the bid documents for personal and professional services, public 263 12/15/04 - COMMERCE - RES.040977, 041014 works contracts and/or service supply and equipment contracts?
Have you had a conversation with the Law Department as they craft the new Executive Order to let them know in the small time that you've been there that there are issues that you care about and are concerned just working on a day-to-day basis to see that they include these issues in the Executive Order?
My counsel has -- at this point I am advised to assert privilege -- excuse me for a second, please.
Basically, when you mentioned "Did you have a conversation with the Law Department," there is a privilege because they represent us. But he has made these issues known to the Administration in 264 12/15/04 - COMMERCE - RES.040977, 041014 crafting the Executive Order.
Well, it is an answer. My frustrations are that there are -- this is not rocket science. There's basic things that you can do, basic steps that you can take. And the fact that way before I even got here that these steps weren't taken, the fact that I've been here and have been pushing at these -- you know, we're still under the FBI probe and our folks are still being interviewed by them. That's kind of destructive to our department, reorganizing it, putting it together, creating these two units, trying to do that. There's a lot of stuff to be done there. But I know I think we're doing our part. I want everyone else to come in to help do their parts too because I don't think that it takes too much to do that. I mean, I appreciate this opportunity to come say this publicly because there's a lot of times I can't. A lot things get put in the newspaper and some things come out and some 265 12/15/04 - COMMERCE - RES.040977, 041014 things don't. But I'm glad I'm here to talk to folks publicly again to express that this should not be such a huge issue for us to rectify. The City should be able to do this. It makes me absolutely crazy to find out that, well, there's Procurement decisions being made, not by Department heads but by people below them and they're the ones and the department heads really don't know. Well, people, now you know. I've been here. I've been out in the public. I've sent letters to these folks. We have met with these folks. She's met with these folks. Our special projects unit is going to meet with them soon again on a quarterly basis. We're doing what we're supposed to be doing. We have to pull people in. If Council can help us do that, that would be very much appreciated. When you're trying your best -- at some point, I don't feel like I'm spinning my wheels over there because we are getting people paid and the numbers for 2004 were from my MBEs 10.65 and for WBE around 7 percent. So we see that the numbers are going up, but 266 12/15/04 - COMMERCE - RES.040977, 041014 that's just and 7. In a way, that's more than the 2 percent and the less than 1 percent, but for me that doesn't cut it. The ranges and goals that we set for the department are much higher than that. I'm looking for increment growth. I'm looking for growth, period. I figure if we can't do that, then what good are we as public servants. This is for the entire City to get behind. We have to work together on this. I can't answer any questions about the ordinance, I wasn't here; about the Law Department's decision to say that it was illegal, I wasn't here; about the fact that the Executive Order expired in 2003. But what I can say is that I am going to do whatever I can with the tools that I have to push this agenda forward. I'll keep speaking. I'll keep yelling. I'll keep getting yelled at by people who probably don't want me to say this much, but I can't help it. This is what we should be doing.
Well, we've tried to help you. We gave you an ordinance 267 12/15/04 - COMMERCE - RES.040977, 041014 which the Law Department has said we don't have the power to do. But that won't stop us, we'll keep doing it.
I have looked at that ordinance, and clearly when you look at some of the testimony, some of the things that we have in there consistent with what the ordinance's goals are. And I am definitely willing to work with Council, particularly on issues in people's districts. I think that's very key. When Councilwoman Reed Miller came through her district and saw what was happening there, I wanted to do that. I am concerned that construction projects are happening and Councilpeople don't know about it in their own districts. That again makes no sense. Somewhere communication has to happen. There have to be systems to let Councilpeople know what's going on in their districts to the extent that they can call us and say, "Hey, look, there's something going on down there, we don't think there's participation," so we can go down and 268 12/15/04 - COMMERCE - RES.040977, 041014 investigate it. That kind of thing has to happen. There has to be more cooperation.
Just to jest for a second, how I find out about construction projects since I'm at-large, I look for all the little yellow and blue painted lines in sidewalk, then I ask something must be going on here.
Mr. Williams, we understand your frustration, but this is a very strange relationship to even try to approach with you when, in fact, not only did we pass an ordinance, but the only reason several Members of this Council didn't draft a bill earlier was because there was disparity studies that were not released to this Council and the fact that the latest disparity study still has not been released to this Council. So while we can appreciate maybe on a personal level your frustration, you're not here on a personal level; you're here in a professional capacity. And we pass a law because somehow someone acquires a disparity study. The law's, in fact, probably best practices in 269 12/15/04 - COMMERCE - RES.040977, 041014 terms of being based upon a Baltimore model. We then, in fact, find out the Law Department decides to render it illegal simply because we supposedly aren't supposed to be involved in establishing policy about City contracting decisions. Maybe there isn't any other way to approach you on this. Maybe we need whoever the new Finance Director is going to be to come here. Maybe we need the Mayor's Office to come here. I mean, a couple years ago the Finance Director came here and she said that she was ashamed what was happening. I guess that's why she went to Atlanta where they're doing it right.
