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       2      AND
       3      AND SMALL BUSINESS
                                PUBLIC HEARING:
                          NEW YORK'S BUSINESS CLIMATE
                               Village of Mineola Community Room
      10                       155 Washington Avenue
                               Mineola, New York
                               September 6, 2018, at 10:00 a.m.

      13      PRESIDING:

      14        Senator Frederick J. Akshar II (Sponsor)
      15        NYS Senate Standing Committee on Labor

      16        Senator Phil Boyle (Sponsor)
      17        NYS Senate Standing Committee on Commerce,
                Economic Development, and Small Business

      19      CO-SPONSORS PRESENT:

      20        Senator Elaine Phillips

              ALSO PRESENT:
                 Senator John Brooks




              SPEAKERS:                               PAGE  QUESTIONS
              Denise Richardson                         11       27
       3      Executive Director
              General Contractors Association
       4        of New York

       5      Marc Herbst                               11       27
              Executive Director
       6      Long Island Contractors' Association

       7      Larry Sitbon                              34       39
       8      Citnalta Construction

       9      John Cavallaro                            39       61
              Corporate Counsel for USA civil
      10      Skanska AB

      11      Dennis Capolino
              A Vice President, serving as
      12        Chief Procurement Officer,
                Chief Diversity Officer,
      13        and Corporate EEO Officer
              Halmar International
              William Haugland, Jr.                     66       85
      15      Principal
              Grace Industries
              Joel Lipsky                               66       85
      17      Co-owner and Chief Operations Manager
              Lipsky Construction
              Nicholas Aldorisio                        66       85
      19      Chief Financial Officer
              Aurora Contractors
              Nanci-Jean DeNapoli                       87       99
      21      Vice President and Secretary,
                KND Electric
      22      Member of Women Builders Council

      23      Christine Donaldson-Boccia                87       99
              Executive Manager and Owner of
      24        J.D. Traditional Industries
              Member of Women Builders Council


              SPEAKERS:                               PAGE  QUESTIONS
              Nancy Colella                            110      129
       3      Principal
              NYS Sustainable Corp
              Ilene Herz                               110      129
       5      Owner
              Sterling Floor Designs, LTD





















       1             SENATOR PHILLIPS:  We'll begin.

       2             So, my name is Senator Elaine Phillips.

       3             You are sitting in my Senate District, which

       4      is the 7th Senate District here in the northwest

       5      quadrant of Nassau County.

       6             So, welcome everyone.

       7             Thank you for taking the time out today for

       8      this important issue.

       9             We are having a hearing today on the MWBE

      10      program.

      11             This is a working group that

      12      Senator Fred Akshar, which I'll introduce in a

      13      second, but Senator Fred Akshar and

      14      Senator Patty Ritchie are chairing, and I am one of

      15      the members of the working group.

      16             And let me start out by saying, the intention

      17      of this working group is to take this valuable

      18      program, "valuable program," and make it a better

      19      program.

      20             There is no intention by this working group

      21      to eliminate it.

      22             There is no intention by this working group

      23      to only point out what's not working.

      24             The idea is to have a balanced discussion,

      25      and make this a better program for everyone in


       1      New York State.

       2             Senator Akshar informed me that this is the

       3      fourth statewide hearing that they have had already.

       4             I'll let him tell you where else they've had

       5      them.

       6             And the intention is to have more.

       7             So, I encourage everyone to speak out, tell

       8      us.

       9             The only way, as legislators, we can make

      10      something better is by understanding what is working

      11      and what is not working.

      12             So, thank you.

      13             Please.

      14             To my right, about to sit down, is

      15      Senator Phil Boyle.  He represents --

      16             I'm sorry, Phil, I don't know.

      17             SENATOR BOYLE:  The 4th Senate District.

      18             SENATOR PHILLIPS:  -- the 4th Senate

      19      District.

      20             And then to his right is Senator Fred Akshar.

      21             So, Senator Boyle, do you want to say a few

      22      words?

      23             SENATOR BOYLE:  Sure.  Thank you very much.

      24             I'd just would like to associate myself with

      25      Senator Phillips' remarks, and also thank my friend


       1      and colleague Senator Akshar for traveling all the

       2      way here -- he's been traveling around the state --

       3      and for his leadership on this issue.

       4             It's a vitally important program, but we need

       5      to make it better, without a doubt.

       6             I can tell you that I'm the chairperson of

       7      the Senate Committee on Commerce, Economic

       8      Development, and Small Business.

       9             So when people call the Senate, sometimes

      10      they end up in my office when their small-business

      11      person -- business or their medium-sized business is

      12      having trouble, many with the MWBE program.

      13             It's a headache, in large part, but we've had

      14      efforts to make it better, and that's what this is

      15      all about.

      16             When the Governor and other administrations

      17      are trying to increase the requirements on MWBEs at

      18      the same time they're making it more difficult to

      19      enter the program and to remain in the program --

      20      and we'll hear from the testimony today on this --

      21      that's a no-win situation.

      22             We want to make this program better, as

      23      Senator Phillips said, and we look forward to the

      24      testimony.

      25             SENATOR PHILLIPS:  Thank you.


       1             And Senator Fred Akshar from the Binghamton

       2      area.

       3             And what Senate District is that?

       4             SENATOR AKSHAR:  52.

       5             SENATOR PHILLIPS:  52.

       6             There are 63 Senate Districts in

       7      New York State, if you didn't know that.

       8             Senator Akshar.

       9             SENATOR AKSHAR:  Thank you.

      10             It's just a short 3 1/2-hour drive from

      11      Binghamton, here, but it's this beautiful country.

      12             Senator, thank you for hosting this hearing.

      13             And as you said, this is, in fact, our fourth

      14      hearing.

      15             I want to first thank Majority Leader

      16      Flanagan for allowing this issue to remain at the

      17      forefront of the Senate Majority's priorities.

      18             The Majority Leader speaks often about

      19      allowing affordability and opportunity to drive our

      20      legislative agenda, and we are looking inward at

      21      existing programs on how we can make them better.

      22             And I think, as Senator Phillips said, but it

      23      certainly bears repeating, that -- and I should be

      24      on the record, that we're not looking to end this

      25      program, because this program is, in fact, a


       1      beneficial program, and it has positive attributes.

       2             We're looking to amend the program, because

       3      it is not being run efficiently and effectively,

       4      and, quite frankly, it is taking away opportunity

       5      and affordability from people.

       6             So this, again, is our fourth.

       7             We've had a hearing in Binghamton, in

       8      Watertown, and in the capital region in Albany.  And

       9      we intend to continue to travel and have a couple of

      10      more hearings throughout the state.

      11             We're doing these hearings because

      12      Senator Ritchie and I, and those at the table,

      13      believe in a bottom-up approach.

      14             I think all too often in Albany decisions are

      15      made at the 30,000-foot level by bureaucrats,

      16      without having any idea how those decisions actually

      17      impact people when they are implementing them.

      18             So, this is happening in this program, so we

      19      are hitting pause button.

      20             Last year during legislative session we

      21      extended the existing program by one year, which

      22      that one year has given us some time to correct and

      23      make the program better.

      24             So, look forward to the testimony today.

      25             And, Senator Phillips, I can't thank you


       1      enough for your leadership on this issue.

       2             When we first spoke about having these

       3      statewide hearings, Senator Phillips was the first

       4      to say:  Come to my Senate District.  We have people

       5      who are struggling with this program.  And I want

       6      you and Senator Ritchie to hear their struggle, and

       7      let them be part of the solution.

       8             So, Senator Phillips, thank you very much.

       9             SENATOR PHILLIPS:  Thank you.

      10             And to Senator Akshar's right, we have

      11      Senator John Brooks --

      12             And I'm sorry, Senator Brooks, what Senate

      13      District?

      14             SENATOR BROOKS:  8th District.

      15             SENATOR PHILLIPS:  8th.

      16             -- from the 8th District here on

      17      Long Island.

      18             Senator Brooks, would you like to say --

      19             SENATOR BROOKS:  Okay.  So Senator Akshar

      20      said he had a, what, 3 1/2-hour ride down here?

      21             I have a 15-minute ride here.

      22             But as we all know, in Long Island, people

      23      don't know how to drive.

      24             So we got a major car accident out here on

      25      Old Country Road that backed us up.


       1             So I apologize for being late.

       2             I think the -- this is such a critical

       3      program to this state, and to this community.

       4             I think we have to take a good, serious, hard

       5      look at some of the problems we had in this program

       6      in terms of getting people qualified for the

       7      program.

       8             I think as Fred has said, sometimes in the

       9      session, some areas of our state have great

      10      difficulty meeting some of the requirements for

      11      these programs, and we need to address that.

      12             But I think it is a critical opportunity to

      13      people that fall in the "minority-owned business"

      14      category to let them grow in this economy.

      15             So, I'm very pleased to be here today.

      16             I thank my associates for coming down, and to

      17      discuss this important issue.

      18             And, after that, we'll figure out how to

      19      change transportation on Long Island so it doesn't

      20      take a light year and a day to go from Seaford to

      21      here.

      22             Thank you.

      23             SENATOR PHILLIPS:  Thank you, Senator brooks.

      24             So, I'm just going to say up front, I don't

      25      mean to be rude, but I really am going to try to


       1      keep us on time.  And I have already gone over

       2      one minute of our time.

       3             So, please, if I cut you off, it's because

       4      I really would like to give everybody the

       5      opportunity.

       6             So we're going to start today with

       7      Denise Richardson, the executive director of the

       8      General Contractors Association of New York, and,

       9      Marc Herbst, a local gentleman, executive director

      10      of the Long Island Contractors' Association.

      11             Please.

      12             MARC HERBST:  We flipped a coin, and I won,

      13      so I go first.

      14             Senators Phillips, Boyle, Akshar, and Brooks,

      15      thank you for holding this important hearing to

      16      examine the Minority- and Women-Owned Business

      17      Enterprises Program, and consider potential

      18      legislative solutions to create a more effective and

      19      efficient program to enhance New York's business

      20      climate.

      21             My name is Marc Herbst, and I serve as the

      22      executive director of the Long Island Contractors'

      23      Association.

      24             I appreciate the opportunity to offer this

      25      esteemed panel my testimony.


       1             The Long Island Contractors' Association

       2      represents the interests of Long Island's premier

       3      heavy-construction general contractors,

       4      subcontractors, suppliers, and industry

       5      professionals.

       6             Our industry is focused primarily on the

       7      building and maintaining of our region's vital

       8      infrastructure, which is its highways, bridges,

       9      transit, electric, cable, gas, clean and wastewater

      10      systems, and all other public works.

      11             We carry a sense of pride that many pf LICA's

      12      170-member firms are multigenerational family-owned

      13      businesses that are located on Long Island, who

      14      continue to work and employ neighbors in our

      15      community.

      16             Many of our successful firms were started by

      17      immigrants who decided to make our region their

      18      home.

      19             Allow me to highlight one such firm.

      20             The name Scalamandre is synonomous with

      21      quality public-works construction in our region.

      22             For many years the family business was led by

      23      Joe Scalamandre.

      24             I ask you to keep Joe in your prayers.

      25             At the end of last year he faced a


       1      life-threatening situation that required very

       2      complicated surgery of which he's still recovering.

       3             He continues to fight for his health, but his

       4      greatest frustration is not being able to be at the

       5      construction sites that he loves so much.

       6             The Scalamandre family business was started

       7      in 1923 by Joe's dad, Peter Scalamandre, who

       8      immigrated to America from Scolati (sic)(ph.),

       9      Italy, with nothing but his hands and a strong work

      10      ethic.

      11             When he arrived, he began building brick

      12      homes on Long Island, but soon fell ill.

      13             Joe, with only minor experience in

      14      construction, estimating, had no choice but to take

      15      over the family business at the age of 16.

      16             Over the years Joe and -- Joe worked

      17      alongside his brother and partner Fred, and built up

      18      the company.

      19             In 1967 the Scalamandre family business began

      20      pouring concrete curbs and sidewalks for many of

      21      Long Island's local municipalities, and soon became

      22      one of the largest concrete providers in the area.

      23             During the sewer-construction program in the

      24      1970s the firm installed more than one million

      25      linear feet of slip-form paving in the


       1      Nassau-Suffolk region.

       2             Other notable Scalamandre signature projects

       3      include the $187 million Caithness Power Plant that

       4      currently supplies Long Island with 10 percent of

       5      its power.

       6             The firm also is a responsible participant in

       7      the current rebuilding of both of our major

       8      airports, LaGuardia and JFK.

       9             While Joe's son Peter, aptly named after his

      10      immigrant grandfather and the family-business

      11      founder, he now leads the business, it was Joe, in

      12      his place of glory, at a construction job site,

      13      marshaling his devoted workforce recently.

      14             He was proud to build the first Long Island

      15      Welcome Center, which was recently opened off the

      16      Long Island Expressway near Exit 51.

      17             The firm continues to employ -- to consider

      18      its employees its greatest assets, and they consider

      19      Joe the ultimate boss.

      20             The Scalamandre legacy is like those of many

      21      family-owned businesses in the heavy-construction

      22      industry.

      23             Many companies were started by immigrants

      24      with limited resources, and, quite frankly, many

      25      instances, with little respect or support from their


       1      new neighbors.

       2             That experience and understanding remains an

       3      underpinning in our industry's fabric.

       4             The heavy-construction industry was, and

       5      continues to be, a leader in supporting those facing

       6      obstacles in reaching their individual potential.

       7             That is why we continue to support programs

       8      that assist minorities, women, and the

       9      disadvantaged.

      10             The founders of many of our companies were

      11      immigrants of Irish, Italian, and Portuguese

      12      descent.

      13             Today's immigrants come primarily from

      14      Central and South American countries, and they are a

      15      large portion of our minority community here on

      16      Long Island.

      17             We as an industry strive to be welcoming to

      18      these newcomers as were to those of our forefathers.

      19             A national study of apprenticeship

      20      opportunities for women and minority in road

      21      construction was conducted by the Transportation

      22      Equity Network.

      23             It concluded that some states haven't done

      24      enough in hiring those groups.

      25             With New York ranking in the middle of the


       1      pack, the Long Island region, however, when singled

       2      out, ranked much more favorably.

       3             Long Island's heavy-equipment operators,

       4      headed by the Operating Engineers, Local 138, boasts

       5      90 percent of it's apprenticeship program consists

       6      of minorities and women.

       7             The industry's largest local union on

       8      Long Island, the Laborer's Local 1298, reports that

       9      60 to 65 percent of its members, as well as its

      10      apprentices, are minorities.

      11             The other locals share similar percentages.

      12             This is the reason, in our region, why very

      13      few public-works projects have any difficulty in

      14      meeting our region's EBO (which the Equitable

      15      Business Opportunities) goal of 5.8 percent of

      16      minority males and 6.9 percent women on job sites.

      17             Since our industry employs over 60 percent of

      18      the workforce from the minority communities, we are

      19      pleased to be a welcoming place to provide

      20      opportunities for new residents and those who are

      21      disadvantaged.

      22             Our region's demographics are changing and we

      23      are proud to be ahead of the curve.

      24             The United States Census data reflects that

      25      the Hispanic community, our largest minority group,


       1      has grown by more than 18 percent since 2010.

       2             Today, 17.15 percent of Nassau's population

       3      is Hispanic.  19.54 percent of Suffolk is Hispanic.

       4             While we are proud to employ many workers

       5      from this and other minority communities, it's

       6      important to point out that the most significant

       7      impact we provide, our industry does not offer

       8      minorities and other workers menial low-paying jobs.

       9             According to the New York State Department of

      10      Labor, the 2017 annual average salary in the

      11      Nassau-Suffolk statistical region for the

      12      5,682 workers in the heavy- and civil-engineering

      13      construction field was one hundred and nine thousand

      14      dollars and ninety-eight dollars (sic); six figures

      15      for the workers of this industry.

      16             But the greatest difficulty today is to move

      17      from a worker to an owner of a construction company.

      18             Peter Scalamandre, the father of Joe and

      19      Fred, could start his business with physical

      20      strength and a strong work ethic, but today's

      21      entrepreneuralship (sic) needs are much more.

      22             Today's entrepreneurs, especially the

      23      minorities' community and women, face a whole host

      24      of legal and regulatory requirements that did not

      25      exist in the past.


       1             This is precisely why the State needs to

       2      review the MWBE program as you are now responsibly

       3      doing.

       4             I implore you not to look for a quick fix.

       5             Time and time again an arbitrary increase in

       6      goal percentage is suggested as an expedient

       7      political process, as a political success.

       8             But this will not achieve the program's real

       9      intent, which is to provide more opportunities for

      10      minority- and women-owned businesses to work

      11      successfully on contracts that enable their firms to

      12      grow and graduate from the program.

