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       1      JOINT HEARING BEFORE THE NEW YORK STATE SENATE
              STANDING COMMITTEE ON LABOR,
       2      STANDING COMMITTEE ON AGRICULTURE,
              AND
       3      STANDING COMMITTEE ON ECONOMIC DEVELOPMENT
             -----------------------------------------------------
       4
                                PUBLIC HEARING:
       5
               TO EXAMINE THE MINORITY AND WOMEN-OWNED BUSINESS
       6          ENTERPRISES PROGRAM, AND CONSIDER POTENTIAL
                    LEGISLATIVE SOLUTIONS TO CREATE A MORE
       7          EFFECTIVE AND EFFICIENT PROGRAM TO ENHANCE
                          NEW YORK'S BUSINESS CLIMATE
       8
             -----------------------------------------------------
       9
                               Senate Hearing Room
      10                       250 Broadway, 19th Floor
                               New York, New York
      11
                               October 16, 2018, at 11:00 a.m.
      12

      13      PRESIDING:

      14         Senator Patty Ritchie, Chairman
                 NYS Senate Standing Committee on Agriculture
      15

      16      ALSO PRESENT:

      17         Senator Elizabeth Little

      18         Senator Thomas F. O'Mara

      19

      20

      21

      22

      23

      24

      25







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       1
              SPEAKERS:                               PAGE  QUESTIONS
       2
              Jonnel Doris                               5       13
       3      Senior Advisor and Director
              The Mayor's Office of MWBE
       4        (New York City)

       5      Lou Coletti                               36       45
              President and CEO
       6      Building Trades Employers' Association

       7      Sandra Wilkin                             53       63
              A Co-Founder
       8      Krista Gobins
              A Co-Founder
       9      Women Builders Council

      10      Jolie Milstein                            71       79
              President and CEO
      11      New York State Association
                for Affordable Housing
      12
              Denise Richardson                         81       89
      13      Executive Director
              General Contractors Association
      14
              J. Naomi Glean                           104      116
      15      EEO Officer
              WDF, Incorporated
      16

      17

      18

      19

      20

      21

      22

      23

      24

      25







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       1             SENATOR RITCHIE:  Good morning, everyone, and

       2      thank you for attending this hearing.

       3             It's the sixth and final hearing of the

       4      New York State Senate's Task Force on the MWBE

       5      program.

       6             I want to acknowledge that Senator Akshar has

       7      been working across the state at these hearings.

       8             He's unable to attend today.

       9             But on behalf of Senator Akshar and myself,

      10      I want to thank everyone who has been willing to

      11      travel across the state to make their comments and

      12      recommendations heard.

      13             I would also like to thank Senator Little for

      14      joining me here today.

      15             She's been somebody who has been involved in

      16      the MWBE program, and someone that we've worked

      17      together on a number of the issues.

      18             We have a number of people who are going to

      19      testify.  I know on the agenda we have them laid out

      20      timewise.

      21             We do have at least one person who is

      22      supposed to testify who won't be here, so we're just

      23      going to roll from one presenter to the next.

      24             I know everybody's schedule is very busy, and

      25      we want to get everyone out as soon as possible.







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       1             But, once again, thank you for being here

       2      today.

       3             We look forward to working with my colleagues

       4      on potential legislation once we come back into

       5      session in January.

       6             And with that, I'll turn it over to

       7      Senator Little.

       8             SENATOR LITTLE:  Thank you, Senator Ritchie.

       9             And, you know, I'm really glad to be down

      10      here for this particular hearing because, as upstate

      11      legislators, we have some, possibly, different

      12      issues in accessibility and numbers, and all of

      13      that, businesses, and the ability to have enough

      14      minority- and women-owned businesses to meet any of

      15      the goals.

      16             So, it's going to be really interesting to me

      17      to hear your issues, and how we can be of help to

      18      you.

      19             And, certainly, you couldn't have two more

      20      upstate Senators here today.

      21             Senator Ritchie is a stone's throw from

      22      Canada, and I'm about 150 miles from Canada.

      23             So, actually, Montreal -- I'm less than that.

      24      Montreal is 150 miles from my house, so it's closer

      25      than New York City.







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       1             So, thank you for being here, and I look

       2      forward to hearing your comments.

       3             SENATOR RITCHIE:  Certainly, it will be

       4      interesting for me.

       5             I know there are some challenges in my area,

       6      but I've heard that things may work a little bit

       7      better in the New York City area.

       8             So I'm looking for, potentially, some

       9      recommendations, or some issues that we need to work

      10      on, to make the program even better than it is now.

      11             So with that, I'd like to start with the

      12      first speaker, and that is Jonnel Doris, senior

      13      advisor and director of the Mayor's Office.

      14             JONNELL DORIS:  Good morning.

      15             Thank you for having us here today.

      16             Good morning, Committee Chairs, and members

      17      of this Senate -- State Senate Committee on Labor

      18      and Agriculture and Economic Development.

      19             My name is Jonnel Doris, and I'm the senior

      20      advisor and director of the Mayor's Office of MWBE.

      21             Today I will provide an overview of the

      22      City's program, including the progress made to date,

      23      certification utilization goals by this

      24      administration.

      25             In the fall of 2016 Mayor Bill de Blasio







                                                                   6
       1      announced the creation of the Mayor's Office, and

       2      the critical step to the administration's commitment

       3      to increasing contract and opportunities for

       4      MWBEs.

       5             The mayor pledged ambitious goals, achieving

       6      30 percent of the MWBE utilization by the end of

       7      2021, and having 9,000 certified MWBEs by the end

       8      of 2019.

       9             In 2015 the mayor outlined a separate

      10      citywide goal of $16 billion to MWBEs by 2025.

      11             The one NYC goal, the 30 percent goal, covers

      12      mayoral and non-mayoral agencies.

      13             On the heels of our May 2018 disparity study,

      14      the mayor announced that he was -- we were

      15      $1.8 billion ahead of schedule, and, therefore,

      16      increased our goal from 16 billion to 20 billion by

      17      2025.

      18             We're excited to have the leadership of our

      19      Deputy Mayor Thompson.  His career-long justice and

      20      equity work continues to increase economic

      21      development opportunities by calling out the

      22      challenge of structural and historical barriers in

      23      the marketplace and within government.

      24             Under the supervision of the deputy mayor's

      25      small-business services, and the Mayor's Office of







                                                                   7
       1      contract services, we play an integral role in

       2      implementing the MWBE program.

       3             "SBS," or, the department of small business

       4      services, certifies MWBEs, and provides essential

       5      capacity-building programs and technical assistance

       6      to ensure they can compete for and execute on City

       7      contracts.

       8             MOCS tracks and reports on utilization data

       9      for all City contracts, subject to Local Law 1.

      10             The purpose of the City's MWBE program is to

      11      remedy the impact of discrimination in the market

      12      where the City makes its procurements.

      13             This impact is statistically analyzed in the

      14      disparity study.

      15             The most recent study demonstrated that

      16      MWBEs' firms are underutilized in City

      17      procurement.

      18             Local Law 1 of 2013 established citywide

      19      contracting goals which match disparity gaps

      20      revealed by the 2011 disparity data analysis.

      21             The City will make policy changes to -- in

      22      accordance with the key findings and recommendations

      23      of the disparity study that was published this past

      24      May.

      25             Along with my colleagues, we support the







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       1      strategic role in ensuring that the City's (sic)

       2      remain focused on achieving the goals of the

       3      program.

       4             Since the start of our administration, the

       5      number of certified firms have increased by

       6      86 percent.

       7             At the close of fiscal year '18, the number

       8      of certified MWBE firms was 6,829.

       9             Additionally, at the end of fiscal year '18,

      10      MOCS reported the MWBE utilization at 19 percent,

      11      representing 1.069 billion in awards to MWBE

      12      contracts under our Local Law 1 program, as compared

      13      to 8 percent, or, $465 million in fiscal year '15 at

      14      the start of the administration.

      15             We are also very happy to report, our 2015

      16      goal of 20 billion to MWBEs by 2025, that we are,

      17      right now, at 10 billion this past October -- this

      18      past September.

      19             So we're very excited that we're halfway to

      20      our goal.

      21             Since the enactment of Local Law 1, the City

      22      has implemented a number of creative initiatives to

      23      help WMBEs build capacity and obtain capital, and

      24      has also advocated for state legislative initiatives

      25      to give the City more tools for its program.







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       1             Pursuant to Local Law 1, the goals therein,

       2      the percentage of dollars awarded to MWBEs, subject

       3      to City's program, has trended upward from

       4      8 percent, to nearly 20 percent, since '15 to now in

       5      2018.

       6             Just to put that into perspective, at the

       7      close of '18, we reported, again, we were closer to

       8      our 30 percent goal, and we believe that we can

       9      achieve that by 2021.

      10             Still, we have more to do.

      11             We are lowering, where we can and wherever

      12      possible, removing structural barriers to enter into

      13      City's procurement marketplace by providing

      14      resources for increased programming at the City

      15      agencies, and creating strategic initiatives to

      16      increase MWBEs' ability to compete successfully.

      17             In accordance with the four core principles

      18      of our office -- accountability, accessibility,

      19      capacity, and sustainability -- we have implemented

      20      initiatives to address issues of MWBEs faced in the

      21      private marketplace; namely, access to capital,

      22      which is a common obstacle for many small and

      23      mid-sized businesses.

      24             In order to respond to this need, this

      25      administration launched a Contract Finance Loan Fund







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       1      and a Bond Collateral Assistance Fund, both

       2      administered through our small-business services

       3      department, and the emerging Developer Loan Fund,

       4      which is administered by our Economic Development

       5      Corporation.

       6             Together, the initial City investment to

       7      these funds was $30 million.

       8             As you may know, the mayor also convened our

       9      city banks to begin a discussion about a partnership

      10      to create more access to capital for these firms.

      11             Earlier this year, on -- in -- February 21st,

      12      we announced that three banks had committed to

      13      invest in our MWBE program an additional $40 million

      14      to the 30 million that we already had in that

      15      program.

      16             In the spring of 2017, we were joined by many

      17      MWBEs, advocates, and stakeholders, including

      18      other City agencies, in calling for the passage of

      19      S6513, A8505.

      20             This bill proposed, one, increasing the City

      21      discretionary spending limit for goods and services

      22      purchased from MWBEs, and giving the City the

      23      authority to provide to the State -- to the State,

      24      sorry, to offer MWBEs a price or points

      25      preference.







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       1             The bill passed overwhelmingly in the

       2      Assembly and the State Senate.

       3             And for that, we thank our elected officials,

       4      including the Senators here today, for their

       5      advocacy and support.

       6             This change provides MWBEs with access to

       7      more and larger contracts to help build their

       8      capacity and succeed as prime contractors.

       9             The discretionary threshold for goods and

      10      purchases was implemented on March 5, 2018.

      11             And by June 30th of 2018, 181 contracts were

      12      awarded to MWBEs in the amount of $12.5 million.

      13             We plan to return to Albany this session and

      14      advocate for State approval for innovative policy

      15      tools that the City has previously requested, but

      16      have not yet received.

      17             We understand what a valuable tool a

      18      mentor-protege program can be, specifically in the

      19      construction industry.

      20             Many state agencies and public authorities

      21      have implemented mentorship programs for MWBEs and

      22      small businesses.

      23             We hope to be able to do the same, but need

      24      State authorization.

      25             Additionally, we will seek the authority to







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       1      create prequalified lists exclusively for MWBEs for

       2      City agencies.

       3             This would enable the City to reserve certain

       4      procurement opportunities to MWBEs.

       5             The housing preservation department, or,

       6      "HPD," has been able to do that similarly by

       7      creating prequalified lists for MWBE developers for

       8      certain projects, pursuant to state legislation

       9      enacted in 2014.

      10             HPD's MWBE pre-qual program established,

      11      pursuant to that authority, aims to increase in

      12      contract and opportunities for certified MWBEs in

      13      HPD -- HDC subsidized affordable housing projects.

      14             In January of 2017, the mayor, HPD, and our

      15      office announced that 8 MWBEs had been selected to

      16      lead construction on 6 new, 100 percent affordable

      17      housing developments, or, 440 homes, for seniors and

      18      New Yorkers with a variety of income levels,

      19      including extremely low-income and formerly homeless

      20      households.

      21             Although these projects were developed --

      22      projects were developed, rather, than in the

      23      procurement-process contracts, and so they did not

      24      count, sorry, towards the City's utilization goals

      25      under Local Law 1, they are a valuable demonstration







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       1      of how prequalified lists allowed HPD to meet the

       2      double bottom line here by employing many of the

       3      City's MWBEs to build affordable housing.

       4             We want MWBEs to have the opportunity to

       5      join MWBE prequalified lists in the procurement

       6      setting as well.

       7             Going forward, we will continue to work

       8      closely with all our elected partners to increase

       9      opportunities for MWBEs, and work together on MWBE

      10      outreach networking and educational events.

      11             Thank you for the opportunity to testify

      12      today, and your continued support and advocacy of

      13      our program.

      14             I'd be happy to take your questions.

      15             SENATOR RITCHIE:  I guess my first question

      16      would be:

      17             I've heard from a number of people who spoke

      18      about the program in New York City, how they are

      19      able to certify substantially faster at the city

      20      level than at the state level.

      21             Could you just give me maybe an overview of

      22      the certification process?

      23             JONNELL DORIS:  Sure.

      24             Our certification process is conducted by our

      25      small-business services department.







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       1             We take, generally, about 6 to 8 weeks for

       2      certifications.

       3             We do require the business to be in business

       4      for at least a year.

       5             We also have default areas, which included

       6      the five boroughs, but also Nassau, Putnam,

       7      Rockland, Suffolk, Westchester counties, and,

       8      five counties in New Jersey -- Bergen, Hudson,

       9      Passaic counties in New Jersey.

      10             That's within our catchment area, and so we

      11      do get firms from just about all over the state too,

      12      but also in the direct New York City area.

      13             We do also ask for, where applicable, to the

      14      ownership or licensing, and also permit process.

      15             We also go on-site to visit the MWBEs, to

      16      ensure that they are who they say they are.

      17             And we do have a robust staff who is out

      18      there looking to certify firms.

      19             We have a big goal of 9,000 businesses.

      20             We're about 7,000 businesses now.

      21             And by 2019, we have to -- that's the end of

      22      our fiscal year, this coming June, we have to

      23      certify another 2,000 businesses.

      24             So we are -- you know, we put a lot of

      25      resources into that, and that's why I believe we're







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       1      able to, you know, certify businesses at the rate

       2      that we have been able to.

       3             SENATOR RITCHIE:  I know I've had numerous

       4      calls at home from people who are trying to certify

       5      and make their way through the paperwork at the

       6      state level.

       7             So I'm just wondering, do you have some kind

       8      of streamlined application process, or -- other

       9      than, it looks like New York City has a lot more

      10      staff, which is something that I think we need to

      11      address at the state level?

      12             Do you have some kind of streamlined

      13      application process that's helping you get

      14      businesses certified in 6 to 8 weeks?

      15             JONNELL DORIS:  Thank you, Senator.

      16             Yes, I believe I -- you know, I would say

      17      yes.

      18             We started off by really taking a look at our

      19      certification process, from the beginning to the

      20      end, and then we implemented some changes.

      21             One of the things that we did was, really

      22      requiring a year of tax returns instead of several

      23      years of tax returns.  That was helpful.

      24             Also, working with the businesses to reduce

      25      the volume of paper, actual paper, associated with







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       1      the applications by 30 percent.

       2             Also, looking at some questions that are on

       3      that particular application.  See, some of them may

       4      be redundant or we may not need them.

       5             And so we did -- and so we reduced the number

       6      of questions, the number of actual physical paper,

       7      and we're also online now with our process.

       8             So we did some -- a few things to streamline

       9      it, and I think it is bearing well with our MWBE

      10      community.

      11             SENATOR RITCHIE:  And as far as outreach, do

      12      you have someone, or a number of individuals, who

      13      are dedicated to helping businesses make their way

      14      through the paperwork process?

      15             JONNELL DORIS:  Absolutely.

      16             I think that's a valuable asset that we

      17      provide to our MWBEs.

      18             We have a whole department that is dedicated

      19      to going out to the businesses and, personally,

      20      one-on-one, walking them through the process.

      21             If they come to us, we help them in our

      22      business solutions centers.  We have them all across

      23      the city.  And they can, essentially, walk-in, and

      24      we are able to walk them through the process of

      25      certifying.  So, they are given an MWBE analyst who







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       1      walks them personally through that process.

       2             And I think that one-on-one interaction has

       3      been critical in helping us move our program

       4      forward.

       5             SENATOR RITCHIE:  And do you have any issues,

       6      or many issues, with businesses that are looking to

       7      recertify after?

       8             I mean, one of the other things that I've

       9      heard is that, after businesses spent so much time

      10      getting certified, that the paperwork and the length

      11      of time, and sometimes the fact they don't get

      12      recertified, you know, it's discouraging other

      13      people from applying.

      14             JONNELL DORIS:  Yeah, that's a great

      15      question, Senator.

