Governors WGDC Report of Recommendations -...

2018

Department of Administration

Office of Diversity, Equity and Opportunity

4/27/2018

Governor’s Working Group on Diversity in Construction

Prepared by:

Report of Recommendations

Governor’s Working Group on Diversity in Construction Page | 2


TABLE OF CONTENTS

Page

I. Letter from Co‐Chairs Darrell Waldron and John Sinnott 4

II. Summary and Overview of Target Areas 5

III. Legislative Proposals 7

IV. Recommendations: • Target Issues 9 • Additional Issues 24

Appendix A – Executive Order 17‐01 “Working Group on Diversity in Construction” 27

Appendix B – Working Group on Diversity in Construction Members 30

Appendix C – Minutes of the WGDC Full Committee and Sub‐Committee Meetings 31

Appendix D – Glossary of Terms 90


I. Letter from Co‐Chairs Darrell Waldron and John Sinnott

April 19, 2018

Governor Gina M. Raimondo State of Rhode Island 82 Smith Street Providence, RI 02903

Dear Governor Raimondo,

On behalf of the members of the Governor’s Working Group on Diversity in Construction (WGDC), we are pleased to submit this second report, which reflects the work that has been done throughout the previous year.

In Executive Order 17‐01, you directed the WGDC to undertake a review of all aspects of horizontal and vertical construction laws, regulations, rules, policies and practices as it relates to their impact on minority, women, and disability business enterprises. We have fulfilled your request and have outlined our findings and recommendations in this report. In doing so, we have recognized the need to continue our efforts. Our review has prompted strong legislative proposals and proposed shifts in implementation that we hope will increase participation by diverse business enterprises in state construction projects. However, we recognize that easing these barriers alone will not achieve our shared goals. Capacity must be built within these businesses, with targeted programs which can address their specific needs. Therefore, we respectfully request the WGDC be extended so we may complete this next step and provide recommendations to you on how best to build capacity among diverse construction firms. By doing so, we hope to increase the percentage of state construction that directly benefits these vital business enterprises.


II. Summary and Overview of Target Areas

During the past year, the WGDC undertook an extensive view of the issues that impact minority, women, and disability business enterprises that engage in procurement opportunities with the State. Specifically, we focused on projects involving vertical and horizontal construction.

Initially, we identified several areas that required research and review. They included:

• Laws relating to bonding, insurance, cash flow issues, and work distribution • MBE Utilization Reporting Requirements by State and Quasi‐State Agencies • Enforcement/Sanctions – Compliance Policies and Practices • Training • Communication on Access to Bid Opportunities • Access to Capital • Mentor Protégé Programs and Joint Ventures • Minority Participation in Apprenticeship Programs

As outlined in our interim report, the WGDC formed two subcommittees: (i) the Legal, Policy, and Regulatory Subcommittee, which undertook an extensive review of state and federal laws and programs, as well as other topic areas; and (ii) the Resources, Access and Workforce Subcommittee that reviewed practices and specific problem areas that have an impact on workers of color, and the utilization of certified minority‐ and women‐owned business enterprises, as well as disability business enterprises. This body of work led to our findings and the identification of specific target areas that the WGDC decided would be the primary focus of our work. Three of those target areas resulted in proposed legislative changes. Other target areas include:

• Insurance Law • Deposit/Up‐front Payments and Mobilization • Set‐asides in Public Construction Contracts (designated solely for RI certified M/WBEs) • Breaking Up Projects (Contract Deconsolidation in Public Construction Contracts) • Project Labor Agreements (PLAs) and Carve Outs • Enforcement/Compliance Policies and Practices (Enforcement and Sanctions) • MBE Utilization Reporting Requirement • Mentor Protégé/Joint Ventures • Training (Training Information and Resources) • Access to Capital • Minority Participation in Apprenticeship Programs • Communication on Access to Bid Opportunities


We note that for several target areas, a legal review will need to be conducted prior to the implementation of any recommendations.

In addition to our focus on the target areas identified above, we spent a considerable amount of time on discussing additional issues; i.e. strategies for the funding to support a disparity study and exploring the opportunities for improving the direct payment process to contractors.


III. Legislative Proposals

In our interim report, we recommended that the Department of Administration’s Office of Diversity, Equity and Opportunity propose legislative changes to statutes related to bonding, prompt payment, and retainage on behalf of the Governor’s Working Group on Diversity in Construction. Since that report was submitted, the legislation was proposed and is currently being considered by the legislature. The recommended statutory revisions are: Proposal A – Bonding: Bill Title: Contractors’ Bonds 37‐12‐1. Contractors required to give bond ‐‐ Terms and conditions. Current law establishes a requirement for the submission of a bond, with surety, for all public construction contracts exceeding $50,000 The proposed statutory revision modifies the bonding requirement to those projects with a cost of more than $100,000 with a State option to waive the bonding requirement for public works projects with a cost between $100,000 and $250,000 to achieve parity with bonding requirements in surrounding states. Proposal B – Prompt Payment: Bill Title: Prompt Payment by Department of Administration 42‐11.1‐3. Time period for payment. Current law establishes requirements for the prompt and timely payment to vendors, construction contractors, and providers of service to the State of Rhode Island. The proposed statutory revision:

• Decreases the timing of payment by the State to vendors from thirty (30) working days to thirty (30) calendar days of receipt of a proper invoice or other contractual date for periodic payment;

• Decreases the timing of payments by contractors to subcontractors from ten (10) days to five (5) calendar days of receipt of payment by the State;

• Establishes a requirement that each subcontractor make payment to lower tier subcontractors within five (5) calendar days of receipt of payment by the prime contractor; and,

• Authorizes the Director of the Department of Administration to promulgate rules and regulations governing the prompt payment by contractors to subcontractors.


Proposal C – Retainage: Bill Title: Retainers relating to contracts for public works, sewer, or water main construction 37‐12‐10. Retainers relating to contracts for public works, sewer or water main

construction. Current law establishes a requirement for the retention of funds on public works projects. Revision to the statutory retainage requirement would authorize the Director of the Department of Administration to promulgate rules and regulations to improve retainage requirements between contractors and subcontractors, and to provide a mechanism for insuring the interim release of retainage.

See: S2413 ‐ http://webserver.rilin.state.ri.us/BillText/BillText18/SenateText18/S2513.pdf and

H7809 ‐ http://webserver.rilin.state.ri.us/BillText/BillText18/HouseText18/H7809.pdf


IV. Recommendations

TARGET ISSUE: Deposit/Up‐front Payments and Mobilization ISSUE SUMMARY:

RESEARCH FINDINGS:

RECOMMENDATION(S):

Deposits, Up‐Front Payments and Mobilization Payment Recommendations for Public Contracts (assumes all contracts bonded >$250,000):

• It is common practice in the residential and private, commercial construction industry to require deposits and/or up‐front payments when signing a contract prior to ordering materials. Such deposits and up‐front payments are considerably less common on public works projects and other governmental procurements. Advance payments are typically limited to goods and services unrelated to construction. Lack of deposits and up‐front payments pose a financial burden for Minority Business Enterprises/Women Business Enterprises/Disability Business Enterprises (M/W/DisBE). These entities have historically had limited access to capital

• Some jurisdictions establish limitations on the amount that a contractor may seek in deposits and up‐front payments

• California Institute of Technology – on occasion it may be necessary or desirable to provide a known and reputable supplier with an advance payment to pay for goods or services before delivery

• University of California, San Francisco – Prior written approval is required to provide advance payment to a known and reputable supplier

• Florida State University ‐ Advance payments to vendors require Procurement Services approval and may be made for maintenance agreements, software licensing agreement, subscriptions and other purchases, provided they result in savings and are essential to operations

• State of Texas/University of Washington – Advance payments are permitted for specific purchases; i.e. books, specialized goods/services, subscriptions, and purchases at significant cost savings and expedited delivery


i. All M/W/DisBE, contractors and/or lower tier subcontractors, shall be allowed to apply for and only as requested, a deposit in the amount no greater than two percent (2%) of the total contract value within one (1) week after the signing of the subcontract. If the General Contractor (GC) / Construction Manager At Risk (CMaR) has not received funding from the State of RI, the subcontractor and/or lower tier vendor / subcontractor shall receive this deposit amount via a joint check directly from the State of RI. Bi‐weekly progress applications for payments can include reimbursement for items such as office management / supervision; material / equipment submittals; insurance; bonds; and storage of fabricated materials specific to that project.

ii. No retainage shall be withheld on the deposit amount.

iii. All M/W/DisBE, contractors and/or lower tier subcontractors, shall be allowed to apply for and only as requested, a mobilization amount of one percent (1%) of the total contract value. The mobilization amount shall be requested one (1) month prior to on‐site mobilization by contractor and/or lower tier contractor. If the GC / CMaR has not been funded from the State of RI, the subcontractor and/or lower tier vendor / subcontractor shall receive this mobilization amount via a joint check directly from the State of RI.

iv. No retainage shall be withheld on the mobilization amount.

v. All M/W/DisBE, contractors and/or lower tier subcontractors, the State of RI / GC / CMaR shall allow bi‐weekly applications for payment, if requested by the contractor. Bi‐weekly progress applications for payments can include reimbursement for items such as office management / supervision; material / equipment submittals; insurance; bonds; and storage of fabricated materials specific to that project.

vi. All M/W/DisBE, contractors and/or lower tier subcontractors, shall have

zero percent (0%) retainage withheld on all monthly payment applications up to and including fifty percent (50%) complete. Once billing amounts exceed fifty percent (50%) complete, retainage shall be withheld on the remaining fifty percent (50%) at a retainage rate of ten percent (10%). Once the contract is completed to one hundred percent (100%), the retainage amount shall not exceed five percent (5%) of the total contract amount.


vii. All M/W/DisBE, contractors and/or lower tier subcontractors, shall be allowed retainage release as determined and approved by the controlling State Agency. GC / CMaR, Subcontractors and/or lower tier subcontractors and/or vendors, shall be allowed to apply for reduced retainage in the amount of two and a half percent (2.5%) of the contract value upon Substantial Completion of their scope of work, provided the estimated value of incomplete / unaccepted work multiplied by a factor of 1.5 does not exceed the 2.5% value. In the case where the estimated value of incomplete work / unaccepted work exceeds the 2.5% retainage of the total contract amount, the greater value shall control to determine retainage release. This process will repeat on a monthly basis until Final Completion for that specific scope of work. Upon Final Completion and acceptance of all contract work for the specific scope of work, the GC / CMaR, subcontractor, lower tier subcontractor and / or vendor shall be allowed to reduce retainage to zero percent (0%).

viii. When a lower tier M/W/DisBE subcontractor and/or vendor is complete

with their scope of work, subject to item (vii.), that MBE/WBE/Disability Business Enterprise entity shall be released 100% payment, only as requested, provided that all requirements of the contract are complete.

ix. When a lower tier M/W/DisBE subcontractor and/or vendor is complete

with a portion of their scope of work, subject to item (vii.), that MBE/WBE/Disability Business Enterprise entity shall be released 100% payment only on that specific scope of work, only as requested, provided that all requirements of the contract for that scope of work are complete. This would apply only for scopes of work that are sequenced in such a manner that there is a substantial duration between completion of one scope of work from completion of the next sequential scope of work.

x. Advance payments to vendors shall require authorization by the

Department of Administration, Division of Purchases and shall be included in the purchase order.

A legal review will need to be conducted prior to the implementation of any recommendations.


TARGET ISSUE: Breaking Up Projects (Contract Deconsolidation in Public Construction Contracts)

ISSUE SUMMARY:

RESEARCH FINDINGS:

RECOMMENDATION(S):

i. The General Contractor (GC) / Construction Manager At Risk (CMaR) and/or prime contractor shall be allowed to designate certain scopes of work and/or partial scopes of work to meet the goals for the MBE/WBE program. During the bidding process, select trade packages can be designated to be bid by M/WBE entities only. This could be extended to an entire scope of work (i.e. all of the masonry package) and/or a partial scope of work within a particular scope of work (i.e. only the CMU masonry block located within the ground floor). This process will allow the GC / CMaR to be creative in breaking up larger trade packages that can easily be managed and performed by M/WBE contractors.

ii. The GC / CMaR and/or prime contractor would designate the M/WBE bid only packages during the advertisement to bid phase.