I'm here in a personal and professional capacity, sir. And I understand what you're saying. My understanding is these hearings were about MBEC and what we're doing and what we're going to do. May I finish please?
I'll let you finish. I will clarify in terms of 270 12/15/04 - COMMERCE - RES.040977, 041014 legislation. The resolution specifically says that you're here to address the ordinance and the Executive Order, not what you think you've done in the last eight months, but the ordinance and the Executive Order. That is, in fact, why you are here.
My apologies. I stand corrected. My extent of knowing about the ordinance is that the Law Department deemed it illegal. That's my extent, that's all I can answer about that. I can't do anything else, but I certainly can talk about MBEC.
Did I see you bring the disparity study across the street one winter night?
Councilwoman, yes, you did. It was my second day working here. I brought over the disparity studies and some other reports, like a mid-year report, brought them over, got clipped by a car, they fell in the mud, wiped some of them off, and brought them and delivered them to the Administration.
Let me just say 271 12/15/04 - COMMERCE - RES.040977, 041014 this. We could go on and on and on, and other people might have questions or conversations. I think that your heart is in the right place and you do want to do the right thing. We would hope that today, as you sat and listened to a number of concerns raised by contractors and vendors about some of the problems they encounter in doing business with the City or not doing with the City, would be part of your looking at how you can make those encounters better, much more productive results for the contractors. You don't have to eat the whole cow to know it's beef. You get the sense of what people are saying. One of the things I would hope you would look at is the ability to make sure that a contractor has a contract with the subcontractor, that you can interject yourself in that, that could be part of the requirement from the contractor. The other issue -- the issue about how the federal government deals to create and foster general contractors between disadvantaged businesses and not just sticking 272 12/15/04 - COMMERCE - RES.040977, 041014 to the subcontractor, how can you we look at growing minority businesses into general contractors.
One of the ways that we address that even now -- one of the suggestions we made to the Executive Order that we hope is still there when we see it at the end is remove the $700,000 limit on certification. We think that that limit -- and we agree with the African-American Chamber of Commerce, that would prohibit and stop businesses from growing. It didn't make any sense to not certify a minority, woman or disabled business owner, particularly African-American businesses, for people who reach a certain threshold. It acted as a barrier for them to grow. And we just thought that was not called for, so we wanted to move out of that and change our certification process and to make it just minority, women, and disabled-owned. We think that will help foster growth. It's a big step, and we attempt to make more steps.
Councilwoman 273 12/15/04 - COMMERCE - RES.040977, 041014 Reynolds Brown.
Following up on your remarks regarding prime contractors, does MBEC advocate for a contracting process which promotes joint venturing among MBE/WBE so that they can receive prime contracts?
We actually can and we actually do, and we want to see more success in that area.
So at this hour, given what we've been informed of by the Administration, what do you believe currently are MBEC's most pressing staff and resource needs, number one? And what would you identify as MBEC's most critical program priorities; one, two, and three program priorities, given the restrictions as been discussed at this hearing?
MBEC has always been understaffed and underfunded, and everyone, I think, is aware of that or should be aware of 274 12/15/04 - COMMERCE - RES.040977, 041014 that. There was a commitment to increase the staffing, which happened. The reason staffing didn't fall into place right when I was there is because there are some arcane policies about hiring in the City government which delayed hiring most of these folks that you see here. That was very frustrating because the issues came to us when I went out to the public and when I went out to the constituent groups. People came in, they wanted to be certified, they wanted their non-payment issues taken care of, but we didn't have the folks. Now that we do have some of those folks -- and I understand that the City is having financial crisis and there are layoffs there, but we frankly don't have enough folks to even work with. We haven't filled in our vacancies yet. We still don't have enough folks, particularly in monitoring and enforcement. We have my deputy and her two compliance officers. If we're going to do this job effectively, we need more. We also need more people for certification. Even with streamlining the 275 12/15/04 - COMMERCE - RES.040977, 041014 process, it's not just doing that, it's working with these vendors in specific areas to move them along, and we need to get through our backlog. What we're doing right now is we hired some temporary folks to start vetting our files to make sure our files are okay.