      16             I believe that, in the beginning, when we

      17      first came in to office, you know, we had to

      18      reevaluate the process, and part of that was our

      19      recertification process.

      20             And we found that, in the beginning, a lot of

      21      businesses were choosing not to recertify, for

      22      whatever purposes, reasons, that they had chosen.

      23             Some of them was the paperwork, was the

      24      process itself was onerous, et cetera.

      25             So the streamlining also included the







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       1      recertification.

       2             So there are things that, for instance, for a

       3      sole proprietor, that will never change, you know,

       4      and, therefore, we don't need to revisit those --

       5      you know, the paperwork or requirements to say, for

       6      instance, "tell us who you are again.:

       7             Because you're a sole proprietor, why do we

       8      need to go through that process?

       9             So we've revamped our process and changed

      10      that, and also given certification for sole

      11      proprietors, which we didn't have before.

      12             So, they now are coming back, and also other

      13      businesses.  Because the process is generally

      14      streamlined, we now have an 80 percent

      15      recertification rate, and that's high.  Right?

      16             So businesses are really coming back because

      17      it's easier, but, also, they know that there's real

      18      opportunity here at the City.

      19             SENATOR RITCHIE:  And those that don't

      20      recertify, is that because there's a cap on the

      21      personal wealth?

      22             What's -- do you know what the reason is that

      23      some of them aren't recertifying?

      24             JONNELL DORIS:  We don't have a cap on the

      25      personal net worth here in the City.







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       1             SENATOR RITCHIE:  (Indiscernible) the City

       2      okay?

       3             JONNELL DORIS:  Pardon?

       4             SENATOR RITCHIE:  So that's not an issue

       5      here?

       6             JONNELL DORIS:  No.

       7             SENATOR RITCHIE:  That is an issue at the

       8      state level, though.

       9             JONNELL DORIS:  Yes, we are aware.

      10             But for us, we don't have a personal net

      11      worth.

      12             I think, you know, being a small-business

      13      owner, you make business decisions.

      14             As a former small-business owner, you know,

      15      every day you have to make a business decision,

      16      what's working, what's not working.

      17             And we try to make the case for these small

      18      businesses that our program is viable, our program

      19      is working, and you can participate in our

      20      marketplace.

      21             But some businesses may choose to not

      22      participate, and that's their prerogative.  But

      23      80 percent of them are choosing to stay in.

      24             And the others that are choosing not to stay

      25      in the program, you know, we do talk to them about







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       1      what their issues may be, or what the challenges

       2      that they may face.

       3             And the private sector also is a robust

       4      private sector and economy at this particular time,

       5      and, you know, we're, essentially, competing with

       6      the private sector for these firms as well, right,

       7      because they can also go to the private sector and

       8      do work, and do the work with the City or with

       9      government, is an option.

      10             And if they're busy elsewhere, because the

      11      market is viable and thriving at this particular

      12      time, they may choose not to do business with the

      13      City.

      14             So that's one of the reasons that they give

      15      as well.

      16             SENATOR RITCHIE:  Just my final question:

      17             I would have thought that there -- because of

      18      the number of businesses here, there really wouldn't

      19      be any kind of issue with finding enough businesses

      20      to fill your 30 percent goal.

      21             But I have heard from a few people that it

      22      still is a struggle.

      23             There's a lot more businesses that are

      24      certified, but there's a lot more construction

      25      projects, in particular.







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       1             So I'm just wondering, have you heard that

       2      there is an issue there here in the city also?

       3             JONNELL DORIS:  As when it comes to

       4      availability, I mean, we do have firms who are

       5      available to do the work, from the small firms who

       6      are now engaging in our market, to large firms who

       7      have been very successful; MWBEs very successful.

       8             I mean, we've reached $10 billion in our

       9      MWBE program, from 2015 till now, and that's a

      10      significant number.

      11             90 percent of that is their prime contracts,

      12      and 10 percent subcontracts.

      13             And so we're very excited about that number

      14      because it speaks to the availability, but the

      15      capacity for these firms to actually perform.

      16             Do we have MWBEs that do everything?  No.

      17             And I think our process helps us to deal with

      18      that.

      19             And we have capacity-building programs at our

      20      SBS (small-business services) department that works

      21      with some firms who are trying to graduate from the

      22      small firms, to the medium, to the larger.

      23             And -- but we're looking at our procurement

      24      process to make sure, also, that how we put out our

      25      procurements allow for competition on all levels,







                                                                   22
       1      right, and so that not just the big firms are

       2      winning or the small firms are being left out.

       3             And, also, to speak to about joint-venturing

       4      and coming together with large firms, smaller firms.

       5             And that's why our mentorship program that we

       6      are seeking, the authority to do, will help us to

       7      alleviate some of those concerns that we have.

       8             SENATOR LITTLE:  Thank you very much.

       9             JONNELL DORIS:  Senator.

      10             SENATOR LITTLE:  I'd like to go back to your

      11      certification process.

      12             And when -- now that you've simplified it,

      13      and we would love to -- I'd love to get my hands on

      14      an application and just see.

      15             JONNELL DORIS:  Sure.

      16             SENATOR LITTLE:  And I suppose we can do that

      17      online.  Right?

      18             JONNELL DORIS:  Sure.

      19             Or we can get one to you.

      20             SENATOR LITTLE:  Okay.

      21             Just to really see, because ours is a very

      22      difficult process.

      23             Also, if you have an online -- do you have an

      24      online tutorial that would tell people how to do the

      25      certification; how to apply online, and do that part







                                                                   23
       1      of it?

       2             SENATOR RITCHIE:  Yes, we do have

       3      instructions, and --

       4             SENATOR LITTLE:  Oh, that goes with it, or

       5      no?

       6             JONNELL DORIS:  -- can I get back to you on

       7      the video part?

       8             But I do know we have presentations and

       9      different things online that you can look, to help

      10      you through that process.

      11             SENATOR LITTLE:  Look at and do it.  Okay.

      12             JONNELL DORIS:  Not sure about the video.

      13             SENATOR LITTLE:  How long does the

      14      certification last?

      15             JONNELL DORIS:  You can recertify it for

      16      five years.

      17             SENATOR LITTLE:  Five years.

      18             See, what we're finding is, before they turn

      19      around, I mean, it takes -- I have one that has put

      20      in their application for recertification March 8th

      21      of 2018, and has not been recertified yet.  And

      22      they're expired, their certification, in just a few

      23      years.

      24             So, that's definitely a problem upstate as

      25      well.







                                                                   24
       1             And for your contractors, or your agencies,

       2      are they required, in the 30 percent goal, to have

       3      15 percent minority-owned business and 15 percent

       4      women-owned business?

       5             JONNELL DORIS:  The City's program, our

       6      goal-setting process, which is outlined in our local

       7      law, requires us to assess each contract for goals;

       8      and so we do not have that specification.

       9             As we do have disaggregated goals, generally,

      10      for the City, that's where you'll be able to find

      11      where the disparity was, and, therefore, we are able

      12      to address those.  But we don't specify it that way.

      13             SENATOR LITTLE:  Okay.

      14             Well, we're finding, at the state level, that

      15      a lot of that's being done.  And it's not even --

      16      the word "goal" is not even being used.

      17             The word "requirement" is being used, which

      18      is unfortunate.

      19             So those two things were questions I really

      20      wanted to ask.

      21             And the other one is on, you have no cap.

      22             So we have a personal net-worth cap of, like,

      23      $3 1/2 million.

      24             So a construction firm that owns cranes, it

      25      owns buildings, especially if it's privately owned







                                                                   25
       1      and personally owned, can't even apply because

       2      they're too wealthy.

       3             And I've been told that the program is really

       4      for start-up businesses, to help them gain some

       5      ground and grow and be successful.

       6             And, of course, if the woman- or

       7      minority-owned business gets too successful, then

       8      they're capped.  So now they're no longer certified,

       9      so many of the contracts they had, they can't get

      10      again.

      11             And so it's almost like, well, you can't be

      12      too successful here.

      13             You don't have that?

      14             JONNELL DORIS:  We do not.

      15             We do not have a personal net-worth cap.

      16             SENATOR LITTLE:  Well, do the big companies

      17      overwhelm the smaller companies and get more of the

      18      projects, or do they just use the subcontracts?

      19             JONNELL DORIS:  So, in the City, a few things

      20      we've done to address that scalability.

      21             I think it's important that we build

      22      businesses.

      23             It's important that we invest in small

      24      businesses, mid-sized businesses, and that we allow

      25      the larger firms to also engage because, they also







                                                                   26
       1      mentor the smaller firms, they also work with them.

       2             And, also, I think they -- they sort of

       3      address a myth about success in our program, right,

       4      because, you know, here, we can show you.

       5             We have firms with 300 employees who are

       6      MWBEs, who are doing very well, and can compete

       7      with any large firm.

       8             And then there are smaller firms that need

       9      this sort of assistance that we provide,

      10      particularly at our small-business services.

      11             So I do -- you know, I do agree that we are

      12      structured and very specific on how we make sure

      13      that all tiers of businesses are engaging.

      14             The subcontractor model is one, yes, that the

      15      smaller businesses can participate in and be like an

      16      entryway into the program.

      17             But we don't want to say to a large business,

      18      because you're successful, you're not a part of it,

      19      because I think they bring valuable lessons learned,

      20      you know, how to do business, how to grow.

      21             All these businesses that start large, they

      22      started as small businesses on the small end of the

      23      small-businesses spectrum, and now they've grown.

      24             And one last thing I'd say is that, the

      25      agencies, for instance, our department of design and







                                                                   27
       1      construction, we looked at the fact that different

       2      MWBEs can compete in different levels.

       3             And so one of the things we did was, we said,

       4      well, let's make a micro pre-qual list, a small

       5      pre-qual list, a medium, and large.

       6             And so, if you meet the criteria, you can

       7      compete in those particular areas that are most

       8      suitable for your business.

       9             And so we're thinking strategically at that

      10      nature so that there is some equitable share here in

      11      the opportunity, and the larger businesses, either

      12      MWBE or not an MWBE, are not pushing everyone else

      13      out.

      14             But if we can scale the work where they can

      15      compete and the requirements are equitable, I think

      16      we've seen success there.

      17             For instance, "DBC," our design and

      18      construction, did over a half billion dollars in

      19      MWBE contracting in last year alone.  And part of

      20      that is these, sort of, innovative tools we're

      21      using.

      22             SENATOR LITTLE:  And on your prequalified

      23      businesses, how long does that prequalification

      24      last?

      25             As long as they're certified?







                                                                   28
       1             I mean, do you certify them?

       2             Or, how does that work?

       3             Because I don't think we have that.

       4             And I'd love to know how you got out of the

       5      State regulations.

       6             It's just -- you know, the City is exempt

       7      from the State, but you're actually certifying

       8      businesses outside of New York City to do work in

       9      New York City?

      10             JONNELL DORIS:  Yes, so -- yes, to -- two

      11      questions.

      12             The first question concerning the

      13      certification:

      14             So I think how we view it is, the folks that

      15      are outside -- I'll go to the second one first.

      16             The folks who are within what we call "our

      17      catchment area," our geographic area, which we

      18      needed for statistical analysis, that may not be

      19      physically in the city, but they have what we call a

      20      "nexus to the city," meaning they have an office

      21      here, they signed up with our city to do business

      22      with us, these firms are engaged in our marketplace.

      23             We want to engage them too.

      24             For instance, on Nassau County,

      25      Suffolk County, we did, last year alone, about







                                                                   29
       1      $290 million in MWBE spend for those businesses;

       2      meaning, out of those counties, which were not the

       3      city, with those counties, we've engaged those

       4      businesses, MWBEs, out of Nassau County and

       5      Suffolk County.  And they're participating in our

       6      program at a very robust stage, because we know is

       7      viable, and they're part of our New York City market

       8      area.

       9             SENATOR LITTLE:  They have to some

      10      relationship with New York City in order --

      11             JONNELL DORIS:  Correct.

      12             They have to have an office here, or they

      13      have to have a -- you know --

      14             SENATOR LITTLE:  History of business here, or

      15      something?

      16             JONNELL DORIS:  -- history of business,

      17      contracts here.  Or, signed up with us to actually

      18      do business here.

      19             We have something called a "payee information

      20      portal" where every business has to go to to sign up

      21      if they want to participate in our program.

      22             So once they've done that, they've shown

      23      interest that they want to be in our marketplace.

      24             And -- so we don't exclude folks from coming

      25      from around the state.







                                                                   30
       1             I think I've mentioned we've had some folks

       2      from upstate as well, and other places, who have

       3      engaged in our marketplace.  And we don't exclude

       4      them from coming to do business with us, but they

       5      just have to set up a nexus to our city.

       6             SENATOR LITTLE:  Well, it sounds like you

       7      really conquered a lot of the things that we're

       8      dealing with in the upstate -- in the regular State

       9      program.

      10             But I've been on -- right from the very

      11      beginning on the Task Force on the Minority- and

      12      Women-Owned Business, which hasn't met in three

      13      years.  So, I think it's actually disbanded, it must

      14      be, after so many years.

      15             But, there's just a lot of issues that we

      16      have to deal with upstate, that we have not been

      17      able to get through.

      18             But thank you for your testimony.

      19             I have no other questions.

      20             SENATOR RITCHIE:  Let me just ask a follow-up

      21      question.

      22             Your certification list; your list of

      23      businesses that are certified by the City, how do

      24      you keep that current?

      25             That's one of the other issues that







                                                                   31
       1      I continually hear complaints about at the state

       2      level; that people try to contact a business that's

       3      been certified, and they find out that the business

       4      is no longer there, the contact information is

       5      wrong.

       6             How do you keep the list up to date?

       7             JONNELL DORIS:  So, we have several intervals

       8      in which we engage our businesses.

       9             One is at recertification, so we're able to

      10      know, you know, what's happening with them.

      11             Also, in our capacity-building programs,

      12      which we have quite a few, once the MWBEs come

      13      into that program, we have the ability to ask them

      14      about their updated information, make sure that

      15      they've done that.

      16             We've also invested, in two thousand,

      17      I believe, it's sixteen, we went out to the

      18      community and did some engagement with some firms,

      19      to actually go out and work with MWBEs, to make

      20      sure that their information is correct.

      21             We actually paid firms to go and target MWBE

      22      firms to make sure that we update their information.

      23             SENATOR LITTLE:  Is that like an audit, you

      24      mean?  Or --

      25             JONNELL DORIS:  Not, an audit.







                                                                   32
       1             It's more of a technical assistance and

       2      support services.

       3             SENATOR LITTLE:  Okay.

       4             JONNELL DORIS:  So we're able to do that.

       5             And we spent some money to make sure that

       6      happened, and it actually produced great results.

       7             But I think part of the challenge that we

       8      face, and that we see, is that businesses do change

       9      addresses.  They do move to a new building, or, you

      10      know, they -- some adjustment in their contact

      11      information.

      12             So we're constantly sending out reminders,

      13      If you're going to change, please let us know.

      14             SENATOR LITTLE:  And that's part of your

      15      notification program, that if they do make changes,

      16      just like in a liquor license, that you need to

      17      notify and change your license, change your

      18      certification.

      19             JONNELL DORIS:  Correct.

      20             SENATOR LITTLE:  Well, I just have one more

      21      question.

      22             How do you -- how involved is the mentorship

      23      program?

      24             I mean, in today's world, people are so busy,

      25      and businesses are busy, busy, busy.







                                                                   33
       1             Do they actually really get involved with a

       2      smaller company and try to mentor them?

       3             Or, how do you guide them?

       4             How do you check on it?

       5             Or how do you -- how does it work?

       6             JONNELL DORIS:  So we do not have a

       7      mentorship program, let's say, as the MTA has.

       8             It's a different kind of mentorship.  Our

       9      mentorship program is more so technical assistance

      10      and support.  It's more sort of a classroom-type

      11      program.

      12             For instance, when I was a contractor, I went

      13      to -- Turner Construction had one, and I went.  And,

      14      you know, it's like mostly a classroom.  We -- for

      15      six months we learned about how to do business, what

      16      to do business, how we sort of engage in the

      17      marketplace.

      18             And that's, generally, what we have.

      19             What we're asking for from the Senate and

      20      from the State is, and what we've asked before is,

      21      to be able to designate specific contracts to link

      22      to this mentorship agreement and program, which is

      23      different than what we say, our mentorship program

      24      is more educational at this particular point.

      25             We want to tie projects to that education.







                                                                   34
       1             We want to -- right now we have classroom.

       2             We want to actually have the, you know,

       3      contracts and workplace mentorship opportunities

       4      where we tie the two, where there's a job

       5      opportunity at the end of the classroom.

       6             So right now we have classroom, but there's

       7      no jobs associated with that because we're

       8      prohibited in having those exclusionary

       9      prequalified --

      10             SENATOR LITTLE:  You mentioned the word

      11      "protege program."

      12             I mean, that sounds like somebody taking a

      13      smaller company under their wing.

      14             And do you actually do that?

      15             JONNELL DORIS:  Not at this particular

      16      juncture.

      17             We're asking for authorization to do a

      18      program like that.