• Consolidation of contracts frequently results in lower administrative costs, economies of scale and fewer delays and miscommunications between agencies and contractor(s)

• However, such consolidation or contract bundling results in larger contracts that may preclude small business enterprises, including Minority/Women Business Enterprises (M/WBEs), from competing for and winning contracts

• Maryland Board of Public Works ‐ Every agency must establish a Procurement Review Group to review procurement solicitations, proposals to exercise contract options, and proposals to award sole‐source contracts when the resulting contract is expected to exceed $200,000

• City of San Antonio, Texas ‐ Economic Development Department works with the Small Business Advocacy Council (SBAC) and the Diversity Action Plan Oversight Sub‐Committee to review procurements to determine if they can be un‐bundled. The SBAC has particularly focused on sole source contracts, and the Diversity Action Plan Oversight Sub‐Committee oversees strategies and tactics aimed at increasing the availability and utilization of M/WBEs on city procurements

• State University of New York – M/WBE Program Coordinators review procurements in the pre‐ solicitation phase to determine if components of the project can be separately procured or the project can be progressed using a phased contract approach to increase participation of M/WBEs without compromising project delivery


TARGET ISSUE: Project Labor Agreements (PLAs) and Carve Outs

ISSUE SUMMARY:

RESEARCH FINDINGS:

RECOMMENDATION(S):

i. Adoption of the approach found in the recommendation on breaking up projects by designating scopes of work to be bid by only M/WBE entities and allowing the General Contractor (GC) / Construction Manager At Risk (CMaR) and/or prime contractor to be creative in carving out select trade packages into a manageable size that an M/WBE’s can bid on exclusively, will create multiple opportunities for non‐union M/WBE contractors to want to engage the PLA projects. Such opportunities may also encourage M/WBEs to embrace the labor unions as a resource for a single project opportunity. This potentially could foster a relationship between the various labor unions and those M/WBE entities, which may encourage those M/WBE entities to partner with the labor unions on private and public projects.

This recommendation does not have regulatory impact.


• PLAs are designed to eliminate potential delays resulting from labor strife, to ensure a steady supply of skilled labor on the project, and to provide a contractually binding means of resolving worker grievances

• Over 80% of RI certified M/WBEs are open shops • PLAs create challenges for non‐union bidders

• Courts have held that the use of PLAs are allowable and justified through the following: (1) They afford a legitimate public interest in completion of the public works project within time and financial constraints; (2) The no‐strike clause contained in PLAs would further that interest; and, (3) The PLA does not preclude non‐union or other bidders from bidding on a project.


TARGET ISSUE: MBE Utilization Reporting Requirements ISSUE SUMMARY:

RESEARCH FINDINGS:

RECOMMENDATION(S):

1. MBE Utilization Reporting Requirements by Vendors

i. The General Contractor (GC) / Construction Manager At Risk (CMaR) and/or prime contractor shall provide along with their bid a listing of all designated M/WBE vendors and/or subcontractors that they propose to utilize on the project. This form is referred to MBE Utilization Plan Form, and should include any sub‐tier M/WBE participation as applicable. This form shall be provided to the Office of Diversity, Equity and Opportunity/Minority Business Enterprise Compliance Office (ODEO/MBECO) for review and approval.

• Under current regulations governing participation by small business enterprises in State purchases of goods and services and public works projects (150‐RICR‐90‐10‐1, Section 1.11) entitled “Recordkeeping”, State agencies are required to keep records relating to the utilization of ISBEs for each of their solicitations and resulting contracts. An ISBE means a small business enterprise certified by the ODEO that is owned and controlled by one or more individuals who are minorities or women as defined by R.I. Gen. Laws § 37‐14.1‐3 or a small business enterprise certified by the Governor’s Commission on Disabilities as owned and controlled by one or more individuals with disabilities as defined by R.I. Gen. Laws § 37‐2.2‐2

• There are State agencies and vendors that are not aware of or believe they are exempt from this requirement

• The records shall include at a minimum: ‐ Name of the Proposer or Bidder that is awarded the contract ‐ Name of each ISBE that subcontracts with the Proposer or Bidder ‐ Subcategory of each ISBE (i.e. MBE, WBE, Disability Business Enterprise) ‐ Any additional M/WBE subcategories that have established Sub Goals ‐ Dollar value that corresponds with each subcontract ‐ Proposer’s proposed ISBE Participation Rate ‐ Bidder’s proposed M/WBE utilization rate as indicated in the Bidder’s approved MBE/WBE Compliance Plan

‐ Proposer’s actual ISBE Participation Rate ‐ Bidder’s actual M/WBE utilization rate

• The above reporting shall be completed at a minimum on an annual basis or as directed by the Office of Diversity, Equity and Opportunity


ii. After award of contract, the GC / CMaR and/or prime contractor shall provide a Monthly MBE Project Reporting Form. This report shall provide current M/WBE vendor / subcontract and/or lower tier vendor / subcontract values and payment information. Attachments to this report will include MBE/WBE invoices and copies of cancelled checks. This form and attachments shall be provided to ODEO/MBECO for review and approval.

2. State, Quasi‐State, and Municipal Agency Reporting Requirements

i. Recommend that all State, Quasi‐State agencies of the State and

municipalities receiving state funds (either direct or through reimbursement) follow procedures and reporting guidelines similar to that of the State of RI Department of Administration (DOA). Reporting criteria from each State agency shall be completed on a monthly basis, while Quasi‐State agencies and municipalities receiving state funds would be required to provide reports to DOA, ODEO/MBECO on a quarterly basis.


TARGET ISSUE: Training (Training Information and Resources) ISSUE SUMMARY:

RESEARCH FINDINGS:

RECOMMENDATION(S):

Committee has held preliminary discussions with Community College of Rhode Island, Department of Labor and Training and community based organizations on the potential for creating new training programs that could benefit minority and women owned businesses. i. It is the recommendation of the CWG that this topic be held for further discussion,

along with the below topics that have not yet been fully vetted. A legal review will need to be conducted prior to the implementation of any recommendations.

• In Rhode Island there are a lot of resources and training opportunities available for minority‐owned businesses, but they are decentralized

• The lack of centralized information is a primary struggle for all businesses wanting to have access to training and resources

• Entities that host trainings for business startups and planning: ‐ Office of the Secretary of State ‐ Providence Public Library ‐ University of RI ‐ Roger Williams University

• Other entities that provide training and technical assistance: ‐ PTAC ‐ CCRI/Goldman Sachs 10,000 Small Business Program ‐ U.S. Small Business Administration RI District ‐ RI DOA/ODEO ‐ RI DLT/Business Workforce Center ‐ RI Contractor’s Registration and Licensing Board has list of approved education providers ‐ Center for Women & Enterprise ‐ Urban Ventures ‐ RI Black Business Association


TARGET ISSUE: Insurance Law

ISSUE SUMMARY:

RESEARCH FINDINGS:

RECOMMENDATION(S):

Extension of the Governors Working Group on Diversity in Construction i. Recommend the extension of the Governors Working Group on Diversity in

Construction, which is currently chartered through April 2018, to continue to provide recommendations on this target issue, and to provide solutions that reduce the burden and enhance opportunities for M/W/DisBEs working in the construction industry. We would further recommend that veteran business enterprises be included in our continued research and discussions. This extension is recommended for one (1) year through April 2019 and we recommend reconvening the committee upon the completion of the disparity study.


• Current insurance requirements pose an increased burden on small, minority, women and disability business enterprise subcontractors

• For all contracts in which insurance is required, a certificate evidencing the following minimum insurance must be provided when award is made, unless otherwise specified: ‐ Liability ‐ $1 Million bodily injury each occurrence, $1 Million annual aggregate ‐ Property ‐ $500,000 each occurrence, $500,000 annual aggregate ‐ Workers compensation $100,000 coverage B ‐ Professional liability (“errors and omissions”) ‐ $1 Million or 5% of estimated project cost,

whichever is greater ‐ Builder’s risk insurance – project contract amount ‐ Automobile liability ‐ $1 Million each occurrence combined single limit ‐ Environmental impairment (“pollution control”) ‐ $1 Million or 5% of contract amount,

whichever is greater (varies depending on project) ‐ Vessel operation (marine or aircraft) liability and indemnity ‐ $1 Million (varies depending on

project)


TARGET ISSUE: Set‐asides in Public Construction Contracts (designated solely for RI certified M/WBEs)

ISSUE SUMMARY:

RESEARCH FINDINGS:

RECOMMENDATION(S):

Extension of the Governors Working Group on Diversity in Construction

i. Recommend the extension of the Governors Working Group on Diversity in Construction, which is currently chartered through April 2018, to continue to provide recommendations on this target issue, and to provide solutions that reduce the burden and enhance opportunities for M/W/DisBEs working in the construction industry. We would further recommend that veteran business enterprises be included in our continued research and discussions. This extension is recommended for one (1) year through April 2019 and we recommend reconvening the committee upon the completion of the disparity study.


• In the 1980s, several states and cities had set‐aside laws; however, in the 1990s, these programs were struck down by the U.S. Supreme Court in City of Richmond v. J.A. Croson Co. The decision stated that government affirmative action programs for construction contracts must meet a high standard of legal scrutiny

• Today, few states and cities have set‐aside programs • U.S. DOT prohibits the use of set asides, except in limited and extreme circumstances where recipients may use set‐asides when no other method could be reasonably expected to redress egregious instances of discrimination

• Connecticut has a small business set‐aside program. They also have a current, valid disparity study that provides support for their program

• Ohio establishes a fifteen percent (15%) set‐aside procurement goal for state agencies who award contracts for goods and services to certified MBEs. However, their program does not apply to construction contracts

• South Carolina sets aside ten percent (10%) of the total annual value of total state source highway funds expended in each fiscal year to be bid exclusively by M/WBEs

• Chicago has a small business and mid‐sized business set aside program


TARGET ISSUE: Enforcement/Compliance Policies and Practices (Enforcement and Sanctions)

ISSUE SUMMARY:

RESEARCH FINDINGS:

RECOMMENDATION(S):




• RI Gen. Laws § 37‐14.1‐8 currently provides for sanctions to be imposed upon contractors for non‐compliance with R.I. Gen. Laws Chapter 37‐14.1 entitled: Minority Business Enterprise. Sanctions include: (1) Suspension of payments; (2) Termination of the contract; (3) Recovery by the state of ten percent (10%) of the contract award price as liquidated damages; and, (4) Denial of right to participate in future projects for up to three (3) years.