      13             To achieve its true mission, the program must

      14      be managed with meaningful State support for MWBE

      15      firms to acquire the necessary financial capacity

      16      for bonding, insurance, and other requirements to

      17      compete in the construction business.

      18             Program administrators must also be

      19      responsible in analyzing the actual inventory of

      20      firms who are available and can perform the typical

      21      work required.

      22             Our partnering association, the General

      23      Contractors Association of New York City (sic), has

      24      championed several actions that will help the

      25      program achieve its intended goals.


       1             LICA wholeheartedly supports these

       2      recommendations.

       3             LICA, however, would like to echo

       4      two specific suggestions this morning.  These are

       5      issues that consistently hinder the contractor

       6      delivery program in the Long Island market, plus we

       7      believe they are successful models that can be

       8      easily implemented, practices now employed by other

       9      agencies.

      10             There is no reason to reinvent the wheel.

      11             First:  The unavailable inventory of outdated

      12      listing of certified MWBE firms creates a tremendous

      13      hardship for contractors seeking to satisfy contract

      14      awards.

      15             We strongly suggest all state agencies

      16      prequalify subcontractors, not just MWBE firms, so

      17      that their credibility and availability of these

      18      firms are known to all bidders in advance.

      19             This is the practice of the School

      20      Construction Authority, one that should be emulated

      21      by all state agencies.

      22             Second, rather than arbitrarily increase

      23      percentage goals, it would be more beneficial to

      24      follow the practice of the Army Corps of Engineers.

      25             This practice makes sense.


       1             The Army Corps sets goals based on the work

       2      to be subcontracted rather than the entire project

       3      value.

       4             The Army Corps' goal must be 50 percent, but

       5      it's 50 percent of the subcontract work, not

       6      50 percent of the total project.

       7             If you follow these recommendations, you can

       8      be assured that future generations will be boasting

       9      about the success and sustainability of firms that

      10      began through the MWBE program.

      11             Today we lift up multigenerational

      12      family-owned businesses, just like the Scalamandres,

      13      that began with the sweat and hard work of its

      14      founder.

      15             Tomorrow, we will do the same, as the current

      16      MWBEs will be honored alongside the venerable

      17      business success stories of Long Island today.

      18             Again, thank you for your attention, and

      19      I appreciate the opportunity to testify this

      20      morning.

      21             SENATOR PHILLIPS:  Thank you.

      22             DENISE RICHARDSON:  Good morning.

      23             Thank you, Senators, for having this hearing.

      24             In the interest of time, I will summarize my

      25      written testimony.


       1             I'm Denise Richardson, the executive director

       2      of the General Contractors Association of New York.

       3             When I spoke at the hearing in Albany in May,

       4      we talked about issues with certification.

       5             Today my focus is the ESD MWBE directory.

       6             Only firms that are listed in the ESD

       7      directory can be counted toward meeting MWBE goals.

       8             The directory is also the basis for

       9      determining the availability and capacity of firms

      10      that can perform work on any given project, and it

      11      must be the foundation on which the agencies

      12      establish a project's MWBE goals; therefore, the

      13      directory must be accurate.

      14             Unfortunately, the directory is woefully

      15      inaccurate and must be fixed.

      16             I will give you two examples to illustrate

      17      its multitude of problems.

      18             Of the 86 firms listed in the category for

      19      "structural steel erection," only 8 actually do this

      20      work.

      21             The other firms provide services that have

      22      nothing to do with erecting structural steel.

      23             A copy of our research is attached to my

      24      testimony for your reference.

      25             Similarly, a review of the NAICS Code for


       1      bridge painters results in a list of seven firms,

       2      two of which are actual bridge painters.

       3             An additional three firms that are known to

       4      have the requisite certifications to paint bridges

       5      are not included under the NAICS Code for bridge

       6      painters, but are included under other codes, and

       7      one is listed in a code that is designated as

       8      inactive.

       9             ESD uses a hodgepodge of industrial

      10      classifications, including NAICS, NIGP, CSI, ESD,

      11      and NYSDOT work codes, but there is no consistency

      12      as to how firms are classified within each coding

      13      system.

      14             A search of all painting codes results in a

      15      list of 312 firms, but there is a total of 6 firms

      16      across all lists that are actual bridge painters.

      17             So when looking to find a bridge painter, the

      18      expectation from agency personnel is that the prime

      19      contractor will solicit all 312 firms in all

      20      painting codes.

      21             This is a waste of time and money, and it

      22      does not help the MWBEs, as they then become

      23      overwhelmed with irrelevant solicitations.

      24             Again, I have attached a copy of our research

      25      to my testimony.


       1             Rather than devoting resources to fix these

       2      easily fixable problems, ESD has hired a consultant

       3      who is tasked with calling MWBE firms to verify if

       4      the prime contractor has, in fact, called them to

       5      advise them of work opportunities.

       6             If the MWBE firm tells the consultant that it

       7      has not been called, the prime contractor must

       8      provide an explanation, even though the prime's MWBE

       9      outreach documentation already includes a date,

      10      time, name of person spoken to, and the outcome of

      11      the call.

      12             This consultant is being paid by our tax

      13      dollars to perform this, obviously, make-work

      14      function.

      15             The GCA recommends that ESD retain an

      16      information-technology and data-analytics consultant

      17      to clean up the directory, and create a program that

      18      will ensure consistent cross-tabulation across the

      19      various industrial classification codes.

      20             This will streamline the search for firms and

      21      will cut down on the number of irrelevant

      22      solicitations that MWBEs receive.

      23             We also recommend that the directory include

      24      a more detailed narrative about firms' actual

      25      business experience.


       1             This will make it easier to target

       2      solicitations to the firms that do the specific work

       3      that is needed; meaning, that MWBEs will then

       4      receive the right solicitations for the work they

       5      actually perform.

       6             To meet project goals, agencies are telling

       7      prime contractors that they must subcontract work

       8      that they would otherwise perform with their own

       9      forces.

      10             We now have situations where paving

      11      contractors are told to subcontract paving work, and

      12      water and sewer main contractors are told to

      13      subcontract the installation of the water and sewer

      14      mains.

      15             This forces the prime contractor to

      16      artificially subdivide the project in ways that add

      17      costs and schedule risk.

      18             This translates to higher costs to the

      19      taxpayers and a longer time for them to receive the

      20      benefit of the new project.

      21             It is time to set the goals based on the

      22      project scope of work and not on arbitrary numbers.

      23             There is an existing body of law governing

      24      MWBE programs that is being ignored.

      25             Project goals are to be narrowly tailored and


       1      must reflect the availability and capacity of firms.

       2             Instead, project requirements are being set

       3      with little to no regard for the project's scope,

       4      schedule, or the availability and capacity of firms

       5      to perform the work.

       6             This is illegal.

       7             Public owners, as part of the

       8      bid-solicitation process, should publish their

       9      goal-setting analysis with the bids facts.

      10             They should also identify the certified MWBE

      11      firms that actually perform the project's scope of

      12      work, and include that information with the bid

      13      documents as well.

      14             It is also time to set the goals based on the

      15      work that is available to be subcontracted on a

      16      project, as Marc Herbst talked about earlier.

      17             If a project has a value of $10 million, that

      18      does not mean that $10 million is available to be

      19      subcontracted.

      20             The goals should be applied -- to not be

      21      applied to the contractor's cost for bonding,

      22      insurance, corporate management, office space,

      23      utilities, and other overhead or specialty equipment

      24      that is not available to MWBEs.

      25             The goals, as Marc earlier stated, should be


       1      applied to the work that can actually be

       2      subcontracted for which there is availability of

       3      MWBEs to perform.

       4             The impact of 30 percent and higher goals on

       5      projects has meant that nearly all of the available

       6      subcontract work is being assigned to MWBE firms,

       7      often at a higher cost than the bids received from

       8      non-MWBE firms.

       9             When every tax dollar has multiple claims

      10      against it to meet a number of needs, we should be

      11      looking at ways to minimize the cost of projects,

      12      not increase them.

      13             It is time to make the MWBE program fit the

      14      reality of construction, and not the other way

      15      around.

      16             The priority must be the most efficient way

      17      to build the project within the established schedule

      18      and budget at the most advantageous cost, and not an

      19      arbitrary subdivision of work that bears little

      20      resemblance to how the project would be built in the

      21      absence of MWBE requirements.

      22             However, this does not mean that the GCA

      23      supports, in any way, shape or form, scuttling the

      24      MWBE program.

      25             What we are advocating for is the


       1      establishment of project-specific goals based on the

       2      availability of MWBEs to perform the work, with

       3      greater help from ESD and the contracting agencies

       4      in making sure that the information about the work

       5      that is performed by certified MWBEs is accurate.

       6             Thank you.

       7             SENATOR PHILLIPS:  Thank you very much.

       8             Questions?

       9             SENATOR AKSHAR:  I'll just ask one quick

      10      question, if I may.

      11             You often hear about this program being

      12      different, regardless -- or, depending on where you

      13      are in the state of New York.  Right?

      14             So today we're on Long Island.

      15             There's definitely a capacity issue where

      16      I come from in the Southern Tier, you know, meeting

      17      that 30 percent.

      18             I just want to understand that, here on

      19      Long Island, you're faced with the same struggles,

      20      right, meeting that 30 percent goal, because you

      21      just can't?

      22             MARC HERBST:  It certainly is, because, as we

      23      mentioned earlier, a lot of the lists are outdated;

      24      they're not realistic.

      25             Denise just spoke about trying to find a


       1      steel contractor.

       2             You've got a list of all kinds of names of

       3      firms that are out there.  You're spending all your

       4      effort and preparation trying to reach out to the

       5      firms, and they're not even in that business.

       6             So, when you finally get down to the people

       7      who are doing it, usually they may not even be

       8      available.

       9             So now you're at the last minute of the

      10      contract, trying to prepare work.

      11             And, now, if you get a waiver, now you've got

      12      to go try to find another source, which you wouldn't

      13      have gone through that entire process, wasted the

      14      time, and now escalated the cost, because now the

      15      materials probably are going to be higher than what

      16      you estimated on to begin with.

      17             SENATOR AKSHAR:  Denise, you talked a little

      18      bit about increase in cost.

      19             Any idea, generally speaking, what the --

      20      fulfilling these obligations is increasing the cost

      21      of construction?

      22             DENISE RICHARDSON:  We're working on a study

      23      of that right now, to see what it's doing both to

      24      our contractors' overhead costs, because, obviously,

      25      everyone has had to add a number of staff members


       1      whose job solely is to call through the MWBE list,

       2      and do their own vetting and own research so they

       3      have their own databases of what services firms

       4      actually provide.

       5             This is an enormously costly and duplicative

       6      effort.

       7             We're also looking at what it has meant in

       8      terms of needing to add additional supervision onto

       9      projects.

      10             Because one of the issues, you know, that

      11      we're finding is, that as the goals increase, and

      12      particularly on some projects, it means that we have

      13      many more subcontractors than we otherwise would

      14      have had, which, on some projects, makes perfect

      15      sense if the business model would have been that

      16      there are many elements of work to subcontract.

      17             On other projects, when you look at what the

      18      scope of work is, particularly if it's a

      19      road-repaving project, there is not a lot of

      20      subcontracting opportunity.

      21             So the goals have to be tailored to match the

      22      needs of the project.

      23             And what we're finding is, that we are

      24      subdividing projects in ways that we would not have

      25      otherwise subdivided them, leading us to have to add


       1      additional supervision and additional time in the

       2      schedule to coordinate multiple subcontractors.

       3             SENATOR AKSHAR:  So it's incredibly alarming

       4      to me, right, because the only people that should be

       5      hiring folks to administer a program is the people

       6      in the state of New York.  Right?

       7             People in the MWBE program should be hiring

       8      more people to administer this program.

       9             I would like to see you folks hiring more

      10      people to set steel and pour concrete, but you're

      11      not doing that.  You're having to hire more people

      12      just to get through all the bureaucracy associated

      13      with this program.

      14             Thank you.

      15             DENISE RICHARDSON:  Thank you.

      16             SENATOR BOYLE:  And I would like to thank

      17      both of you for testifying.

      18             My long-time friend Marc Herbst, for those of

      19      you who don't know, Marc and I were elected to the

      20      State Assembly on the same night in 1994.

      21             He was smart and went into the private

      22      sector.

      23             But, Denise, you did talk about

      24      misclassification.  I'm interested in that.

      25             300-some-odd bridge painting


       1      subcontractors --

       2             DENISE RICHARDSON:  Painters.

       3             SENATOR BOYLE:  -- but only 6 or so that

       4      actually do it.

       5             How do those other companies get on the list,

       6      and what are they doing to have gotten there?

       7             DENISE RICHARDSON:  The process for

       8      companies, the companies select their own codes.

       9             We have spoken to ESD at length, and this is

      10      also an issue in New York City as well, about

      11      devoting staff to work with the firms to help them

      12      select the proper codes.

      13             Part of the problem is, when you look at the

      14      NAICS classifications, they're very broad.  And

      15      there's a number of subclassifications that need to

      16      become part of the list so that you can refine it.

      17             The similar problem exists with NIGP.

      18             And one of the things that ESD did, in a way

      19      to try and help firms, was to incorporate these

      20      multiple lists that I referenced.

      21             However, what has happened is that, because

      22      there is no cross-check, someone who lists

      23      themselves as, say, an interior painter, will show

      24      up on all lists unless they are specifically

      25      excluding other types of painting.


       1             And in the reverse situation, someone who may

       2      be a bridge painter, and doesn't go through to find

       3      the relevant subclassification, will be listed in

       4      the "general painting" code.

       5             So there really needs to be a concerted

       6      effort to work with the firms to resolve the issues.

       7             And I mentioned in my testimony in Albany, we

       8      did a survey about a year ago of firms -- of the

       9      MWBE firms, and asked them to identify to us what

      10      information in the directory was correct for them

      11      and what was not.

      12             And half of the information was incorrect.

      13             SENATOR BOYLE:  Wow.

      14             Thank you.

      15             SENATOR PHILLIPS:  Senator Brooks.

      16             SENATOR BROOKS:  I think both of you made

      17      some excellent points, and I think, particularly

      18      when we're dealing with the list, and have an

      19      outdated list, and the confusion that brings and the

      20      expense.

      21             And, Marc, you know, I think your

      22      association, what it's been doing from a training

      23      standpoint and bringing everybody in, is excellent.

      24             I think -- I think what's important that

      25      you're giving to us, is the practical side of what's


       1      really going on, and that's what we have to look at:

       2             How we honestly implement these programs in a

       3      realistic, as to what resources are and are not

       4      available in certain regions.

       5             And most importantly, any list that we have

       6      people should be correct and honest.  Not, at the

       7      last minute, you're searching for somebody to fill a

       8      slot.

       9             So, you know, I appreciate both

      10      presentations.

      11             For Marc and I, we're in a role reversal.

      12             When he was the Assemblyman, I used to scream

      13      at him as a school board member.

      14             Now we reverse ourselves.

      15             But --

      16             MARC HERBST:  I didn't scream at you,

      17      Senator.

      18             I was nicer than you were to me.

      19                [Laughter.]

      20             SENATOR BROOKS:  We can go back to one night,

      21      Marc, but we'll leave that.

      22             But I do thank you both for some excellent

      23      comments and solid suggestions of what has to be

      24      done.

      25             Thank you.


       1             DENISE RICHARDSON:  Thank you.

       2             SENATOR PHILLIPS:  I have one quick question.

       3             So you have given your feedback to ESD, both

       4      of you?

       5             DENISE RICHARDSON:  Yes.

       6             SENATOR PHILLIPS:  How many times?

       7             DENISE RICHARDSON:  Several.

       8             SENATOR PHILLIPS:  Thank you.

       9             MARC HERBST:  It's an ongoing conversation.

      10             SENATOR PHILLIPS:  Thank you.

      11             DENISE RICHARDSON:  We're also in the process

      12      of -- I just cited those two specific codes.

      13             But we're also in the process of doing a

      14      similar analysis with all the relevant heavy civil

      15      construction codes to see what exactly is in there.

      16             And we will provide them with all the

      17      information, because we -- you know, we would like

      18      to work with them and help them resolve this, to the

      19      extent that they're interested in helping us.

      20             SENATOR PHILLIPS:  Okay.  Thank you.

      21             Thank you, both of you.

      22             I'm going to ask Mr. Larry Sitbon to come up,

      23      from Citnalta Construction Company.

      24             Mr. Sitbon has taught courses to MWBEs on how

      25      to become an MWBE, so I felt that he has a unique


       1      ability to give us, and I apologize, in three

       2      minutes or less, what works from his standpoint, and

       3      what doesn't work.

       4             LARRY SITBON:  Okay.

       5             So unlike Marc and Denise, I did not come

       6      prepared to speak.