      19             SENATOR LITTLE:  You need legislation to do

      20      that, or you need money to do that?

      21             JONNELL DORIS:  We would -- we hadn't -- we

      22      did not ask for funds to do it; however -- we're

      23      always happy to receive.

      24                [Laughter.]

      25             SENATOR LITTLE:  That would be next.







                                                                   35
       1             JONNELL DORIS:  Yeah.

       2             But we do ask -- but we do ask for -- I mean,

       3      so the mayor has made MWBE a priority of his

       4      administration; and, therefore, created our office,

       5      staffed up our small-businesses services.

       6             I mean, we've invested quite a bit in our

       7      program.  So we're not -- and we went to the private

       8      sector to raise funds also for our program.

       9             And so we're very engaged in making sure that

      10      we're self-sustaining.

      11             But, what we need out of the State is the

      12      authority to designate contracts, which we cannot do

      13      now, for such a program.

      14             And that's what -- where the mentorship

      15      arrangement comes in play.

      16             And so we do not have that authority right

      17      now to set aside specific contracts and associated

      18      prequalified lists for exclusively MWBE

      19      mentorship-protege arrangements.

      20             SENATOR LITTLE:  Okay.  I would be interested

      21      in following that.

      22             SENATOR RITCHIE:  I just want to say thank

      23      you so much.

      24             We've been joined by Senator O'Mara.

      25             JONNELL DORIS:  Senator.







                                                                   36
       1             SENATOR RITCHIE:  Thank you for being here

       2      today.  It's very enlightening.

       3             You know, I'm hoping that, at some point in

       4      the future, you would be willing to share, you know,

       5      some of your knowledge and your time to kind of go

       6      over exactly what you do in New York City that has

       7      worked well, that maybe we could bring back to the

       8      state level, because I have heard a number of really

       9      positive comments about the certification process,

      10      especially being able to get it done in 6 to 8 weeks

      11      is so much better than what we're hearing on the

      12      state level.

      13             JONNELL DORIS:  Thank you, Senator.

      14             SENATOR O'MARA:  Two years.

      15             Yeah.

      16             JONNELL DORIS:  Wow.

      17             Thank you.

      18             SENATOR O'MARA:  Thank you.

      19             JONNELL DORIS:  Thank you, Senator.

      20             SENATOR LITTLE:  Thank you again.

      21             JONNELL DORIS:  Thank you, Senator.

      22             SENATOR LITTLE:  Maybe the State can be your

      23      protege.

      24             SENATOR RITCHIE:  Next we will hear from

      25      Lou Coletti, president and CEO of Building Trades







                                                                   37
       1      Employers' Association.

       2             LOU COLETTI:  Good morning.

       3             Welcome to New York City.

       4             SENATOR O'MARA:  Good morning.

       5             LOU COLETTI:  I'm going to -- my testimony is

       6      going to be a little different, because I think I've

       7      been before your panel at some of the hearings in

       8      Albany.  And so I think much of the material we've

       9      submitted to you already.

      10             I just want to -- which included a number of

      11      recommendations.

      12             But I also want to ask you to go back and

      13      take a look at our capacity report.

      14             That capacity report measured the actual

      15      number of MWBE contracts awarded, by dollar volume

      16      and by race, in New York City, and came to the

      17      conclusion that you can't meet 30 percent goals.

      18             But I suggest to you that that report also

      19      applies to New York State contracts in the five

      20      boroughs.

      21             Okay.  What I'd like to do -- because I have

      22      a couple of more recommendations that we didn't talk

      23      about.

      24             But what I'd like to do at the beginning,

      25      because I think the prime-contracting community is







                                                                   38
       1      probably one of the most misunderstood elements in

       2      this discussion, so what I'd like to do is take a

       3      moment and explain to you who we are.  Okay?

       4             The Building Trades Employers' Association is

       5      an organization that represents 26 trade

       6      contractors, general contractors, construction

       7      managers, and every subcontractor who has a union

       8      agreement.  We have 1300 members.

       9             But our organization has the largest number

      10      of MWBE contractors in the entire state of New York.

      11             We have over 85, with almost 52 -- 52 percent

      12      of them can perform contracts, $5 million and above;

      13             32 percent can provide, again, are doing

      14      work, from between a million and 4.9 million;

      15             And 18 percent can do between 500,000 and

      16      nine hundred -- and a million.

      17             The members of the building trade unions that

      18      we employ, which seems to be a very hot topic of

      19      discussion in this city, of the 8500 active union

      20      apprentices in New York City, 65 percent are

      21      African-American, 33 percent are Latino, 27 percent

      22      are Asian and other nationalities, 10 percent women,

      23      and 72 percent New York City residents.

      24             We have programs with the New York City

      25      School Construction Authority to recruit people.







                                                                   39
       1             We've placed over 900 returning military

       2      veterans in the programs, and over 1500 women.

       3             So when you're looking to talk about

       4      diversity, and the dialogue that I read, I really

       5      suggest that you come talk to us because we've got

       6      the numbers that back it up.

       7             Some of the proposed amendments I'd ask you

       8      to suggest for 15-A, is to include specific language

       9      that eliminates the state agency's ability to impose

      10      liquidated damages for failure to hit the goal.

      11             I'm going to try to say this politely.

      12             Liquidated damages violate the Croson versus

      13      Richmond U.S. Supreme Court decision, where these

      14      goals are aspirational, not mandated.

      15             And I think I can speak for my membership,

      16      the tolerance level for getting multimillion-dollar

      17      fines for an inability, after going through a

      18      process to help try to find companies, is getting

      19      very frustrating.

      20             And I think, if we don't do something,

      21      somebody's going to do something else that is not in

      22      the best interests of anyone.

      23             I was listening to the previous conversation,

      24      where we were talking about mentoring programs and

      25      things like that.







                                                                   40
       1             We can't do them.

       2             You cannot -- the law does not prevent a

       3      prime -- and the law prevents a prime contractor

       4      from providing any technical assistance to a

       5      subcontractor working for them on that job.

       6             SENATOR LITTLE:  Really?

       7             LOU COLETTI:  Yes.

       8             And to prove it, a couple of years ago, there

       9      must have been 8 or 10 -- I'm sure Denise Richardson

      10      will talk about it when she gets up here -- of our

      11      contractors who were fined, agreed to six-, eight-,

      12      ten-million-dollar civil penalties, because they

      13      wanted to charge us criminally for violating the

      14      commercially useable function.

      15             You can't do it.

      16             It has to be an independent third party

      17      that's providing that kind of mentoring.

      18             So all this talk about mentor-protege and

      19      ment -- I'm telling you, our contractors are not

      20      going to put themselves at risk to do it.

      21             Okay?

      22             We'd also ask you to amend 15-A with language

      23      that makes it clear, that when you're establishing a

      24      goal, the goal is based on the hard cost of

      25      construction; not soft cost, not total project cost,







                                                                   41
       1      like it's done now.

       2             You have a $100 million project.  The goal

       3      becomes 30 percent of $100 million, as opposed to,

       4      maybe, either 70 million of that is actual hard

       5      construction costs.

       6             So we'd also ask that the State provide

       7      funding for capacity-building programs.

       8             There is a way to do it, but they have to put

       9      some money on the table.

      10             You know, I heard -- hey, listen, I like

      11      Janelle.

      12             I heard a lot of good talk about it, about

      13      the mentoring programs, but, I'm not seeing it.

      14             I'm not seeing it in the City.

      15             I'm not seeing it in the State.

      16             You want a model?

      17             Look at the school -- New York City School

      18      Construction Authority.

      19             The way they set it up is, they invest their

      20      own money, and they hire a series of third-party

      21      consultants.

      22             It could be a contractor, it could be a

      23      financial expert, it could be a bonding expert.

      24             And one of their -- when one of their prime

      25      contractors goes to that agency's staff person and







                                                                   42
       1      says, "Listen, this MWBS struggling a bit," then the

       2      agency hires the appropriate technical expertise as

       3      a third-party contract that can go and help them,

       4      because the prime contractor cannot provide any

       5      assistance.

       6             And it's a model that works, and it clears

       7      everybody in terms of the law.

       8             SENATOR LITTLE:  Does the agency pay for

       9      that?

      10             LOU COLETTI:  Yes.

      11             SENATOR LITTLE:  Okay.

      12             LOU COLETTI:  The other thing, as an amend --

      13      comes to the State, is I would urge you to put in

      14      the language, and establish what the ESD did for the

      15      regional economic development councils, and we

      16      should have regional MWBE advisory councils --

      17             SENATOR LITTLE:  Absolutely.

      18             LOU COLETTI:  -- with New York having its

      19      own.

      20             It would be nice if the language would

      21      include that the membership has to be from

      22      prime-contractor organizations as well as MWBEs,

      23      because, right now, we have two MWBE councils, one

      24      in the city, one in the state, and nobody talks to

      25      us.







                                                                   43
       1             I can tell you, in New York City, my members

       2      are doing about $50 billion worth of work.

       3             They're doing JFK.

       4             They're doing all the big infrastructure

       5      projects.

       6             They're doing the airports.

       7             They're doing dormitory authority work.

       8             It's like we don't exist.

       9             Now, I'm not saying there should be some

      10      meetings where MWBEs have, and address issues

      11      without us, but bring us to the table.

      12             We want this program to be successful, and

      13      all we do is get penalized and penalized and

      14      penalized and ignored.  Doesn't matter whether it's

      15      the State of New York or the City of New York.

      16             And the other thing I would urge you to do,

      17      is to establish a commission that will address

      18      issues that affect not only MWBEs, but all

      19      contractors, about agency payment practices.

      20             No damages for delay, change orders that

      21      never seem to get done, affect the cash practice,

      22      payment processes, they're horrible.

      23             And when the public sector has to compete

      24      with a hot private sector, it's one of the reasons

      25      people are walking away on the building side,







                                                                   44
       1      walking away from public work, because they're never

       2      going to get paid.

       3             And, cash, I don't have to tell you, cash is

       4      king in our industry.

       5             So I'll conclude my statements, and any

       6      questions you may have, by just saying that, I've

       7      been saying this for a while, and I'm constantly

       8      reminded when you talk about MWBE programs, of a

       9      saying Confucius said in 500 BC:  When goals can't

      10      be reached, don't adjust the goals, adjust the

      11      action steps.

      12             And that's what I think we need to do to make

      13      New York State's MWBE program: to build upon the

      14      success they've had.

      15             I'm not suggesting that they haven't been

      16      successful.

      17             But if you want to build upon that success,

      18      we're projecting, in New York City, in the next

      19      two to three years, there's still going to be

      20      $50 billion a year of activity.

      21             If we don't do it now, when are we going to

      22      do it?

      23             Make it work for both parties.

      24             We are not the enemy.

      25             So I thank you for your attention.







                                                                   45
       1             I'd be glad to answer any questions that you

       2      might have.

       3             SENATOR RITCHIE:  Just, I appreciate you

       4      being here again, and I appreciate you being at the

       5      hearing in Albany.

       6             So, thank you --

       7             LOU COLETTI:  Thank you for having us.

       8             SENATOR RITCHIE:  -- thank you for your time.

       9             Can you just give me, specifically, what

      10      you're looking for with regards to the meeting?

      11             You're looking for your organization to meet

      12      with the MWBE organization?

      13             Is that --

      14             LOU COLETTI:  There is, in the state of

      15      New York, I believe the Governor's Office has an

      16      MWBE advisory board.

      17             I have no idea who's on it, but I can tell

      18      you that none of the prime contractors are.

      19             The City of New York, which is not, I know,

      20      your jurisdiction, but it's the same thing, have an

      21      MWBE advisory council.  There are no prime

      22      contractors.

      23             I'm going to be in real trouble for saying

      24      this.

      25             When Mike Bloomberg was mayor, we were there,







                                                                   46
       1      and we worked together in trying to improve the

       2      program.

       3             That's not the case here; we're not at the

       4      table.

       5             So why wouldn't you want to be at the table

       6      to work on -- because I bet you, on 50 to 60 percent

       7      of the things that I think we think can improve the

       8      program, we'd be willing to participate.

       9             You want us to mentor, and go in a classroom

      10      and provide that?

      11             Well, you know what?  Maybe we would do that

      12      if we got 10, 15, 20 percent credit toward the goal.

      13             That costs my members money; their staff

      14      time, their expertise.

      15             What can we do to make this work for both

      16      parties?

      17             SENATOR LITTLE:  No, I appreciate all your

      18      comments.

      19             And, certainly, I think the regional councils

      20      would be, you know, a great help.

      21             And I almost think the task force started out

      22      as, but it was mostly agencies, and people from all

      23      the different state and city was involved as well.

      24             But this sounds like a good idea.

      25             That, you know, we've got to get -- for







                                                                   47
       1      people up where we are, they're dealing with people

       2      in New York City and state agencies to try to get

       3      information.  And the staff at the state level is so

       4      small, it's just not workable.

       5             And you want someone to get certified.

       6             And the reason they're getting certified is

       7      they realize it would be a benefit to them, and they

       8      could hire more people and provide more jobs and

       9      improve the economy; but they can't get certified.

      10             And it's just not working.

      11             LOU COLETTI:  No, as big a problem as it is

      12      for us here in New York City, I can't imagine how

      13      difficult it is outside of New York City, and

      14      especially upstate.

      15             And the best thing I can say for the

      16      certification process -- I'm going to defer to

      17      Denise Richardson -- is blow it up and start all

      18      over again.  It doesn't work anywhere.

      19             Okay?

      20             New York City, for some of the major projects

      21      we're talking about, general contractors tell me

      22      that they are adding anywhere from 2 to 4 million

      23      dollars to their bid just for compliance, to make a

      24      case, and hope they don't get fined for liquidated

      25      damages because they can't find MWBEs.







                                                                   48
       1             SENATOR LITTLE:  Well, the worst part about

       2      it is that, you're trying to improve the economy in

       3      the local area.  And by requiring -- and it is only

       4      a goal, it's not a requirement -- but by what

       5      they're doing, and making them have minority and

       6      women-owned businesses as part of the contract, so

       7      if you're up north, where do you go to get

       8      contractors?

       9             LOU COLETTI:  That's right.

      10             SENATOR LITTLE:  Syracuse, Albany,

      11      New York... anyplace.

      12             But they don't exist in the North Country to

      13      the number.

      14             LOU COLETTI:  That's right.

      15             SENATOR LITTLE:  And even the ones that are

      16      trying to get certified, it takes so long to get it.

      17             And then if they own a lot of property, or

      18      equipment, they're past the $3 1/2 million

      19      threshold.

      20             LOU COLETTI:  Yeah.

      21             Yeah, and given the strength of the

      22      New York market, those firms that are locally based

      23      here are not going to look to do jobs Upstate

      24      New York.

      25             So you have a double problem with Upstate







                                                                   49
       1      New York.

       2             SENATOR LITTLE:  Right.

       3             I've been told that businesses that call

       4      around, to try to prove that they need a waiver

       5      because they can't get anyone to do the work, the

       6      companies down here will say, Stop calling us.

       7      We're not going to do the work.  We can't come up

       8      there.

       9             LOU COLETTI:  Yes.

      10             SENATOR RITCHIE:  Senator O'Mara?

      11             SENATOR O'MARA:  Yeah, I've got a couple.

      12             Thank you for being here, Lou.

      13             LOU COLETTI:  Thank you, Senator.

      14             SENATOR O'MARA:  Appreciate it.

      15             On the -- to follow-up on Betty's question on

      16      the wealth, $3.5 million that knocks an MWBE entity

      17      out, how restricting is that in the New York City

      18      metropolitan area?

      19             SENATOR LITTLE:  They don't have it.

      20             SENATOR O'MARA:  You don't --

      21             LOU COLETTI:  Oh, I think it becomes more

      22      restrictive here.

      23             You know, I think it's restrictive in

      24      general.

      25             SENATOR O'MARA:  Yeah.







                                                                   50
       1             LOU COLETTI:  It becomes more restrictive

       2      here than it would be upstate.

       3             SENATOR O'MARA:  Exactly.

       4             SENATOR LITTLE:  The guy said that they don't

       5      have it in New York City.  They don't have a

       6      threshold.

       7             LOU COLETTI:  Oh, no, you're right.

       8             You're right; he's right.

       9             We don't have that in New York City.

      10             SENATOR O'MARA:  You don't have that in

      11      New York?

      12             LOU COLETTI:  We do not have that in

      13      New York City.

      14             SENATOR LITTLE:  Size; micros, mediums and

      15      large.

      16             LOU COLETTI:  Yeah, I think the most

      17      difficult issue that you have to find a reasonable

      18      path on with MWBEs, is that, at some point, you have

      19      to graduate from the program and get out into the

      20      marketplace and compete.

      21             I don't have a clue as to what that point is.

      22             Again, I know the SCA --

      23             SENATOR O'MARA:  To have that level in

      24      New York City, there is no point that you get out of

      25      the program.







                                                                   51
       1             LOU COLETTI:  No.

       2             But in the school --

       3             SENATOR O'MARA:  You always have that

       4      benefit.