• Historically, sanctions have never been authorized

• The following states have strong enforcement/sanction laws and practices: (1) Indiana (2) Maryland (3) Massachusetts (4) New York (5) Northeast Ohio Regional Sewer District


TARGET ISSUE: Mentor Protégé / Joint Ventures

ISSUE SUMMARY:

RESEARCH FINDINGS:

RECOMMENDATION(S):




• M/WBEs lack access to essential industry relationships and business development assistance

• RI firms are eligible to participate in two mentor‐protégé and joint venture programs administered by the U.S. Small Business Administration; both rely on federal set‐asides and are not matching programs: ‐ 8(a) Business Development Mentor‐Protégé Program ‐ All Small Mentor‐Protégé Program

• DOT facilitates Disadvantaged Business Enterprise mentor‐protégé agreements and business development programs on its projects (not a matching program)

• There exists several private sector mentor protégé programs; i.e. Gilbane M/W/VBE Contractor Training Program, Suffolk M/W/VBE Trades Partnership Series, Turner School of Construction Management • Several states, cities and regions currently have publicly‐administered mentor‐protégé programs, including: New York State, New York City, Port Authority of NY and NJ, Florida, Chicago, Denver, and are usually administered by the region’s Supplier Diversity office or economic development corporation and have varying degrees of governmental involvement, and may or may not be construction‐specific


TARGET ISSUE: Access to Capital

ISSUE SUMMARY:

RESEARCH FINDINGS:

RECOMMENDATION(S):




• Unique challenges of the construction industry make contractors exceptionally reliant on access to capital; socioeconomic factors make it difficult for M/WBEs to attain needed financial resources

• Access to capital target areas: ‐ Gap Financing / Mobilization money ‐ Capital growth ‐ Socioeconomic accommodation

• Access to capital landscape in RI: ‐ RI Commerce Corporation Small Business Assistance Program ‐ Bank Local Community Deposit Program ‐ Community Development Corporations:

BDC Capital / Goldman Sachs 10,000 Small Businesses Accion East Boston Community Investment Corporation Center for Women & Enterprise RI Black Business Association

• Community Investment Corporation – SBA Microloan, SBA Community Advantage, SBA 504 • St. Louis Contractor Loan Fund – a non‐profit formed in 2015 to increase the capital capacity and stability of construction M/WBEs and prepare firms for traditional banking relationships


TARGET ISSUE: Minority Participation in Apprenticeship Programs

ISSUE SUMMARY:

RESEARCH FINDINGS:

RECOMMENDATION(S):




• There is a need to improve minority participation in apprenticeship programs

• Apprenticeship programs are governed by federal (29 U.S.C. 50, 29 CFR §§ 29 and 30) and state law (RIGL § 28‐45)

• Current structure of apprenticeship programs: ‐ Sponsored by joint employer and labor groups, individual employers and/or employer

associations ‐ Paid on the job learning with related instruction ‐ Must be at least 16 years of age ‐ Must have high school diploma or GED ‐ Must pass an entrance exam ‐ Must be physically able to perform ‐ Creation of Standards for the registered occupation in compliance with 29 CFR § 29

• 29 CFR § 30 requires registered apprenticeship program sponsors to provide equal opportunity for participation. Sponsors must adopt an Affirmative Action Plan


TARGET ISSUE: Communication on Access to Bid Opportunities

ISSUE SUMMARY:

RESEARCH FINDINGS:

RECOMMENDATION(S):




• There is a need to improve communication to small, minority, women, and disability business enterprise firms regarding bid opportunities

• Applicants seeking certification as minority, women, or disadvantaged business enterprises are provided information on the Division of Purchases’ vendor registration process and are encouraged to register in both the RIVIP and RI‐FANS systems

• State agency and quasi‐state agency bid opportunities are currently posted on the Division of Purchases website located at www.purchasing.ri.gov

• Vendors that register in the RI‐FANS system can receive email notifications of bid opportunities • Municipalities are offered the opportunity to post municipal bids on the Division of Purchases’ website, but are not required to do so

• The Division of Purchases does not advertise bids in minority media outlets. As of April 1, 1997, state law requires that state bids be solicited from vendors by computer, rather than mail and/or print advertisements

• Pre‐bid conferences are organized for select projects which allow for discussion regarding the project with prospective primes and subcontractors.


ADDITIONAL ISSUES ISSUE:

• Disparity Study

RECOMMENDATION(S):

i. Recommend the WGDC be permitted the opportunity to revisit certain issues depending upon the results of the disparity study. We further recommend that the WGDC receive and review the interim reports provided by the consultant completing the disparity study. Finally, the WGDC should reconvene at the completion of the disparity study for the purpose of revising or introducing new recommendations based on the content of the report.


ISSUE: • Improving the Direct Payment Process to Contractors

I. Research:

In an effort to further the understanding of issues surrounding the prompt payment of vendors, the WGDC tasked State staff with researching two specific questions:

1) Does the state have the capability to make direct payments to subcontractors; and,

2) What is the cause of the delays in payment to general contractors and ultimately subcontractors?

II. Direct Payment to Subcontractors

a. The following items were identified as administrative hurdles to the process of making direct payments to subcontractors:

i. Process requires that every subcontractor register as a vendor in the RIFANS system

ii. Process requires the creation of a separate purchase order for each subcontractor

iii. Process requires that each vendor file a W‐9 in order for the State to get taxpayer information to report on IRS Form 1099 for payments made by the State to the vendor

iv. Process is considered an administrative burden because there are many subcontractors and constant changes with subcontractors

b. Concerns were raised with regard to liability of the State for untimely payments. It was suggested that we might be able to limit liability with subcontractors waiving the liability

c. With respect to payments, it is widely felt that general contractors prefer to maintain control over subcontractor payments

d. There has historically been resistance by State government to involve itself in private contracts

e. Reviewed four (4) states and found that only one (1) provides for awarding authority/owner to pay directly to subcontractor after an administrative hearing: Massachusetts does this under M.G.L. c. 30, § 39 F

i. States reviewed: Maryland, Massachusetts, New York, and Pennsylvania.

III. Internal System Delays for Payment to Contractors

a. Agency buyers and project managers may delay payments to contractors b. Payments may be delayed due to the failure of contractors to submit signed lien

releases in a timely manner c. A review was conducted on payment of all construction related invoices for 2017. The

results of that review are as follows:


i. The average time for submittal of invoices from agencies to Accounts & Control was 30 days from the date of the invoice.

ii. The average time from the receipt and entering of an invoice by Accounts & Control to the time agencies approved payment of said invoice was 4 days.

iii. The average time for Accounts & Control to pay an approved invoice was 9 days. d. There are concerns that the proposed shortening of the prompt payment process will

not alleviate issues that appear to be caused by the delayed submission of invoices to Accounts & Control by agencies.

RECOMMENDATION(S):

i. Instruct all vendors to send their invoice(s) to both the agencies where the procurement originated as well as to the Office of Accounts and Control.

ii. When possible, appropriately incorporate as a measure of staff performance the expedience of which vendor invoices are processed at the agency level.

iii. We recommend that funding be allocated for the creation of a Contract Management Unit to provide staffing and resources to handle the administration hurdles listed above.

iv. We further recommend that penalties for untimely payments be enforced in

accordance with established legislation. An invoice is approved upon agreement between the designated representative from the state agency, the designer, the Construction Manager, General Contractor, and/or the subcontractor. Current law requires that interest payments on overdue invoices shall compound on a monthly basis (see: RI General Laws § 42‐11.1‐6). The CWG recommends that daily interest accrue for payments not made on time.



Appendix A

Executive Order 17‐01 “Working Group on Diversity in Construction”


Appendix B

Working Group on Diversity in Construction Members

The following individuals were appointed by Governor Raimondo to serve as members of the Working Group on Diversity in Construction:

F Name L Name Title Organization Mario Bueno Executive Director Progreso Latino

William Bundy Chairman of the Board Rhode Island Black Heritage Society

Charles Byrne c/o Byrne Bonding Division of Starkweather & Shepley

Associated Builders and Contractors, Inc.

Stanford Cameron Founding Member The Black Contractors Association of RI

Stephen Cardi, Jr. Treasurer Cardi Corporation

Channavy Chhay Executive Director Center for Southeast Asians

Christine Rancourt Bruzzi* Assistant State ADA Coordinator Governor's Commission on Disabilities

Andrew Cortés Executive Director Building Futures | Apprenticeship RI

Lindsay Desjarlais Chapter President National Association of Women in Construction

Carmen Diaz‐Jusino Regional Director Center for Women and Enterprise

Julius Kolawole President African Alliance of Rhode Island

Angus Leary President & General Manager of the Northeast Suffolk Construction Company

John Marcantonio President RI Builders Association

Douglas Peckham Project Executive Dimeo Construction Company

Justin Kelley* Business Representative, Local 195 of District Council 11

International Union of Painter's and Allied Trades

John Sinnott, Co‐Chair Vice President Gilbane Building Company

Ron Crosson* Executive Director Urban Ventures

Barbara Thornton Principal Brewster Thornton Group Architects

Luis Torrado President Latino Contractors Association

Michael Van Leesten CEO OIC of Rhode Island

Darrell Waldron, Co‐Chair Executive Director Rhode Island Indian Council

Joseph Wanat Managing Director Vanasse Hangen Brustlin, Inc.

Belinda Wong President Care Technology LLC

Kasim Yarn Director Rhode Island Office of Veterans Affairs

* Christine Rancourt Bruzzi was appointed to replace Bob Cooper, Justin Kelley replaced Michael Sabitoni, and Ron Crosson replaced Jr Neville Songwe


Appendix C

Minutes of the WGDC Full Committee and Sub‐Committee Meetings


Overview of Governor’s Diversity in Construction Working Group


Resources, Access and Workforce Subcommittee

Meeting Notes

June 6, 2017

Subcommittee members present: John Sinnott ‐ Co‐Chair, Darrell Waldron – Co‐Chair, Doug Peckham, Michael Van Leesten, Andrew Cortéz, Caroline Skuncik, Lindsey Desjarlais, Channavy Chhay, Mario Bueno, Julius Kolawole, and Jr Neville Songwe

Subcommittee members absent: Stanford Camron, Stephen Cardi, Bob Cooper, Carmen Diaz‐Jusino, Angus Leary, Michael Sabitoni, and Joseph Wanat

Internal State Staff present: Dorinda Keene, Cheryl Burrell, Richard Palmieri, Elvys Ruiz, Armindo Goncalves, Sean Fontes, Melody Weeks, Dan Jennings, and Hannah Abelow,

Internal State Staff absent: Carol Cornelison, Andrew Marcaccio, and Richard Sparks

Guests: Denise Correy and Belinda Wong

Quorum Present: Not initially. Two members arrived late, at which time a quorum was achieved

Keywords: protégé/mentorship program, communication, resources, manpower, training, bonding, Minority Business Enterprise (MBE), Women Business Enterprise (WBE) Disadvantaged Business Enterprise (DBE)

I. Call to order a. Meeting called to order at 2:22 PM by Darrell Waldron.

II. Introduction of members a. Insufficient number of members for a quorum at start of meeting. It was

determined that no business would be conducted, rather, there would be discussion only

III. Overview/Discussion a. Darrell provided an overview on the focus group meeting held on May 30, 2017

with M/WBEs – outcomes and recommendations: i. M/WBEs feel underutilized and that there is a lack of enforcement regarding

primes meeting M/WBE subcontracting requirements ii. Letters of complaint were received from an MBE contractor who has not been

able to secure any work a. John provided an overview on the focus group meeting held on June 5, 2017 with

prime contractors – outcomes and recommendations: i. Primes feel pressure to meet diversity standards and voiced concerns regarding

M/WBEs bidding on projects for which they (M/WBEs) are not prepared financially and/or in manpower. Questions concerned communication gap preventing primes from finding qualified subs, and vice versa, suggested third party to provide business management assistance to fledgling subs, and


including subs with business management experience in policy‐making discussions.

b. Discussion of areas for improvement: i. Communication between M/WBEs and primes ii. Access to workman’s compensation iii. Confidence in and communication between primes, subs, and the state

government iv. M/WBEs business management skills v. Workforce culture vi. Outcomes for M/WBEs across all minority demographic groups

c. Identification of target areas: i. Enforcement ii. Access to capital for M/WBEs iii. Capacity building iv. Mentor protégé v. Centralized training resources

IV. Additional issues discussed: a. Creating and implementing a mentor protégé program b. Centralizing and streamlining process from both sides by creating a cabinet

member within the governor’s staff c. Exploring policy, regulations, and legislation adopted by other states and federal

agencies – specifically those addressing mentor protégé programs (example given: SBA All Small program), good faith efforts, best practices, M/WBE rating systems, insurance and bonding pools, loan development through quasi‐governmental agencies

V. Comments and Announcements: a. Data on subcontracting by in‐state/out‐of‐state and minority/demographic groups

to be presented at full committee meeting IV. Meeting adjourned at 4:30 PM by John Sinnott.