       7             I came prepared to listen.  And I introduced

       8      myself at the podium when I first came in.

       9             I spoke with Senator Phillips briefly about

      10      some of the frustration that I'm experiencing right

      11      now, and she asked me to speak.

      12             I'm part of Senator Boyle's district.  I'm in

      13      Bohemia, Long Island.

      14             Just briefly, only because of the Scalamandre

      15      story, you know, my parents emigrated here in 1940,

      16      during World War II, from North Africa.  And I felt

      17      different, myself, than others growing up.

      18             And I -- my best friend was a little

      19      Afro-American boy -- one of my best friends.  He was

      20      the grandson of the superintendent in my building.

      21      And when he hurt, I hurt.  When people made fun of

      22      him, it hurt me.

      23             And I said to Senator Phillips that I do

      24      believe in the program.

      25             I believe there were injustices that


       1      occurred.  I believe opportunities were not provided

       2      for minorities and women throughout my generation

       3      particularly.

       4             We've come a long way.

       5             I'm here today to listen because I was

       6      extremely frustrated by something that happened with

       7      my company last month.

       8             I explained to Senator Phillips that we are,

       9      to some degree, regarded as the poster boy at the

      10      MTA for doing the right thing with M and Ws.

      11             Mike Garner who runs the program openly

      12      demonstrates that whenever he gets the opportunity.

      13             And so because we know our way around the MTA

      14      and we know our way around the SCA, we've managed to

      15      effectively work with the program, succeed with the

      16      program, and, although it provides extra difficult

      17      situations for us, we manage it.

      18             So, just briefly, what happens, so you'll

      19      understand my motivation, we were low bidder on the

      20      biggest job we've ever been low bidder on, a

      21      $106 million bid.  It was not a program subject to

      22      15-A.  It was Local Law 1.

      23             But it was taken away from us because our

      24      paperwork that we submitted was remiss, no question.

      25             The documents gave us the opportunity for a


       1      four-day cure, which the owner didn't provide us

       2      with.

       3             And they just went to the next bidder and

       4      deemed us to be non-responsive primarily because our

       5      minority paperwork was not proper, which was

       6      extremely frustrating to me, especially after having

       7      done the right thing, if you will, for so many

       8      years.

       9             So to get back to your particular cause, it

      10      is getting more and more difficult every day to do

      11      business.

      12             We focus ourselves; I think 33 percent of the

      13      effort in my company right now is devoted towards

      14      minority.

      15             My partner said to me, Everything we talk

      16      about now is minority.

      17             That's a little bit of an exaggeration.

      18             But, when we bid a job in our bid room, we

      19      have two big television sets.

      20             One has the cost of the bid, and the other

      21      television set on a projection screen has, how are

      22      we going to meet the minority goals?

      23             And that goes part and parcel with our bids.

      24             In meeting the goals, we're taking a far

      25      greater risk.


       1             I have a belief in my company, whenever my

       2      estimator would bring in a contractor to us to

       3      perform work, my first two questions would be:

       4             Is he union, and -- he or she; and is he or

       5      she bonded?

       6             Nowadays, bonding is out the window with

       7      minorities, to a large -- actually, I would say

       8      70 percent of the minorities are not bonded.

       9             I've got a $5 million unbonded contract, a

      10      $3 million unbonded contract.  And, generally,

      11      I don't like to go higher than two hundred and fifty

      12      or five hundred thousand dollars, unbonded.

      13             So there's a far greater risk on our part.

      14             And we have to -- I know we have to make sure

      15      that the minorities meet commercially useful

      16      purposes, but we have to keep an extra management

      17      eye on the daily activities of the contractors, the

      18      minority contractors, because many minority

      19      contractors are financially suffering, and don't

      20      have the same experience that another contractor who

      21      might be doing a $5 million job has, and this is a

      22      first for many of them.

      23             So it just creates a difficult situation for

      24      us in working.

      25             And that's, basically, our situation.


       1             SENATOR PHILLIPS:  Thank you, Mr. Sitbon.

       2             So this is definitely an issue that is

       3      costing your firm.  It's making the overhead for a

       4      project increase because of the amount of

       5      administrative time you're putting towards making

       6      sure.  And the amount of risk.  I mean, you are

       7      employing unbonded subs.

       8             LARRY SITBON:  My biggest thing in life, as a

       9      business owner, and I started the business 44 years

      10      ago, as a business owner, the first thing I look at

      11      is risk.  That's the first thing I like to evaluate.

      12             Whether it's sending someone to the deli for

      13      a sandwich or bidding a job, I worry about risk.

      14             And, also, we do take higher prices from

      15      minorities in order to meet the goals.  It's a fact.

      16             SENATOR PHILLIPS:  Right.  Great.

      17             Thank you very much.

      18             Thank you for your testimony.

      19             LARRY SITBON:  Thank you.

      20             SENATOR PHILLIPS:  I'm going to ask

      21      John Cavallaro and Denise (sic) Capolino.

      22             Capolino?  Capolino (different

      23      pronunciation).

      24             DENNIS CAPOLINO:  Capolino.

      25             SENATOR PHILLIPS:  Capolino.


       1             Thank you.

       2             Oh, Dennis.

       3             You're Denise.

       4             Sorry, Dennis.  My apologies there.

       5             DENNIS CAPOLINO:  That's okay, but I will say

       6      that's probably a first for me.

       7                [Laughter.]

       8             SENATOR PHILLIPS:  Okay.

       9             So, John is with Skanska USA Construction,

      10      and Dennis is with Halmar International.  Both are

      11      members of the GCA.

      12             JOHN CAVALLARO:  Good morning, Honorable

      13      Senators.

      14             As Senator Phillips mentioned, my name is

      15      John Cavallaro.  I am corporate counsel for

      16      Skanska USA civil.

      17             Skanska is actually a global developer and

      18      construction company.  I believe we're the seventh

      19      largest contractor in the world.

      20             My role at Skanska is actually to oversee the

      21      national DBE compliance program, which includes M/W

      22      compliance here in the New York area.

      23             I oversee about 60 projects, and they range

      24      from hundreds of millions, to as high as $4 billion.

      25             So I definitely offer a national perspective.


       1             My range of projects go from Seattle to

       2      Boston, to Orlando, to Southern California.  But the

       3      New York metro area has the -- I would say the

       4      highest number of projects that I see M/W challenges

       5      on or DBE challenges.

       6             I think, Senator Brooks, you hit the nail on

       7      the head.

       8             How do you get a piece of legislation, put it

       9      into practice, with day in and day out folks that

      10      are running the program, actually can do this in an

      11      efficient way, where the ideals of the program are

      12      actually met, which is, really, provide the

      13      opportunities that the program speaks to, and level

      14      the playing field that DBE regulations kind of speak

      15      to, that the M/W regulations pull from?

      16             I think you're going to hear in these

      17      workshops, if you haven't heard already, that in the

      18      New York area, particularly downstate, capacity is a

      19      tremendous issue.

      20             We at Skanska, to address that issue on our

      21      Laguardia project, a $3.9 billion project, and our

      22      Farley project, which is a $1.26 billion project,

      23      actually built in an exclusion in our project labor

      24      agreement which said that MWBEs can actually work

      25      non-union on a union project.


       1             The unions were very resistant at first, but

       2      ultimately agreed to it.  And it was an effort to

       3      address the issue, that you have a lot of MWBE

       4      companies out there, that they hear the word

       5      "unions" and they're reluctant to get involved in

       6      the project.

       7             We've also participated in USDOT bonding

       8      workshops.

       9             We do -- we run a building-blocks program for

      10      MWBEs.

      11             We spend a lot of effort in trying to train

      12      the community, particularly the MWBE community, how

      13      to work on a mega project which is unionized.

      14             But the one thing that we're finding time and

      15      time again, and I think you've heard this from

      16      Denise and Marc, is that the goals are not

      17      consistent with what's happening day to days.

      18             I participated personally in some of the

      19      disparity-study workshops that ultimately supported

      20      New York State's 30 percent goal.

      21             But the one thing that I find that the

      22      disparity studies did not take into account is, what

      23      do you do with a prime contractor who has

      24      unreasonable pricing?

      25             Just last week we bought out a scope of work.


       1             When I say "buy out," it's a process of

       2      hiring a subcontractor.

       3             My non-MW was at $8 million.  My M/W was at

       4      $28 million.

       5             So I have an M/W, he's available to do the

       6      work, but he's available to do it at more than

       7      300 percent the cost.

       8             So, if you look at the disparity study,

       9      I have availability, I have certification, but where

      10      does the unreasonable pricing?

      11             And, ultimately, the taxpayers bear that

      12      burden.

      13             So I ask that any improvement in the

      14      legislation take into account the issue of

      15      unreasonable pricing.

      16             And the primes, in my opinion, should be

      17      relieved of that pressure to meet the goal when the

      18      pricing rises to the level of unreasonableness.

      19             Also, we talk about that, in New York State,

      20      we have umpteen thousands of firms certified in our

      21      database, which is true.

      22             I'd like legislation, when revisited, to take

      23      a look at those areas of work on a kind of

      24      scope-by-scope basis.

      25             One thing that most of us in the room


       1      probably use every day is elevators and escalators.

       2             There's not a single M/W firm certified to do

       3      the escalator work and the elevator work that we do.

       4             Perhaps there should be exclusions for

       5      certain areas of work based upon the

       6      non-availability of M/Ws when they just don't exist

       7      in those particular areas of work.

       8             Another issue, and I'm going to give you

       9      very, kind of, specific examples of what we deal

      10      with day to day, when we're talking about improving

      11      the legislation.

      12             We have many, many prime contracts where we,

      13      as the prime contractor, contractually must perform

      14      a certain percentage of the work; 50 and 60 percent.

      15             So if I have a 50 percent self-perform

      16      guarantee to the owner, and I have a 30 percent

      17      goal, that only leaves me 20 percent work for the

      18      non-MW subcontractors.

      19             The non-MW subcontractors are very critical

      20      to the M/W community because they're the very ones

      21      hiring them at the second tier.

      22             So we find that they're diminishing, and

      23      their numbers are reducing.  That will ultimately

      24      have a negative effect on us getting M/W because,

      25      many times, M/W firms, they're small by definition,


       1      they don't have the capacity.

       2             So I will subcontract a very large scope of

       3      work to a first-tier non-MW, who, in turn, will

       4      break it down and get that M/W participation at the

       5      second tier.

       6             So we need that first level of non-M/Ws to

       7      be active, efficient, successful, and financially

       8      stable.

       9             Another area where I think we can improve the

      10      legislation -- and I think, Marc, you touched on

      11      this -- I've had the benefit of being the compliance

      12      officer on three large projects where the Department

      13      of Defense was the owner.

      14             The federal government operates under

      15      something called the "Federal Acquisition

      16      Regulation," much different than the DBE or the M/W

      17      regulations.

      18             On those projects, they actually take the

      19      prime contract amount, break it down into two

      20      components:  What will the prime self-perform, and

      21      what is the amount to be subcontracted?

      22             And then goals are measured against the

      23      amount to be subcontracted.

      24             That's a very efficient way of identifying

      25      the goal, and I think, practically speaking, a


       1      realistic way of getting to the goals, because when

       2      we speak of bonding, insurance, general conditions,

       3      supervisory salaries, executive salaries, those are

       4      not areas where there will be any participation, but

       5      yet the goal in New York State is measured against

       6      that.

       7             So by breaking out the subcontractor,

       8      (indiscernible), as Marc mentioned, it's a more

       9      efficient and, I think, realistic way of achieving

      10      the goals.

      11             On the certification side, I think a little

      12      bit of a misnomer exists in New York State.

      13             We hear many subcontractors, even some

      14      primes, talk about a firm being "certified."

      15             But certified does not equal qualified, and

      16      qualified doesn't equal compliant.

      17             So, New York State spends an awful lot of

      18      money hiring integrity monitors who work on the

      19      owner's behalf, making sure that us, like primes and

      20      subs, are being compliant.

      21             I would suggest that the efforts of those

      22      integrity monitors be redirected, that, in that

      23      certification process, they're vetting out those

      24      firms for compliance efforts, commercial-useful

      25      function standards.


       1             And that, this way, I believe, as Marc

       2      mentioned, through the pre-qual process, when a firm

       3      is presented as being "certified," it's more than

       4      just a financial review.  It's that the firm is

       5      viable, qualified, and compliant.

       6             I think it gives us all in this state a sense

       7      of reassurance that we have the State's stamp of

       8      approval.

       9             We understand we're going to have our

      10      compliance efforts to undergo, nonetheless.  But at

      11      least we have that extra level of reassurance,

      12      particularly when non-compliance comes into

      13      existence.

      14             The other thing that we would ask you to take

      15      a look at is that, MWBE firms are small by

      16      definition.

      17             And on the mega projects that we work on, we

      18      are giving them subcontracts in the tens of millions

      19      of dollars, when they've never handled work of this

      20      nature, this scope, and, really speaking, this

      21      scale.

      22             Recently had a subcontractor who failed on a

      23      project, an M/W.  Had a $38 million subcontract.

      24             His next largest subcontract prior to that

      25      was 6 million.


       1             And, surprise, surprise, he failed within a

       2      few months because the work and the scale of the

       3      work was just too much.

       4             But, we're under a lot of pressure to give

       5      them this work because there's pressure to meet the

       6      numbers.

       7             So we ask that, there's an inherent tension

       8      between hiring the firms, but then saying, "Hands

       9      off.  I can't give you assistance as a prime

      10      contractor, in fear that I might violate the

      11      standards for commercial-useful function."

      12             If I want to properly take credit for that

      13      $38 million subcontract, I, literally, have to stand

      14      on the sideline as the prime contractor and let that

      15      small business with a $38 million subcontract, work

      16      on its own, and manage its own work.

      17             And if I give too much assistance, I can then

      18      have a prosecutor knocking on my door saying:  You

      19      violated CFF as a prime contractor.  Now you're

      20      under investigation.

      21             There needs to be more balance in the CFF

      22      standards, in my opinion.

      23             These are firms that need assistance.

      24             I believe most of us in the room, when we

      25      think about our careers, there's someone who gave us


       1      assistance, there's someone who was our mentor,

       2      there's someone who helped us along the way.

       3             If the essence of the program is to truly

       4      have the M/Ws succeed, the primes should be able

       5      to coordinate with them, give them more assistance,

       6      for that successful rate.

       7             But, that has to take into consideration that

       8      the prime should not be in the position of being in

       9      fear of being prosecuted for making sure that

      10      coordination, schedule, guarantees, quality control,

      11      are all met.

      12             There's so much more to a project than M/W

      13      compliance, so we have to be careful that the tail

      14      is not wagging the dog.

      15             SENATOR PHILLIPS:  Mr. Capolino -- oh, excuse

      16      me.

      17             JOHN CAVALLARO:  Yeah, just two other


      19             The other thing that I would suggest, too, is

      20      that, when you look at the federal DBE regulations,

      21      and you put on all of the materials that they add,

      22      there's, literally, hundreds of pages of guidance.

      23             The New York statute is a few paragraphs, and

      24      there's no guidance behind it.

      25             Take a look at your New York State Committee


       1      on Open Government.

       2             FOIL, we'll deal with it every day,

       3      especially as public officers.

       4             If I want to look up an issue for FOIL, I go

       5      to your database, the New York State Committee on

       6      Open Government, and there's a library of guidance

       7      opinions, so that you know, as a public official,

       8      how to operate, and how to disclose documents, and

       9      how to withhold documents.

      10             I would suggest that there are's so many gray

      11      areas in the New York statute, that adopt something

      12      similar to what you do with the Committee on Open

      13      Government, and start publishing guidance opinions

      14      for the contracting community, so that we encounter

      15      these gray areas, we have some level of guidance.

      16             By leaving the contracting community with so

      17      many questions, even unintentionally, we can find

      18      ourselves in the area of noncompliance.

      19             That's not good for the project, that's not

      20      good for the public owner, and that's certainly not

      21      good for the contracting community.

      22             And then, lastly, to Denise's point, we have

      23      six different commodity codes in New York that we

      24      use.

      25             Let's standardize the codes to one code, one


       1      basis.  And let's standardize the forms.

       2             New York State uses various forms of payment

       3      verifications, waiver requests, utilization plans,

       4      and participation plans.

       5             Let's standardize one set of forms so that

       6      we're all speaking the same language, and the public

       7      employees and the contracting community are kind of

       8      using the same verbiage when they're operating under

       9      a project.

      10             I think that there's such a shotgun approach

      11      to the forms, the codes, the certification, that it

      12      just raises the risk for a lot of miscommunication

      13      when you're operating day to day.

      14             So thank you for your time.

      15             And, again, I applaud you for having us here

      16      today.