       5             LOU COLETTI:  -- right.

       6             But in the School Construction Authority

       7      program, they have contract limits.

       8             So once you -- I think they have two or three

       9      different levels.

      10             Once you get -- graduate from that third

      11      contract level, you must go in and compete with

      12      every other contractor for their work.

      13             SENATOR O'MARA:  The membership data that you

      14      talked about is not written in your testimony that

      15      we have here.

      16             LOU COLETTI:  Oh, you know what?  Because

      17      I brought a new one.

      18             SENATOR O'MARA:  Yeah, it says --

      19             LOU COLETTI:  You may have an old one.

      20             It's attached to the back.

      21             SENATOR O'MARA:  -- (indiscernible) the data.

      22             Yeah, can you -- can you -- is it in the back

      23      here?

      24             LOU COLETTI:  If it's not there, we brought

      25      25 copies of the new one, because we -- is it in the







                                                                   52
       1      back?

       2             SENATOR O'MARA:  No.

       3             LOU COLETTI:  All right.

       4             SENATOR O'MARA:  It's not.

       5             LOU COLETTI:  We gave your staff 25 new

       6      copies where it is.

       7             SENATOR O'MARA:  Those are the buildings

       8      trades' members.

       9             LOU COLETTI:  On the workforce side, yes.

      10             SENATOR O'MARA:  Yes.

      11             LOU COLETTI:  Okay.  On the contractor side

      12      they are our members.

      13             There's two -- you'll see two documents.

      14             One that talks about the number of MWBE

      15      contractors.

      16             The second page talks about the number of

      17      minority and women workers in the building trade

      18      unions who we employ.

      19             SENATOR O'MARA:  Okay.  Great.  That will be

      20      helpful to get that.

      21             And then, Senator Little, do you know if this

      22      council that was referenced, the MWBE state council

      23      or working group, has that ever met?

      24             SENATOR LITTLE:  Well, no.  There was a task

      25      force, and we met the first couple of years.







                                                                   53
       1             We haven't met in about three years.

       2             It wasn't really --

       3             SENATOR O'MARA:  That's unusual for a

       4      Governor's task force or panel, unfortunately.

       5             A lot of these are named.  Sometimes members

       6      aren't even appointed to them.  And they rarely, if

       7      ever, meet.

       8             LOU COLETTI:  They may not be appointed to a

       9      council, but I can tell you there are meetings going

      10      on between the Governor's Office and representatives

      11      of the MWBE community on some regular basis, without

      12      any prime-contractor representation.

      13             Same thing here in New York City.

      14             They may be informal, but they go on.

      15             And all we're asking for is, give us a seat

      16      at the table.

      17             SENATOR O'MARA:  We'll look into that.

      18             LOU COLETTI:  Thank you very much.

      19             Okay.  Thank you.

      20             SENATOR RITCHIE:  Appreciate you coming.

      21             SENATOR LITTLE:  Thank you.

      22             SENATOR RITCHIE:  Next we will hear from

      23      Sandra Wilkins (sic) and Krista Gobins from the

      24      Women's (sic) Builders Council.

      25             SENATOR O'MARA:  Gobins (different







                                                                   54
       1      pronunciation).

       2             SENATOR RITCHIE:  Gobins.

       3             Sorry, Krista.

       4             KRISTA GOBINS:  That's okay.

       5             SANDRA WILKIN:  Good afternoon.

       6             And I would like to thank Senator Ritchie,

       7      Senator Little, and Senator O'Mara, and the senators

       8      who comprise the New York State Working Group on the

       9      Minority and Women Business Enterprise to have the

      10      opportunity to speak today.

      11             My name is Sandra Wilkin.

      12             I am proud to be a New York State-certified

      13      woman-owned business owner.

      14             I am here today as a co-founder of the

      15      Women Builders Council, and I have served multiple

      16      boards and organizations as an advisor at both the

      17      state and local level of MWBE issues.

      18             It is with this body of legislators and the

      19      Office of the Governor and the mayor of New York who

      20      have understood the needs for laws and policies in

      21      support of New York State's MWBEs.

      22             That support, in turn, grows our state

      23      economy.

      24             Looking back over the 25 to 30 years that

      25      I have been in the building industry:







                                                                   55
       1             I could point to disparity study after

       2      disparity study; I can point to minority contracting

       3      utilization; I can point to numerous local cases,

       4      state, and U.S. Supreme Court cases, all recognizing

       5      the same thing:  Disparity is real.  Disparity is

       6      ongoing.

       7             And it is our duty; MWBEs, legislators,

       8      New York business associations, and government

       9      entities, to continue to remedy this disparity.

      10             Disparity in the construction industry has

      11      been an open secret.

      12             We don't have to look any farther than the

      13      statewide MW utilization goals of 30 percent.

      14             On the face of it, it looks high, almost

      15      1 out of 3 to be MWBE businesses.  But you have to

      16      ask yourself:  Why is it just 30 percent, and why

      17      can't we meet it?

      18             The open secret of disparity in the

      19      construction industry is the reason we can't even

      20      meet a goal of 30 percent MWBE utilization, and it

      21      is the entire reason that we must continue to use

      22      the law to fight the problem of disparity.

      23             It is also a two-way street, where certified

      24      minority and women businesses also have a duty and

      25      responsibility to participate in wanting to do







                                                                   56
       1      business with New York State, and to continue to

       2      grow their businesses while knowing and being aware

       3      of the risks they face.

       4             99 percent of the businesses in

       5      New York State are, in fact, small businesses.

       6             And there is a website that I refer in my

       7      testimony.

       8             MWBEs make up 53.5 percent of available

       9      prime contractors and 53.48 percent of available

      10      subcontractors in New York State.

      11             To me, this represents a great opportunity to

      12      increase the access and certification for minority

      13      and women small businesses statewide.

      14             If there was ever a time in our nation's

      15      history for us to use these programs to encourage

      16      businesses, it is now.

      17             These programs must continue, and must be

      18      funded, so that we can grow the state of New York.

      19             Several points to raise to help us with this:

      20             First:  It shouldn't be a Herculean effort

      21      for subcontractors to get paid.

      22             Often you hear about the difficulty in

      23      getting paid.

      24             If we can track a Fed-Ex package through

      25      every facility on the way to our door, why can't we







                                                                   57
       1      do the same with payments, in having a method of

       2      tracking them from the initial requisition through

       3      the final payment, and see it all online?

       4             MWBEs are commonly subcontractors and are

       5      at the mercy of the primes.

       6             They should be able to confidently know that

       7      the status of any requisition, request, and payment.

       8             Second:  Insurance premiums are

       9      disproportionately higher for small minority and

      10      women businesses as compared to their large

      11      counterparts.

      12             Third:  Dispute resolution for construction

      13      projects shouldn't be the domain of those with time,

      14      money, and lawyers.

      15             Very often, small minority, women, businesses

      16      do not have the resources to hire outside council to

      17      navigate the time-consuming disputes so often found

      18      in large construction projects, and construction

      19      without representation just should not stand.

      20             Fourth:  We ought to expand mentorship and

      21      technical-assistance program to the small businesses

      22      and MWBEs statewide who have to navigate the often

      23      confusing and complex procurement processes at the

      24      state-agency level.

      25             It is how I became a mentor contractor.







                                                                   58
       1             I got my start working in public projects,

       2      actually, at the School Construction Authority, and

       3      now have the honor and the opportunity to assist

       4      programs developing mentor and technical-assistance

       5      programs.

       6             Fifth:  We must remain ever diligent of those

       7      who seek to sidestep our laws through using

       8      pass-throughs and fronts to get around MWBE

       9      requirements.

      10             Too many out there will seek to game the

      11      system if enforcement of our MWBE law is not robust

      12      and consistent.

      13             Ultimately, how we choose to treat MWBEs

      14      creates two visions of the future of the state of

      15      New York.

      16             In one, if we choose not to support MWBEs,

      17      we are choosing to cripple a critical component of

      18      our economy in New York.  We are choosing to allow

      19      the open secret of disparity to stand.

      20             When there are hurdles for MWBEs to get to

      21      the market, we lose out on competition that can

      22      decrease prices and increase quality.

      23             But there is another vision, one where

      24      MWBEs are continued to be welcomed and included as

      25      essential parts of New York's growth.







                                                                   59
       1             It is a vision where our laws protect

       2      individuals and business owners, and help them

       3      flourish.

       4             One that recognizes that the contributions

       5      minorities and women have made to our great state

       6      and country, and one that allows those contributions

       7      to build our economy.

       8             We are stronger together when we all work to

       9      build our great state.

      10             Our vision as New Yorkers and legislators is

      11      one where MWBEs are included, welcomed, and

      12      promoted.

      13             Join me in building the future of our great

      14      state.

      15             I look forward to answering any of your

      16      questions you may have.

      17             Thank you, Senators.

      18             SENATOR RITCHIE:  Krista, did you have

      19      something to add before we --

      20             KRISTA GOBINS:  Yeah, I just wanted to

      21      apologize on behalf of Deborah Bradley.

      22             Her husband has Parkinson's disease.

      23             Actually, and I'm here to say, thank you,

      24      because your office helped him when we walked all

      25      the way from New York City to Canada.  And your







                                                                   60
       1      office organized volunteers for him two years ago.

       2             So she apologizes that she can't be here

       3      today.

       4             I think that Sandra and I are going to be

       5      able to answer any questions that you have, but

       6      I know that what Deborah wanted to communicate is

       7      that, our members, which represent women builders

       8      from all around the state, many of whom live in your

       9      districts, support the reauthorization of

      10      Article 15-A.

      11             We think that there are some areas for

      12      improvement that are listed in Deborah's testimony,

      13      which include things that Sandra mentioned, and also

      14      Lou from the BTA mentioned, which is, reviewing

      15      "CUF," the commercially useful standard, so that

      16      there's a clear, definite line of when a prime

      17      contractor can work with an MWBE, and they're not

      18      unfairly hurt because they are an MWBE.

      19             So, for example, speaking on behalf Deborah,

      20      she worked on the Tappan Zee Bridge project as a

      21      subconsultant -- MW -- WBE subconsultant.

      22             At one point she needed to use a crane.

      23             And instead of being able to use the GC's

      24      crane and rent it from the GC, they said, No, we

      25      don't want to get sued for fraud.  You have to come







                                                                   61
       1      in and bring in your own crane.

       2             So she had to rent the crane.  It cost more

       3      on the project, more for the taxpayers.  It's

       4      onerous for the MWBEs on the project.  And they're

       5      almost treated differently.

       6             So I think we have a list of recommendations

       7      that could help further clarify that for GCs

       8      working on these projects, so that they're not

       9      unfairly treated on a project, and it doesn't cost

      10      the State more money, which no one wants.

      11             And we also talk about, again, as you had

      12      said, Senator Ritchie, giving New York State and ESD

      13      more resources so that they can hire more staff to

      14      help with certification.

      15             In New York City, I know that we have people

      16      who call WBC.  We give them some certification

      17      assistance to the much of our abilities.

      18             But especially in areas that are upstate and

      19      in Western New York, it would be nice if they could

      20      have the bandwidth to reach out and have a direct

      21      relationship with their constituent, rather than

      22      just being, you know, some person in New York City.

      23             So we would like to see ESD in this year's

      24      budget get some more resources so that they can hire

      25      some more help and get rid of any backlog they might







                                                                   62
       1      have.

       2             The third issue -- and I'm sure, Sandra, you

       3      can talk about this -- is the personal net-worth

       4      cap.

       5             We worked a lot with you, Senator Ritchie, on

       6      this issue.

       7             We're a strong supporter of you and your

       8      initiative.  And anything that we can do to help

       9      further that message of not capping and limiting

      10      minority and women business enterprises.

      11             Because even the idea, or the concept, as you

      12      said, Senator Little, of saying, you can be

      13      successful, but not that successful.

      14             So I think we can all agree on that level.

      15             And then, our final recommendation would be

      16      to expand the statewide mentorship programs, which,

      17      if you have any questions, Sandra would be a great

      18      person to ask.

      19             We are highly supportive of the New York City

      20      School Construction Authority program and all they

      21      do to build small business.

      22             The MTA also has their small-business program

      23      that was put into statute in 2010, also given

      24      supporting funds by the budget.  So, that gives them

      25      the ability to have these programs to get these







                                                                   63
       1      small contractors, and then to grow them.

       2             Sandra can also speak on that because she's a

       3      large part of the program, its inception, and also

       4      the consulting team.

       5             So if you guys have any questions, we'd be

       6      happy to answer them.

       7             SENATOR RITCHIE:  (Indiscernible) actually

       8      was the one question that I did have, if you could

       9      kind of explain what the mentorship program consists

      10      of, that would be helpful.

      11             SANDRA WILKIN:  Ah, yes, thank you,

      12      Senator Ritchie.

      13             And thanks to Krista Gibbons (sic), our

      14      policy advisor for WBC.

      15             The mentor programs do take on different

      16      models, and, perhaps, one size doesn't necessarily

      17      fit all agencies.

      18             The ones that we feel that have experienced

      19      the greatest growth, for instance, are, as you've

      20      heard in the past, school construction, the MTA, and

      21      other agencies that are looking at developing those

      22      which have a higher budget level, and require the

      23      most in terms of construction.

      24             For other agencies, they can have very

      25      similar models.







                                                                   64
       1             For instance, the EDC, or the ESD, for

       2      New York State, for the other agencies, depending on

       3      the kind of services that they are rendering, you

       4      can put in a mentor program.

       5             The key elements to the mentor program is

       6      that it's both learning and providing the service at

       7      the same time.

       8             By doing that, the -- most of the capacity,

       9      or the capabilities, are met in those cases.

      10             SENATOR LITTLE:  One of the things, I guess,

      11      I didn't quite understand, but I do from your

      12      testimony, is that the large contractor is an MWOB.

      13             But if they hire subcontractors as MWOBs,

      14      they can have no relationship with them, like you

      15      talked about this renting of the crane.

      16             But if they're not MWOBs, they would be

      17      able to use the crane and they could have done

      18      everything else.

      19             SANDRA WILKIN:  Right.

      20             SENATOR LITTLE:  So on this hand, then, why

      21      would you want to subcontract to MWOBs if you had

      22      already met your goal by being the large contractor?

      23             It doesn't even make sense.

      24             And then you penalize them if they work

      25      closely with them.







                                                                   65
       1             KRISTA GOBINS:  Do you want me to speak to

       2      that?

       3             SANDRA WILKIN:  Sure.

       4             KRISTA GOBINS:  So the situation I was

       5      speaking of, the person/the general contractor was

       6      not an MWBE.

       7             They hire the MWBEs, and then as a

       8      subcontractor, they perform the work.

       9             But there is, in law, called "commercially

      10      useful function."  And this was really devised for a

      11      very good reason; to make sure that there wasn't

      12      fraud, and that people weren't creating shell

      13      companies saying that they were minority- or

      14      women-business-owned.

      15             You know, so, they really wanted to make sure

      16      that these companies weren't getting too much help.

      17             But if -- and I can certainly send some

      18      information to your office on CUF.

      19             SENATOR LITTLE:  That's clear.

      20             But a lot of this stuff needs to be clarified

      21      and easier for people to understand getting into the

      22      business.

      23             The other thing is, on the personal wealth,

      24      it should be according to the type of business,

      25      because if you're in a business that requires cranes







                                                                   66
       1      and equipment and large buildings, then -- and

       2      you're a privately-held company, you're way over;

       3      you don't even apply.

       4             I have a great company, totally woman-owned,

       5      and she won't even apply.

       6             She says, There's no way I can apply.  I'm

       7      over it just with my property.

       8             SANDRA WILKIN:  Senator Little, you bring up

       9      a great question, and, actually, in some way, this

      10      is the crux, and a good problem for New York to

      11      have.

      12             We're seeing very large growth because of

      13      these programs for minority and women businesses;

      14      and, yet, some of the guidelines and the laws are so

      15      restrictive that it eliminates the opportunity for

      16      these firms to grow.

      17             So, they are not big enough in terms of

      18      capacity, in terms of bonding --

      19             I'm referring to, obviously, the construction

      20      industry at this point.

      21             -- to be able to sustain having to be able to

      22      be the largest prime on that project, but the --

      23      they're gearing towards that.

      24             And you find, unfortunately, this -- there is

      25      a middle group of firms that should still be able to







                                                                   67
       1      have the opportunity of working as minority and

       2      women businesses.

       3             And if we're able to navigate that path for

       4      them, and eliminate the biases that are out there

       5      and the restrictions, they'll be able to grow their

       6      businesses.

       7             And their businesses, as the same as any

       8      business within those goals or contracts, they also

       9      require to have goals on their contracts.

      10             KRISTA GOBINS:  And, Senator Little, I think

      11      what you're talking about, how different areas

      12      require a different amount of capacity construction

      13      is extremely expensive.

      14             You take a huge amount of risk.

      15             You're required to have a lot of personal

      16      wealth to receive access to capital, bonding, and

      17      just to have your own personal savings in case

      18      you're doing a public-work job.  And things get

      19      delayed or things go wrong, you need to have the

      20      capital to be able to continue the company.