Legal, Policy, and Regulatory Subcommittee

Meeting Notes

June 7, 2017

Subcommittee members present: John Sinnott ‐ Co‐Chair, Darrell Waldron – Co‐Chair, Doug Peckham, Andrew Cortez, Jr Neville Songwe, Doug Peckham, Barbara Thornton, and Luis Torrado,

Subcommittee members absent: William Bundy, Stan Cameron, Bob Cooper, and Michael Sabitoni,

Internal State Staff present: Dorinda Keene, Cheryl Burrell, Richard Palmieri, Elvys Ruiz, Sean Fontes, Melody Weeks, Hannah Abelow, Mike Mitchell, George Whalen, Andrew Marcaccio, Kathleen Corbishley, and Kevin Carvalho

Internal State Staff absent: Carole Cornelison, Richard Sparks, and Kasim Yarn

Guests: Denise Correy and Christine Rancourt Bruzzi

Quorum Present: Yes

Keywords: communication, enforcement, implementation, Minority Business Enterprise (MBE), Women Business Enterprise (WBE), Disability Business Enterprise (DisBE), monitoring.

I. Call to order a. Meeting called to order at 2:15 by John Sinnott who provided a recap of the last

meeting II. Introduction of Members III. Overview/Discussion

a. Presentation on diversity in construction laws and regulations by Dorinda Keene followed by questions and discussion of presentation contents. Mr. Cortez suggested creating a plain language guide from the regulations. Questions concerned general laws regarding retainage, purchasing regulations on state payment of deposits to contractors, complaint procedures and the definition of ‘public works’ ‐‐explained to include all construction funded wholly or in part by the state.

b. Discussion of areas for improvement: i. Uniform implementation and enforcement of existing regulations and

capabilities ii. Communication between W/MBEs, prime contractors, and the state iii. Streamlining and better explaining process of compliance and attaining

certification c. Identification of target areas:

i. Implementation and enforcement ii. Improving public explanation of rules and regulation iii. Improving access to capital and incentivizing W/MBE utilization within law iv. Disparity study


IV. Issues all Parties Agreed On: a. Need for a disparity study to accurately update regulations a. Need for plain‐English explanation and Spanish translation of rules and regulations to

assist small minority business contractors and the general public better comprehend statues, laws, and regulations

b. Review of best practices for incentivizing contractors to use affirmative action without a public actor

V. Comments and announcements: a. Upcoming information seminar for vendors and contractors on compliance for recently

updated regulations VI. Meeting adjourned at 4:24 PM by John Sinnott.


Overview of Governor’s Diversity in Construction Working Group Full Committee Meeting

June 19, 2017

Committee members present: John Sinnott ‐ Co‐Chair, Darrell Waldron – Co‐Chair, Michael Van Leesten, Channavy Chhay, Mario Bueno, Julius Kolawole, Jr Neville Songwe, Kasim Yarn, Barbara Thornton, Mario Bueno, Doug Peckham, Channavy Chhay, Christine Rancourt Bruzzi on behalf of Bob Cooper, and Roy Coulombe on behalf of Michael Sabitoni

Committee members absent: Stanford Cameron, Stephen Cardi, Carmen Diaz‐Jusino, Angus Leary, Joseph Wanat, Luis Torrado , William Bundy, Andrew Cortez, John Marcantonio, and Lindsay Desjarlais

Internal State Staff present: Dorinda Keene, Cheryl Burrell, Richard Palmieri, Elvys Ruiz, Armindo Goncalves, Sean Fontes, Melody Weeks, Hannah Abelow, Carole Cornelison, Andrew Marcaccio, Kevin Carvalho, Kathleen Corbishley, George Whalen, and Kelly Caesar

Internal State Staff absent: Richard Sparks and Mike Mitchell

Guests: Denise Correy and Belinda Wong

Full Committee Meeting Minutes approved (two abstentions recorded). Ms. Thornton introduced a motion to approve the minutes from the April 24, 2017 Full Committee Meeting with the adjournment correction. The motion was seconded. The floor opened for questions; none were raised. The motion passed with none opposed with Mr. Coulombe and Ms. Rancourt Bruzzi abstaining.

Quorum Present: Yes

I. Call to Order Mr. Waldron called the meeting to order at 2:24 p.m.

II. Report on M/W/DBE Utilization Ms. Keene presented reports on the utilization of MBEs, WBEs, and DBEs through state procurements for FY15, FY16, and FY17 to date. Ms. Abelow suggested rearranging the agenda to vote to approve minutes and the recommendation of target areas due to time constraints of voting members. Mr. Waldron expressed his preference to discuss target areas before voting.

III. & IV. Subcommittee Reports and Recommendations for Target Areas: Legal, Policy, and Regulatory Report ‐ Mr. Sinnott provided a brief overview on the work of the subcommittee then introduced Barbara Thornton to report out on the subcommittee’s findings. Ms. Thornton identified 3 additional target areas from the Legal, Policy and Regulatory Subcommittee: Utilization reporting requirements, enforcement and compliance policies / practices, and classification issues. Potential solutions identified by Ms. Thornton


are requiring an MBE utilization plan in the cost phase of bid proposals as is done in the design sector bidding process, the continuation of monthly construction payment reporting which includes information on which MBE subcontractors are working on‐site and how much of the contract is being allotted to MBEs, exploring less strenuous alternatives to sanctions and processes to recognize contractors who meet and exceed goals, the enforcement issues surrounding the misclassification of small contractors as independent contractors, and exploring the need for a centralized enforcement and tracking entity. Mr. Sinnott emphasized the importance of a commitment to investment of resources and manpower towards compliance, and noted the limited nature of such resources. He suggested coordinating with existing programs within the DLT, ODEO and other organizations. Mr. Peckham identified four main target areas from the Legal, Policy, and Regulatory Subcommittee: bonding, insurance, cash flow, and the relationship between prime‐ and sub‐contractors. Potential solutions identified by Mr. Peckham are raising the bonding requirement from $50,000 to $200,000, exploring contractor‐ and owner‐controlled insurance programs, creating a fund to provide M/WBEs with project startup money, lessening the burden of retainage on M/WBEs, prime contractors breaking up large projects into smaller projects more accessible to M/WBEs, and utilizing set‐asides. Mr. Sinnott noted that any commitment to established goals will require an investment of time and financial resources, then opened the floor to questions and comments. There were none. Resources, Access, and Workforce Report ‐ Mr. Waldron introduced J.R. Neville Songwe to report out on the Resources, Access and Workforce Subcommittee. Mr. Songwe identified 14 target areas:

1. Communication 2. Resources 3. Oversight 4. Obtaining data (emphasis on Disparity Study) 5. Prime contractor penalization 6. Apprenticeship 7. Defining existing regulations 8. Mentorship 9. Big jobs 10. Access to capital 11. Lack of trust 12. Legal 13. Procurement 14. Bonding

Mr. Songwe then identified 4 target areas for the ODEO to focus on: 1. Advocate for fairness in system 2. Strong, enforceable compliance regulations 3. Legislation and policy


4. Outreach and communication

He then identified 4 recommendations for the governor’s office: 1. Create a fund for subcontractors during the time compliance and regulations are being

readjusted 2. Reinforce the status and capacity of ODEO, allow it the breadth and depth to oversee

compliance and regulation at a statewide level 3. Immediately initiate a Disparity Study and make results accessible 4. Reporting systems on minority vendors: (1) be standardized (2) have a clear, established

line of responsibility (3) vest ODEO with the authority to facilitate compliance (4) ask ODEO Director for regular input and agency compliance and reporting performance, (5) regularly conduct surveys of vendors and buyers to determine whether there are barriers to full participation within existing laws and regulations, (6) the State should carefully examine and implement action to avoid any adverse impact on M/WBEs resulting from procurement policies and practices, (8) establish a formal mentorship/protégé program to build an effective long‐term working relationship between established and early‐stage businesses

Mr. Songwe identified recommendations for the state legislature: 1. Increase the budget of ODEO to the level appropriate to the fulfill the duties of the

division 2. Create a fund to ease the financial burden on M/WBEs 3. Require that each procurement agency include in its minority business plan a forecast of

goods and services which it intends to purchase in the next fiscal year 4. Authorize the governor to take action to address and remedy M/WBE procurement

disparities found in Disparity Study when such study is complete Vote on Proposed Target Areas for Subcommittees: Mr. Sinnott called for a motion to vote on the Legal, Policy and Regulatory Subcommittee’s work on the established target areas. The motion was recommended by Mr. Bueno and seconded by Ms. Chhay, and carried unanimously. Mr. Waldron called for a motion to vote on the Resources, Access and workforce Subcommittees work on the established target areas. The motion was recommended by Mr. Kolawole and seconded by Ms. Chhay. Mr. Waldron opened the floor for debate. There was no call for debate. The motion carried unanimously.

V. Actionable Target Areas Mr. Waldron acknowledged the similarity of the target areas identified by both subcommittees, and noted that these target areas are included in the action items. He then asked Mr. Marcaccio if he believes that the target areas are covered by the action items, Mr. Marcaccio stated that he believes this to be accurate.


Ms. Abelow emphasized the importance of the coordination of training resources in addition to working on a mentorship/protégé program, and noted the importance of looking into resources. Mr. Waldron opened the floor for questions and comments. Mr. Van Leesten noted his appreciation of the diligence and competence of the committee. There were no further questions or comments. Ms. Burrell asked Mr. Marcaccio to provide an overview of race‐neutral and race‐conscious policies and recommends that subcommittees divide target areas between race‐neutral and race‐conscious. Race‐neutral policies, such as bonding, which apply equally regardless of race. Race‐conscious policies, such as an MBE goal or race‐targeted set‐asides, do not apply equally regardless of race, must be motivated by a compelling public interest subject to strict scrutiny, and be narrowly tailored to the targeted discrimination. He then recommended the committee look towards race‐neutral policies until a disparity study is completed. Ms. Abelow informed the committee that the governor has acknowledged the importance of a Disparity Study and that the governor’s office is exploring funding options, including the possibility of assistance from private funding. Mr. Marcaccio noted that enforcement of existing laws and regulations is an area where immediate action can be taken and that doing so will increase the amount of data ODEO collects and is able to use to craft polices in the future. Mr. Sinnott and Mr. Waldron agreed that cash flow, bonding, and insurance, are priority areas. Ms. Burrell suggested that both subcommittees approach these issues from their individual perspectives. The floor was opened for questions and comments. Mr. Songwe introduced Timothy Byrne, Business Manager of plumber and pipefitter union UA Local 51 to discuss the union’s program which reaches out to minority communities to promote diversity within the union. Mr. Byrne emphasized the importance of addressing cash flow, bonding, and insurance. He stated that these issues are essential because their presence prevents firms from investing in and training their workforces. Mr. Goncalves brought up the importance of addressing business acumen and the ability to execute a project on‐time within the mentorship/protégé program. Mr. Waldron and Mr. Sinnott both noted the importance of providing business guidance to W/MBEs and building trust in the relationship between primes and subs. Ms. Wong recommended the committee look into standardizing sub‐contracting forms in order to simplify the process. Mr. Waldron agreed, citing New York as an example.


Mr. Van Leesten noted the importance of improving relationships and building trust. Mr. Waldron noted the importance of utilizing relationships to fill generational gaps in training. Mr. Songwe organized the discussed points into categories of resources, data, and legal.

VI. Next steps Ms. Abelow offered that the State staff would begin research into best practices, landscaping and data. Mr. Kolawole recommended the State look into best practices. Mr. Waldron recommended introducing subcontractors to prime contractors in order to increase communication between the groups. He noted that many contractors do not spend much time on computers and may not be familiar with the resources, such as the W/MBE directory, available online. He recommended looking into alternative methods of distributing the database. Ms. Abelow agreed, and added that the internal staff group would begin looking into improved methods of distributing the directory. Mr. Kolawole recommended paying more attention to asset mapping.

VII. Comments and Announcements Mr. Waldron noted that a suggestion had been made to decrease the size of the committee in order to more easily achieve a quorum. Ms. Keene noted that she and Mr. Marcaccio had updated the “Diversity in Construction” presentation, which was presented to the Legal, Policy and Regulatory Subcommittee at its previous meeting, to include information on retainage and the formal definition of “public works”. New slides were made available. Mr. Waldron recommended periodically resending the meeting calendar in order to increase attendance.