      17             SENATOR PHILLIPS:  Thank you.

      18             Thank you.

      19             Mr. Capolino.

      20             DENNIS CAPOLINO:  Hi, I'm Dennis Capolino.

      21      I'm a vice president of Halmar International.

      22             For Halmar International, I serve as the

      23      chief procurement officer, chief diversity officer,

      24      and corporate EEO officer.

      25             I'm current -- Halmar is one of the four


       1      partners on third -- of Third-Track constructors.

       2             And we're currently working on the

       3      Long Island railroad project right here at home.

       4             SENATOR PHILLIPS:  (Inaudible.)

       5             DENNIS CAPOLINO:  And it's going to be --

       6      it's going to inconvenience people for the next four

       7      or five years, but it's going to be a great project.

       8             So, for Third-Track constructors, I am

       9      currently managing the procurement, and I'm the

      10      MWBE, SDVOB, program manager.

      11             So I am managing the MWBE program for a huge

      12      project also.

      13             The people that went before me today have

      14      talked in a lot of generalities.

      15             I want -- I thought maybe I would spend a

      16      little time giving you some real statistics of

      17      things that we have experienced over the last few

      18      years.

      19             We find that invitation to bids to MWBE

      20      firms, and on every single project we send out

      21      hundreds.  Sometimes on a project like Third Track,

      22      it will be thousands.

      23             We find we get about a 7 percent response

      24      rate --

      25             SENATOR PHILLIPS:  Seven?


       1             DENNIS CAPOLINO:  Seven.

       2             SENATOR PHILLIPS:  Seventy?

       3             DENNIS CAPOLINO:  Seven.  Seven

       4      (indiscernible).

       5             -- of firms that we invite to bid, that

       6      actually submit a bid.

       7             We also have job-specific outreach events.

       8             We've had three already out here on the

       9      island for this project.

      10             We find that on the job-specific outreach

      11      events we average about a 3 percent turnout.

      12             There was one here the MTA sponsored on

      13      June 2, I believe.  23 firms showed up.

      14             We find that most MWBE firms do not -- they

      15      don't want to spend the time to put a quote together

      16      and give us a price before we actually bid the

      17      project.

      18             But yet the -- our public owners require us

      19      to submit a utilization plan, telling us (sic) what

      20      firms we plan to use, how much and what work they're

      21      going to do, either with our bid or within seven

      22      days of our bid.

      23             We also find that a lot of MWBE firms just

      24      plain do not want to work for certain state

      25      agencies.


       1             New York City DOT is famous.

       2             MTA.  MTA has some pretty rigorous

       3      requirements for qualification, as does,

       4      New York City agencies, they have their VENDEX.

       5             I found that the agencies are not willing to

       6      bend their qualification requirements for MWBEs.

       7             I've been in many battles where I proposed

       8      someone who had two years' experience, and not

       9      three, and they've just plain said, no, you can't

      10      use them.

      11             We also find that the agencies tend not to

      12      adhere to Executive Order 15-A themselves.

      13             As was discussed earlier, they don't set

      14      project-specific goals.

      15             Right now, it's a straight 30 percent on

      16      everything that's State-funded.

      17             I've seen one job in probably the last three

      18      years that the goal was less than, then.  And before

      19      it was 20.  Now it's 30.

      20             I've seen one that -- where I think it

      21      was 10.  Just one.

      22             They don't give waivers.

      23             Waivers are not a thing.  No matter what you

      24      do, you do not get a waiver.

      25             And, again, as everyone has said here, the


       1      goals are not really realistic relative to the

       2      projects that we're doing.

       3             We've also found that just the certification

       4      in the New York State database is really

       5      meaningless.

       6             Now, we talked about, the certifications

       7      aren't -- don't really show what work the firm does.

       8             But the agencies themselves come to us and

       9      they say:  Well, okay, they're in our database, but

      10      that doesn't mean anything.  You have to verify that

      11      they're certified.  You have to verify that they're

      12      real.  You have to verify that they perform a

      13      commercially useful function.

      14             And I'll say that, while we -- when we do

      15      that, we find -- I find a lot of firms that

      16      I wouldn't consider to be real, and we tend to shy

      17      away from them, and, obviously, we don't use them.

      18             I think there truly is a lack of capacity.

      19             I've seen a lot of -- I've seen a lot of

      20      statements made that there's over 10,000 firms that

      21      are certified now.

      22             I would submit to you that probably less -- a

      23      third or less are actually shovel-in-the-ground

      24      construction firms.

      25             Most of them are construction managers,


       1      engineers, and they don't actually build things.

       2             A lot of them are non-union, we talked about

       3      that.

       4             Government agencies, such as MTA, where

       5      projects now, or even the New York State DOT, their

       6      projects, they do project labor agreements.

       7             These firms don't want to -- they just don't

       8      want to get involved.

       9             And I found, even on jobs, you know, where

      10      I've told them, "It's a project-labor agreement.

      11      Even though you're non-union, you can still work on

      12      the project," they want nothing to do with the

      13      unions.

      14             And a lot of them are very small and they

      15      have their crew, and that's how they make their

      16      living.

      17             Which, there's another point:  A lot of the

      18      firms that are certified, they don't even do

      19      commercial work.

      20             There's residential builders, there's people

      21      that do storefronts on shopping centers.  They don't

      22      even perform our type of work.

      23             A lot of them are from out of state.  They're

      24      not even New York State businesses.

      25             When we talked about the painting, the bridge


       1      painters, one of the things Denise didn't mention is

       2      that, of the six, seven, that are certified, only

       3      one or two are actually New York State companies,

       4      and only one in Long Island.

       5             I find that I -- on a regular basis,

       6      yesterday, three times, I've had to tell

       7      non-minority small businesses that, I'm sorry,

       8      I can't accept a bid from you on my job because

       9      everything that I'm giving out now is only going to

      10      minority businesses.

      11             There were three yesterday, and people that

      12      I've worked with for over 20 years, and I just told

      13      them, Don't waste your time.  You cannot get this

      14      job.

      15             SENATOR AKSHAR:  The cost on this job,

      16      (inaudible/no working microphone).

      17             DENNIS CAPOLINO:  The cost of?

      18             Well, we're talking about $200,000 contracts,

      19      million-dollar contracts.  I'm not talking about

      20      major companies.

      21             We're talking about, you know, just "people

      22      trying to earn a living" kind of companies.

      23      Absolutely.

      24             So with that in mind, I want to go over a

      25      couple numbers.


       1             On the Long Island Railroad Third Track

       2      project, before we bid the job, we sent out

       3      3,282 invitations to minority- and women-owned

       4      businesses.

       5             Part of the rules of good-faith effort, you

       6      have to make what we call -- you have to do what we

       7      call at least three "touches."

       8             "Touch" could be an e-mail -- well,

       9      typically, it's two e-mails and a phone call.

      10             So, 3,282 people we contacted 3 times.

      11             We received 962 responses.

      12             163 of the 962 said they will bid the job,

      13      and of those 163 "will bids," we actually received

      14      70 bids, on a $2 billion project.

      15             Now -- so, outreach events.

      16             Three or four months before we actually bid

      17      the Third-Track project, we had an outreach event.

      18             We invited 3,588 firms.  About 75 attended.

      19             In March of '18, Halmar did an outreach for

      20      another project a little further up the line in

      21      Westchester County, for the enhancement of five

      22      train stations.

      23             We invited 3,267 firms.  41 showed up.

      24             I talked about the MTA's outreach, where they

      25      only got 23 firms.


       1             So we decided to try something different, and

       2      we decided to do what we call "targeted outreaches."

       3             And one of the -- one of the -- and with us,

       4      our approach to try to meet the goal on Third-Track

       5      is, we're breaking the project up into very small

       6      parts.

       7             We have 13 bridges we have to build.

       8             We're breaking the bid packages up into one-

       9      or two-bridge bid packages.

      10             So we did that, and we did an invitation just

      11      for the steel fabrication and the steel erection.

      12             We invited 62 firms that were certified for

      13      steel fabrication or steel erection.  Two attended.

      14             On August 16, we did another big outreach

      15      event for Third Track.

      16             We invited 3,018 firms.  67 showed up.

      17             Now, I sat down --

      18             I'm sorry?

      19             SENATOR PHILLIPS:  (Inaudible/no working

      20      microphone.)

      21             DENNIS CAPOLINO:  Yeah, okay.

      22             One more quick point.

      23             So I sat down and worked out the numbers

      24      for -- because we touched on this also, with

      25      exclusions from the contract, when you're setting


       1      goals.

       2             So the base contract for Third Track is

       3      1,457,100 -- $1,457,117,009.

       4             We have a 20 percent self-perform

       5      requirement.

       6             So if we deduct that, if we deduct our

       7      mobilization and demobilization costs, our overhead

       8      and profit, our bonds and insurance, direct-hire

       9      project management, and there's also items that

      10      cannot be -- that are what we call "sole source."

      11      We can only use one firm.

      12             For example, the positive train control

      13      system, we can only us Bombardier.

      14             For the signal system we can only use

      15      Insolvile (ph.).

      16             So you get to the bottom of this, and there

      17      are's 468 million available to subcontract, at all,

      18      to every firm.

      19             Our 36 percent goal is 524,562,000.

      20             So, sitting here today, if I subcontract

      21      everything out to an M/W or SDVOB firm, I'm still

      22      going to be $56 million short of the goal.

      23             And the other thing that we didn't talk about

      24      today, that we didn't bring up, because this is the

      25      MWBE program, but now we've -- the State has now


       1      instituted an SDVOB program (service-disabled

       2      veteran-owned businesses).

       3             Our goal on Third Track for that is

       4      6 percent, which equates to $87 million.

       5             There's only 231 certified SDVOB firms in the

       6      entire state that perform construction work.

       7             So, from -- meeting those goals, I think, are

       8      going to be even harder.

       9             SENATOR PHILLIPS:  It's a project that is,

      10      needless to say, very relevant to here in the

      11      7th Senate District, since the entire -- with the

      12      exception of a small portion going through

      13      Senator Hannon's district, but, it is a project that

      14      is right here in the 7th Senate District.

      15             So, thank you.

      16             DENNIS CAPOLINO:  Uh-huh.

      17             SENATOR PHILLIPS:  Thank you, and good luck.

      18             SENATOR AKSHAR:  I think you highlighted a

      19      couple of important points that's often discussed

      20      when we're having these hearings, that -- I would

      21      qualify both of you as, this is my words,

      22      heavy-hitters.  Right?

      23             You're very, very heavy-hitters.  Very, very

      24      big multi-billion-dollar-jobs companies.

      25             But you both hit on the importance of, you


       1      know, even though you're very large companies,

       2      right, you're taking care of a lot of smaller

       3      people.  Right?

       4             DENNIS CAPOLINO:  Uh-huh.  Absolutely.

       5             SENATOR AKSHAR:  Somebody -- that $200,000 to

       6      somebody could change their company.

       7             A million dollars to somebody could change

       8      their company.

       9             So, I appreciate you highlighting that,

      10      that -- you know, that line through all the

      11      projects, and how you are -- while you may be a very

      12      big -- both of you, respectively, very big

      13      companies, you, in fact, are taking care of people

      14      down the line.

      15             DENNIS CAPOLINO:  Well, and I think that

      16      you'll find that a lot of our -- a lot of the states

      17      are -- and I almost don't want to say this, but

      18      they're kind of going away from the MWBE programs,

      19      and they're going to either diverse business

      20      programs or they're going to small-business

      21      programs.

      22             New Jersey, California, there's a -- you

      23      know, there are's a lot of them now, Connecticut,

      24      they do small-business.  And small businesses are

      25      minority, veterans, woman-owned, and also, you know,


       1      groups of non-minorities.

       2             SENATOR AKSHAR:  Let me ask one last

       3      question, I know we're tight on time.

       4             How often are you hiring MWBEs from out of

       5      state to fulfill the requirement?

       6             Can you speak -- can either of you speak on

       7      that.

       8             JOHN CAVALLARO:  I can't assign a percentage

       9      to it, but you do have MWBEs from the tristate

      10      area outside of New York, even as far as

      11      Pennsylvania, that are certified in New York.

      12             And with the tension and the goals, for

      13      example, I have two projects in New York City alone

      14      where the goals are one -- where the goals,

      15      collectively, are $1.1 billion.

      16             SENATOR AKSHAR:  "Billion"?

      17             JOHN CAVALLARO:  "Billion."

      18             1.1 billion in participation.

      19             But, M/W firms are small by definition.

      20             They have to be small or they graduate out of

      21      the program.

      22             So what does that mean?

      23             That means I need volumes and volumes and

      24      volumes of them to meet that 1.1 billion.

      25             So oftentimes we do find, when you're looking


       1      at the pricing and going through the (indiscernible)

       2      process, you will be hiring firms from out of state.

       3             And if I could just add one other point to

       4      what Dennis said, I think there's a lot of good

       5      things about -- and we don't talk about it enough,

       6      about mentor-protege programs, if we truly want to

       7      help small businesses.

       8             We were the first company in the

       9      United States to enter into the USDOT mentor-protege

      10      program.

      11             It's not an area of taking credit.

      12             It's not an area where we're counting

      13      numbers.

      14             It's about truly mentoring small businesses

      15      to grow, succeed, and become, hopefully,

      16      medium-sized and large businesses, and become large

      17      employers, in the United States.

      18             I think that there should be more focus in

      19      that area as well.

      20             And I don't know that we speak about that

      21      enough in New York State.

      22             SENATOR AKSHAR:  All right.  Thank you.

      23             JOHN CAVALLARO:  Thank you.

      24             SENATOR PHILLIPS:  I'm going to keep things

      25      rolling, unless we -- thank you.


       1             Thank you, both of you, very, very much.

       2             As we get our next panel up here, I just want

       3      to take a minute to thank all the staffs, that this

       4      wouldn't have happened without my staff, without

       5      Senator Boyle's staff, Senator Brooks', and

       6      Senator Akshar's.

       7             So, thank you very much.

       8             We also have Lisa Harris who is from our

       9      Senate Legal Department up in Albany.  She is here.

      10             Lisa wave, please.

      11             Lisa has been instrumental in coordinating,

      12      and -- our efforts as a Committee working group on

      13      this MWBE issue.

      14             So thank you, Lisa, for being here.

      15             So if I could have my next panel come on up.

      16             I'm doing a really bad job of keeping us on

      17      track, I just want you to know.

      18             I also am going to say, at 12:15, I am going

      19      to hand this event over to my colleague,

      20      Senator Akshar, because, believe it or not, I have

      21      to go.

      22             So I apologize up front.

      23             So I'm going to let you introduce yourselves

      24      because I'm doing a bad job, as Dennis, or,

      25      "Denise," knows.


       1             So, thank you.

       2             So, please, Mr. Haugland.

       3             WILLIAM HAUGLAND:  I am Bill Haugland, with

       4      Grace Industries.

       5             We are an infrastructure construction company

       6      here, based out of Long Island, New York, primarily

       7      working in the Long Island, New York City, and

       8      Westchester-southern New York region.

       9             The New York State Department of

      10      Transportation is among our largest customers.

      11             And the 30 percent MWBE goal with the program

      12      is certainly affecting our daily -- you know, the

      13      way we're progressing projects in the past.

      14             It's not a -- you just -- the concept of

      15      subcontracting to a minority group of companies is a

      16      great one.  And I haven't heard anybody today, and

      17      I don't think there's anybody here, that is opposed

      18      to that.

      19             And, you know, Denise and Marc have been

      20      doing a great job in the AGC advocating that around

      21      the -- around the state.

      22             But, to -- you know, to mandate -- and

      23      "mandate" is the wrong word -- require that this

      24      goal was set forth, and 30 percent as a blanket

      25      throughout the entire value of the project, which,


       1      as Rich I believe touched on, is not just on our

       2      work that we would be subcontracting out.

       3             There could be forced items that are in there

       4      from the DOT; there's our overhead; our profit, and

       5      God willing; all associated with that.

       6             So, I mean, effectively, if you take a job

       7      that's $10 million, sell price to the State, and it

       8      has a 30 percent goal, in reality, it's more than

       9      30 percent that we're subcontracting out at that

      10      point.

      11             So, I mean, I don't -- you know, advancement

      12      of the program doesn't have to just be in increasing

      13      the number, from 30 to wherever it would go, but

      14      making it more sustainable.

      15             And I think that there's been some great

      16      ideas.

      17             We've independently, sounds like we're all

      18      coming up to the same conclusion here, and I've

      19      heard it a couple of times, where if we were to take

      20      a step back and look at what we're trying to achieve

      21      in further helping some companies that may have a

      22      disadvantage associated with them, to help advance

      23      them, and look at the work that we would be

      24      subcontracting out, and allocate a percentage, and

      25      maybe that percentage of our subcontractor work is


       1      more than 30 percent at that point.