      21             So you're right, construction is a very

      22      expensive industry to start up and to continue in.

      23             SENATOR LITTLE:  It seemed like when we first

      24      started, they were talking about financial firms and

      25      women that were investment bankers, and things like







                                                                   68
       1      that, who had -- who may, if they're successful,

       2      accumulate a large personal wealth.

       3             But now we're talking about equipment and

       4      your buildings, and your buildings and your

       5      property, that helps you have the business that you

       6      have.

       7             It's not just personal wealth, although you

       8      do own it, but you wouldn't have the business

       9      without the equipment, and cranes, and all that.

      10             (Indiscernible) --

      11             KRISTA GOBINS:  And you want to have small

      12      businesses make smart decisions.

      13             If you're leasing a building, and you're a

      14      WBE, you want to buy that building because it's the

      15      smart thing to do.

      16             We have members who are terrified that they

      17      will reach that cap, reach that capacity.

      18             We had someone who had a parent pass away,

      19      and they were afraid to take inheritance or building

      20      or homes because -- or, equipment, like you said,

      21      because they don't want to --

      22             SENATOR LITTLE:  No, I had somebody that put

      23      things in a trust fund, and establish a charity, and

      24      all kinds of things, because she had inherited money

      25      and she didn't want to put her business at risk --







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       1             KRISTA GOBINS:  It's a bad decision to make.

       2             SENATOR LITTLE:  -- (indiscernible) employees

       3      are purchasing the business, you know, as they begin

       4      to retire, and, you know, they're mostly women.

       5             To stay as a women-owned businesses has been

       6      beneficial to them, to being certified.

       7             SANDRA WILKIN:  Senator Little, just to --

       8      another comment on that.

       9             We understand that these programs are for

      10      small businesses, but small businesses do grow, and

      11      that the personal net worth is an important factor.

      12             But, in reviewing it, and recommendations

      13      that we can make, to just get the personal net

      14      worth, in terms of guidelines, and in terms of

      15      categories, perhaps, that would be more consistent

      16      with the businesses that are there.

      17             SENATOR LITTLE:  Thank you.

      18             SENATOR O'MARA:  I've just got a couple of

      19      questions.

      20             Of your -- the Women Builders Council, how

      21      many member companies do you have in that group?

      22             SANDRA WILKIN:  (Indiscernible.)

      23             KRISTA GOBINS:  You mean companies that

      24      comprise our organization?

      25             We have, probably, about 175.  And we have







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       1      about 33 Board Members.

       2             SENATOR O'MARA:  How many of those companies

       3      are qualified MWBEs; do you know?

       4             KRISTA GOBINS:  I would say about 75 percent

       5      of our membership are M -- WBEs.

       6             But, also, we have, like, some of the larger

       7      companies.  We have female executives that sit on

       8      those large.  Like the Turners, the Skanskas, we

       9      have their participation on our board as well.

      10             So we represent not only WBEs, but we

      11      represent the women executives who serve in

      12      leadership positions on some of these big prime

      13      companies.

      14             So it's a plethora of women.

      15             SENATOR O'MARA:  What are your thoughts on

      16      this upper level of wealth that we've talked about,

      17      3.5 million for upstate, which is relatively small,

      18      and then you get kicked out of the system?

      19             But, what are your thoughts on, at some

      20      point, should a company that's reached a certain

      21      success level have to then compete head-to-head with

      22      non-MWBE companies and the bidding in con -- and the

      23      bidding that goes on?

      24             SANDRA WILKIN:  I think that we -- I think it

      25      needs to take a better look at what is preventing







                                                                   71
       1      firms from being able to grow, number one.

       2             Whether or not we -- I think we all

       3      understand to -- or, we feel, in terms of business,

       4      that a 3.5 net worth in doing business, as in the

       5      financial industry, and in most businesses, is quite

       6      a low threshold.

       7             So as far as what that number is, I think

       8      would really depend on the particular industry that

       9      would be doing business, and not have a circumstance

      10      as what we're hearing, where those firms are

      11      deciding not to do business with New York.

      12             SENATOR O'MARA:  Thank you.

      13             SENATOR RITCHIE:  Thank you both very much.

      14             Thank you.

      15             Next we will hear from Denise Richardson, the

      16      executive director of General Contractors

      17      Association.

      18                (Pause in the proceeding.)

      19                (The hearing resumed.)

      20             SENATOR RITCHIE:  So we are going to change

      21      the order now.

      22             We'll hear from Jolie Milstein, who is the

      23      president and CEO of New York State Association for

      24      Affordable Housing, and then we will hear from

      25      Denise Richardson.







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       1             JOLIE MILSTEIN:  Thank you, Senator.

       2             Thank you for the opportunity to participate

       3      in today's hearing regarding Minority- and

       4      Women-Owned Business Enterprise Program.

       5             My name is Jolie Milstein.  I'm the president

       6      and CEO for New York State's Association for

       7      Affordable Housing, known as "NYSAFAH," the trade

       8      association for New York's affordable housing

       9      industry statewide.

      10             Our 375 members include for-profit and

      11      not-for-profit developers, lenders, investors,

      12      attorneys, architects, and others active in

      13      financing, construction, and operation of affordable

      14      housing.

      15             Together, NYSAFAH's members are responsible

      16      for most of the housing built in New York State with

      17      federal, state, or local subsidies.

      18             NYSAFAH strongly support the efforts to

      19      encourage greater participation by MWBEs in public

      20      and private contracting.

      21             Greater diversification of the contractor

      22      population ensures a more equitable prosperity for

      23      New Yorkers, leads to a stronger, more resilient

      24      workforce, and to greater innovation.

      25             All of these outcomes contribute to a







                                                                   73
       1      prosperous business climate for which New York has

       2      historically been recognized and to which we always

       3      aspire.

       4             Based on the 2016 disparity study conducted

       5      by New York State, we are seeing positive trends in

       6      utilization of MWBEs for public projects and

       7      procurements.

       8             Similarly, in the affordable-housing

       9      industry, MWBEs have become a more active part of

      10      the affordable-housing industry, as evidenced by

      11      their growing membership within NYSAFAH, which now

      12      stands at 12 percent of our total membership, and is

      13      an even higher percentage of the construction

      14      portion of our membership.

      15             We are especially proud of this growth

      16      because our MWBE members provide dynamic

      17      contributions in the development and preservation of

      18      affordable housing.

      19             They are the architects and engineers who

      20      create energy-efficient housing, the developers who

      21      bring together many resources necessary to build

      22      affordable housing, and the contractors and

      23      subcontractors who construct the safe, quality

      24      housing that's critical for families to thrive.

      25             State funding and subsidies are essential in







                                                                   74
       1      the construction of affordable housing.

       2             In 2017, the Senate, the Assembly, and the

       3      Governor appropriated 2.5 billion for a 5-year

       4      housing plan that will produce around 100,000 units

       5      of affordable housing in our state.

       6             This was a landmark level of support for

       7      housing in New York State, and I would be remiss if

       8      I didn't thank you for all your support for these

       9      funds.

      10             Moreover, use of the subsidies from those

      11      funds include MWBE participation utilization

      12      requirements, the topic of this hearing and very

      13      relevant to NYSAFAH.

      14             While we understand increasing MWBE

      15      utilization rates is a complex issue, and one that

      16      we all take a stake in improving, we believe the

      17      efforts should continue to focus on enhancing the

      18      administration of the existing MWBE requirements.

      19             We hear from MWBEs in the affordable-housing

      20      industry that the regulatory burdens and

      21      inefficiencies in the program create challenges for

      22      MWBEs.

      23             Many working in the housing field tend to be

      24      small, with 10 or fewer employees, and lack

      25      significant capital.







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       1             Even more, lack of staff resources to fill

       2      key compliance requirements imposed by the State,

       3      prompting many to forgo opportunities where the

       4      State is a party.

       5             The State should create a system with fewer

       6      regulatory burdens for MWBEs, or, at a minimum,

       7      greater financial and technical assistance, such as

       8      the availability of no-cost or low-cost program

       9      software, in order to comply with various State

      10      recordkeeping and reporting obligations.

      11             Administration of the MBE (sic) program has

      12      improved over the years; however, there remain many

      13      impediments.

      14             The certification, recertification, process

      15      for an MWBE can take up to three years,

      16      significantly more time than the typical three-month

      17      certification-approval process in New York City.

      18             One commonsense improvement would be for the

      19      State to expedite recertification where the MWBE is

      20      already performing services pursuant to an awarded

      21      State contract.

      22             MWBEs should also be allowed to update

      23      their profiles to include their certification

      24      status, their MWBE certification expiration date,

      25      and capacity-related information, such as the size







                                                                   76
       1      of the largest project worked on, the percentage of

       2      work that's self-performed, general and excess

       3      liability limits, and references.

       4             Developers and contractors do not want to

       5      hire an MWBE, only to then find out its

       6      certification is about to expire or it lacks the

       7      required bonding capacity to undertake a project.

       8             There's also too much duplication in

       9      reporting.

      10             For instance, an MWBE operating in

      11      New York City and New York State must include their

      12      information through two separate portals and

      13      databases.

      14             We appreciate there are two different

      15      jurisdictions, but seeking ways to import

      16      information from one database to another would be

      17      our modest -- would be one modest efficiency to help

      18      these small businesses.

      19             This applies to updates in MWBE contractor

      20      information as well.  Efforts must be made to ensure

      21      that the MWBE only has to input updated information

      22      once.

      23             Moreover, the list of MWBEs from which

      24      developers and contractors can select is in need of

      25      improvement.







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       1             One common complaint shared with NYSAFAH is

       2      that this -- the list of MWBEs lacks companies in

       3      key major trades, including excavation, foundation,

       4      plumbing, and structural steel, precast concrete,

       5      among others, making it difficult to satisfy

       6      utilization-plan requirements.

       7             Accordingly, while developers must agree to

       8      certain MWBE utilization goals, it makes sense that

       9      the State should have goals to increase the number

      10      of listed MWBEs, in total, and by category of

      11      work, to actively market through outreach events

      12      across the state to fulfill those goals.

      13             The State could even go further by helping

      14      identify MWBEs with experience in key areas.

      15             The division of homes and community renewal

      16      could, for example, provide a list of MWBEs

      17      participating in affordable-housing projects to the

      18      division of minority and women business development,

      19      which could include the information on MWBE profile,

      20      and provide an overall list to the

      21      affordable-housing industry.

      22             There is significant potential to collate the

      23      data held by the State to help increase MWBE

      24      participation and visibility and to market upcoming

      25      opportunities on public projects if the State is







                                                                   78
       1      willing to invest in the systems to do so.

       2             A more immediate reform that the State and

       3      Assembly have championed is a proposed change to the

       4      MWBE net-worth criteria.

       5             Currently, each minority- or women-owned, or

       6      upon whom MWBE certification is based, cannot have a

       7      personal net worth in excess of $3.5 million.

       8             This limitation prevents otherwise qualified

       9      MWBEs from participating in public contracts.

      10             The criteria encourages MWBEs to underperform

      11      in order to remain on the net-worth threshold, and

      12      punishes them when they are successful.

      13             It is for this reason that we support

      14      legislation sponsored by Senator Ritchie and

      15      Assemblywoman Peoples-Stokes, and passed by the

      16      Senate and Assembly earlier this year.

      17             The legislation would provide for additional

      18      certification classifications for MWBEs that are

      19      otherwise ineligible to be certified due to

      20      personnel net worth or the small-business criteria.

      21             While we prefer eliminating, or raising, the

      22      net-worth threshold, given that the Governor has

      23      vetoed such legislation in 2017 based on legal

      24      concerns, we believe the current legislation is a

      25      reasonable solution to the net-worth issue.







                                                                   79
       1             We hope Governor Cuomo will approve the

       2      legislation and enact this commonsense reform.

       3             Thank you for your opportunity to testify

       4      today, and for your consideration of NYSAFAH's

       5      comments regarding the MWBE program.

       6             I'm happy to answer any questions.

       7             SENATOR LITTLE:  You know, one question comes

       8      to mind, and I don't even know if this is being

       9      done, but, in the housing industry, it's pretty

      10      close-knit, and all.

      11             Is there any -- ever any best-value

      12      attributed to an MWBE-certified business, whether --

      13      or, quality of work, or standards, or --

      14             JOLIE MILSTEIN:  You know, it's generally

      15      word of mouth.  There's no formal network that

      16      I know of.

      17             But as you well know, this is a very tight

      18      labor market.

      19             And I think that successful developers that

      20      have a bench, a deep bench, I don't think they're

      21      particularly broadcasting that around just because

      22      it's such a tight labor market.

      23             So, I don't know how collegial people are in

      24      sharing their best subs and contractors.

      25             SENATOR LITTLE:  Nor do I know how the State







                                                                   80
       1      would evaluate every one of these businesses.

       2             Then I know one contractor who hired an

       3      asbestos-removal company that was an MWBE, that

       4      could not do the work.  And they had to give up on

       5      that one and hire another one.

       6             And the second contractor used a power washer

       7      to get rid of the asbestos.

       8             It's not quite the best idea in a renovated

       9      building.

      10             And in the end, the result was terrible.

      11             And the current contractor lost a -- the job

      12      and, you know, had consequences.

      13             JOLIE MILSTEIN:  I'm not aware of, within the

      14      program, an evaluation system on past performance.

      15             But it certainly is something that might

      16      improve the whole --

      17             SENATOR LITTLE:  I would think, at some

      18      point, as we go through this, they have to get to a

      19      point where you -- you know, you get a 3-star,

      20      4-star, or 5-star rating as an MWBE.

      21             But, I mean, upstate, we don't have enough,

      22      so it's, just, if you can get one, you go for it.

      23             So, thank you.

      24             That's something that, I guess, that has to

      25      be done in the future, and we have to look at it.







                                                                   81
       1             SENATOR RITCHIE:  I'd just like add, you

       2      know, I've heard a number of stories too.

       3             Another was with an asbestos contractor, that

       4      they had heard over and over again, not great

       5      reviews, and were really concerned.  But that was

       6      the only company that would fall under an MWBE, for

       7      them to attempt to get to their quota.

       8             And, you know, the program has merit, and we

       9      need to find ways to make the program work better.

      10             But, making a contractor hire a business that

      11      they know is not going to be able to perform is not

      12      the right way to do it.

      13             JOLIE MILSTEIN:  That doesn't help anyone,

      14      and it certainly isn't a good use of taxpayer

      15      dollars.

      16             SENATOR LITTLE:  No.

      17             SENATOR RITCHIE:  Thank you so much;

      18      appreciate the testimony.

      19             JOLIE MILSTEIN:  Thank you for your time.

      20             SENATOR LITTLE:  Thank you.

      21             SENATOR RITCHIE:  Denise.

      22             DENISE RICHARDSON:  Good afternoon.

      23             It's nice to see all of you again.

      24             Before I get into my specific remarks, I just

      25      want to touch on some things that the prior speakers







                                                                   82
       1      have talked about.

       2             First of all, New York City's MWBE program

       3      does have a cap; however, it's not about personal

       4      net worth.  It is about size of contract awards.

       5             So in the New York City MWBE program, if you

       6      have received over $50 million worth of contract

       7      awards in a 3-year period, you are considered to

       8      have graduated.

       9             So that's an important distinction.

      10             But one of the things that I think works

      11      about that, is that it's tied to actual amount of

      12      work that a company has received and about the size

      13      of the company's business, as opposed to the

      14      personal net worth of the owner.

      15             So -- and we recommended in prior hearings

      16      that the State look at a size-of-business model for

      17      graduation as opposed to personal net worth of the

      18      owner.

      19             SENATOR O'MARA:  Is that an annual

      20      calculation?

      21             DENISE RICHARDSON:  It's over -- it's a

      22      rolling 3-year period.

      23             SENATOR O'MARA:  Rolling 3-year period?

      24             Okay.

      25             DENISE RICHARDSON:  Which is helpful, because







                                                                   83
       1      it also kind of takes into account, particularly for

       2      construction, that if you're working on a prime

       3      contract, that's also about the average duration of

       4      a prime contract, so, it works.

       5             So I just wanted to make that point.

       6             The second thing I wanted to point out is,

       7      I know that you have focused a great deal on

       8      certification, and I know that you reacted very

       9      favorably to New York City's time frame of

      10      certification.

      11             And it is -- the certification process itself

      12      is much more efficient in New York City than in

      13      New York State.

      14             However, in New York City, the MWBE program

      15      suffers from a very big disconnect between

      16      certification, which is about, is the company a

      17      minority- and women-owned business versus the type

      18      of work that the business actually performs?

      19             And in New York City, the focus is on

      20      certification as to MWBE status.

      21             And it is, basically, up to the MWBE firm

      22      to -- in a completely separate system that is not

      23      managed by the department of small business services

      24      that is doing the certification, the MWBE firm, in a

      25      separate system known as the "payee information







                                                                   84
       1      portal," self-selects the type of work that it

       2      performs, that it wishes to be known as.

       3             That has created enormous problems for the

       4      prime-contracting industry in identifying firms to

       5      participate in MWBE work.