VIII. Adjournment Meeting adjourned at 3:45pm by Mr. Sinnott



Legal, Policy, and Regulatory Subcommittee meeting

September 12, 2017

Committee members present: John Sinnott ‐ Co‐Chair, Darrell Waldron – Co‐Chair, Doug Peckham, Andrew Cortez, Barbara Thornton, Luis Torrado, Belinda Wong, Joseph Wanat, Channavy Chhay, Lindsay Desjarlais, Stanford Cameron, Andrew Cortez, Justin Kelly, and Luis Torrado

Committee members absent: Stephen Cardi, Carmen Diaz‐Jusino, Angus Leary, Michael Sabitoni, William Bundy, John Marcantonio, Charles Byrne, Christine Rancourt Bruzzi (for Bob Cooper), Jr Neville Songwe (relocated to another state), and Kasim Yarn

Internal State Staff present: Dorinda Keene, Cheryl Burrell, Elvys Ruiz, Sean Fontes, Hannah Abelow, Andrew Marcaccio, Vilma Peguero, Krystal Waters, and Jean Heiss

Internal State Staff absent: Mike Mitchell, Armindo Goncalves, Carole Cornelison, Kathleen Corbishley, George Whalen, and Ryan Erickson

Keywords: Individuals with Small Business (ISBEs), Project Labor Agreement (PLA)

Guests: Craig Lewis

Quorum Present: Yes

III. Call to Order Mr. Sinnott called to order the committee meeting at 2:08 p.m.

IV. Reports/Discussion on Target Areas Bonding and Insurance Law‐ Ms. Keene explained the three part presentation disseminated to the committee members as Bonding Requirements, Key Terms / Incentives and a Power Point presentation. Bonding Requirements and thresholds were discussed for Rhode Island and neighboring states including Massachusetts, Connecticut, Maine, New Hampshire, Vermont and New York. Ms. Keene defined the three critical types of bonds: Bid Bonds Performance Bonds Payment Bonds A tiered bonding requirement was suggested to allow for the establishment of bonding requirements based upon the size of the contract. Implementing a program to assist M/WBEs in getting bonding had also been suggested. Companies not providing the appropriate paperwork required to document their experience and financial information to obtain bonding insurance was identified as a main problem area.


Mr. Sinnott stated that there is an issue with firms putting their businesses on the line by allowing their payments to suppliers and vendors to fall behind consequently affecting their credit. Mr. Waldron asked if it would be more attainable to provide some type of technical assistance to vendors rather than providing trainings. Ms. Keene identified the three points of consideration as: ‐ Legislative changes to bonding law ‐ Tiered approach ‐ Establishing a bonding fund Ms. Thornton asked about the possibility of considering the removal of the prohibition against waiving the bonding requirements. Ms. Abelow asked if the committee was in agreement to add the four mentioned points of consideration to list of recommendations. Mr. Cortez said that if the State is taking the risk in establishing a bonding fund guaranteeing a portion with programmatic requirements to increase M/WBE utilization then the State should provide the guarantee around that as well as establish the requirements to get into that pool. He also asked that we take a look at what sort of programmatic elements are tied to the mentioned considerations. Mr. Cameron stated that bonding waivers and higher bonding thresholds are applicable to contracts between the state and the prime contractor. Bonding requirements for subcontractors are established by the prime. Ms. Abelow asked about the usual practice prime contractors follow with regard to their subcontractors bonding requirements and whether primes base this on the States’ requirements. Mr. Sinnott answered by stating that Gilbane usually bases their requirements on relationships, past experience and good standing. Ms. Burrell stated that the goal of this meeting is to report on research completed by the State staff and the committee should hold all recommendations until the next full committee meeting. Prompt payment ‐ Ms. Keene continued with her presentation on prompt payment defining it as the assurance that valid and proper invoices are submitted by vendors and paid on time including both prime and subcontractors. She presented her research on the existing Federal and State laws referencing the neighboring states closest to us geographically. Maryland and Massachusetts were identified as the two best practices states. She suggested that the committee look into considering legislative and policy amendments to incorporate some of the prompt payment mechanisms that Maryland and Massachusetts have in their existing laws. The committee agreed that prompt payment is a major issue. Ms. Burrell stated that the RI Division of Purchases is looking into an e‐procurement system that may solve some of the issues identified. Ms. Wong suggested that there be some type of electronic system to keep track of invoices and dates rather than allow the information to be entered in at someone else’s discretion. Retainage ‐ Ms. Keene continued her presentation on retainage defining it as money that is withheld from payments to contractors to insure successful completion of work as well as payment to all subs and suppliers. She suggested that the committee look in to modeling what Massachusetts is currently doing. She also suggested that the committee consider


recommending legislative and policy amendments due to the lack of a system in Rhode Island to insure that retainage has been released to the lower tier subs and suppliers. Ms. Thornton stated that in situation where projects last multiple years the contractor is required to release retainage to their subcontractor within 90 days but as a prime contractor retainage isn’t released until after the project has been completed. She suggested that retainage be released with the phases of the work. Deposit/ Up‐front Payment and Mobilization Money ‐ Ms. Keene presented her research based on her national findings stating that up‐front payments and/or deposits are very rare in the public sector and that the majority of examples identified are higher education. Based on the best practice examples she presented, reviewing current State procurement regulations and policies were suggested to see if advance payments or deposits would be appropriate for high cost equipment manufactured to meet functional specifications and/or for specialized goods and services that would result in cost savings to the State. Ms. Thornton stated that larger items do not ship until they are PIF. Mr. Cortez suggested creating a transparent set of criteria that applies to everyone.

V. Laws Affecting Work Distribution PLAs/Carve Outs ‐ Ms. Keene began her presentation by discussing the advantages and disadvantages of PLAs stating that the information disseminated includes examples of best case scenarios across the country. One possible suggestion is the use of a carve‐out provision in PLAs that would allow for the participation of M/WBE firms without becoming signatory. Mr. Kelly indicated that the Building Trades are determined to see an increase in MBE and WBE firms that become signatory to the trade unions, and he has a resolution regarding that matter. Mr. Cortez asked why contractors who are nonunion are not able to bid successfully, although theoretically they should be able to do so regardless of their affiliation. Why are non‐signatory contractors uncomfortable bidding on contracts or not winning contracts for projects subject to a PLA? Mr. Cameron indicated that there are legitimate concerns, and the answer partly lies in the stance of the trade unions that they are looking to increase the number of MBEs that are signatory; i.e. permanent union members, vs. the number of non‐signatory MBEs that might participate with PLA. Mr. Kelly indicated that it is a goal of the Building Trades to increase the number of signatory members. Mr. Kelly also indicated that he welcomes non‐signatory MBEs to participate on PLA projects. This is seen as an opportunity to work together as a precursor of a more permanent relationship. Ms. Wong indicated that, as an open shop contractor, she has received phone calls from prime vendors bidding or working on PLA projects. The first question asked is whether or not she is union. If not, they will not have any further discussions, even though she does pay prevailing wages. Mr. Sinnott indicated that there is often a fear among subcontractors regarding PLA projects that is a business issue – will they be able to get enough work to sustain their employees at the prevailing wage?


Set‐asides ‐ Ms. Keene presented her research on set‐asides explaining that many States had established set‐aside laws in the 1980’s. However, there were several Supreme Court cases in the late 80’s and early 90’s ruling that the set‐aside laws were unconstitutional. She referenced the City of Richmond v. J.A. Crosson Co. which resulted in a finding that most of the set‐aside programs were unconstitutional and therefore no longer exist. Any program based on race has to pass strict scrutiny, had to be narrowly tailored to satisfy compelling governmental interest and empirical evidence of past discrimination was necessary. There are a limited number of set‐aside programs that exist today. The State of Connecticut has a small business set‐aside program but it is not based on race therefore it is not subject to the same strict scrutiny as a program based for MBEs. Connecticut’s program sets aside 25% of all construction contracts to small business and within that program they have an aspirational 25% of the 25% for certified M/WBEs. Connecticut has a current and valid disparity study which would support any program based on race. The State of Ohio also has an MBE set‐aside program that establishes a 15% set‐aside on their contracts that does not apply to construction contracts. She stated that Ohio also has a current and valid disparity study to support their program. The State of South Carolina has a program that is just for their 100% state funded highway projects. USDOT specifically prohibits set‐asides on anything that is funded wholly or in part by USDOT, and they only allows set‐asides in cases of very egregious discrimination and only after recipients have petitioned for a waiver. South Carolina conducted a disparity study in 2005. The City of Chicago also has a set‐aside program for small and midsize businesses which is not subject to the same strict scrutiny standards as M/WBEs. Chicago has a valid disparity study conducted in 2009. Ms. Keene said that the research presented validates the importance of Rhode Island completing a disparity study. Mr. Sinnott asked if there is a possibility to go forward with a small business set‐aside which is not subject to the same strict scrutiny. Mr. Waldron asked how far away from the study we are. Ms. Abelow answered by stating that there is currently a funding issue because the legislature did not approve the request for funding for the disparity study. Internal funding options are being looked into as well as external such as other state agencies and community partners who see the disparity study as being a useful tool. The question was asked if there could be a small business set‐aside based on zip code or HUB zones. Mr. Marcaccio said any questions related to set‐asides with respect to zip codes or hub zones will not get a black and white answer because they would be contested by the courts and what standard they use will matter. Anytime you have a law that will impact race when framed in a manner that they are being discriminated on the basis of race, for example if it’s a set‐aside program for women, which is a gender based program the courts point of view may be that because its gender we are not going to scrutinize as much as race. With regard to zip code the result would depend on how the law is crafted. Ms. Wong stated that income would be a more appropriate basis. Mr. Sinnott asked if the set‐aside programs in other states were based on the results of the disparity studies. Ms. Keene answered by stating that the historical data shows that after the set‐aside programs of the 1980’s were deemed to be unconstitutional the disparity studies started commencing. Now disparity studies are conducted to provide the necessary empirical data to support existing and new programs. For example the City of Chicago’s set‐aside program


has an expiration date. Therefore they are required to conduct a new study whenever they request an extension of the program. Mr. Sinnott asked what if we are to establish a short term goal for a set‐aside based upon census results with a sunset clause, while we are awaiting the completion of the disparity study. Mr. Waldron asked if the pre‐constitution (common law) can be used to establish a set‐aside program. Mr. Fontes said the zip code may be a path that can get us to where we want without violating race as a category. The committee discussed concerns about whose zip code would be used for the basis. If firms use their zip codes their corporate headquarters zip codes or their personal residence. If the company zip code is used it may not benefit the M/WBE. Breaking Up Projects ‐ Ms. Keene said there has been a push to bundle contracts into larger contracts but many states are moving in the opposite direction by unbundling projects. Ms. Thornton said Rhode Island has a perfect program to facilitate the unbundling of projects by getting qualified MPA vendors to build capacity for the smaller MBE companies if the purchasing department would allow use of the MPA for projects larger than the current thresholds or caps on the utilization of MPAs. Ms. Abelow asked if increasing the MPA/ Mini Bid threshold would be helpful to MBEs.

VI. MBE Utilization Reporting Requirements by State and Quasi‐state Agencies Mr. Marcaccio explained that whenever you have a program based on race you need to meet that high level of scrutiny which can be determined by the disparity. He said the law also needs to be narrowly tailored and to determine whether the laws are narrowly tailored you need to show whether the program is working or not by tracking the data. Mr. Cameron asked to what degree we currently track Ms. Burrell said that there is a lack of continuity in terms of who is reporting that data. She suggested that the committee take a look at some of the information presented and consider some recommendations around continuity and reporting and how that information is collected.

VII. Enforcement/Sanctions – Compliance Policies and Practices Ms. Keene said that the current law has good language with respect to enforcement and sanctions however sanctions have not historically been utilized. Mr. Marcaccio explained that because Maryland has a good program with good studies, data, and tracking, they are able to hit people with sanctions and they feel confident that if they are challenged, they will win.