       2             But, by all means, there's examples, as I've

       3      learned today, and I've seen with other agencies

       4      around the country, and it sounds like even within

       5      the state, where they'll do that at the time of bid.

       6             You write in your subcontractor value, you

       7      write in the percentages of whether it's an M/W, a

       8      small-business company, and -- and -- you know, you

       9      set that at the time of bid, so that way it's up

      10      front and everybody understands what's going on.

      11             But, right now, meeting a 30 percent goal on

      12      a fast-award job, which we all know in the

      13      infrastructure business, schedule; the schedule at

      14      the time of the bid, and then the schedule of when

      15      the actual -- the job is going to get brought in, is

      16      usually accelerated along the way, as we've seen

      17      with the landmark Third-Track project, as well as

      18      LaGuardia, I'm sure, and some of these other

      19      projects, even on a smaller scale that we deal with.

      20             And, okay, as a general contractor, we have

      21      the ability to -- you know, that's was we do:  We

      22      solve a problem; we provide a solution to a

      23      challenge.

      24             And when we have a subcontractor that may not

      25      be able to do that, and we can't do anything to help


       1      them, we have to take this hands-off approach, you

       2      know, we're asking for the system to fail.

       3             And there's been countless examples, so

       4      I know, in the spirit of time, we don't need to keep

       5      going into that.

       6             But, thank you.

       7             SENATOR PHILLIPS:  Very helpful, but to hear

       8      it reiterated time and again.

       9             Mr. Lipsky.

      10             JOEL LIPSKY:  All right.

      11             Thank you very much, Senators, for having me

      12      here.

      13             Senator Akshar, thank you very much for

      14      taking leadership and being open to this.

      15             It's a very, very important issue for my

      16      company.

      17             And, for Senators Phillips and Boyle and

      18      Brooks, I do a lot of public works in your

      19      districts, both publicly -- public-funded work from

      20      the State, and also I do a lot of private work that

      21      is not State-funded.

      22             So I do a little bit of both, okay, public

      23      and private.

      24             I am co-owner and chief operations manager

      25      for Lipsky Construction.


       1             I graduated with a bachelor's degree in

       2      construction management, and have been working

       3      specifically in New York State for the last

       4      10 years.

       5             After I graduated, I did go and work for

       6      Turner Construction in the city.  They are a large,

       7      we recognized, as one of the top construction firms

       8      in the state.

       9             And after working with them for about

      10      five years, I then moved back to Long Island and

      11      joined the family business.

      12             Myself and my brother are third-generation

      13      owners of the construction company.

      14             My grandfather and my father started this,

      15      and we have been providing construction services to

      16      Long Islanders for over 50 years now.

      17             We were raised on Long Island, we were

      18      brought up on Long Island.  Our business is on

      19      Long Island.  Our homes, and our roots, for the next

      20      30, 40 years, will be on Long Island.

      21             So, we are not going anywhere anytime soon,

      22      much to the dismay of some of the competitors I have

      23      in this room.

      24             I just want to thank Dennis for providing

      25      very, very good statistics on some of the stuff.


       1             Now, I'm sure that you have these numbers

       2      available because of all the outreach that you're

       3      required to do and to prove to the State, and the

       4      extent of which your company needs to put the

       5      resources in, not just human resources, but the

       6      financial resources as well, just to be in

       7      compliance of the outreach program.

       8             So the position of my company, being a

       9      family-owned-and-operated company on Long Island,

      10      where all my proceeds and profits stay within the

      11      community, is the following:

      12             Any program that the State can provide to us,

      13      that can bring about new, qualified, responsible

      14      contractors, we are 100 percent open to.

      15             I am eager to discover who they are.

      16             I am more eager to even work with them.

      17             My family and my company both understand that

      18      the MWBE program was put in place to create a

      19      healthy, a vibrant, and reliable work pool in which

      20      MWBE contractors have a fair shot at winning some

      21      State contracts.

      22             The program, based on its merits, is a very,

      23      very good program.

      24             It's a necessary program to provide equal

      25      opportunity for women and minority businesses that,


       1      historically, have been underrepresented and

       2      underutilized in the past.

       3             So, overall, I think that the merit and the

       4      theory behind the program is a very, very good one.

       5             Myself, being a product of New York State,

       6      meaning, I went to public school within the state,

       7      in Bay Port, by Senator Boyle's district, where the

       8      State put extreme emphasis on inequality in the

       9      school system, has taught me and educated me that

      10      inequality is an issue, and it has been,

      11      historically, an issue, and still presents itself to

      12      be an issue today, not to the degree that it once

      13      was.  We are always making improvements on the

      14      issue.

      15             But the issue is not going away, and

      16      responsible procedures need to be put in place in

      17      order to close this gap.

      18             And I think that the disparity study that the

      19      State has released shows that there is a gap, to

      20      some degree.

      21             Now, to what extent of that gap is?

      22             I know that Mike Elmdorf from the AGC, who

      23      has spoken to your panel before, can kind of go over

      24      that more in detail.

      25             But, in summary, my company is very much open


       1      to having a responsible program be put in place so

       2      that we can meet some new contractors.

       3             The challenges that my small

       4      family-owned-and-operated company face is that:

       5             When did this goal become a requirement?

       6             How did it become a requirement?

       7             The good-faith effort is absurd.

       8             It's open-ended, and there's -- it just takes

       9      up tremendous resources, as Dennis pointed out

      10      earlier, not only in big companies, but, as a small

      11      company who mostly has family working for it, I've

      12      had to retain at least one or two individuals for

      13      the sole purpose of being in compliance with the

      14      outreach program, and trying to get the bids, prior

      15      to submitting it, in line with the bid solicitations

      16      with the MWBE programs.

      17             The other challenges, I'm not going to beat a

      18      dead horse here:

      19             The certification process is extremely bad.

      20             The recertification process is bad.

      21             I also have very, very well-qualified

      22      contractors that get decertified, in some cases,

      23      halfway through the project, that put the risk and

      24      responsibility back on me to figure it out.

      25             I also have issues in the way that the bids


       1      are solicited.

       2             In some cases, only very specific contractors

       3      can do this very special work, yet they still have

       4      to conform to the MWBE requirements regardless if

       5      they're an MWBE contractor or not.

       6             I have to use this guy.  He's the only guy

       7      that's available and qualified, as per the

       8      architect, to do this work.

       9             I don't have a choice, but somehow have I to

      10      make it work.

      11             The backlash that we're getting, and how it's

      12      affecting my company, is I'm, for sure, spending

      13      more time on my overhead -- more money on overhead,

      14      tremendous time vetting out and doing due diligence

      15      to make good-faith efforts.

      16             I've been told that I will receive financial

      17      penalties, in the sense that they'll deduct money

      18      from my contract if I don't meet these goals.

      19             I'm not sure if you Senators are aware, but

      20      every State project that happens to be -- every

      21      single contractor here has a report card, of sorts,

      22      that we're not allowed to see.  And if we don't hit

      23      the goals, it will be reflected negatively on the

      24      report card, and that will be viewed in a negative

      25      fashion for any future work that we try and do,


       1      regardless of any good-faith effort that we tried to

       2      do.

       3             If we don't meet the goal, it will be

       4      reported, and, in some cases, will prevent us from

       5      doing work with the State again.

       6             I've also been closed-door -- behind closed

       7      doors, black-balled by some of the consultants that

       8      you hired.

       9             And a specific quote by someone -- by one of

      10      the consultants of your agencies was that, he will

      11      ensure that I will never receive a State contract

      12      ever again unless I meet the requirement.

      13             That's a direct quote from a consultant from

      14      the State.

      15             And, overall, when you go to the Empire State

      16      Development and try and reason with them:

      17      (Motioning) I don't want anything to do with it.

      18             "Meet your goals," is the response that we

      19      get.  "Figure it out.  As a contractor, you guys

      20      will figure it out."

      21             It's a hard line from the Governor's

      22      Administration to meet the 30 percent goals.  And

      23      the responsibility and the effort that needs to get

      24      done is put on small businesses, and big businesses,

      25      and costing our overhead to be higher.


       1             And that just gets translated down to the

       2      bid.

       3             When I put my bid in, my prices,

       4      unfortunately, are going slowly up, not because of

       5      higher wages on Long Island, but because of all the

       6      additional overhead that's required in order to

       7      conform to this program.

       8             We find that the State generally doesn't want

       9      to compromise to any degree.

      10             And, again, like what Dennis was saying, they

      11      have a waiver program.  But, the joke of all these

      12      networking functions that we go to is, "They don't

      13      waive for anything."

      14             You know, I know that there's a number on

      15      there that they do grant waivers, but it's very,

      16      very rare.

      17             Now, Senator Phillips, I understand that you

      18      sit on the Insurance Committee, or at one point did.

      19             And I understand that, Senator Brooks, you

      20      have insurance background.

      21             I just want to let you guys know, from my

      22      understanding, the qualification process to get on

      23      this list, which I'm going to talk about the list in

      24      one minute, in no way vets out people's insurance.

      25             Besides providing a very simple document that


       1      says, you have something, they don't do any type of

       2      due diligence to vet out the people with bad

       3      insurances.

       4             And I'll give you an example of what that

       5      means.

       6             I've had roofers come to me, and have found

       7      out that they exclude personal liability for any

       8      injury over one story.

       9             So any roofer over -- if that worker is on a

      10      two-story, three-story, four-story, roof that falls,

      11      that subcontractor's insurance will not take that

      12      claim.  It goes back onto me, or the owner.

      13             I've had cabinet installers whose insurance

      14      doesn't cover them outside of their workshop, and

      15      they're trying to install cabinets on my job sites.

      16             And I think your father was a steelworker at

      17      one point.

      18             I had steelworkers -- a steel contractor that

      19      didn't even know that any worker on a hoist or

      20      ladder that fell, his insurance would not cover that

      21      claim.

      22             They also have exclusions on Labor Law 220.

      23      There's exclusions on "action over" and "primary

      24      non-contributory."

      25             And I'm not going to bore you with what those


       1      terms mean, but they're very, very important terms,

       2      and it's actually a black-and-white:  Either you

       3      have -- you're in compliance with these insurance

       4      requirements that the State is imposing for their

       5      State contracts, or they're not.

       6             And what we're largely finding is that there

       7      is a large population of contractors on this list,

       8      8,600, but, largely, unqualified.

       9             And in the sense that, what we're finding is,

      10      the biggest disqualification is their insurance

      11      alone.

      12             A very, very small portion of them actually

      13      possess the right insurance to do the work.

      14             And, again, what Dennis was saying is that,

      15      to get a -- any type of subcontractor, and even a

      16      smaller pool of subcontractors, to be bonded is like

      17      almost impossible.

      18             So the risk then comes back to my firm, and

      19      my family.

      20             And when I say "my firm," I'm talking about

      21      my family.

      22             So all that risk, if they don't perform,

      23      they're not bonded, I have the bond, but I have to

      24      use them because I need to meet the State

      25      requirements, is then passed down to me as a general


       1      contractor.

       2             I always like to end on a good note, so

       3      I will end on a good note.

       4             I think that the theory of the program is

       5      very, very important, and it works, and I'll tell

       6      you why.

       7             I have met some very, very good competitive,

       8      qualified, and responsible contractors through this

       9      program.

      10             And I believe that was the intent originally,

      11      was to gain more exposure and even the playing field

      12      of minority- and women-based contractors.

      13             I can affirmly say that I have met some of

      14      these contractors that I may not have -- normally

      15      have met without this type of program, and, in some

      16      cases, have used them on private work.  Because they

      17      do such a good job for me publicly, and they stay

      18      competitive, that I will take them into the private

      19      sector with me as well.

      20             Charlie Hull at Hull Enterprises is a great

      21      contractor.  He's a landscape contractor.  I very

      22      much enjoy working with him.  I met him on a State

      23      project for Office of General Services.  He's a very

      24      good friend of mine.

      25             Mary Cassone -- is Mary here?


       1             I believe she's going to talk.

       2             Mary Cassone is another woman-owned

       3      contractor on Long Island.  My family has worked

       4      with her family for many, many years, and she's a

       5      very, very good contractor.

       6             So, the theory of the program works, but

       7      there's definitely a lot of things that could get

       8      improved on.

       9             The biggest one that I have is the list.

      10             The list that's on the website,

      11      8,600 contractors, is a misrepresentation in any

      12      capacity.

      13             They are not qualified.

      14             They are out-of-state contractors to find.

      15             I'm not going to, again, beat the dead horse,

      16      but, the painting of the bridge is a perfect

      17      example, when the State will say:  How can you not

      18      find -- out of the 8,000 people, how is that you

      19      cannot find one minority contractor that can do the

      20      work for this specialty thing?

      21             And they don't have the right insurance.

      22      They can't work on the job site.  The State does not

      23      allow them.

      24             It puts the risk on my family, and on my bond

      25      and everything.


       1             So the list needs a lot of improvements.

       2             And I'm not sure why the Governor's

       3      Administration is more concerned with showing that

       4      number go up.

       5             For whatever reason, I kind of feel like it's

       6      a quota-driven type of statistic as opposed to a

       7      quality-type-of-contractor statistic.

       8             And I would actually like to see the number

       9      go down from 8,000, because I would like to see that

      10      the contractors are more qualified.

      11             It puts the burden on contractors like myself

      12      and my colleagues to do the vetting process for the

      13      State.

      14             This -- this -- there's no way -- so the

      15      State is saying, this person --

      16             SENATOR PHILLIPS:  Mr. Lipsky, we're going to

      17      give -- I apologize.  I think we got your point.

      18             JOEL LIPSKY:  Okay.  Yeah.

      19             SENATOR PHILLIPS:  And I hate to cut you

      20      off --

      21             JOEL LIPSKY:  Okay.

      22             SENATOR PHILLIPS:  -- but I am going to cut

      23      you off because we also have one more person.

      24             But, we got it.  We got it.

      25             Thank you.


       1             I apologize.

       2             NICHOLAS ALDORISIO:  I can be very brief.

       3             I can just say ditto, and move on, if you

       4      want.

       5                [Laughter.]

       6             SENATOR PHILLIPS:  Yeah, I was going to say,

       7      he did a great job.

       8             NICHOLAS ALDORISIO:  Yeah.  Excellent.

       9             My name is Nick Aldorisio.  I'm the chief

      10      financial officer of Aurora Contractors.

      11             We're a general construction company,

      12      construction-management firm, in Ronkonkoma,

      13      New York.

      14             Thank you very much for allowing me to speak

      15      today; we really appreciate it.

      16             We are also, as everyone mentioned,

      17      definitely an advocate of the goals of the program.

      18             But, I just put a list together, and I'll go

      19      through it quickly, it's very repetitive.  We seem

      20      to be all be struggling with the same issues.

      21             Some of the challenges in the current

      22      marketplace:

      23             Again, the MWBE-certified contractors lack

      24      bonding capacity.

      25             They lack union affiliation.


       1             Their insurance requirements are -- to say

       2      "they lack" is an understatement, as Joel stated

       3      very eloquently.

       4             Their overall responsiveness is a challenge

       5      as well, I think we touched upon it earlier, not

       6      only, though, in the bid phase, but throughout the

       7      course of the project.

       8             They're -- they're -- they seem to be spread

       9      thin.  They're smaller companies, but then there's,

      10      also, they're in high demand.

      11             So, sometimes, even if you have a qualified

      12      company, you know, their labor force may be a little

      13      limited.  They don't have a union hall to pull from

      14      necessarily in some cases.

      15             So, during the course of construction, they

      16      could be not as responsive as some other companies

      17      as well.

      18             Very often, project specifications

      19      established by the design professionals require

      20      specific contractors and/or specific materials,

      21      which limit your ability to hire MWBE trades.  That

      22      was mentioned previously as well.

      23             The final contract value is what the goals

      24      are based on.

      25             Quite often, there are costs associated with


       1      that that you can't achieve the goals with, again,

       2      as has been spoken to previously.

       3             The search criteria and the website are

       4      lacking.

       5             We do a lot of work with New York City.

       6             New York City has a similar-type program for

       7      the private sector.

       8             ICAP program:

       9             Private sector is allowed.

      10             Real-estate tax relief if they comply with

      11      certain hiring practices of MWBE contractors and

      12      employees, and so forth and so on.

      13             Their database is similar in content;

      14      however, their search criteria is much more refined.

      15      It allows you to search for union contractors.

      16             We do a tremendous amount of union work.

      17             A lot of the New York State contracts now

      18      have PLAs.

      19             So, having that simple search criteria of

      20      union and non-union is important.  It saves a

      21      tremendous amount of time during the bid phase,

      22      soliciting phase, so forth and so on.

      23             And then, again, we are getting some mixed

      24      messages in speaking with individuals from the

      25      agencies about good-faith effort versus goals versus


       1      requirements.