       6             In 2016 the General Contractors Association

       7      spent a million dollars of our own money, paid for

       8      by our member dues.  We are, in fact, a

       9      private-sector trade association.

      10             But we were struggling with so many

      11      difficulties in the list, that we felt as though we

      12      needed to provide a service to our members, by

      13      surveying the city's MWBE firms, to work with them

      14      to straighten out their codes, so that we could give

      15      our members some current information about the types

      16      of work that firms perform.

      17             We found numerous inaccuracies in the list.

      18             We turned over all of that information that

      19      we collected to the department of small business

      20      services.

      21             They have corrected some of the information.

      22             I believe they're still working with other

      23      portions of the information.

      24             But to date, right now, in -- on the

      25      New York City-certified MWBE list, there are over







                                                                   85
       1      1400 firms with no indications whatsoever of the

       2      types of work that they perform.

       3             And we continue to work with SBS on trying to

       4      straighten out the coding, similar to what I talked

       5      about when I testified in September at your hearing

       6      on Long Island, about the State's need to undertake

       7      that same kind of effort to work with the MWBE

       8      community to straighten out their certification

       9      list.

      10             We also took our information and turned that

      11      over to ESD as well.  And, to date, I am not sure to

      12      the extent that they have made the corrections that

      13      we noted in our own research.

      14             So I want to point out that, although

      15      New York City has a much more efficient

      16      certification process, there is still work that

      17      needs to be done on matching the certified MWBEs

      18      with the type of work that they perform.

      19             Also, I would like to also correct some

      20      information about what happened on the

      21      Tappan Zee Bridge.

      22             The prime contractors on the

      23      Tappan Zee Bridge are General Contractors

      24      Association members.

      25             And when Deborah Bradley brought it --







                                                                   86
       1      brought to my attention what happened, I asked them,

       2      you know, what the circumstances were.

       3             She's completely right when she talks about

       4      the issue of commercially useful function.

       5             On a large construction project sometimes

       6      there are oversights.

       7             Her contract was silent on the issue of

       8      providing a crane.

       9             The prime contractor did not specifically

      10      indicate in her subcontract that she would have use

      11      of their crane; and so, therefore, when the DBE

      12      program manager looked at her situation, a

      13      determination was made that, in order to prevent a

      14      later violation of a commercially-useful-function

      15      standard, she needed to provide her own crane.

      16             However, it's being perceived as though the

      17      prime contractor denied her that, and I don't think

      18      that that is a fair assessment of the situation.

      19             It does point out the fact, though, however,

      20      that when you look at commercially useful function,

      21      there are two things that need to take place.

      22             Number one:  The firm has to come to the

      23      table with the ability to do the work that they are

      24      subcontracted to -- that they are contracted to

      25      perform.







                                                                   87
       1             Certainly, in the case of Deborah Bradley,

       2      her firm certainly has the technical capability to

       3      perform the work that she was subcontracted to do.

       4             The issue of the crane was an oversight on a

       5      very large project.

       6             What needed to happen in that process was a

       7      very quick decision on the part of the government

       8      agency involved.  And that's not what happened in

       9      this case.

      10             And because they needed to move the job

      11      along, and they couldn't get clear direction, the

      12      decision was made to tell her to provide her own

      13      crane.

      14             That's a very different scenario than saying

      15      that the prime contractor refused to assist their

      16      MWBE sub.

      17             It comes back to, on a construction project,

      18      time is of the essence, and these kinds of

      19      administrative decisions need to be made quickly.

      20             So with those things being said, what I would

      21      like to mention today is, you know, in looking at

      22      the whole MWBE program at the level of detail that

      23      the General Contractors Association certainly has,

      24      one of the things that we have noticed is that the

      25      documentation for good-faith effort is completely







                                                                   88
       1      paper-oriented.

       2             Thousands of pages of spreadsheets and

       3      telephone logs and letters are submitted for prime

       4      contractors to document their good-faith effort in

       5      their efforts to meet what are, in fact, the MWBE

       6      requirements.

       7             There has been a lot of discussion about

       8      needing to do a better job on the part of the

       9      government agencies of identifying firms to

      10      participate in capacity-building programs.

      11             The good-faith-effort documentation, if it

      12      were automated in a searchable-type database, where,

      13      you know, ESD or DOT or any of the agencies could

      14      query the documents, they could find out:

      15             Who's bidding?

      16             What types of jobs are they bidding on?

      17             Why is someone who's in a "structural steel"

      18      code only bidding on painting work?

      19             That's probably a good indication that

      20      they're in the wrong code and they're a painter, and

      21      not a structural steel erector.

      22             Right now, with all this paper, there's no

      23      way to generate any value out of all of the

      24      information that's being collected.

      25             And, in fact, for our members, what we find







                                                                   89
       1      repeatedly, is that we will submit boxes of

       2      documents, and the agency will say:  We're not even

       3      going to look at that.  Our definition of

       4      "good-faith effort" is to meet the goal.

       5             That's a separate issue that we will not get

       6      into today.

       7             But I think in terms of your recommendations,

       8      going back to how to strengthen the MWBE program,

       9      what should be looked at is a partnership with the

      10      industry to develop an automated way of submitting

      11      good-faith efforts so that we can get some value out

      12      of the information that our members are spending

      13      millions of dollars to collect.

      14             And that's my recommendation for today.

      15             And I'll answer any questions you have.

      16             SENATOR RITCHIE:  First, I want to say, thank

      17      you, because I know you've been at several hearings,

      18      and you put in a lot of time making sure that we

      19      heard your members' concerns.

      20             So, I want to thank you for that.

      21             DENISE RICHARDSON:  Thank you.

      22             SENATOR RITCHIE:  Just a quick question on

      23      the crane scenario.

      24             That was the one thing that popped into my

      25      head:  Was there no way to get any kind of approval







                                                                   90
       1      from an agency before they had to spend that money?

       2             Is that part of the process, it was too slow,

       3      or there isn't any?

       4             DENISE RICHARDSON:  It was too slow, and an

       5      immediate decision had to be made in order to

       6      procure the crane in time.

       7             And I think that that was unfortunate.

       8             And I don't want -- I don't want to cast

       9      aspersions on the agency because, obviously, with

      10      the Tappan Zee, there were hundreds of decisions

      11      that had to be made every single day.

      12             But it does kind of show the need for,

      13      I think, better coordination on these projects.

      14             And we face it also on other projects, where

      15      we will, literally, be waiting for a determination

      16      from an agency on an MWBE issue, and it's holding up

      17      the rest of the project.

      18             And so that aspect of the project needs to

      19      move faster, which is why, in terms of

      20      mentor-protege, we can't be expected to build the

      21      job and teach how to build at the same time.

      22             What we favor in a mentor-protege program is

      23      a model like the school construction authority or

      24      like the MTA mentor program, where a separate

      25      contractor or consultant is engaged to work with the







                                                                   91
       1      firms that are in the program on their own work; not

       2      as part of a much larger construction project where

       3      the prime contractor, who's trying to meet a

       4      schedule and build a scope, and keep -- you know,

       5      and manage costs associated with that project, is

       6      also trying to teach their MWBE subcontractors how

       7      to work at the same time.

       8             That is a recipe for disaster.

       9             But we definitely support a school

      10      construction authority-type model program.

      11             SENATOR O'MARA:  How much expense does

      12      something like that add to a project?

      13             Can you give us some examples?

      14             DENISE RICHARDSON:  I can't really talk about

      15      the expense of having a -- of managing a

      16      mentor-protege program on a particular project

      17      because we have not been in that situation.

      18             What I can talk about, though, are the

      19      compliance costs that we're facing for our M -- for

      20      MWBE efforts, and it is becoming significant; it's

      21      millions of dollars.

      22             I have one member who told me recently that

      23      he has more people on his staff managing compliance

      24      issues than he has actually managing projects.

      25             That's a scary prospect.







                                                                   92
       1             But when you look at, in particular, trying

       2      to meet a 30 percent goal, when most subcontracts

       3      are of a smaller dollar value, and you have more

       4      subcontractors on a project than you've ever had

       5      before, and so you're slicing the work into ever

       6      smaller pieces in order to meet a goal that's based

       7      on a total-dollar value of the project, not just on

       8      subcontractible work, you're adding additional

       9      supervisors, you're adding additional

      10      superintendents, you're adding additional safety

      11      people.

      12             And so it's starting to increase the overhead

      13      cost exponentially, which is not really being

      14      reflected in agency estimates.

      15             SENATOR O'MARA:  Are you recouping that cost?

      16             DENISE RICHARDSON:  I would not be able to

      17      say yes in every instance.

      18             SENATOR O'MARA:  If you are recouping the

      19      cost, that's adding to the overall cost of the

      20      project?

      21             DENISE RICHARDSON:  It's definitely adding to

      22      the overall cost of the project, there's no question

      23      about that.

      24             Where it becomes problematic for a prime

      25      contractor is, if the project, for whatever reasons,







                                                                   93
       1      is delayed; if there are many, many change orders;

       2      and the overhead of the project starts to get

       3      squeezed by a schedule that has gone beyond what the

       4      prime contractor anticipated, that's where the cost

       5      becomes significant.

       6             SENATOR LITTLE:  Thank you.

       7             Going back to the crane, I hate to do that,

       8      but, is what happens here is:

       9             The prime contractor is not an MWOB.

      10             So, the subcontractor is.

      11             But if the subcontractor wanted to rent the

      12      crane, the prime contractor is afraid he'd get

      13      penalty for helping that subcontractor, and making

      14      it look like they -- you were just using that

      15      subcontractor to get your MWBE -- help your goal,

      16      and it wasn't real?

      17             Is that --

      18             DENISE RICHARDSON:  Yes, our members have

      19      faced a number of issues in terms of perceived

      20      violations of commercially-useful-function

      21      standards.  And there are many cases associated with

      22      that.

      23             The way the auditors, the agencies, the

      24      investigators, look at it is that, the subcontract

      25      must lay out, in great specificity, exactly what the







                                                                   94
       1      responsibilities of the subcontractor versus the

       2      prime contractor will be.

       3             Had the subcontract said, You will be

       4      entitled to use our crane, there would have been no

       5      issue.

       6             It's not that the

       7      commercially-useful-function standards prohibit

       8      that.  It's that it must be documented.

       9             In this instance, the subcontract did not

      10      say, "you will be entitled to use our crane"; and,

      11      thus, when that oversight was discovered, it became

      12      a question of, you know, are we permitted to allow

      13      our subcontractor to use the crane, given that her

      14      subcontract did not spell that out?

      15             SENATOR LITTLE:  Is there a way to put some

      16      clarity in this, or clarify those guidelines, or

      17      make it easier and clearer for the prime contractor

      18      to understand and the subcontractors to understand?

      19             DENISE RICHARDSON:  I think that what has

      20      happened, certainly to our members, and other

      21      contractors around the country, now that this issue

      22      is being looked at, is that the whole issue of

      23      commercially useful function becomes an audit issue

      24      several years after the project has been completed.

      25             And so I think, certainly for the







                                                                   95
       1      General Contractors Association members, which is

       2      whom I'm speaking on behalf of today, we would be

       3      extraordinarily concerned about any program language

       4      that left it vague in one way or another.

       5             And we have been told, you know, by the

       6      various prosecutors at different times, that what

       7      they look for is the deep pocket to make, you know,

       8      this a revenue case.

       9             So we would be extraordinarily reluctant, and

      10      concerned, about any standard that allowed a

      11      judgment call based on the need.

      12             We would support, you know, engagement by the

      13      agency, affirmative determinations by an agency,

      14      yes, you can do this; no, you can't do that.

      15             However, I wish to point out that, in

      16      instances where we have brought issues to an agency

      17      concerning the viability of an MWBE firm, because we

      18      felt as though they could not provide the function

      19      that they represented they provided, we have been

      20      told by the agency, Well, you need to meet the

      21      requirement.  Go ahead and use the subcontractor.

      22             And our members have repeatedly taken firms

      23      off their utilization plan because they raised

      24      questions themselves, and they could not get

      25      assistance from the agency.







                                                                   96
       1             So we're not in a position where we are

       2      willing to take liability for something where, later

       3      on, our company's reputation will suffer.

       4             And that's why we support -- the

       5      General Contractors Association supports the

       6      commercially-useful-function standards as they are

       7      written.

       8             And in the event that an MWBE or group of

       9      MWBEs need assistance, to manage that separately

      10      through a mentor program under a separate contract

      11      by the agency.

      12             It's just too much liability and risk for us.

      13             SENATOR LITTLE:  Do you have instances where,

      14      when they go to do the final audits for the

      15      payments, that they deduct or they disqualify some

      16      of your MWB -- -OB contracts?

      17             DENISE RICHARDSON:  Yes.

      18             SENATOR LITTLE:  And then they won't pay?

      19             DENISE RICHARDSON:  Yes.

      20             SENATOR LITTLE:  And that's happened often?

      21             DENISE RICHARDSON:  Yes.

      22             SENATOR LITTLE:  Well, there's got to be a

      23      way to avoid that, somehow, if they have accepted

      24      this.

      25             I had one, where it was a State grant;







                                                                   97
       1      therefore, it had to be MWB -- -OB goals.  And it

       2      was for a city civic center, they bought a big

       3      jumbotron.

       4             And it was listed on the list of MWOB

       5      contractors that they could buy from, and they

       6      bought it.

       7             But they said, after it's up, then used for

       8      six months, great thing.

       9             Then they said, Well, that contractor didn't

      10      really build the screen and the unit.  It was a

      11      Panasonic.

      12             So suddenly, now, they took away a huge

      13      percentage of their things.

      14             In the end, we had to work to get a waiver,

      15      and everything else, because there was no way to

      16      correct that.  And that they shouldn't have been on

      17      their list.

      18             But, you know, it's just almost impossible at

      19      times.

      20             There's got to be more flexibility, and there

      21      has to be more clarity, in this whole program.

      22             DENISE RICHARDSON:  Well, I think to your

      23      point, that scenario that you described has happened

      24      to us frequently.

      25             And we have found, at the end of a project,







                                                                   98
       1      where the agency, you know, is coming through and

       2      making those exact determinations.

       3             And I agree that there needs to be

       4      flexibility to reflect, certainly in the case of

       5      construction, how the construction industry works,

       6      or in the case of providing goods and services, that

       7      not every person who is a legitimate supplier may

       8      stock every single item.

       9             And I do think that, in many instances, the

      10      rules were written in a very rigid, black-and-white

      11      scenario without accounting for how business really

      12      works, how things will happen on a project.

      13             At the same time, because of what, certainly,

      14      the GCA members have encountered, I am very

      15      concerned about guidelines that would be too loose,

      16      that would lead to, later on, second-guessing.

      17             I think it's better to spell out up front

      18      exactly what the expectations are that everybody

      19      abides by.

      20             But to your point about what happened with

      21      one of your constituents, we face that all the time.

      22             SENATOR RITCHIE:  It still is confusing to me

      23      how this is only a goal, and that so many companies

      24      face penalties, and money is held back, when it's

      25      not a requirement.  It's an aspirational goal.







                                                                   99
       1             So...

       2             DENISE RICHARDSON:  I think that our next

       3      speaker, who represents a company who is a GCM

       4      member, will speak to that in detail.

       5             There is a perception that the

       6      prime-contracting industry just does not want to

       7      make the program work.

       8             And nothing could be further from the truth.

       9             As prime contractors, the way that we are

      10      successful is by bringing the best team of

      11      subcontractors who are available to the table at all

      12      times.

      13             Prime contractors and their subcontractors

      14      make money when they finish a job ahead of schedule;

      15      not late.

      16             So it's in our interest to bring on any

      17      project that we're bidding, the best subcontractors

      18      that we can find, that can help us deliver that job

      19      ahead of schedule.

      20             So I think that there is a myth that we don't

      21      want the MWBE program to be successful.

      22             I also want to point out that most of the

      23      prime contractors today started out as small

      24      subcontractors, and grew their businesses to become

      25      primes.







                                                                   100
       1             So, if there's any group of people that wants

       2      to see a robust subcontracting industry, it's us,

       3      because that's how we all started as well.

       4             SENATOR O'MARA:  Do you -- as I have asked

       5      the other individuals testifying, what the numbers

       6      of your organization are, MWBEs, and are actually

       7      certified?

       8             DENISE RICHARDSON:  We have about 20 percent

       9      of our membership who are MWBEs.

      10             We have two companies, in particular, that

      11      started out as MWBE subcontractors purely, have

      12      graduated from the program.

      13             And, now, while they demographically would be

      14      considered minority-owned businesses, they are no

      15      longer participants in the program and bid in the

      16      prime-contractor open market.

      17             SENATOR O'MARA:  How many members do you have

      18      altogether?

      19             DENISE RICHARDSON:  300.

      20             SENATOR O'MARA:  You know, there's a lot of

      21      concern, the need for this program.  And

      22      I understand contractors do want to see this work

      23      and be successful.

      24             And it's important for us on this panel, and

      25      the Senate, to make sure we have a working thing.