VIII. Next Steps Mr. Waldron said that we should probably look into putting a team together to look into the legislative issues with regard to the disparity study. He said that it is very disappointing to hear that the funding for the disparity study has been defeated.


Ms. Abelow stated that there has been some funding identified internally but what we have been told is that additional funding will not be provided. The Department of Administration is looking into other funding options.

IX. Comments and Announcements None identified

X. Adjournment

Meeting adjourned at 4:02 p.m. by Ms. Burrell



Resources, Access and Workforce Subcommittee meeting

September 15, 2017

Committee members present: John Sinnott – Co‐Chair, Darrell Waldron – Co‐Chair, Doug Peckham, Andrew Cortez, Belinda Wong, Channavy Chhay, Andrew Cortez, Justin Kelly, Julius Kolawole, and Stan Cameron

Committee members absent: Stephen Cardi, Carmen Diaz‐Jusino, Angus Leary, Michael Sabitoni, William Bundy, Mario Bueno, Charles Byrne, Christine Rancourt Bruzzi (for Bob Cooper), Lindsay Desjarlais, John Marcantonio, Jr Neville Songwe (relocated to another state), Michael Van Leesten, and Joseph Wanat

Internal State Staff present: Dorinda Keene, Cheryl Burrell, Richard Palmieri, Elvys Ruiz, Sean Fontes, Melody Weeks, Hannah Abelow, Andrew Marcaccio, Ryan Erickson, Vilma Peguero, Jean Heiss, George Whalen, and Krystal Waters

Internal State Staff absent: Mike Mitchell, Armindo Goncalves, Carole Cornelison, and Kathleen Corbishley

Keywords: Individuals with Small Business (ISBEs), Project Labor Agreement (PLA) Rhode Island Vendor Information Portal (RIVIP) Rhode Island Financial Accounting System (RIFANS) Office of Diversity, Equity and Opportunity (ODEO) Affirmative Action Plan (AAP)

Guests: Andrew Boardman

Quorum Present: Yes

XI. Call to Order Mr. Sinnott called to order the committee meeting at 2:11 p.m.

XII. Reports/Discussion on Target Areas Training – Mr. Ruiz began his presentation on training information and resources explaining the different resources available to those who need guidance. There are many entities in Rhode Island that provide training and information to MBEs. Secretary of State resources – State laws, tax requirements from RI Division of Taxation, Requests for letter of good standing, administrative rules, name availability guidelines, Title 6A – Uniform Commercial Code, Title 6‐2 Registration and Protection of Trademarks. Providence Public Library offers various workshops and seminars monthly. University of Rhode Island services ‐ Business planning, financial statement development, loan application preparation, establishing your business, strategic planning, marketing and brand building, licenses, permits and business regulations, international trade assistance. Training – Primer Paso, The Right Foot.


Procurement Technical Assistance Program (PTAC) services– BidMatch opportunities, one‐on‐one counseling. Workshops – Doing Business with the State of RI, Opportunities in Government Subcontracting, Market Research, Advance Proposal Preparation. Federal Governments ‐ U.S. Small Business Administration services – Business guide, loans & grants, contracting, learning center, Local assistance. Trainings – Financing Options for Small Businesses, Establishing Values for your Business, How to Write a Business Plan, Selling Your Business, Strategic Planning, Young Entrepreneurs etc. RI Office of Diversity, Equity and Opportunity workshops – Pre‐Certification and Capacity Building, Getting Certified with the State as an ISBE, How To Do Business with the State of Rhode Island, Financing Your Business Expansion. Department of Labor & Training resources – Workforce Development Business Workforce Center. RI Contractor’s Registration and Licensing Board – Pre‐education and continuing education courses. Center for Women & Enterprise trainings – Accounting for Non‐Accountants, Business Planning: Getting Started, Legal Consideration for New Business Owners, Understanding Cash Flow Management, Steps to Grow Your Business, Pricing for Your Market, Protect Your Business Brand with Copyrights. Mr. Ruiz mentioned other entities that offer services and trainings such as Roger Williams University and RI Black Business Association. Mr. Sinnott asked if the trainings/information are offered in multiple languages. Mr. Ruiz answered by stating that the all the websites have the capability to be translated in multiple languages through Google Translator. Ms. Burrell asked if Mr. Whalen could provide a brief summary on the requirements for continuing education for those registered with the RI Contractors Registration Board. Mr. Whalen stated that in 2015 they started pre‐education for those that are performing work on residential and commercial buildings. Currently there is a continuing education program for those that are registered which entails a five hour course of construction education. There are also online courses available at an affordable price. The goal is to raise the bar by providing the education and resources needed. Mr. Ruiz suggested creating a centralized system for access to training information and resources. The benefit of having a one stop business resource center is that any training opportunity can be found without difficulty in on single place. Communication on Access to Bid Opportunities ‐ Ms. Heiss began her presentation by explaining how the public is currently informed about bidding opportunities. She stated that when individuals come into the office they are given the applications for MBE and DBE and within the application is information on the purchasing website, how to bid and a list of projects they may be interested in. Firms are always encouraged to register with RIVIP and RIFANS. She discussed the major benefits of the Supplier Portal and the procurement opportunities posted on the DOA purchasing website.

The committee discussed the inconsistency with municipalities posting about bid opportunities on the website and that consistency in posting opportunities would be particularly relevant with the school construction projects.


Ms. Weeks stated that the City of Newport has offered to take all the municipal bids and post them on their website. The Bid Match program picks up everything that is listed publically on the site which triggers a notification to be sent to clients. Ms. Abelow suggested that we expand what RIVIP does. Ms. Heiss outlined the three ways the Office of Diversity, Equity and Opportunity communicates their outreach efforts: 1. In the application package for certification 2. When a firm is approved as an M/WBE in the certification approval letter 3. On the ODEO website She also explained the process with pre‐bid conferences stating that not every project has a required pre‐bid conference. For example RIDOT, RIPTA, RIDEM may or may not have a pre‐bid conference, and not all are mandatory. Access to Capital ‐ Ms. Keene stated that access to capital is one of the critical issues for W/MBEs. She said that vendors in the construction industry face unique challenges such as: ‐ Very small profit margins ‐ The construction payment chain is complicated ‐ Managing growth and working capital ‐ Complexity of projects – unpredictable problems cut into profits ‐ Large capital requirements at startup stage MBEs and WBEs have some particular challenges such as: ‐ Credit history of firm ‐ Wealth & credit history of owner (collateral/personal guarantees) ‐ Financial literacy ‐ Location Mr. Sinnott asked how location is a challenge for a construction company or a subcontractor Ms. Keene responded by stating that they considered to be a socioeconomic challenge. Many of the vendors are in communities where the collateral that they have may not be of the same value as property in other locations in the state so what they have for assets may not be comparable. She also discussed the existing landscape for access to capital breaking them out into three groups: ‐ RI Commerce Corporation Small Business Assistance Program ‐ Bank Local Community Deposit Program ‐ Community Development Corporations (CDCs) Mr. Kolawole said that it is important that we know how many firms applied, how many loans are granted/ rejected and why so that we may discuss solutions. She also discussed other community based entities that provide services and/or access to capital such as: ‐ BDC Capital/Goldman Sachs 10,000 Small Businesses ‐ Accion East ‐ Community Investment Corporation ‐ Center for Women & Enterprise ‐ Rhode Island Black Business Association Ms. Keene recommended Missouri as a best practice state with respect to their Loan fund program. She explained that St. Louis Contractor Loan Fund was developed by 30 local governments, nonprofits, community advocates, financial institutions, private sector businesses and educational institutions. The program features are as follows: ‐ Loans up to $1 million


‐ Below‐market rates ‐ Term flexibility ‐ Receivable‐ or equipment‐ backed ‐ Technical assistance for application ‐ Approved loans include lines of credit, start‐up cost loans, and loans for growth of

established contractors She stated that 11 loans ($2.8 million) were approved and 8 loans ($1.5 million) closed in 2016. Eligibility Determinations: ‐ Made on a case by case basis, permitting access to credit for broad range of customers ‐ Applicants with credit issues, including a history of bankruptcy, other derogatory credit

history, or prior negative legal actions are still eligible to participate Business Assistance Programs Provided Regarding: ‐ Financial Capacity ‐ Ability to Estimate ‐ Project Management Skills ‐ Business Development ‐ Contract / Legal Literacy She suggested that the committee consider recommending the establishment of a private‐public partnership loan fund for certified M/WBE construction firms in Rhode Island, modeled after the St. Louis Contractor Loan Fund, including business development and financial management components. Mr. Cortez said that he doesn’t want the committee to lose sight of tying the source of capital from financing the project to the source of capital for the business enterprise we are trying to develop.

Mentor‐Protégé Programs and Joint Ventures – Ms. Keene explained that mentor protégé and joint venture programs administered by the U.S. Small business Administration both rely on federal set‐asides and are not matching programs. RIDOT facilitates Disadvantaged Business Enterprise mentor protégé agreements and business development programs on its projects. She outlined the private sector mentor protégé programs for companies such as: ‐ Gilbane Building Company ‐ Suffolk Construction Company ‐ Turner School of Construction Management Ms. Keene also listed several public programs in cities and states such as: ‐ New York ‐ NJ ‐ Florida ‐ Chicago ‐ Denver She suggested that the committee consider working with large prime vendors, such as Cardi Corporation, Gilbane Building Company, Dimeo Construction Co., and Suffolk Construction Co., and others, in order to establish a Rhode Island based mentor‐ protégé program for construction M/WBEs. Also that the committee consider developing an educational component on joint ventures for construction M/WBEs in Rhode Island. Minority Participation in Apprenticeship Programs – Mr. Fontes began his presentation by defining apprenticeship and outlining the process in Rhode Island. He explained that


apprenticeship is governed by federal and state law. He discussed structure of apprenticeship being set up by sponsors that may come in the form of joint employer relationships, joint employer relationships with labor groups and also individual employers. The apprentices receive paid on the job training but that there are a number of requirements that need to be met to qualify. Ms. Burrell asked if there were any restrictions for individuals who may have a criminal record. Mr. Cortez answered by stating that it is at the sponsor’s discretion. Mr. Fontes continued his presentation on the apprenticeship program standards that are completed and sent to the State registration agency office which would then go to the State apprenticeship council for review and approval. He also mentioned the Affirmative Action Plan requirements (AAP) stated that prior to 2003 apprenticeship programs required AAPs to insure that discrimination would not occur within the programs. Recently regulations have changed to require all sponsors to have an AAP. They must outline their outreach efforts, provide an underutilization analysis, and establish goals and any good faith efforts they use to ensure that minorities are participating. Mr. Fontes also discussed pre‐apprenticeship programs which are designed to prepare individuals for entering registered apprenticeships programs. The program should have a documented partnership with a registered apprenticeship program sponsor and some entity that will perform the training. Ms. Peguero mentioned some of the benefits the apprenticeship program provides to the community and the individual. Mr. Ruiz presented his research on the best practice state identified as New York. They suggested the committee think about how we reach out to the minority community and increase minority participation in the apprenticeship program. Mr. Cortez suggested that the committee also look into the State of Washington.