Being current and being correct. I wasn't here when -- I was only here eight months and I don't know what happened before, but I want to find out what happened and I certainly want to make sure that all of our files are correct. I think that's just very important, given what the atmosphere is around the probe that we have that. So we pulled some temporary staff into that. And for six months, we're tying to get this accomplished in six months. We need some more -- again, more certification staff and more compliance officers. As far as MBEC's goals, one, clearly 276 12/15/04 - COMMERCE - RES.040977, 041014 to push participation rates up, percentages up in the City. One of the things that gets lost in the mix when talking about prime contractors and subcontractors is the City Charter. The City Charter for at least $250 million of the $500 million approximately that's spent, the City Charter says that you have to go to the lowest responsible, responsive bidder. We encourage and we push our folks, the MBEC folks, to be prime contractors. We want them to get in there and to bid, but if they're not getting the lowest bid, then we want to make sure there's participation rates there. We don't want to miss out on that at all. So I think it's an incorrect characterization to say that we're just working for subcontractors. We're tying to get people to be prime contractors. We want to put them out there. We've been able to do some of that with the NTI Program, but we want to do it on a larger scale. But there are barriers, again, to some folks becoming prime contractors. Bonding is a huge issue for people to get a 277 12/15/04 - COMMERCE - RES.040977, 041014 bond to be able to do the stuff, particularly on a large contracting issues. And that's something that -- I've met with the Administration, with some members of Council staff about this, and we're continuing to work on this issue.
Okay. Now, what does that mean? This is why I raise the question. I clearly remember in Janice Davis' early tenure here, she actually sat down with business people in the business of providing bonding for MBE/WBEs. So help me understand what you mean when you say, "We're working on it."
We need another sit-down with those folks. That's what I want to work on. Apparently, that hasn't happen. We hear people coming in and still dealing with bonding issues. One of the things that the City had was a pilot bonding program. I don't understand the entire capacity of it. It was run out of Risk Management but funded by Commerce.
Yes. Commerce had some issue with it and they dropped the program. I sent a letter to the Administration saying I think we need to look at this and to bring this pilot program on. It's a pilot program; take out the things that aren't working and continue working. I haven't had any response yet from the Administration or the Law Department from that letter.
But particularly when bonding remains a deterrent and a handicap to help businesses grow to capacity, so that conversation or discussion was with -- when you say the Administration, are we talking about Stephanie Naidoff or the Second Floor?
Okay. I cut you off. You mentioned two. Is there a third program priority for --
One was just participation rates here. To me, again, I 279 12/15/04 - COMMERCE - RES.040977, 041014 think it is very simple to have City departments raise their percentages just by having the will to do it. There is no excuse for them not to raise that. So I think that's the first priority. Secondly is getting people paid. We have to do that. When you read down in the testimony about my staff and what they're doing with non-payment issues, you'll see that this takes an inordinate amount of time, which it should. It is very difficult when some of the processes that should be there in the City and in the way the City contracts out, as what the Councilman read there, that kind of system should be put in place. Absolutely. That would be very helpful to us. Chasing people down is what we do and we need to do that. We probably in our enforcement and monitoring -- we're stretched thin, but if we have pick some priority, people have to be paid. Yes, we still monitor; yes, we still do enforcement, but we have to get people their money. And that's like an immediate situation, "I need my money now. We haven't been paid." 280 12/15/04 - COMMERCE - RES.040977, 041014 When Mrs. King came up here, it was first I had met her or heard about the situation. And hopefully, she'll be meeting soon with my staff here. But that kind of situation is ridiculous. That's the kind of thing we run into a lot and the people haven't been a lot, particularly from the City or from a City's agency and we have to put our processes into that. I think our third priority is to make sure that there are no excuses from City departments or from people in the private sector that they're not enough certified minority, women, or disabled-owned businesses. To that extent, we're doing extensive outreach to pull people in. I meet people on a week-to-week basis that said, "Well, MBEC was terrible. We don't want to go through that. We don't want to go through your certification process." And those are the kinds of people we're trying to bring into this so that we can have them there so when we go to the City departments, when we talk to private industry, we'll say, 281 12/15/04 - COMMERCE - RES.040977, 041014 "We've got people here. You look at our database. There's no excuse for not using our folks." So those are my three priorities.
Thank you, Mr. Chairman. Were you here when someone testified he was given $800 a week just to use his company name?
Obviously, he's referring back a few years. And it suggested that that happens a lot, that there are people who front a company and it's a scam. How confident are you in our City and your compliance and all of the things that you described, your staffing, do you think that we still have an issue that you believe that there are issues like you heard here today existing in this decade?