                                                                   101
       1             But some of these, what I call "quotas," and

       2      not goals, are causing problems within the program.

       3             But there's also, to look at it from the

       4      need for it, that this is to help these MWBEs

       5      break through what's commonly referred to as

       6      "the old-boys' network."

       7             Can you comment on that kind of feeling?

       8             I mean, it's, like, you got the big 'ole boys

       9      that always play with themselves, share contracts

      10      with themselves, and kind of block out these smaller

      11      up-and-coming entities.

      12             DENISE RICHARDSON:  You know, before I came

      13      to the GCA, I worked for over 20 years at various

      14      public agencies as -- in procurement.

      15             And I appreciate the perception that it's an

      16      old-boys' network.

      17             But in a competitive-bidding situation, the

      18      bidding is available to the open market.  And

      19      whomever bids, and whoever is the lowest responsive

      20      and responsible bidder, gets the job.

      21             The issue, in terms of what we would call,

      22      you know, "the club of contractors," is driven by

      23      other forces.

      24             If you look at public-agency contracts,

      25      they're extraordinarily adversarial, extraordinarily







                                                                   102
       1      complicated.

       2             And so for a firm who has never bid on a DOT

       3      contract, and let's say they're a very successful

       4      MTA contractor, and now it's the first time that

       5      they're coming to bid a DOT contract, it's a whole

       6      new process of bidding and contract requirements and

       7      specifications.

       8             And so what tends to happen over time -- and

       9      the construction industry is, you know, fairly

      10      specialized -- if you are a contractor that, you

      11      know, builds wastewater treatment plants, you've

      12      developed an expertise.  You know the technology.

      13      You know the requirements.  You have a workforce

      14      that you have trained in that specialty.  Same way

      15      if you're a bridge builder or a paving contractor.

      16             So the perception of the old-boys' network is

      17      really driven by the type of work the firm performs,

      18      the specialties that they have; the agencies where

      19      they know the specifications, they know the

      20      requirements, they know the expectations.

      21             And just like in medicine, you know,

      22      construction also has become much more specialized

      23      over the years.

      24             So you see a group of contractors that

      25      consistently bid for state DOT, or maybe for city







                                                                   103
       1      DOT, or whatever, which is more driven by the

       2      contract terms, the type of work; also, the

       3      portfolio of projects that are in any given capital

       4      program.

       5             And one of the biggest barriers to entry for

       6      new contract -- new prime contractors in particular,

       7      and we've really seen this with State DOT, where you

       8      have seen gaps in years when the agency did not have

       9      an approved program.

      10             Contractors look on a 12- to 18-month

      11      schedule of what's coming out to bid in a certain

      12      agency.

      13             When we've gone for, you know, a year or two

      14      with the MTA capital program, for example, being

      15      rolled over, or, the DOT capital program, you know,

      16      being uncertain as to what projects are going to be

      17      in the portfolio, that takes that group of

      18      contractors saying:  I don't know what to do.

      19      Should I bid in another state?  Should I move to

      20      another market?  Should I, you know, lay off some of

      21      my key people?  What should I do?

      22             And the best way to assure that you have a

      23      robust pool of new firms is to have an ongoing

      24      portfolio of work that's being bid, because,

      25      particularly for infrastructure work, if you're an







                                                                   104
       1      infrastructure contractor, your market is,

       2      typically, the public sector.

       3             On the building side, they will switch back

       4      and forth between public and private work with much

       5      more flexibility.

       6             But if you're an infrastructure contractor,

       7      the public sector is your market.

       8             SENATOR O'MARA:  Thank you very much.

       9             SENATOR RITCHIE:  Thank you.

      10             DENISE RICHARDSON:  Thank you.

      11             SENATOR LITTLE:  Thanks, Denise.

      12             SENATOR RITCHIE:  And our last speaker

      13      for today is J. Naomi Glean, EEO officer,

      14      WDF, Incorporated.

      15             J. NAOMI GLEAN:  Good afternoon.

      16             Thanks so much for having me, allowing me to

      17      speak.

      18             Thanks so much for showing so much interest

      19      in this topic.

      20             I am, I think, the only person representing

      21      the prime contractor today, and the only MWBE

      22      officer to speak to you, so, I'm hoping you guys

      23      have questions about the day-to-day as well.

      24             First of all, I work for WDF, Inc., which is

      25      a specialty construction company that works mainly







                                                                   105
       1      throughout New York City, but we are a New York

       2      State company.

       3             I was a little reluctant to submit my

       4      testimony because I'm busy at work, trying to put

       5      together all the good-faith efforts that we're doing

       6      on our several, several city and state agency

       7      projects.

       8             But I said to myself, that this is much more

       9      important than just getting the next letter out to

      10      our agencies, in order to speak to how -- the

      11      efficiency that's of the program.

      12             First and foremost, we wholeheartedly support

      13      the MWBE program.

      14             We have a robust program in-house for

      15      ourselves, but, we as a group, and myself

      16      personally, truly believes that small businesses

      17      need a helping hand.

      18             Every single large prime contractor, if

      19      you've spoken to any of the CEOs, they'll all tell

      20      you the long list of people that helped them get to

      21      where they are.

      22             So, to try to tell ourselves that

      23      minority-owned businesses, women-owned businesses,

      24      don't need a helping hand just doesn't make any

      25      sense.







                                                                   106
       1             The program is great to show that there is a

       2      disparity in opportunities.

       3             But I am here as someone who's worked as an

       4      MWBE officer for seven years, to let you know that

       5      I've seen some changes in the program, and how prime

       6      contractors are viewing the program.

       7             The good things, that's more small businesses

       8      are getting jobs.

       9             All contractors -- all prime contractors that

      10      I know are trying to meet the goal.

      11             And it is no secret that the agencies are not

      12      letting you get away with not meeting the goal.

      13             When I started seven years ago, you could put

      14      together a one-page letter and say, "I tried my best

      15      and I couldn't find anyone," and that would be

      16      accepted, and you can go on and -- with your

      17      1 percent participation.

      18             That is no longer acceptable; that's not the

      19      standard.

      20             The amount of efforts that we as -- at WDF

      21      put forth to provide a good-faith effort takes a

      22      department.

      23             It takes me training the rest of the company,

      24      so that everybody helps me to get to our goals.

      25             It starts with our solicitation of MWBEs,







                                                                   107
       1      and we rely heavily on the certification on

       2      directories that you've been talking about all day.

       3             And I'll speak to how we can work on those

       4      directories.

       5             But it starts with a solicitation, through

       6      several means of solicitation, to negotiations for

       7      subcontracts and purchasing, to vetting the firms.

       8             Which is something that I don't know if you

       9      guys are familiar, that the primes spend a lot of

      10      time, cost on manpower, on vetting the firms, even

      11      though they're on the certified directory.

      12             Because one of the biggest issues we have is

      13      that there's prosecutors, and then there's the

      14      agencies that you work for, and those two entities

      15      are not on the same path; they do not think the same

      16      way.

      17             So the directory, I would suggest -- and

      18      I did suggest in my written testimony, that the

      19      certification process is more robust.

      20             I know we've spoken about how long it takes

      21      people to get certified, but I'm -- quite frankly,

      22      I don't think enough is being asked during that

      23      certification process.

      24             When we vet a firm, we're looking to see that

      25      the 51 percent owner is the minority, is the woman,







                                                                   108
       1      but that they have their own staff to do the work

       2      that we're going hire them to do, that they have

       3      their own equipment to do the work, and that they

       4      have a facility that is capable of doing what

       5      they're supposed to be doing.

       6             We spoke -- someone else spoke about

       7      self-certification.

       8             There are some firms that check off the boxes

       9      of what they do.

      10             And I am not convinced that the agencies are

      11      looking at exactly what those firms do.

      12             In order for me to take credit for an MWBE,

      13      they have to be certified with the agency, but

      14      certified for a particular work.

      15             And so if the work that they're certified for

      16      is not the work that they're bidding on, then

      17      I can't take the credit for it.

      18             If I find out that they are certified to do

      19      one thing, and then they've offered to do these

      20      whole other five things, I can't take credit for

      21      that either.

      22             A lot of times the agencies can tell that

      23      we're paying a minority- or woman-owned business,

      24      and so they say, Why aren't you taking the credit?

      25             Well, I know they're not certified to do this







                                                                   109
       1      particular work, and so I'm not going take the

       2      credit.

       3             Or, I vetted and I found some other issues

       4      with this firm, and I don't think that a prosecutor

       5      is going to look well at what they're doing on this

       6      portion, so I'm not going to take that credit.

       7             All of these things are major issues in the

       8      certification process.

       9             You may be certified to do one thing, but

      10      then you do another in your contract.

      11             And that has to be scrutinized a little more

      12      in the certification process, in my opinion.

      13             When I go to the different events, sort of --

      14      networking events, firms come up to me and they say,

      15      Oh, I don't -- I haven't gotten an e-mail.  How do

      16      I give a bid to your company?

      17             I say, Well, what do you do?

      18             They tell me what they do.

      19             And I say, Well, I go to the directory and

      20      I pull down every single MWBE that does that scope

      21      of work, and I have sent them a fax, an e-mail, and

      22      we've called them.  You haven't gotten any of those

      23      things?

      24             No.

      25             Well, what are you certified?







                                                                   110
       1             Well, actually my certification's for a

       2      different thing, but I'm going to change it.

       3             There has to be more scrutiny on the

       4      certification list.

       5             In terms of the goals, some people are

       6      talking about how the goals are assessed.

       7             It is my understanding of the regulations,

       8      that a goal is supposed to be assessed to the actual

       9      project.

      10             Right now there is just a general number that

      11      is given, and it is assessed to every single

      12      project, which does not take into account when there

      13      is specialty work.

      14             WDF is a specialty contractor.  We do

      15      plumbing and we do heating work and we do sprinkler

      16      work.  Half of the work we do has to be done under a

      17      license.

      18             So the sprinkler work we do and the plumbing

      19      work we do has to be done with the licensed holder,

      20      and so we cannot subcontract out the work that's

      21      under our license.  So there's that whole chunk of

      22      work that we can't sub out unless we totally give

      23      away our -- we win the bid and then give away the

      24      whole project.

      25             And then, on top of that, the -- we're a







                                                                   111
       1      union shop.  And so any company that works with us

       2      has to be a part of the union or sign up with an

       3      agreement.

       4             And there's no conversation -- there's not

       5      much conversation about the fact that the

       6      certification list is dwindled by a lot when you

       7      look to see who is unionized, and who is willing to

       8      sign up on one -- for one agreement with the union

       9      per project.

      10             That takes a lot of people out of the running

      11      in working with your -- working on our projects in

      12      particular.

      13             The goals right now are a general number.

      14             And then, if we cannot meet the goal, then we

      15      have to present good-faith efforts.

      16             Now, my good-faith efforts are binders,

      17      sometimes boxes worth, of documentation of who we've

      18      e-mailed, who we've faxed, who we've called, who

      19      we've negotiated with, and the e-mails back and

      20      forth.

      21             And 99 percent of the time no one looks at

      22      all of that documentation.  Everybody just wants you

      23      to meet the number, and that is all.  Do not talk to

      24      me until that number is met, and that's it.

      25             So we're at a place, it's kind of backwards.







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       1             I feel that the agency -- that the government

       2      should look at the contracts, see what is actually

       3      available to subcontract out, what's actually

       4      available to purchase, and then set the goal on

       5      that.

       6             Now, the SCA uses that goal.  They -- their

       7      goals are centered around what is subcontracted out.

       8             So they ask the prime contractor, What are

       9      you actually subbing out?  What is the value of

      10      that?  Who are all the firms you're using.

      11             And out of that value, that's where your goal

      12      is; and that to me makes the most sense because you

      13      know exactly what everybody is doing.

      14             Everybody is actually -- I'm going to sub out

      15      some of my work.  I'm not going to do it all.

      16             But that portion -- a portion of that should

      17      go out to minority- and women-owned businesses.

      18             And where we can go above and beyond, we

      19      definitely do.

      20             In terms of, back to certification, not only

      21      is there a cost to extra vetting by the prime

      22      contractors, we're looking to see if the firms can

      23      provide a commercially useful function.

      24             And right now, we do not -- I do not believe

      25      that there's enough guidelines across the board of







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       1      what a "commercially useful function" actually is.

       2             Because we're very -- at WDF, we scrutinize

       3      the rules, the regulations.  We're very cautious on

       4      what we take credit for.

       5             And I do not believe that every prime

       6      contractor feels the same way, I do not feel that

       7      every agency feels the same way, or all the

       8      prosecutors feel the same way.

       9             I have had many agency reps tell me, Just

      10      take the credit because they're on the certified

      11      list.

      12             And the very same firm, I've had a prosecutor

      13      tell me, You should have known you can't take credit

      14      for that firm because they're not legitimate MWBE.

      15             There has to be guidelines so, across the

      16      board, all the primes know we're all on the same

      17      playing field, because, the higher the goal gets, it

      18      leaves room so people to do things illegally and try

      19      to get around the system in order to meet those

      20      numbers.

      21             So we spoke about -- other people spoke about

      22      the mentor-protege programs; giving assistance to

      23      minority- and women-owned businesses.

      24             I would like to see more paths to give small

      25      companies a helping hand, but our industry right now







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       1      is based in perception.

       2             There is a lot of gray area, that you don't

       3      know exactly how it's going to shake out if you do a

       4      certain thing.

       5             And so, if we can figure out actual

       6      guidelines for what "help" means, and how you can do

       7      it and still take credit.

       8             I will tell you that I have two letters out

       9      right now to agencies, asking if I can do a certain

      10      thing and still take credit for MWBEs.

      11             And it's been months, and I haven't gotten a

      12      response.

      13             And so if I've been doing it for seven years,

      14      the company's been doing it for longer, we don't

      15      know the answer, and the agency is not responding,

      16      then I can only assume that other companies are

      17      dealing with the same thing.

      18             If there's some sort of guideline book that

      19      all firms can have, it would be helpful.

      20             And dealing with MWBEs directly on a

      21      day-to-day basis, I would tell you that they need

      22      the guidelines more than anybody else.

      23             If you're a small business, what I've seen

      24      is, that you hear:  That if you become

      25      MWBE-certified, you would probably get more







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       1      contracts.  Your company will seem more interesting

       2      to larger companies and you'll get more

       3      opportunities.

       4             But that's about it.

       5             They don't read the rules and the regs the

       6      way that we do, they don't have a staff to go over

       7      and look over the news and what's going on, because

       8      they're building.

       9             They're usually, 10, less than 50, people,

      10      and they're building, and they're trying to get

      11      their -- get their projects done.

      12             And so they don't know the rules.

      13             And when a company comes to them with some

      14      scheme, that they say everybody else is doing, then

      15      they join up.

      16             And so, if we all had a -- guidelines, that

      17      would help, especially with the MWBEs, because I get

      18      a lot of calls from MWBEs asking me to do things

      19      that I deem illegal or wrong.

      20             But they say, Well, this other company did it

      21      and it's fine, nobody said anything.

      22             But, we get audited later, and we don't want

      23      to have -- be answering the questions after the

      24      fact.

      25             We would like to know up front, this is







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       1      exactly what you can do, this is following the

       2      rules; and we're glad -- we're happy to follow them.

       3             The certification lists, they seem very long.

       4             But when you look at the kinds of work, the

       5      specialty work, you're bringing down numbers a lot.

       6             When you're looking for union workers, the

       7      numbers are going down even further.

       8             And so there has to be some more work by the

       9      government to actually do training or recruitment

      10      for companies that do this specialty work on

      11      projects.

      12             I am much more concerned in your questions.

      13             I've written a lot more, so you can take your

      14      time and read it.

      15             But I'm much more interested in your

      16      questions about day-to-day MWBE utilization.

      17             SENATOR LITTLE:  Yeah, one of the things you

      18      talked about was greater vetting of the companies.

      19             I will tell you that that's -- up north, in

      20      our area, because we don't have as many, maybe

      21      that's it.

      22             But, they are vetting them to the point where

      23      they don't understand a family-inherited business.

      24             And they find that the women-owned business,

      25      managers, are making more money than somebody that







                                                                   117
       1      has been with the company, you know, when it was

       2      owned previously for many, many years.

       3             They get denied; absolutely denied based upon

       4      that.

       5             Which -- so they are vetting, and

       6      I understand, they need more staff.

       7             And I think that's the only way to get to

       8      that.

       9             The other thing that I would ask you:

      10             I had a company that manufactured, something,

      11      and I don't remember what it was.  And then they

      12      were having trouble with the implementation, getting

      13      it put in.  So they decided they would put it in.

      14             They had to start a whole certification over

      15      again because that was a new function of their MWOB.

      16             There should be a way that you can grow your

      17      business by expanding what you do.

      18             And, yes, letting them know that, and qualify

      19      under another category, but not starting over.

      20             J. NAOMI GLEAN:  Yeah, I'm not sure how that

      21      process works.

      22             I know I've worked with a company that

      23      manufactures windows, and, they want to install

      24      them, but they're not certified to install.

      25             And they have the staff --







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       1             SENATOR LITTLE:  Very similar.