XIII. Comments and Announcements None identified

XIV. Adjournment

Meeting adjourned at 3:58 p.m. by Mr. Sinnott



October 16, 2017

Committee members present: John Sinnott ‐ Co‐Chair, Darrell Waldron – Co‐Chair, Michael Van Leesten, Mario Bueno, Julius Kolawole, Doug Peckham, Christine Rancourt Bruzzi, Belinda Wong, Stanford Cameron, Luis Torrado, Andrew Cortes, and Charles Byrne

Committee members absent: Stephen Cardi, Carmen Diaz‐Jusino, Angus Leary, Joseph Wanat, John Marcantonio, Lindsay Desjarlais, Channavy Chhay, William Bundy, Kasim Yarn, Barbara Thornton, and Justin Kelly

Internal State Staff present: Director Michael DiBiase, Dorinda Keene, Cheryl Burrell, Elvys Ruiz, Armindo Goncalves, Sean Fontes, Melody Weeks, Hannah Abelow, Andrew Marcaccio, Mike Mitchell, Krystal Waters, Jean Heiss, and Vilma Peguero

Internal State Staff absent: Kelly Caesar, George Whalen, Kathleen Corbishley, Carole Cornelison, Dan Jennings, Caroline Skuncik, and Richard Palmieri

Guests: Kimberly Danla

Keywords: Contractor Controlled Insurance Program (CCIP) Owner Controlled Insurance Program (OCIP) General Contractor (GC)

Full Committee Meeting Minutes approved. Quorum Present: Yes

XV. Call to Order Mr. Sinnott called the meeting to order at 2:10 p.m.

XVI. Subcommittee Reports: Mr. Sinnott provided a brief overview of the work the subcommittees have been doing. He then turned it over to Mr. Peckham to report out on the bonding research for the Legal, Policy, and Regulatory Subcommittee. Legal, Policy, and Regulatory Report – Mr. Peckham disseminated copies of his research to those in attendance. His presentation was split up into 5 parts:

1. Bonding Recommendations for Public Contracts 2. General Liability Insurance Coverage / Limits Recommendations for Public Contracts 3. Cash Flow / Prompt Payment Recommendations for Public Contracts 4. Deposits, Up‐Front Payments and Mobilization Payment Recommendations for

Public Contracts 5. Release of Retainage Recommendations for Public Contracts


Mr. Sinnott asked in the cases where there are subcontractors who are physically capable of doing the work and know how to do the work but may not have good credit, are there waivers or remediation plans as to how we can help them get across the finish line, and would it be possible to do this with the state as a partner? Mr. Byrne stated that you cannot sue City Hall. If the state stepped in and fronted companies that are financially unstable the contractor would have no indemnification and they would not be incentivized to finish the project. Mr. Sinnott suggested that maybe the state could establish some type of bonding pool for at risk subcontractors that would allow ISBEs to participate on these projects. Mr. Byrne suggested that there be a separate grant set up to support the contractors that are not meeting the requirements. Mr. Sinnott asked if the state could create their own bonding capacity, protection or default insurance Mr. DiBiase stated that the recommendations presented are a good start in terms of the bonding limits. We should also look into creating other bonding vehicles and look at other models in other states. Most importantly we need to be reasonable about what we are requiring for bonds. Mr. Sinnott stated that there are other ways that CCIP and OCIP can be beneficial. Mr. Peckham mentioned a previous discussion he had with Mr. Sinnott about potentially using retainage in certain applications for prompt payments Mr. Sinnott stated that even if it’s within twenty five days from approval to the CM to the GC to the State that’s still fifty five days. He asked Mr. Cameron if he could hold out for fifty days if he had done work for the state. Mr. Cameron stated that it would be very difficult but if it’s a situation where the GC has not yet received payment you really have no choice but to agree to the terms. Mr. Cameron questioned why there are some instances where the state is able to pay in 10 to 15 days, while in others payment is made in 30 days or more. Why should there be a difference if all the paperwork is in order? Mr. Byrne acknowledged that most contracts will have a “paid when paid” clause, and he stated that he could not float payroll for sixty – sixty five days without getting paid. Mr. Torrado asked what the penalties are for non‐payment within the agreed upon time frame. Mr. Waldron said that no one enforces the penalties Mr. Cameron asked that the state consider mobilization for the prime Mr. Peckham referred him to the handout previously disseminated Mr. Sinnott asked how we can craft the proper legislation to provide an option that would not be an obstacle to the M/WBE community that would help them learn and grow Mr. Cortes asked if there should be some way to allow those in the MBE program to receive payments faster regardless of what happens with the payments to the prime Mr. DiBiase said that subcontractors have to be able to float and we need to enable them to do so. He said that if the private sector doesn’t pay subcontractors before the work is done then he doesn’t see the state agreeing to this either. He said it would be better if we could create mechanisms so that subcontractors are able to get the financing that will allow them to float.


Mr. Byrne said that subcontractors are being forced into waiting for payment for fifty + days because they have no other choice. He said that a lot of GCs pay when they feel like paying. Mr. Bueno asked if there was a way to incorporate retention of funds language into the legislation if the money isn’t being paid out to the subcontractors Mr. Torrado said that the biggest complaint he gets from subcontractors is that they’re being pushed to the limit and become so desperate that they end up agreeing to late payment and reductions because they can’t wait for the money Mr. Waldron said that the fifty day payments need to be shortened The committee asked what would be a realistic bid bond amount Mr. Mitchell said that a lower number would serve the states interests but that there may be companies who cannot get the kind of bonding amounts suggested. He said that there have not been very many problems with companies not holding their bid prices. He said that $200K is feasible but it’s much larger than the current $50K amount. Mr. Byrne said that a $100K amount is 100% more than what is currently required and that it may be worth having a trial period to see how many firms default on it and then revisit it instead of tripling it. Ms. Abelow asked what the subcommittee’s analysis showed for other states thresholds Ms. Keene provided the committee with a brief summary of the research presented at the last subcommittee meeting. She said that Massachusetts has a tiered model based on the size of the contract, Connecticut does not require a bond until it reaches $100K, Maine has a limit of $125K, New Hampshire is at $35K, Vermont doesn’t require a bond and New York has a tiered approach and their lowest tier is at $100K Mr. Torrado indicated that he had to leave the meeting early due to a previous commitment. While he recognized that it is not related specifically to the topic being discussed at the particular moment (e.g.: bonding requirements), Mr. Torrado urged the committee to consider the issue of school construction projects and the lack of MBE participation on same. Mr. Sinnott pointed out that some regulatory amendments are needed in the RIDE school construction regulations to address the $500,000 threshold written into the current regulations. Mr. Goncalves suggested the committee look at public and private partnerships. The City of Boston has a program called Boston Career Academy. The city and state put money into the program, and subcontractors could apply to the program and receive 15% ‐ 20% against their contract at a very low rate to create credit. It is also important to note that the program doesn’t utilize conventional credit standards. Mr. Sinnott asked how much work is done in the state in a year Mr. Bueno asked if we could take a step by step approach by starting at a 100% increase and working it into the legislation to have a second increase after a certain time frame. Mr. Byrne asked if it would be possible to help minority contractors by increasing the 10% requirement to 15% or even 20% Mr. Sinnott said that there is not the capacity to enforce such a requirement Mr. DiBiase asked at what levels states exempt projects from bonds Ms. Keene summarized the thresholds found in the research conducted for the subcommittee meetings


Mr. DiBiase suggested that one potential option would be to follow models used by New York and South Carolina, raising the bonds limit to $100K but allowing the state to waive the bonding requirement up to $250K for MBEs. Mr. Mitchell pointed out that requirements for letters of credit from banks should require that those letters of credit be irrevocable. Resources, Access, and Workforce Report – Mr. Waldron asked the committee to skip the report out to work through some of the larger agenda topics

IX. Interim Report: Mr. Sinnott stated that the report handed out is not the final report but a draft Legislative Proposals – The committee discussed the specific proposals around prompt payment. Mr. Bueno asked if there was anything on the books for timing of payment. Mr. Mitchell said that it’s in the statute that the state shall pay within 30 working days Mr. Bueno asked if there was a way to require the contractors to pay regardless of whether the prime has been paid. He said it should it should be incorporated into the language to hold funds from the prime until they pay their contractors Mr. Sinnott asked if primes could be rewarded for forwarding funds to the subcontractors. Mr. Mitchell asked if the contractor could ask that his subcontractor release a percentage of his payment for forwarding funds or provide a discount on the work Mr. DiBiase said that what may make a bigger impact is to provide some type of financing mechanism for MBEs Ms. Burrell asked if the committee was in agreement to change the bonding amount to $100k with the state waiving up to $250k. The committee was in agreement Mr. Sinnott stated that the idea is to set a motion to accept the interim report with the changes specified. The next item on the agenda is the next steps Mr. Bueno made a motion to approve. Mr. Waldron seconded the motion. The floor opened for questions; none were raised. The motion passed with none opposed Mr. Kolawole asked if the committee or members of the committee would be willing to meet with him to assist him with gaining more knowledge about the incentive and 30 days piece Mr. Byrne asked in situations where there are four or more tiers of a contract who remains responsible for the contractors that were not prequalified by anyone Mr. DiBiase said that he has spent a lot of time on this area since his appointment to this position. He stated that prompt payment should be made faster. He also said that the other side of the problem is the human capacity, the mentoring and academies. Both the public and private sector need to be built up. He asked that the internal staff inform the committee about what is happening with the legislative proposals.


X. WGDC Next steps: Topics for Future Focus and Next Steps ‐ Mr. Sinnott asked what sort of vehicles can be can set up to address the issues the committee has identified and how can we make it work once the legislation has been implemented Ms. Abelow said that at the next subcommittee meetings we can bring the specific statutes for each of the three topic areas Mr. Waldron asked that the committee get more aggressive and specific about the recommendations, such as financing. He said that it is important that we hear more from the communities. Ms. Burrell asked if the committee would consider meeting in the evening Mr. Cortes suggested that each of the subcommittees meet first to prepare for evening meetings. Mr. Sinnott identified three areas for future focus:

− Funding – covering such topics as bonding, retainage & prompt payment − Training − Disparity Study ‐ Do we wait for disparity study funding or do we move forward with

some of the other initiatives previously identified? Ms. Wong asked if we could increase bonding to $225K while we are waiting for the disparity study and then eventually increase to $250K and in the meantime anything under $200K is waived. Mr. Cortes suggested that we not wait for the disparity study. He also said we are all aware that the law can be challenged but that does not mean that it will be challenged, and it is important not to freak out about it.

XI. Comments and Announcements Training to be held at the Rhode Island Indian Council on how to get certified with the state as a minority owned business on November 1, 2017.

XII. Adjournment Meeting adjourned at 4:15pm by Mr. Waldron


Overview of Governor’s Diversity in Construction Working Group Full Committee Meeting November 27, 2017

Committee members present: John Sinnott ‐ Co‐Chair, Darrell Waldron – Co‐Chair, Barbara Thornton, Mario Bueno, Julius Kolawole, Doug Peckham, Belinda Wong, Andrew Cortes, Charles Byrne, Channavy Chhay, Lindsay Desjarlais, Justin Kelly, Kasim Yarn, Joseph Wanat, and William Bundy

Committee members absent: Stephen Cardi, Carmen Diaz‐Jusino, Angus Leary, John Marcantonio, , Michael Van Leesten, , Stanford Cameron, Luis Torrado, and Christine Rancourt Bruzzi

Internal State Staff present: Director Michael DiBiase, Cheryl Burrell, Hannah Abelow, Dorinda Keene Elvys Ruiz, Sean Fontes, Melody Weeks, Mike Mitchell, Krystal Waters, Jean Heiss, Vilma Peguero, Erin Wright, Kelly Caesar, Morris Akinfolarin, and Richard Palmieri

Internal State Staff absent: George Whalen, Kathleen Corbishley, Carole Cornelison, Dan Jennings, Caroline Skuncik, Armindo Goncalves, and Andrew Marcaccio

Guests: None

Keywords: Rhode Island General Law (RIGL) Construction Manager (CM) General Contractor (GC)


I. Call to Order / Introductions Mr. Waldron called the meeting to order at 2:07 p.m.

II. Approval of Minutes Mr. Waldron motioned to approve the minutes. The Motion was seconded by Ms. Thornton. No abstentions recorded. Minutes were unanimously approved.

III. Review and Discuss Interim Report Ms. Burrell provided a brief review of the Interim Report stating that the report had been submitted to the Governor by the deadline. She highlighted the three areas where the Committee will be making recommendations for change. ‐ Bonding ‐ Prompt Payment ‐ Retainage Mr. Sinnott stated that the work the committee has done on the report is outstanding. Mr. Cortés asked if the committee could discuss addressing the timeline for the items that didn’t make this Interim Report.