       2             It's a very competitive process, the bid

       3      process.

       4             I think New York State does a great job, and

       5      they get good numbers.  They have a lot of qualified

       6      GCs bidding on your work.

       7             But when we have to struggle with, do we hire

       8      someone that's most qualified with the best price to

       9      get the best bid, versus, just simply trying to

      10      obtain a goal?

      11             If we take the approach that we're going to

      12      take -- try to obtain the goal, how -- we're not

      13      guaranteed that the other competitors are taking

      14      that same approach.  So, our number could be less

      15      competitive for that reason.

      16             So, again, very repetitive.

      17             But, we really do appreciate the program, and

      18      appreciate allowing us to voice our concerns about

      19      it.

      20             SENATOR PHILLIPS:  Thank you.

      21             SENATOR BOYLE:  Just a quick question.

      22             Joel, you mentioned about the report card.

      23             Can you describe that, and if you get

      24      feedback on it?  Or --

      25             JOEL LIPSKY:  Yeah.  As an example, when you


       1      go work for the Office of General Services for

       2      New York State, which is an extension of the

       3      Governor's program, they know how well you did on

       4      your submittal process, how well you did on your

       5      work performance, how well you did on your minority-

       6      and women-based quotas, on your past projects with

       7      them.

       8             They keep track of this information.

       9             It's actually a good program because it helps

      10      qualify good contractors within the state.

      11             But when you make the requirements so

      12      difficult, and you draw such a hard line in the

      13      sand, like the Governor has done, it makes it very,

      14      very difficult, for all the reasons that everyone is

      15      talking about, to get a good report card, you know,

      16      of sorts.

      17             And this is how they -- this is -- that's

      18      future work for us (indiscernible).

      19             WILLIAM HAUGLAND:  If it's also -- it's also

      20      utilized, Senator, on design-build and best value.

      21             JOEL LIPSKY:  Yeah.

      22             WILLIAM HAUGLAND:  There's a whole category

      23      for minority utilization.

      24             And if you had a minority plan you submitted

      25      on a past project, that for -- could be very valid


       1      reasons, did not achieve, you could end up getting

       2      points deducted on your next project at that point,

       3      as a result of it.

       4             And with competitive bidding amongst the

       5      GCs, every point, or tenth of a point, really does

       6      matter here.

       7             SENATOR BOYLE:  Thanks, Bill.

       8             SENATOR PHILLIPS:  Thank you.

       9             All three of you, thank you very much for

      10      your time.

      11             The next panel are going to be members of the

      12      Women's (sic) Builders Council, which is,

      13      Nanci-Jean DeNapoli from KND Electric;

      14      Christine Donaldson --

      15             Christine, help me out.

      16             CHRISTINE DONALDSON-BOCCIA:  -Boccia.

      17             SENATOR PHILLIPS:  -- -Boccia.

      18             Thank you very much.

      19             Who is -- they're going to go first?

      20             Nanci-Jean.

      21             NANCI-JEAN DeNAPOLI:  This is not fun, coming

      22      up here to publicly speak, but --

      23             SENATOR PHILLIPS:  That's okay.

      24             You're in friendly territory here, so...

      25             NANCI-JEAN DeNAPOLI:  Good morning.


       1             On behalf of KND Electric and the

       2      Women's (sic) Builders Council, I want to thank all

       3      the Senators who comprise the New York State Senate

       4      working group on the Minority WBE -- MWBE program

       5      for hosting and having us here today.

       6             My name is Nanci-Jean DeNapoli.  I'm

       7      vice president of KND Electric, and a board member

       8      of the Women Builders Council.

       9             For 20 years I have worked in partnership

      10      with my sister-in-law, Christine DeNapoli, and our

      11      family, to own and operate and expand KND Electric

      12      to a full-service union electrical contracting firm,

      13      providing a broad range of services on public and

      14      private projects throughout New York.

      15             We're in our 21st year of business and

      16      I have over 60 employees.

      17             I am also, on a positive side of the WBE

      18      program, a successful WBE electrical contractor.

      19             As you can see, we're in our 21st year.

      20             And I've been given the opportunity to work

      21      on historical projects that I probably never would

      22      have been able to do if I wasn't a WBE.

      23             One is the Third Track.  I am speaking with

      24      somebody on working with Third Track.

      25             And I'm also proud to be a sub on the


       1      Moynihan Station.

       2             I believe he left.

       3             But, again, the program, because of Senators

       4      and everybody beyond advocating for us, it has given

       5      me and my family opportunity to go into the

       6      electrical business.

       7             I will turn it over to Christine.

       8             CHRISTINE DONALDSON-BOCCIA:  Good morning,

       9      and thank you for having this wonderful event and

      10      letting us speak.

      11             I'm Christine Donaldson-Boccia.

      12             My father was Jim Donaldson, who was partners

      13      with his brother in the big Donaldson organization,

      14      which is a Long Island acoustical and drywall

      15      company.

      16             I am the executive manager and owner of, now,

      17      J.D. Traditional Interiors.  We split away from the

      18      name.  And I'm a 100 percent union interiors

      19      contractor.

      20             I perform both public and private.

      21             And I'm also a very successful proponent and,

      22      hopefully, not graduate, but, of the MWBE program

      23      for New York City and New York State.

      24             I'm fourth generation.

      25             I got into this business when my father


       1      passed away in 2007 and left the company.

       2      I originally went in to either run it out or sell

       3      it.

       4             And, within a year, I was bit by the bug, and

       5      I decided, I'm going to do this.

       6             2008, I became WBE-certified, and I decided

       7      to continue my father's legacy.

       8             I now have 11 people in my office, and I run

       9      a field of 85 to 100 men and women doing mostly

      10      New York City public work, New York City School

      11      Construction Authority, and MTA work.

      12             We are here to provide testimony as WBEs, and

      13      represent Women Builders Council which was

      14      established in 2004.

      15             WBC is the leading association representing

      16      women in the construction industry on several

      17      important fronts:

      18             Organizing legislation of -- advocacy.

      19             Providing professional development and

      20      inspiring the next generation of women builders.

      21             WBC's mission is to increase diversity and

      22      the role of women in the construction industry by

      23      providing a dynamic forum to remove the barriers

      24      that prevent women from succeeding in industry that

      25      is traditionally dominated by men.


       1             WBC was founded by several women business

       2      owners who organized -- recognized the challenges of

       3      doing business as a traditionally male-dominated

       4      industry.

       5             Now in our 14th year, we have grown to be

       6      one of the leading voices of women businesses and

       7      women professionals in construction.

       8             Our board includes many of the leading women

       9      in construction, from certified minority- and

      10      women-owned businesses, to women in the country's

      11      top construction firms.

      12             WBC advocates on behalf of women and

      13      minorities, and encourages the construction industry

      14      to consider varied issues and initiatives that

      15      affect small-business growth throughout the state.

      16             NANCI-JEAN DeNAPOLI:  Thanks, Chris.

      17             Today we're here on behalf of KND Electric

      18      and the hundreds of members of the WBC, to

      19      communicate to you the importance of the

      20      New York State Minority- and Women-Owned Enterprise

      21      Program.

      22             And the ways in which it has provided our

      23      firms and thousands of WBEs across the state with

      24      the ability to compete and win State contracts that,

      25      historically, would never have been accessible to


       1      us.

       2             Like many small businesses across the state,

       3      Christine and I, my sister-in-law, started our

       4      business in the back of her house.

       5             As a firm, carrying the legacy of three

       6      generations of electrical contractors, we have

       7      committed ourselves to doing our best, working hard,

       8      and providing our clients with the best work

       9      possible.

      10             But in an industry that has always been

      11      dominated by men, where deals, historically, were

      12      closed over scotch or on the golf course, the best

      13      product and lowest bid sometimes weren't enough.

      14             And that's where the New York State WBE

      15      program began to open doors and start conversations,

      16      and changed the face of the construction industry.

      17             Article 15-A was signed into law on July 19,

      18      1988, and authorized the creation of an Office of

      19      Minority and Women Business Development to promote

      20      employment and business opportunities on State

      21      contracts for minorities and women.

      22             Under this statute, the state agencies were

      23      also charged with establishing employment- and

      24      business-participation goals for minorities and

      25      women.


       1             The program has gone a long way, especially

       2      with the leadership shown by Andrew --

       3      Governor Andrew Cuomo, who set a goal of 30 percent

       4      on all state contracts in 2015.

       5             Our board members have attended conferences,

       6      hearings, and meetings throughout New York State,

       7      and heard complaints about the program and its

       8      goals.

       9             Diversity isn't easy.

      10             Gender equality takes effort and intention,

      11      but that doesn't mean we can just throw in the towel

      12      and walk away from a program that continues to

      13      accomplish its mission, and that is, to increase

      14      diversity and the role of women in the construction

      15      industry.

      16             Women represent over half of the population

      17      in New York State and on Long Island, and we are

      18      asking that you continue to support a program and

      19      the initiatives that provide economic opportunities

      20      to groups who have, historically, been discriminated

      21      against and shut out of the State procurement

      22      process.

      23             CHRISTINE DONALDSON-BOCCIA:  I would like to

      24      add that, traditionally, women and minorities have

      25      to work harder in order to get the same


       1      opportunities in this construction industry, which

       2      has been, traditionally, a man-dominated industry.

       3             I sit on several boards.

       4             I was the first woman in 97 years to get on a

       5      board of all men in the walls-and-ceilings industry.

       6             Nanci sits on lots of board, and so do many

       7      of the other women that sit in the Women Builders

       8      Council board of directors.

       9             We put in a lot of time, a lot of effort, and

      10      it's hard to get that recognition.

      11             You get your foot in the door, but you have

      12      to do the right job to get asked back.

      13             It's no different than anybody else, but

      14      having the ability to get the invites for our MWBE

      15      projects.

      16             And, you know, Joel was up here talking, and

      17      I'm going, I've never gotten an invite from Lipsky.

      18             "Here's my card," you know?

      19             But, without a forum like this, I wouldn't

      20      have known about his company, and he wouldn't know

      21      about me.

      22             You know, the program has provided our firms

      23      and other certified firms who comprise WBC with the

      24      ability to compete with other national competitors,

      25      and through the program, win contracts.


       1             I have a $2 million contract at LaGuardia

       2      to put up ceilings.

       3             I have other smaller contracts.

       4             I have several contracts with the MTA.

       5             I had a legacy of getting a company,

       6      unfortunately, when my father passed away.

       7             And I had a cold group of contractors, but a

       8      lot of business I lost, and I had to go out there

       9      and find my own way.

      10             And getting my W certification certainly did

      11      help that.

      12             NANCI-JEAN DeNAPOLI:  Thanks, Chris.

      13             Our second recommendation on how to improve

      14      the New York State MWBE program is to provide

      15      clarity for commercial useful function, also known

      16      as "CUF."

      17             Construction is a team-oriented process, and

      18      there's a disconnect between the definition of

      19      "CUFs" as it is applied in the construction

      20      industry.

      21             To provide a brief explanation:

      22             To discourage MWBE fraud throughout the

      23      construction industry, prime contractors can face

      24      serious financial and legal consequences when

      25      certain support is provided to an MWBE contractor on


       1      a project.

       2             However, the prime contractor can provide

       3      equal or comparable support to a non-WBE contractor,

       4      setting an unlevel playing field for the MWBEs on a

       5      project.

       6             Providing any usual support services, for

       7      example, sharing a piece of equipment or joint

       8      checks, may be considered noncompliance with the

       9      requirement of commercially useful function.

      10             Since every state agency has their own set of

      11      unwritten rules and regulations, prime contractors

      12      are terrified of being financially penalized for

      13      treating an MWBE firm like any other sub on a

      14      project.

      15             WBC recommends the establishment of definite

      16      guidelines to inform contractors that MWBEs and

      17      government agencies regarding what is permissible

      18      and what is prohibited.

      19             The industry practices should align with the

      20      definition of "commercially useful function."

      21             WBC also recommends the creation of an

      22      ombudsman, or a representative, who could deliver

      23      quicks opinions for prime contractors and MWBEs on

      24      what type of cooperation is legal.

      25             At this point, CUF is supposed to prevent


       1      shell under -- MWBEs from being created, and we

       2      understand it is a very serious issue, but, it's

       3      hurting legitimate firms, and it's making it

       4      difficult for prime contractors to partner with us

       5      on a project.

       6             CHRISTINE DONALDSON-BOCCIA:  We'd also like

       7      to talk about the certification process.

       8             WBC would like to see Empire State and

       9      New York State agencies and authorities provide with

      10      the -- resources they need to accurately handle the

      11      influx of applications, inquiries, and technical

      12      assistance.

      13             It took me almost two years to get my

      14      recertification through New York State, and that was

      15      with many phone calls, me being proactive, and,

      16      finally, getting a one-on-one with somebody through

      17      Women Builders Council, who indeed found out my

      18      application had been sitting there.

      19             There's -- New York State and New York City

      20      both have resources.

      21             It makes sense to cull your resources and get

      22      a program that works for everybody.

      23             NANCI-JEAN DeNAPOLI:  I have also witnessed,

      24      my certification was up, and I believe it's three

      25      years for New York State.


       1             By the time I went to recertify, the one that

       2      was not certified for three years, they kept saying,

       3      You're still certified until we get to your paper

       4      which is at the bottom of the pile.

       5             By the second round of me being certified,

       6      I was still not certified for the first round.

       7             So it really needs a lot of help in the

       8      office.

       9             CHRISTINE DONALDSON-BOCCIA:  And in

      10      relation -- whoops, I'm off-key here.

      11             But, one other thing that we'd like to bring

      12      up is the personal net worth for New York State.

      13             In my case, I inherited some money when my

      14      mother passed away.  Thankfully, not enough to put

      15      me over the threshold.

      16             But, I have a friend who actually lost her

      17      WBE certification when her husband passed away and

      18      she inherited his estate.

      19             That had nothing to do with her company.

      20             You know, you lose your spouse, and you're

      21      given substantial funds, and then you get kicked

      22      out.

      23             She eventually closed shop.  She could not

      24      continue because all her relationships were through

      25      her certification.


       1             I know of another circumstance where the

       2      owner scrimped and saved and bought her building

       3      many, many years ago down in Dumbo.

       4             Well, when the real-estate market went crazy,

       5      Dumbo's prices shot up, she got kicked out of the

       6      program.

       7             How is that anything to do with her company?

       8             So that really needs to be looked at.

       9             And, also, as an owner, you need to have

      10      substantial finances to back your bonding and your

      11      banking.

      12             You know, credit lines, and what happened in

      13      the banking industry, they look at everything.

      14             It's very, very difficult to get a decent

      15      credit line.  More and more banks are being pulled

      16      out of construction industry.

      17             You need to have your finances to do that.

      18             SENATOR PHILLIPS:  I know I (inaudible) so

      19      I'm going to go first.

      20             So you -- what do you believe are the

      21      barriers to get men and -- women and minorities to

      22      own their own businesses?

      23             We heard some testimony earlier that

      24      17 percent of the population, roughly, here on

      25      Long Island are of Hispanic descent.


       1             We know that 50 percent, if not more, of the

       2      population here on Long Island are women.

       3             I'm working with one of the local unions.

       4      They're actually under -- under government mandate

       5      to increase their apprenticeship programs for women.

       6             And so I'm introducing them to high schools,

       7      but, it's not easy.

       8             So, what do you see as the barriers?

       9             Because we say, look, let's -- we want women,

      10      it's -- and minorities, but there's something that's

      11      preventing it from happening.

      12             CHRISTINE DONALDSON-BOCCIA:  Part of it is

      13      the insurance costs, and, you know, the elephant in

      14      the room of the scaffold law.

      15             NANCI-JEAN DeNAPOLI:  It's a huge problem.

      16             CHRISTINE DONALDSON-BOCCIA:  The insurance

      17      costs are absolutely insane.

      18             I just had a workers' comp audit.  My

      19      workers' comp is over $400,000.

      20             It's a crazy number.  It's scary.

      21             And if I wasn't thrown into this business,

      22      I don't know if I would have done it.

      23             Nanci's got a lot more guts than I do.

      24             But, part of it's insurance.

      25             Part of it -- I've spoken at the MTA, at


       1      their mentor program; I've helped over at the SCA,

       2      I spoke on a panel; to get people to consider coming

       3      in and starting their companies for MWBEs.

       4             The mentor programs are so important, and to

       5      put women, like myself and Nanci and many others for

       6      WBC, and show it's a success.

       7             One of the things I do, I work with the

       8      Girl Scouts.  You know, it's not -- you don't have

       9      to stand behind a register and take somebody's

      10      money.  You can sit in a C-Suite and do that.

      11             You know, you can go for your own company.

      12             You can go into industries that are typically

      13      man-dominated.