I think we'll always have issues with that. I think that there are 282 12/15/04 - COMMERCE - RES.040977, 041014 people out there who we either run into or uncover who will try to come through our agency and will try to be a front for other folks. We have to stand vigilant of that. I'm very confident that since I've been there for my eight months that that hasn't happened, that people haven't come through that have been fronts. What I am not assured of is what happened before I got there, which is why we're going through a file vetting process now to ensure that the people we have there are actually legitimate certified minority, women, and disabled-own businesses.
I talked to the Procurement Commissioner just a few weeks ago about the issues of bonding in general, from buying police vehicles to whatever. I understood that that's going to require a Charter change to adjust the way we do. And from what I've learned, the bonding process that's in place now really is passed on to us. We're paying for it. Everything that we buy, a person that has to go get a bond that we require, they're basically passing that right 283 12/15/04 - COMMERCE - RES.040977, 041014 down to us. I was staggered to see what increase in just a police vehicle is based on the requirement that we have. Now, I would hope -- and you're aware this must be on ballot, this issue. I would hope that you're pushing the Procurement Commissioner to get that over here because in this age, there are certain things we don't need bonds. I mean, if we're buying 10 police cars every few months and something goes wrong, it really isn't catastrophic to the City. And to have hundreds of dollars per unit to be passed on to us unnecessarily is not a good situation, and I think we really need to freshen that up. The ballot was crowded last time around and that didn't make it there. I would hope in the next few months that we can address this and get that overhaul because it obviously affects you too, correct?
Absolutely. And I think the problem is worse than that. When you have a construction job -- let's say you're doing like a million-dollar job and 284 12/15/04 - COMMERCE - RES.040977, 041014 there's a five-million-dollar job that you could do. You've increased capacity, but the bonding company still says, "Well, you've only done a million-dollar job; you can't do that." But then how can you grow and do these five-million-dollar jobs if the bonding companies aren't allowing you to do that? It's a horrible situation. I think that it really does call for a Charter change.
Would you agree that that money is just passed on to the deal?
That's a significant amount of money. You're talking about -- what did you say, a five-million-dollar deal.
We're talking very big bucks. We're talking big bucks and we're also talking the fact that this yet is another barrier to MBEC certified vendors, 285 12/15/04 - COMMERCE - RES.040977, 041014 particularly when they want to grow. If we want to grow folks from subcontractors to prime contractors, there has to be a shift someplace. And the bonding -- and this goes back to even why we have things like 17-500 because there's been historical discrimination keeping legitimate minority and disabled businesses out of all these industries, and bonding is just one of these issues and it's an issue that should be addressed.
Thank you, Councilman. Let me beat a dead horse two more times. Subsection 17-508 of the bill passed by Council last year, "Contract reports and documentation. As a condition of each contract, the contractor must submit the following when requested by the MBEC: One, copies of signed agreements with the DBE's being utilized to achieve the contract goals. Two, reports and documentation verifying 286 12/15/04 - COMMERCE - RES.040977, 041014 payments to the DBEs being used to achieve the contract goals. And three, reports and documentation on the extent to which the contractor awarded subcontracts to DBEs under contract not affected by this chapter. "Subsection 17-512. Penalties. One, a contractor who fails to comply with any provision of this chapter is subject to any or all of the following penalties: A, suspension of contract; B, withholding of funds; C, decision on contract based on material breach; D, refusal to accept a bid; E, disqualification of bidder, contract or other business from eligibility to providing goods and services to the City for a period not to exceed two years; F, payment of liquidated damages; and/or G, a fine of $300 per day for each day of non-compliance." That's a fairly strong law, isn't it?
But deemed illegal simply because Council doesn't have the power to deal with City contracting. 287 12/15/04 - COMMERCE - RES.040977, 041014 Any other response?
I just want to make a statement that the original legislation that created MBEC, they operated under that for years. It's amazing that this legislation was deemed illegal because we didn't have the power, because if we didn't the power, MBEC wouldn't exist. Thank you. Any further questions? (No response.)
Furthermore, it seems strange that a bill would be deemed illegal after signed by the Mayor with a parallel Executive Order. It's very hard to exceed the power of Council when something's actually signed by the Mayor and a parallel Executive Order is actually issued. But we will revisit this issue. This hearing on all the resolutions 288 12/15/04 - COMMERCE - RES.040977, 041014 today is recessed to Thursday, January 27, 2005 at 10:00 a.m. Thank you for coming.
Thank you. (Council adjourned at 4:10 p.m.) - - - - 289 C E R T I F I C A T I O N I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of Wednesday, December 15, 2004, were reported fully and accurately by me, and that this is a correct transcript of the same. RE: COMMITTEE ON COMMERCE AND ECONOMIC DEVELOPMENT _________________________ Lisa C. Bradley, RPR