       2             J. NAOMI GLEAN:  -- and they're capable to do

       3      it.

       4             And, you know, it's really -- as far as

       5      I know, I've been told that they just have to put in

       6      more paperwork that says that they can do that.

       7             And they haven't -- they haven't had the

       8      interest in doing that.  And I don't know why that

       9      would be a hard thing to do.

      10             SENATOR LITTLE:  Maybe it's not a total

      11      startover, but this company got penalized because

      12      they were, you know, including that, and then that

      13      couldn't be part of their --

      14             J. NAOMI GLEAN:  To your point on the WBE

      15      standards, and certification, there's no black line

      16      that says exactly what a woman is supposed to do,

      17      what a minority is supposed to do, as the owner --

      18      the 51 percent owner of the company.

      19             So that also adds to some confusion.

      20             Sometimes, when we go out to meet company

      21      owners, you're kind of making a guess on, you know,

      22      how much do they know about the company, and is

      23      doing the payroll enough work to be the 51 percent

      24      owner, or is that a sham?

      25             And another -- you know, that's another nod







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       1      to guidelines across the board, because the woman

       2      could be there every single day, and then someone

       3      else comes in and says, Well, she doesn't know

       4      enough.  She doesn't do enough on a daily basis.

       5             SENATOR LITTLE:  Right.

       6             And, I had a brother and sister inherited a

       7      company, so the sister had the 51 percent.

       8             But since she was the office manager, the

       9      bookkeeper, the organizer, the hiring, the human

      10      resources, but he was in sales, and so they got

      11      denied, because he was doing more.

      12             But they don't give the same credit to what

      13      the woman is doing, yeah.

      14             Thank you.

      15             J. NAOMI GLEAN:  You're welcome.

      16             SENATOR O'MARA:  How much time do you spend

      17      on a typical project in tracking down all of these

      18      eligible MWBEs to meet your quotas?

      19             J. NAOMI GLEAN:  To meet -- to start the

      20      plan, you're asking?

      21             SENATOR O'MARA:  Yeah.

      22             J. NAOMI GLEAN:  Well, our bid list is at

      23      least ten projects long at any given moment, and we

      24      spend a lot of time reaching out to the MWBEs.

      25             I have a dedicated person in my office who







                                                                   120
       1      sold -- well, her major role is to solicit firms.

       2      So she's e-mailing, faxing, calling, all these

       3      firms, and then following up with the e-mails.

       4             And then the estimators are also following up

       5      with the specific questions that the contractors

       6      have.

       7             So it's a little hard to figure out exactly

       8      how much time it is, but it's definitely enough to

       9      have a full-time person, plus other people, in the

      10      company, monitoring that.

      11             And then we have to gather all of that

      12      information to get it back to the agencies.

      13             SENATOR O'MARA:  You're doing the work

      14      because, I guess, kind of what I'm getting at, is

      15      how many workers, how many employees, are doing this

      16      work?

      17             You're overseeing it.

      18             You do other work as well, in addition to the

      19      monitoring these MWBE projects?  Or --

      20             J. NAOMI GLEAN:  No.

      21             So, my sole responsibility is to work on

      22      minority- and women-owned businesses.

      23             Well, also, EEO issues.

      24             And so I'm working from the beginning of the

      25      project with the solicitation, all the way through







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       1      to the end.

       2             So, monitoring how we're using those firms,

       3      and making sure that they're still providing a

       4      commercially useful function throughout the project.

       5      And then reporting how we're spending funds with

       6      them.  And answering any questions from the agencies

       7      and the owners.

       8             So it's myself, one other person with me.

       9             And then the -- I meet with the project

      10      managers on a monthly basis, to ask them to follow

      11      up:

      12             How are they -- minority-owned business

      13      working?

      14             Are they -- do they still use their own

      15      staff?

      16             Do they still have their own equipment?

      17             Have they asked you for anything?

      18             Do they need help fielding any issues they

      19      have?

      20             And then the estimators are, and purchasing

      21      department is, also working to, you know, make sure

      22      that we seal the deals with these minority- and

      23      women-owned businesses.

      24             So it's a lot of people working to make sure

      25      that we meet these goals.







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       1             SENATOR O'MARA:  Now, as it comes to the

       2      state program, which we're here primarily dealing

       3      with, have you received any waivers?

       4             J. NAOMI GLEAN:  Far and few in between.

       5             Let's see, just on state.

       6             I don't remember the last time I got a waiver

       7      on a State project.

       8             And that does not mean, I try; I try all the

       9      time.

      10             But, I can't remember the last time I got a

      11      waiver on a State project.

      12             SENATOR O'MARA:  And you submit all the

      13      good-faith effort work you go through, and your

      14      staff goes through, and everybody in the company

      15      that's working on this, and you document it all, and

      16      send your binders or boxes full of documentation,

      17      it's not being looked at?

      18             You're just being told, No, you got to get to

      19      30 percent?

      20             J. NAOMI GLEAN:  Yeah, and, I mean, I'm not

      21      going to tell you every single time they don't look

      22      at it.

      23             But, if I send you several binders worth of

      24      information, and -- at 5 p.m., and then, at 10 a.m.

      25      the next day, you say that my waiver is denied,







                                                                   123
       1      I assume you didn't get to look through all of that.

       2             And, to be honest, I've never asked for a

       3      complete waiver.  It's only partial waivers, because

       4      we believe in the program, and we do subcontract out

       5      to minority- and women-owned businesses, and

       6      purchase materials.

       7             So, it's never an entire waiver.

       8             And I think, because it's not a full waiver,

       9      and they see that we've gotten so close, they say:

      10      Well, we'll just give you a little more time, you'll

      11      figure it out.  The project's not over yet, keep

      12      going, something will pop up.

      13             And so it's very hard to get a waiver,

      14      especially at the beginning of the project.

      15             At the beginning of the project, I don't

      16      remember the last time I got a waiver.

      17             SENATOR O'MARA:  What's your company's market

      18      territory?

      19             J. NAOMI GLEAN:  We're -- all of our projects

      20      are in New York City.

      21             SENATOR O'MARA:  New York City?

      22             J. NAOMI GLEAN:  Uh-huh.

      23             SENATOR O'MARA:  Okay.  You don't do anything

      24      outside of City here?

      25             J. NAOMI GLEAN:  We're about to start one in







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       1      New Jersey.

       2             And we've had -- we've done some

       3      "Hurricane Sandy" work and emergency work on

       4      Long Island and Queens.

       5             But, it's mainly in New York City.

       6             SENATOR O'MARA:  We get a lot of complaints

       7      about the directory, as you talked about, and others

       8      have, with not being properly categorized in what

       9      functions they do, and difficulty of those firms

      10      being able to change that designation.

      11             And oftentimes, the designation, we've heard,

      12      just seems to get picked by the State, and says,

      13      "this is what you're certified in," when it's not

      14      specifically what they do, or all that they do, for

      15      sure.

      16             And they have trouble changing that.

      17             And, you mentioned you hear that as a problem

      18      as well.

      19             But, I guess one of the questions I have in

      20      regard to that categorization, if you're a certified

      21      minority- or woman-owned business, what difference

      22      does it make what category you're certified in?

      23             If you're a woman- or minority-owned, then

      24      you're eligible to do work.

      25             And then it's up to you, as the prime







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       1      contractor, or the general contractor, to determine

       2      whether that's an entity that is capable of doing

       3      that work.

       4             J. NAOMI GLEAN:  Well, no.

       5             The agency will not -- that you're working

       6      with will not give you credit if the firm is not

       7      certified for what you're using them for.

       8             SENATOR O'MARA:  No, I understand that.

       9             But do you think that's necessary, to have

      10      each individual MWBE certified in every particular

      11      category?

      12             Once they've established the ownership, and

      13      that it is an MWBE, why do they need to be

      14      categorized and approved at each function or type of

      15      work they might do?

      16             J. NAOMI GLEAN:  Well, it goes to vetting

      17      their capability of doing the work.

      18             So, if you don't -- if you don't know what

      19      they're doing, you don't know how they get it done.

      20             So if they're certified to -- let's say, if

      21      they're a certified supplier, and they don't have

      22      any labor, they have no staff -- they have no

      23      workers, and then they say that they can actually

      24      install things for me, where are they getting that

      25      staff from?







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       1             That's an easy way for me to ask that

       2      question, so at least --

       3             SENATOR O'MARA:  Well, I see that can help

       4      you.

       5             But, there's no category listings for male

       6      White contractors.

       7             J. NAOMI GLEAN:  Uh-huh?

       8             SENATOR O'MARA:  So if you're going to a

       9      majority-owned firm, let me say, rather than a

      10      minority-owned firm, there's no directory of what

      11      their qualifications are, or whether they do

      12      business or not.

      13             So why do the minority ones need to be

      14      categorized if other contractors aren't?

      15             Because you can contract with others as well.

      16      Right?

      17             J. NAOMI GLEAN:  Uh-huh.

      18             SENATOR O'MARA:  You don't contract just with

      19      minority businesses.

      20             J. NAOMI GLEAN:  Well, there's like

      21      ten things that I can put in that category of, why

      22      do minority-owned businesses have to go to that

      23      standard when White-owned businesses don't?

      24             SENATOR O'MARA:  Well, yeah, so why do we

      25      make them do that?







                                                                   127
       1             J. NAOMI GLEAN:  Yeah.

       2             I -- I wish somebody would tell me.

       3             I don't know.

       4             I mean, it's the same thing with the cranes.

       5             When I train my staff, I tell everybody that

       6      you can't give a minority-owned business a crane if

       7      that's not part of their subcontract.

       8             And that's not something I would ever say

       9      about a non-minority-owned business.

      10             And that's -- I think that's something that

      11      the regulations have to look at: the practicality of

      12      how work is actually done.

      13             I think there are definitely other portions

      14      of the program that we can scrutinize and say, are

      15      we actually helping the minority- and women-owned

      16      businesses, or are we really penalizing them for

      17      being -- for being a minority- and women-owned

      18      business?

      19             At some point, it is to their detriment to be

      20      part of --

      21             SENATOR O'MARA:  If you weren't looking to

      22      utilize that subcontractor to meet the quota, then

      23      you wouldn't need to -- you couldn't care what

      24      category they were in, because you would just -- you

      25      would just contract with them to do the work.







                                                                   128
       1             J. NAOMI GLEAN:  Uh-huh.  Yes.

       2             And there's a lot of times --

       3             SENATOR O'MARA:  It would be up to you, as

       4      the prime, to determine what their actual capability

       5      is.

       6             J. NAOMI GLEAN:  There's a lot of times we

       7      use and work with minority-owned companies, and

       8      don't take credit for them.

       9             They're going to do the job the best way, and

      10      they're going to get it done on time and at a good

      11      price.

      12             But we think some agency might not like this

      13      portion of how we're going to do the business, but

      14      we're just going to work with you, because you

      15      know -- have know-how and you're going to get it

      16      done.  But I'm not going the fight with an agency

      17      about this minutia here.  I'm not going to take

      18      credit for it.

      19             So we -- as a firm, we definitely use

      20      minority-owned businesses at times that we don't

      21      look for credit.

      22             And sometimes we get in trouble for that

      23      because every agency wants to take every penny of

      24      the credit.

      25             SENATOR O'MARA:  Yep.







                                                                   129
       1             J. NAOMI GLEAN:  But there's a lot with the

       2      program that I question, are we penalizing minority-

       3      and women-owned business by scrutinizing them to

       4      this extent?

       5             And it's because some people try to get over

       6      on the system.

       7             And because a few people try to get over on

       8      the system, and did the wrong thing, now everybody

       9      is assumed to be in cahoots.  And everybody is

      10      assumed to -- you know, every woman-owned business,

      11      it's really her husband that does it.  Every, you

      12      know, minority in business, where did you get that

      13      money from?

      14             And I think it's a backwards way.

      15             I think we're at a point now, we've turned

      16      the table of:

      17             Everybody understands that we need these

      18      programs and they are actually good;

      19             And everybody knows that they need to

      20      participate in it;

      21             And there's no easy way out of just not

      22      meeting your goals and not showing good-faith

      23      efforts.

      24             And so I think now we can reevaluate the

      25      program and say, you know, what is actually going to







                                                                   130
       1      benefit the minority-owned businesses?

       2             Us not giving a joint check for a lender, and

       3      a minority-owned supplier who's saying, "I need

       4      money from this lender; otherwise I can't get the

       5      supplies from the manufacturer," that's not helpful

       6      to them.

       7             You know?

       8             There's just like a blanket rule with

       9      agencies that said, No joint checks for

      10      minority-owned businesses.

      11             And it just doesn't make sense.

      12             I think it's a point where we understand

      13      enough of the basics that we can delve into the

      14      nuances of the program.

      15             SENATOR LITTLE:  And when a business is just

      16      starting out, two young women, and their -- both of

      17      their fathers owned the business, were renting

      18      office space, got denied.  And they had already

      19      started the business, and they were doing work.

      20             And, it just doesn't work.

      21             You know, I just want to say, as we -- you

      22      know, your idea of "penalize them," that's true,

      23      because they are being held to a totally different

      24      standard, even though we're trying to help.

      25             And I voted for this, because I did believe







                                                                   131
       1      that this was a good thing.

       2             But the 30 percent is a goal.  It is not a

       3      quota.  It is not a restriction.

       4             Is that, the whole state, an overall

       5      30 percent of the contracts are minority-owned

       6      businesses.

       7             And they're putting it on 30 percent on each

       8      and every project, each and every place, even though

       9      we don't have access in our area to a number of -- a

      10      large number of businesses to get that 30 percent

      11      goal; and, therefore, the business goes elsewhere,

      12      and it's not helping the economy of our districts.

      13             So, there's a lot of work that needs be done

      14      on it.

      15             I think the motivation for the program is a

      16      good idea, but, I really appreciate the comments

      17      that we've heard today.

      18             J. NAOMI GLEAN:  Great.

      19             Yeah, I mean, this is an anecdote.

      20             Within our company we have a

      21      general-contracting division.  And then we have the

      22      specialty divisions.

      23             It's a lot easier to meet our goals on the

      24      general-contracting side.  We have a lot more scopes

      25      of work.  There's a lot more places where we can







                                                                   132
       1      make smaller contracts, as opposed to on our

       2      specialty work.

       3             And so, if the goals were assessed to what's

       4      actually there, and not insurance and bonding and

       5      overhead, if it was actually assessed to the scopes

       6      of work, I think we would -- we would definitely

       7      meet the goals a lot easier and help a lot more

       8      companies that way.

       9             SENATOR RITCHIE:  I would like to say, thank

      10      you for your comments.  They were very helpful.

      11             Appreciate it.

      12             J. NAOMI GLEAN:  Thank you.

      13             Thanks for your time.

      14             SENATOR RITCHIE:  And I would just like to

      15      say, this will conclude our final hearing.

      16             We have, I think, a number of themes that

      17      we heard over and over again throughout the

      18      six hearings, the issues like:

      19             Regional staff that's needed.

      20             We need help building capacity.

      21             The program needs to reassess the 30 percent

      22      goal, but, is being implemented as a requirement.

      23             We need to take another look at the personal

      24      net worth.

      25             You know, I appreciate Senator Little and







                                                                   133
       1      Senator O'Mara for being here.

       2             Certainly, Senator Akshar, who took a lot of

       3      time going across this state.

       4             We'll all be working together to put

       5      recommendations in place as we go back to Albany in

       6      January.

       7             I want to thank our Senate staff that's here.

       8             And, also, I want to thank Lisa Harris, who

       9      has spent a lot of time helping us.  Our counsel has

      10      really put a lot of work, and traveled to the

      11      hearings too.

      12             With that, once again, to all of our

      13      speakers, thank you for taking the time.

      14             We certainly will take what you said back to

      15      our meetings, when we're putting forward

      16      recommendations.

      17             And, Senator Little, did you have anything to

      18      say, to close?

      19             SENATOR LITTLE:  No, I think that we've

      20      gotten some really good ideas, and concrete ideas.

      21             And as we've gone through all of these, we're

      22      finding that a lot of the comments are the same

      23      around the state from different groups.

      24             But, it's become a struggle, and that's not

      25      what it was meant to be.







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       1             So I think that we really need to relook at

       2      the program and see how we can clean it up, and fix

       3      it.

       4             And if New York City can do it, I'm sure that

       5      New York State should be able to, too.

       6             Thank you for being here.

       7             SENATOR O'MARA:  Just, thanks, everybody, for

       8      being here.

       9             It's a pleasure to listen to you and get your

      10      input on this issue.

      11             I want to thank Senator Ritchie for your

      12      leadership on this with Senator Akshar;

      13             And, Betty, you being here as well.

      14             I think I've attended four of these across

      15      the state, and it's been very helpful in us

      16      determining which direction to try to move forward

      17      to improve this program.

      18             SENATOR RITCHIE:  Thank you.

      19             With that, we will adjourn the hearing.

      20

      21                (Whereupon, at approximately 1:31 p.m.,

      22        the public hearing concluded, and adjourned.)

      23                           ---oOo---

      24

      25