      14             We need to get more women out there to

      15      show -- and minorities, to show that it is possible.

      16             NANCI-JEAN DeNAPOLI:  I think at the school

      17      level, we're thinking of WBCs trying to go into the

      18      school to show women and girls.

      19             I mean, I have two daughters myself, and

      20      their friends.  And when people hear that I'm a

      21      woman-owned business owner in the electric industry,

      22      they turn their heads.

      23             They're, like, wow.  How many years you doing

      24      this?

      25             Over -- I'm in 21 years.


       1             Like, wow.  Like, they just can't believe

       2      that a woman could actually own, especially a

       3      Local Union Number 3 and Local 25 shop.

       4             But I've been doing this 20 years, and I do

       5      have to say, the scaffolding law is way out of

       6      control.

       7             It's almost criminal, the amount of money

       8      that -- I had to pay 70 percent more in insurance

       9      this year, so my bottom line could just get wiped

      10      away.

      11             SENATOR AKSHAR:  I'm sorry, just repeat that

      12      number.

      13             NANCI-JEAN DeNAPOLI:  75 percent --

      14      70 percent more in insurance that I had to pay

      15      because of the scaffolding law, because there's no

      16      players that want to insure anybody in New York

      17      State, especially if you're "Local 3" electrical

      18      contractors.

      19             They say it.

      20             We also -- we're not allowed to participate

      21      in a lot of OCIPs on major projects if you're

      22      Local 3.

      23             "We don't want you to participate."

      24             So it's -- really, there's a lot of bad

      25      language going on out there.


       1             And, you should all know that we could build

       2      our schools a lot cheaper if the scaffolding law

       3      wasn't there because the insurance costs would go

       4      way down.

       5             CHRISTINE DONALDSON-BOCCIA:  (Inaudible)

       6      outrageous --

       7             NANCI-JEAN DeNAPOLI:  Anything that we have.

       8             CHRISTINE DONALDSON-BOCCIA:  -- our

       9      railroads, (indiscernible) everything.

      10             NANCI-JEAN DeNAPOLI:  I mean, across the

      11      pond, like we all know, they're paying a lot less

      12      money than we are.

      13             I mean -- I mean, again, as a WBE, when we

      14      have our primes that we have to bid -- they have to

      15      give their work to us, and I am a $10 million

      16      contractor, and you have someone who does a hundred

      17      to two hundred million, my costs, yes, are going to

      18      pay the same amount for your journeymen, but my

      19      insurance costs and my overhead, of course, they're

      20      a lot more money.

      21             So now they have to give me a piece of the

      22      contract for more money than what they have bid the

      23      project on, for a premium.

      24             So, it's either they're going to have to lose

      25      on the portion that they're giving, or the money is


       1      going to have -- there's going to have to be more

       2      money to build.

       3             CHRISTINE DONALDSON-BOCCIA:  I don't carry

       4      insurance to do exterior work.

       5             I will only do interiors, because exterior

       6      will cost me a heck of a lot more, because the

       7      liability.

       8             Even though I'm on the same lists, the

       9      same -- there's a premium cost for exterior work,

      10      and I won't do that.

      11             So when the bids come out to me from anybody

      12      that would be doing -- unless it's an OCIP or CCIP,

      13      I have to decline.

      14             That's hurting the MWBE program directly.

      15             SENATOR AKSHAR:  So we'll probably call on

      16      you again to describe your troubles with scaffold.

      17             I am partnering with Assemblyman

      18      John McDonald to remove a provision in the

      19      existing scaffold law that speaks about absolute

      20      liability.

      21             Clearly, it's driving costs.

      22             NANCI-JEAN DeNAPOLI:  That's what it is.

      23             I mean, we should put the onus on the person

      24      who's at fault.

      25             SENATOR AKSHAR:  Sure.


       1             NANCI-JEAN DeNAPOLI:  We're not telling you

       2      to get rid of it, you should protect the worker.

       3      But put it on whoever's at fault.

       4             SENATOR AKSHAR:  All right.  So there is an

       5      effort in Albany, not only to amend this program,

       6      but also to take on big public-policy issues, like

       7      the antiquated scaffold law, right, and amend and

       8      change that to make New York more affordable.

       9             So that's an issue we'll be picking up in

      10      January when we return.

      11             NANCI-JEAN DeNAPOLI:  Good.

      12             Yes, we'd be very interested.

      13             SENATOR AKSHAR:  Thank you.

      14             SENATOR BROOKS:  I just think it's important

      15      to recognize, for both of you, that the MBE programs

      16      themselves open up doors.  That's the primary

      17      objective.

      18             I think what we're hearing today is a number

      19      of issues that have to be addressed.

      20             The insurance for one.

      21             The qualifications of companies.

      22             Obviously, you folks are exceptionally

      23      well-qualified and are successful.

      24             And I've dealt with minority-owned businesses

      25      that have been successful because they are


       1      well-qualified.

       2             So there's a lot of work to be done here.

       3             But I think the fact that both of you are

       4      acknowledging it was a door-opener for you is an

       5      important factor, and one that tells us we've got to

       6      continue this program, but we have to reform it and

       7      improve it.

       8             CHRISTINE DONALDSON-BOCCIA:  And if the lists

       9      were cleaned up, I wouldn't be getting so many

      10      concrete-bid requests.

      11                [Laughter.]

      12             CHRISTINE DONALDSON-BOCCIA:  All the time.

      13             Concrete and Upstate New York.

      14             SENATOR AKSHAR:  Well, let me follow up on

      15      that, because that's where I'm from.

      16             So, do you receive a lot of calls from

      17      people, you know, in Western New York and Central

      18      New York, northern New York, to come and provide

      19      services?

      20             CHRISTINE DONALDSON-BOCCIA:  I do -- well,

      21      not phone calls.  I receive requests to bid;

      22      e-mails.

      23             SENATOR AKSHAR:  So let me ask you to quote:

      24             Would you go to Binghamton --

      25             CHRISTINE DONALDSON-BOCCIA:  No.


       1             SENATOR AKSHAR:  -- would you go to Watertown

       2      or Rochester, to do work?

       3             CHRISTINE DONALDSON-BOCCIA:  I'm specifically

       4      Long Island and the five boroughs.

       5             SENATOR AKSHAR:  And one last thing:

       6             I want to congratulate you and applaud you on

       7      both of your successes.  It seems to me you're doing

       8      very well in the program.

       9             Before you -- though, you heard a lot of

      10      testimony from other people.

      11             I just want to be clear that -- that the

      12      hurdles that were discussed, in your mind, do they

      13      exist?

      14             NANCI-JEAN DeNAPOLI:  I'm doing this about

      15      20 years, and I would say the first 5 to 8 years,

      16      until people really started taking it serious, it

      17      was a dog-and-pony show.

      18             So their best-faith efforts really were not

      19      best-faith efforts.

      20             But I do see today that the onus, people are

      21      responsible for making sure that they make the

      22      effort to try to meet their goal requirement, and

      23      there is a little bit more protection on us.

      24             We do have people advocating for us, and

      25      people aren't just saying, yeah, yeah.  No, your


       1      price is too high.

       2             So it is better for us, but I do understand

       3      both sides of the fence from where they're coming

       4      from.

       5             CHRISTINE DONALDSON-BOCCIA:  And it's not --

       6      I've, you know, heard from some of the GCs.

       7             It's not just them that have to hire more

       8      people.

       9             It's us also.

      10             I mean, the amount of paperwork for any of

      11      the public-works jobs is ridiculous.

      12             I've got a small Nassau County

      13      water-treatment plant.  Took four hours to do the

      14      first certified payroll.  And my assistant has been

      15      doing certified payrolls for 32 years.

      16             SENATOR AKSHAR:  Huh.

      17             CHRISTINE DONALDSON-BOCCIA:  She's not a

      18      newbie at this.

      19             She came to me and she said, "For $140,000

      20      contract, are you kidding me?"

      21             SENATOR PHILLIPS:  And do you support having

      22      to have to bid competitively, versus --

      23             CHRISTINE DONALDSON-BOCCIA:  Absolutely.

      24             SENATOR PHILLIPS:  -- thank you.

      25             CHRISTINE DONALDSON-BOCCIA:  It -- you don't


       1      get hired because you're an MWBE.

       2             You get hired because you can do the work,

       3      and you've got a proven track record.

       4             NANCI-JEAN DeNAPOLI:  Right.  That's what we

       5      stand on now.  I am a woman-based enterprise, but

       6      I am an electrical contractor.  Successful

       7      electrical contractor.

       8             CHRISTINE DONALDSON-BOCCIA:  And I have to

       9      tell you, even though I do some projects better than

      10      some of my competitors, there's a lot of GCs, you

      11      still have to spread the wealth around.

      12             You cannot just hire the same companies time

      13      and time again.

      14             That gives opportunity to MWBEs as well as

      15      non-MWBEs.

      16             It's a fair playing field out there as long

      17      as you're willing to put in the time and effort to

      18      play the game.

      19             SENATOR PHILLIPS:  Thank you.

      20             Thank you very much.

      21             SENATOR BOYLE:  I'd like to thank both of you

      22      for sharing your stories.

      23             And, I see it firsthand.  My wife is a

      24      small-business owner.

      25             She's probably started the certification


       1      process four or five times, and just says -- I mean,

       2      it takes a week.  And she's got to run the business,

       3      so she's trying to do the application.

       4             Finally, I think she's hiring someone to help

       5      with the application.

       6             You shouldn't have to hire someone for an

       7      application to help your business.

       8             I mean, if it's that complex, then there's

       9      something wrong with it.

      10             And then, obviously, she has paperwork, if

      11      she does it.

      12             So -- but thing -- nice thing is that, if

      13      I should pass away, I leave her the money, it's

      14      definitely not going to put her over the threshold,

      15      my public-employee's policy.

      16                [Laughter.]

      17             SENATOR PHILLIPS:  Yeah, but she loses your

      18      one-half deduction, so you're (indiscernible).

      19                [Laughter.]

      20             SENATOR PHILLIPS:  Thank you.

      21             Thank you very much.

      22             CHRISTINE DONALDSON-BOCCIA:  Thank you.

      23             NANCI-JEAN DeNAPOLI:  Thank you.

      24             SENATOR PHILLIPS:  Our next panel is

      25      Nancy Colella and Ilene Herz.


       1             We need a seventh-inning stretch here.

       2             Who's going to start here?

       3             NANCY COLELLA:  Good afternoon.

       4             So thank you, everyone, for actually

       5      attending this very, very important communal here

       6      with the Senators.

       7             Elaine, thank you for your invitation.

       8             Matthew is very -- speaks very highly of you.

       9             I love Matthew.

      10             So, my name is Nancy Colella.  I am the

      11      principal at New York State Sustainable Corporation.

      12             And, what my company and firm does is,

      13      actually, we advocate for renewable energy

      14      conservation measures for the commercial market.

      15             Basically what I do is, I walk into an owner

      16      and discuss what their portfolio is doing.  And I,

      17      basically, monitor and study their behavior of their

      18      properties, portfolio (indiscernible), and

      19      I actually develop a conservation measure from --

      20      anything from fuel cells, to solar, or collaboration

      21      of investments, that make sense for the business.

      22             And so thank you again for having me.

      23             Some of the -- some of what has been

      24      discussed here today I feel is imperative.

      25             I see the two women that have been very


       1      successful, and I will have to say it takes a lot to

       2      get there.

       3             A lot.

       4             And it's not just sweat equity, and it's --

       5      it's equity.

       6             And this is what I believe to be the

       7      hinderance of actually going past your second year:

       8             You can't make money unless you have capital.

       9             How can we get capital if the banks wouldn't

      10      even touch me?

      11             They won't touch me.

      12             And I can't even get working capital.

      13             It has to be off of my personal bankroll.

      14             So I'm now at a point where I'm in the

      15      business two years, and I'm, finally, because

      16      construction takes a long time to procure,

      17      hopefully, getting a check soon.

      18             But in the interim, I've been working

      19      part-time and doing side work just to get capital to

      20      build back into my business.

      21             So my thought process is, if there are

      22      credits and incentives for banks to fund small

      23      capital, you know, equity lines of credit to

      24      women-owned businesses, it would be terrific.

      25             I mean, you know what I can do with $10,000?



       2      It can run me two years, $10,000 working capital.

       3             I mean, a lot of what's being done today is

       4      virtual.

       5             A lot of the work that's being done today is

       6      virtual.

       7             So, I don't have to have a storefront.

       8      I don't have to have a foundation.

       9             All of my work is interactive, it's done on

      10      Google.

      11             I have engineers that work virtually.  I call

      12      them in when I need them.  I pay them great money,

      13      but they're superior at what they do, because my

      14      quality of my work stands for itself.

      15             So, I work with folks that make sense, that,

      16      to me, as a woman that is actually building on the

      17      business and building on the relationships that I've

      18      developed over the previous 20 years of

      19      construction, and my relationships in commercial, in

      20      commercial real estate.

      21             So some of the items that I wanted to bring

      22      to your attention is that's really the hindrance.

      23             The first thing is capital.

      24             How can we get banks, small incremental

      25      incentives, to be able to contribute to capital


       1      loans for businesses that want to flourish?

       2             The first points of -- or, the three prongs

       3      that I believe are the most important are:  The

       4      sweat equity, the capital; the relationships of the

       5      business; and, of course, you know, the ramp-up,

       6      which is the marketing.

       7             Marketing, if you don't have that, how are

       8      you getting out there?

       9             How are you making those relationships?

      10             How are you branding the company?

      11             I mean, you know, it goes on and on and on.

      12             I'm sorry, I think this thing keeps shutting

      13      out.

      14             Another -- another element that I feel is

      15      really important is, I'm very fortunate.  I have a

      16      very strong backbone with family support, but, now

      17      there's child care.

      18             If you have a child that is going -- is

      19      underneath four years old, how is a woman taking

      20      care of her child, so she can be out there in the

      21      field, build her business.  Right?

      22             Are we having any kind of support in that

      23      realm, where we -- as a woman, I have a

      24      four-year-old I have to drop off in the morning at

      25      daycare.  Make sure she's going -- you know, getting


       1      picked up.  But if I didn't have my husband or my

       2      family support, how are we doing that?

       3             Right?

       4             Those are challenges.

       5             These are -- you know, if I was a single mom,

       6      that would be almost impossible.

       7             Impossible.

       8             So, again, so I'll go through these.

       9             Economic capital considerations.

      10             The initial ramp-up stages of a new business

      11      required for components, strategic planning,

      12      operations planning, marketing outreach, sweat and

      13      capital equity.

      14             From a capital equity standpoint, it is

      15      critical to integrate programs to private-sector

      16      funding mechanism's banks, to not only offer mutual

      17      benefits to the bank, but allow immediate access to

      18      capital as a small funding -- small funding work

      19      capital for women-owned business enterprises.

      20             Currently, most women-owned enterprises use

      21      high-finance credit cards and overtax themselves in

      22      the hopes of new future business revenue.

      23             I have more stories than I have time to share

      24      in terms of these situations, but I believe with

      25      collaborative efforts, there can be a devised better


       1      method of working capital to be funded prior to

       2      women-owned businesses folding under the pressure

       3      and never reaching their corporate goals of

       4      progression, scaling, and growth.

       5             Another circumstance is credit to private

       6      sector for utilizing women-owned business

       7      enterprises, minority businesses.

       8             I believe, with additional exposure to

       9      incentivized programs supporting private-sector

      10      businesses, that promote hiring newly-developed

      11      women-owned businesses, will be promoted by

      12      additional new businesses to utilize women-owned

      13      businesses while preventing the dissolving of

      14      struggling enterprises.

      15             Currently, I believe there are direct tax and

      16      corporate credit initiatives, more so for municipal,

      17      state, and city work.

      18             The private sector is completely underserved,

      19      and would support the progression of staying in

      20      business.

      21             So, are there any credits that can be given

      22      to the private sector in addition to anything that

      23      we have now, to expose their -- you know, their

      24      usage of our services, basically?

      25             So that's something that I would consider to


       1      be, you know, a beacon, to allow a one-year business

       2      or a start-up business to continue going forward in

       3      the private sector.

       4             As you know, private sector tends to pay

       5      quicker than does a State or a contract job.

       6             So, those are my statements.

       7             So, thank you.

       8             SENATOR PHILLIPS:  Ilene.

       9             ILENE HERZ:  Good morning.

      10             I wish to thank the Senators for having the

      11      interest and taking the time to hear about my and

      12      other women's situation with the New York State

      13      Division of Minority Affairs.

      14             Your concern and leadership are greatly

      15      appreciated.

      16             My husband started this business, a flooring

      17      business, with a partner in 1979.

      18             He funded the business with our money that we

      19      had saved over 11 years of marriage.

      20             In 1998 his partner was diagnosed with a

      21      terminal illness.  The illness rapidly rendered him

      22      incapable of working.

      23             I began to work with my husband every evening

      24      after my workday and every weekend.

      25             When my husband's partner requested he be


       1      bought out, Jerry asked me if I would give up

       2      practicing law and become his partner.

       3             I agreed.

       4             We bought out his partner's interest in 1999.

       5             The buyout was funded my inheritance, our

       6      savings, and insurance.

       7             I have always been active and involved in

       8      this business; therefore, working in and owning this

       9      business was a logical, natural transition for me.

      10             My (indiscernible) experience through my

      11      practice of law, and my service on local and

      12      regional boards of education and charities,

      13      qualified me in areas critical to the further growth

      14      of the business.

      15             We decided I would be the person with the

      16      primary responsibility for running the company.

      17             The results of my contributions are evidenced

      18      by the fact that not only has the company remained

      19      viable, it has grown significantly since 1999 when

      20      I left my job as county attorney.

      21             My company is independently-owned and

      22      operated by me.

      23             We are a family-owned business, and I own

      24      60 percent of the company.

      25             As the president and majority stockholder,


       1      I have the final decision on all issues.

       2             In 2001 I joined the Suffolk County Women's

       3      Minority Business Enterprise Coalition.  They

       4      sponsor meetings to help women-owned businesses.

       5             Through them I became aware of the benefits

       6      of, and was encouraged to obtain, a certified

       7      woman-owned business status through New York State.

       8             In preparation for my application, I attended

       9      a special workshop that was sponsored and conducted

      10      by New York State Development Corporation.

      11             I subsequently met with Mr. Farqua, who is

      12      their person, to review my completed application.

      13             Additionally, he conducted a site inspection

      14      of my facilities and operations.

      15             My company was certified as a WMBE (sic) in

      16      2001.

      17             My certification was regularly renewed until

      18      2014.

      19             With each subsequent renewal, I updated all

      20      information -- new information, contracts, and

      21      financial, and submitted that information along with

      22      my basic information.

      23             My reapplication was never questioned and was

      24      always promptly approved.

      25             In 2014, recertification was submitted on


       1      October 30th.

       2             I had not heard back by December, which was

       3      unusual.

       4             Therefore, I called to check my status, and

       5      was informed, due to high volume, my certification

       6      was awaiting analyst assignment.

       7             As of May 27, 2016, I still had not heard,

       8      and again called to determine my status.  I was

       9      informed it was still pending.

      10             On January 12th of 2017 I received a request

      11      for additional information, and I responded the next

      12      day.

      13             On January 16th, I was shocked to receive a

      14      letter denying my renewal.

      15             I reached out to my analyst, Miss Yee (ph.).

      16             She explained my renewal was denied because

      17      on, some documents, Jerry is listed as president;

      18      therefore, according to the corporate bylaws, he as

      19      president controls the company.

      20             I questioned that, since I was listed as

      21      president on most documents, why shouldn't I have

      22      been considered in control?

      23             Miss Yee reiterated, Jerry was listed;

      24      therefore, he is considered in control.

      25             I stressed this smallest mislabeling was


       1      clearly an oversight.

       2             I explained, I'm a majority stockholder, I am

       3      in full control, and I explained the bylaws, or the

       4      original boilerplate bylaws from the 1980 corporate

       5      kit at the time when I was not even a partner.

       6             I explained to Miss Yee my original, basic

       7      WMBE (sic) application was prepared by the Division

       8      of Minority Affairs, under their guidance, and has

       9      been unchanged since approved 16 years earlier.

      10             Significantly, my original application was

      11      proved based on my proof of actual real ownership

      12      and control of my company.

      13             Miss Yee responded, her agency had recently

      14      been cited for being lax in previous years;

      15      therefore, she had strict direction to scrutinize

      16      each renewal.

      17             Miss Yee also shared her division was very

      18      severely backlogged.

      19             She informed me I had two possible solutions

      20      to attempt to correct this denial, noting neither

      21      solution was guaranteed to be successful or at all

      22      timely.

      23             The first was to file an appeal.

      24             She stated this was a very lengthy process,

      25      especially considering there was a very substantial


       1      backlog.

       2             Or, I could cure my defect -- effect and

       3      control by hiring an attorney to rewrite the

       4      corporate bylaws, take control from the president.

       5             I questioned how this cure would be

       6      effective, because, since Jerry was only listed by

       7      accident in one or two places, I am the president,

       8      and I am primarily listed as president.

       9             Additionally to that, though, if I went with

      10      Cure Number 2, I would have to find a vendor on the

      11      New York State contract whose product I use, ask

      12      them to write a letter to the State, who's using --

      13      a state agency using the product, requesting they

      14      write a letter to New York State, asking my cure be

      15      expedited.

      16             She noted, although this process may be

      17      shorter than an appeal, clearly, it is not short,

      18      and there's no assurance my company status as a

      19      WMBE (sic) would be restored.

      20             Miss Yee acknowledged she was swamped, and

      21      kindly gave me her e-mail to expedite our

      22      communications.

      23             I called, and sent her the following e-mail:

      24             I reviewed all my recent documents.

      25             The error is not in the bylaws.


       1             The error is that, only in some places, Jerry

       2      is erroneously listed as the president.

       3             He is not, I am, president, and own the

       4      controlling shares of the stock.

       5             How can this error be cured?

       6             Significantly, I own 60 percent of the

       7      company and in control.

       8             On February 17th, Miss Yee specifically

       9      requested additional information.

      10             She said she did not require all my minutes,

      11      but, instead, requested the first minutes of 1979 --

      12      a time I was not involved in the business -- and the

      13      minutes memorializing the ownership of my 60 percent

      14      acquisition, and of the shares I had given to my

      15      now-current partners, my sons.

      16             I supplied the information the next day.

      17             On February 13th, via voicemail, Ms. Yee

      18      said she spoke with legal and wanted to talk with

      19      me.

      20             She said legal said, Because the records you

      21      have for the minutes of the meeting do not

      22      specifically appoint you as president, I can now

      23      either appeal, or, hold a board meeting, appointing

      24      me as president, and she will ask for a waiver of

      25      the two-year waiting period, and she will try to


       1      process my new application quickly.

       2             I questioned the legal decision, as the

       3      documents requested were only about ownership

       4      change, not presidency.

       5             The actual minutes appointing me to president

       6      were not requested; and, thereby, were not reviewed.

       7             I immediately sent Ms. Yee all the corporate

       8      minutes for the past 17 years which annually

       9      appoints me as president.

      10             I honestly expected at that point I had

      11      established my position with my company.

      12             Additionally, per her request, I held a

      13      meeting that very day to again reaffirm my

      14      presidency, and sent that along with my corporate

      15      minutes.

      16             The next day I received, via voicemail, a

      17      waiver of the two-year application waiting time.

      18             I was beyond surprised and disappointed to

      19      receive this.

      20             I wondered if my 17 years of annual meeting

      21      minutes had even been looked at.

      22             On February 17th of 2017, Ms. Yee informed

      23      me she would do the initial review of my new

      24      application.

      25             I submitted it three days later.


       1             On February 21st, Ms. Yee reviewed and

       2      approved my new application as "complete."

       3             She signed it and marked it "expedited."

       4             On March 9th, Ms. Yee informed me she had

       5      been reassigned to a different division.

       6             I would now be taken care of by a

       7      Raymond Emmanuel (ph.), and (indiscernible) Butler

       8      was to be my new analyst.

       9             I then received extensive lists of questions

      10      from Mr. Butler, which I responded to on

      11      March 17th.

      12             On May 26th I received another set of

      13      questions, which I promptly responded to.

      14             On June 1st my new application was denied.

      15             No one called.  No site visit was conducted.

      16             The reasons for denial were not related to

      17      the basic issue: the control and running of my

      18      company.

      19             My leadership, control, and final

      20      decision-making was ignored.

      21             The issues raised in denial are specifically

      22      addressed in the appeal which was filed July of

      23      2017.

      24             In November of '17 my attorney requested

      25      guidance on a proposed hearing date.


       1             He had heard nothing then.

       2             We actually, finally, did hear from them

       3      August of 2018, and I believe we may have a date in

       4      October.

       5             From 2001 until 2017, the New York State

       6      Division of Minority Affairs represented

       7      (indiscernible) support.

       8             My application and recertification went

       9      smoothly and promptly for 13 years.

      10             Suddenly, the process and attitude of the

      11      agency changed.  It appears the division is no

      12      longer an advocacy and support agency for women.

      13             For example, my male minority partner

      14      (indiscernible) is listed "president" on just a few

      15      documents.

      16             I was listed as president on most documents,

      17      and all supporting documents established my control.

      18             Nevertheless, it was my male partner who

      19      New York State determined was president, even though

      20      I sent definitive evidence to the contrary.

      21             In their WMBE (sic) information, a basic

      22      qualification, New York State asks for the business

      23      to be able to successfully demonstrate that

      24      ownership be real, substantial, and continuing, and

      25      the majority -- minority members and/or woman must


       1      exercise the authority to independently control the

       2      day-to-day business decisions.

       3             I have repeatedly and conclusively

       4      demonstrated that.

       5             I have worked tirelessly 45 to 80 hours a

       6      week for 20 years.

       7             It is frustrating and insulting to me as a

       8      woman to know, when there's a choice in deciding who

       9      is in control, New York State automatically assumes

      10      it is the male who controls, and proceeds to only

      11      seek evidence to support their prejudiced

      12      assumption.

      13             Throughout every step, from application, to

      14      denial, to reapplication, and then re-denial,

      15      New York State only requested information to support

      16      their biased assumptions.

      17             They never requested, even when supplied,

      18      they never reviewed, any information to determine

      19      how the company actually is run and who is in

      20      control.

      21             Their analysis was repeatedly flawed by their

      22      faulty logic.

      23             For example, a reason -- the most recent

      24      denial was because my vice president of sales signs

      25      most sales contracts.  He is considered to be in


       1      control.

       2             Furthermore, because my vice president of

       3      operations manages inventory and supervises

       4      installations, I am considered not to be in control.

       5             Had they investigated the complete, actual

       6      process in each division, it would have been evident

       7      I am in control.

       8             The agency did not even bother to come for

       9      the promised site visit.

      10             Leadership of the company requires

      11      delegation.

      12             Because I am a female, I am successfully

      13      delegating responsibilities within my company.

      14             Where I, as a female, I am considered to not

      15      be in control because I can delegate.

      16             Would they think the same if I were a male?

      17             The questions they asked, and the conclusions

      18      they drew, leads me to believe they were just

      19      looking for a reason to deny my application.

      20             New York State should come to terms with what

      21      the purpose of this agency is.

      22             I don't want, nor did I expect, them to be a

      23      rubber stamp because I am a female.

      24             I do expect them to support and embrace the

      25      truth of how a business is run.


       1             Rather than being punished for being a

       2      qualified, successful business, businesses such as

       3      mine should be able to grow and mentor other

       4      minority businesses throughout state.

       5             Once again, thank you for your time.

       6             SENATOR PHILLIPS:  Thank you.

       7             SENATOR BOYLE:  Quickly, Ilene, thank you so

       8      much for your testimony; and thank you, Nancy.

       9             I mean, since you have been decertified, can

      10      you estimate, approximately, how much business you

      11      may have lost as a result of not --

      12             ILENE HERZ:  No.

      13             I know I can point to specific contracts;

      14      but, no, I couldn't.

      15             It's been significant, and we've really had

      16      to scrounge to look in other areas.

      17             And, it's hard.

      18             SENATOR BOYLE:  Thank you.

      19             SENATOR PHILLIPS:  Anyone else?

      20             So, again, I'd like to -- thank you, ladies;

      21      thank you very much for sharing your testimony.

      22             I want to thank everyone.

      23             Before I thank my fellow Senators, I want to

      24      point out that our Town of North Hempsted

      25      councilwoman, Dina DiGiorgio, who is a


       1      small-business owner, had some meetings before, but

       2      was kindly -- kind enough to join us.

       3             So, thank you.

       4             As a business owner, both from a family

       5      standpoint in your own business, we have some

       6      amazing testimony today.

       7             So, thank you, everyone, for taking the time.

       8             I think we have a lot to think about here.

       9             Obviously, there were some reoccurring

      10      themes, which is -- actually, makes it a little

      11      easier on us when there are reoccurring themes,

      12      because it just highlights areas that can be

      13      corrected to make this program be a better program

      14      for all of New York State.

      15             I'd like to thank Senator John Brooks for

      16      taking the time to come out here, Senator Phil Boyle

      17      for taking the time, and one of the Co-Chairs of

      18      this working group, Senator Fred Akshar, for coming

      19      down from Binghamton.

      20             So on behalf of the 7th Senate District,

      21      Senator Akshar, thank you very much.

      22             And, please, does anyone else --

      23             SENATOR BOYLE:  Yes.

      24             I want to thank Senator Phillips for her

      25      leadership in hosting today; and my colleagues


       1      Senator Brooks and Senator Akshar; for all the

       2      people who testified and that came to learn.

       3             We have a lot to think about.  And,

       4      obviously, we're not in legislative session at this

       5      point in time.

       6             We'll go through the silly season of

       7      elections, and get over that, and then get back to

       8      the important work being done.

       9             I do believe we can make this program better,

      10      make it more efficient, and really reach the goals

      11      that it was intended to do, promoting minority and

      12      women-owned businesses, and do it the right way.

      13             So, thank you again, for everyone.

      14             SENATOR PHILLIPS:  Senator Brooks.

      15             SENATOR BROOKS:  Again, I would also like to

      16      thank Senator Phillips for hosting this program.

      17             I think it's important.

      18             I think this is a critical tool to allow

      19      people that have generally not had an opportunity to

      20      get into business, to get into business.

      21             I think we've identified a number of concerns

      22      that have to be addressed.

      23             I'm also glad to learn of some of the success

      24      stories we heard about today too.

      25             It's a program that can work, does work; can


       1      be made stronger.

       2             And I think all of us, as we return to

       3      session, need to work on improving what we have in

       4      building on something that has worked.

       5             And I think some of the concerns that were

       6      expressed today, we certainly have to look up

       7      insurance, certainly, as a big issue, for number

       8      one.

       9             The list, and the imperfection, to be polite,

      10      in that list has to be addressed.

      11             But I think this was a good door-opening day

      12      for us.

      13             Thank you.

      14             SENATOR AKSHAR:  Well, Senator Phillips,

      15      thank you very much for having me.

      16             It's been a pleasure to be in your Senate

      17      District.

      18             I don't come to Long Island very often, but

      19      I'm glad to be here.

      20             And we did hear -- we are hearing recurring

      21      themes and recurring issues, and I think that's

      22      important for us on this working group, because if

      23      you hear them in northern New York or

      24      Western New York or Long Island and New York City,

      25      something's wrong.  Everybody's talking about the


       1      same thing.

       2             So it allows us to focus our energy and our

       3      efforts in those specific spaces to improve the

       4      program.

       5             And I agree with Senator Brooks, it was good

       6      to hear some success stories of the program, and how

       7      it is functioning, and how people have been

       8      successful in the program.

       9             So, I look forward to, you know, having a

      10      couple more hearings throughout the state, listening

      11      to people's issues, and then returning to Albany and

      12      collectively working on this issue.

      13             I think it's important to note that this

      14      effort is a bipartisan effort, and not often does

      15      that happen in Albany.

      16             It certainly doesn't happen in Washington.

      17             And the fact that you see a bipartisan panel

      18      listening to your testimony, I do want to praise

      19      Senator Sanders from Queens, who has been very

      20      instrumental with this Task Force and working group.

      21             He brings an interesting perspective because,

      22      as a member of city council, he was the architect of

      23      the City's MWBE program.

      24             So, Senator Ritchie and I are very pleased to

      25      be partnering with Senator Sanders and everything


       1      that he brings to the table.

       2             So, we're looking forward to going New York

       3      City.

       4             The next hearing is going to be

       5      October 16th.

       6             And if anybody is looking for details on that

       7      particular hearing, please visit the Senate's

       8      website,, for additional details.

       9             And just thank you, everybody, again for

      10      taking time out of your busy day.

      11             Thanks.

      12             SENATOR PHILLIPS:  Once again, I'd like to

      13      thank the staff that worked so hard, both from

      14      Albany and here on Long Island, for all your

      15      efforts.

      16             So thank you, everyone.

      17             Have a wonderful day.

      18                (Whereupon, at approximately 12:28 p.m.,

      19        the joint-committee public hearing held before the

      20        New York State Senate Standing Committee on Labor

      21        and the Senate Standing Committee on Commerce,

      22        Economic Development, and Small Business

      23        concluded, and adjourned.)

      24                           ---oOo---