Mr. Waldron said anything that did not make the deadline for the Interim Report will be discussed today. Mr. Byrne asked the committee to discuss the bond amount indicated in 37‐12‐1 of the Interim Report. He asked that the bond be for 100% of the contract rather than 50%.

IV. Review Legislative Proposals Ms. Keene discussed the three draft legislative proposals on the issues of bonding, contactor retainage and prompt payment. The committee discussed each of the proposed changes. Mr. Cortés asked if the committee considered having the Chief Purchasing Officer’s role for granted waivers documented. He said he is a little leery of having the authority for waivers rest with one individual without specifying the procedure. Mr. Mitchell stated that the state requires all procurement related decisions be in writing as so indicated in the State Purchases Act. Mr. Byrne asked Mr. Sinnott if the committee could discuss the email he sent to Mr. Sinnott regarding an apprenticeship program having GC sign up to mentor MBEs that need a surety credit. He said that they would be incentivized to do this because they would be given a tax credit at the end of the project. Mr. Sinnott said that it would be a good idea to provide W/MBEs with mentors that they can rely on. He said that programs should be discussed as next steps. Ms. Keene briefly discussed the proposed changes in the report on the topic of retainage. Ms. Thornton said that she liked that the proposed changes give the Department of Administration flexibility. Ms. Keene then discussed the proposed changes on prompt payment legislation. Ms. Thornton asked if The Division of Purchases thinks that the proposed changes are attainable. Mr. Mitchell stated that purchasing has not yet had an in‐depth discussion on the topic. Ms. Thornton asked the committee to discuss the penalty for non‐compliance. She said that the question of penalties has been brought up at previous meetings but it has not been addressed. Mr. Mitchell said that it’s not something the Division of Purchases handles. He said that the bill submitted to the agency goes up to Accounts & Controls for processing and that’s what triggers the actual timing. Ms. Thornton asked if there is a delay in the process, what is the mechanism utilized. Mr. Mitchell said that he believes the mechanism should be the payment of interest but that is not something that the Division of Purchases handles. Ms. Thornton asked the internal staff to investigate this topic and provide clarification as to what are the penalties. Ms. Abelow said that the internal staff would get back to the committee at a later date. Mr. Kelly asked that, if there is a failure to make a payment by the GC, prime or CM in a subcontracting tier, what would be the penalties. Ms. Abelow responded by stating that the committee needs to look into different mechanisms to address that issue.


Mr. Mitchell said that currently there is language in performance bonds meant to protect subcontractors. However, they often fail to take advantage of their legal rights because it is very expensive to do. He suggested that the committee look into what the state can do under the Prompt Payment Act to intervene if there is a failure to pay. Mr. Byrne suggested a score card approach for those who fail to pay on time and take that into consideration during the award process. Mr. Bueno asked if the committee would consider arbitration for payment disputes. Mr. Wong asked if a flagging option can be added to the system for those who do not pay on time. Mr. Mitchell said that they can flag a contractor repeatedly but the current statutes and regulations do not allow the Division of Purchases to take action, disciplinary or probationary, against a contractor. Mr. Waldron asked the committee if we can make recommendations on the topic being discussed. Ms. Burrell stated that the recommendations for change give the Division of Purchases the empowerment to act. Mr. Waldron asked if there is enough in the recommendations for the Division of Purchases. Mr. Mitchell said that there is not enough in the recommendations as they are currently written. He said that an internal meeting is necessary to give him the opportunity to make suggestions on crafting appropriate language. Ms. Burrell asked that the Legal, Policy, and Regulatory Subcommittee work with Mr. Mitchell on this task. Mr. Yarn asked if there are individuals that should be present to address Ms. Thornton’s concerns about the accounting piece. Ms. Burrell agreed that someone from Accounts & Control should be at the table. Ms. Abelow said the committee has a couple weeks to incorporate the discussed changes in order to get it to the Governor’s office by the deadline. Mr. Sinnott asked the committee to consider setting up a tribunal or arbitrator board where the funds would be escrowed and the contractor and subcontractor could come free of cost to hear the case being made and save the subcontractor the cost of taking legal action on their own.

V. Identify Strategies to Address Remaining Barriers Mr. Sinnott asked if the committee would like to focus on the barriers that are specific to the three pieces of legislation or if they have a desire to dig deeper. Ms. Burrell suggested that the committee take a look at page number 19 of the Interim Report which identifies specific topic areas that should be discussed. Mr. Cortés said that the committee has already identified an area the legal subcommittee should look into, previously discussed, and the resources subcommittee should look into the mentor protégé programs as well as apprenticeship related issues. Ms. Thornton stated that deposits are a real issue. The committee discussed the status of the disparity study.


Mr. Waldron said that the funds are still being put together and the committee will continue its work in hopes that the study will be funded soon. Ms. Burrell stated that the state is currently pursuing several options for funding and there have been positive discussions but to date it has not been fully funded. Ms. Thornton said it would be a missed opportunity if the committee ends its work without having the commitment on the disparity study and asked how the committee can help. Ms. Abelow said that there is a desire on assembling the funding for the disparity study and that funding has been identified within the DOA budget. She said the City of Providence has expressed interest as well as The Rhode Island Foundation. She asked the committee to come to her or Ms. Burrell if they should have suggestions. Ms. Thornton asked if it would help if the committee members spoke with their contacts at the Rhode Island Foundation. Ms. Abelow said that the full amount can be paid over multiple fiscal years. Mr. Sinnott asked if private organizations are able to help fund the disparity study. Ms. Abelow asked if any of the committee members would be interested in helping to identify additional funding sources. Mr. Waldron said he has an issue with using the committee’s contacts. He said that $500k Is not a lot of money and the state should be able to get that with their contacts. Ms. Thornton said that because the committee knows the most about where we are and what we are trying to achieve it’s important to share that with potential funders. Ms. Abelow asked Mr. Waldron to clarify his perspective. Mr. Waldron stated that he does not think it is part of the committee’s responsibility to come up with funding. He said he believes strongly that there is a need for it to benefit the community. Ms. Abelow stated that the state would not be seeking funds from the organizations the committee members represent. Mr. Cortés said that there may be other municipalities outside of Providence that may be interested. The committee discussed the possibility of finding a way to offer a tax write‐off. Mr. Akinfolarin said that he is surprised that the state hasn’t been able to come up with the funding for the disparity study. Mr. Sinnott said that the state not being able to fund it is an editorial as to where RI still is financially as a state. He also said that if we wait for the General Assembly it may get bumped or cut. Mr. Bundy said a disparity study may be seen to some as an adversarial document that would point out issues in government. He then said it is one thing to conduct the investigation yourself and be up front about it, and another to secure funding from other organizations to point out the disparities in the state. Ms. Thornton asked how we can make it important enough to that state legislature to get it funded. Mr. Waldron said that the lack of funds is a telling tale of what’s been going on for many years. He also said that the committee is going to move forward regardless but that we need to be able use the disparity study results as a measuring tool.


Ms. Abelow said that the disparity study remains a priority for the administration and that the state is responsible for identifying the funds. She also said that no matter how it is funded it is a state procurement and the state owns the results and the document and will be held responsible for the results. Mr. Sinnott and Mr. Kelley volunteered to help identify funding. Ms. Burrell asked that the Chairs work with her in developing a strategic template to assist the subcommittees with working through the remaining barriers. Mr. Sinnott asked if a committee member can be assigned to each subcommittee as leader to oversee progress. Ms. Abelow asked that the subcommittees include mentor protégé programs and access to capital in their discussions. Mr. Sinnott asked Mr. Cortés to lead to the Resource, Access, and Workforce Subcommittee discussions and Mr. Peckham for the Legal, Policy, and Regulatory Subcommittee The committee discussed other ideas for recommendations. Mr. Peckham asked that the committee identify who would take the risk for waiving of bond requirements. Mr. Mitchell said that the proposed recommendations do not state it explicitly but that the State takes the risk. Mr. Sinnott said that Gilbane has a process where if the client requests that the bond be waived for a particular subcontractor in good standing then they will waive the bond. Mr. Peckham asked if the contractor would have to ask for a waiver prior to the bid on lump sum work. Ms. Thornton suggested that be worked into the MBE Utilization Proposal. Ms. Burrell asked Mr. Peckham if he had specific language he would like to suggest be added to existing law. Mr. Peckham stated that in his previously submitted recommendations he stipulated the amount that bid bonds should be. Ms. Burrell asked Mr. Mitchell if there should be language added to the existing language for proposed changes or if the issues can be administratively addressed or procedurally addressed. Mr. Mitchell responded by saying that he thinks it’s procedural. He said that he would look at the statute and get back to the committee. Ms. Abelow said that if there is anything the committee would like to have added to the recommendations it will be taken into consideration. Mr. Fontes suggested that the committee add the same draft language to RIGL 37‐12‐1 that has been applied in RIGL 37‐12‐10 Paragraph F for creating regulations with respect to bonding and prompt payment. He said that the processes that are being discussed now may not be appropriate for the statutes and may need to be changed in the future; if the legislature will allow us to promulgate rules and add the teeth and structure to the bills then we will not be bound to the legislative process if we need make changes. Ms. Burrell asked if the committee would like to incorporate Mr. Fontes suggestion to the other legislative pieces. Mr. Waldron motioned to incorporate the language. The motion was properly seconded by Mr. Cortés and the committee unanimously.


VI. Comments and Announcements

Ms. Abelow asked for an update on the conversations between ODEO, the Office of the General Treasurer and the School Building Authority regarding school building regulations Ms. Keene responded by stating that Treasurer’s office has assembled a Task Force to address the issue of school construction. She said the state is looking at a minimum of $2.2 billion dollars of work that needs to be done to bring school buildings up to code. She also said that the treasures office wants to make sure that there is W/MBE participation and that any new legislation that is passed will clearly delineate that RIGL 37‐14.1 is applicable to all state school construction projects, and that Office of Diversity Equity & Opportunity will be reviewing and approving plans. She said that the Task Force will make a recommendation to the Governor’s office to be put into the budget for January.

VII. Adjournment Meeting adjourned at 3:55pm by Mr. Sinnott



January 22, 2018

Committee members present: John Sinnott ‐ Co‐Chair, Darrell Waldron – Co‐Chair, Mario Bueno, Julius Kolawole, Doug Peckham, Belinda Wong, Andrew Cortes, Channavy Chhay, Justin Kelly, Kasim Yarn, Joseph Wanat, William Bundy, Stephen Cardi, Luis Torrado, and Barbara Thornton

Committee members absent: Carmen Diaz‐Jusino, Angus Leary, John Marcantonio, Michael Van Leesten, Stanford Cameron, Christine Rancourt Bruzzi, Charles Byrne, Bob Cooper, Lindsay Desjarlais, and Michael Sabitoni

Internal State Staff present: Cheryl Burrell, Elvys Ruiz, Sean Fontes, Melody Weeks, Hannah Abelow, Mike Mitchell, Krystal Waters, Jean Heiss, Vilma Peguero, Erin Wright, Morris Akinfolarin, Richard Palmieri, Armindo Goncalves, Andrew Marcaccio, Carole Cornelison, Erin Wright, Denise Correy, and Ryan Erickson

Internal State Staff absent: Kathleen Corbishley, Dan Jennings, Caroline Skuncik, Dorinda Keene, and Kelly Caesar

Guests: Louise Sawtelle, Peter Keenan, Ron Crosson, and LeeAnn Byrne

Keywords: Rhode Island General Law (RIGL) Construction Manager (CM) General Contractor (GC) Master Price Agreement (MPA) Office of Diversity Equity and Opportunity (ODEO) Division of Capital Asset Management and Maintenance (DCAMM) Division of Information Technology (DOIT)


XVII. Call to Order / Introductions Mr. Waldron called the meeting to order at 2:07 p.m.

XVIII. Approval of Minutes Mr. Waldron motioned to approve the minutes. The motion was seconded by Mr. Cortés. No abstentions recorded. Minutes were unanimously approved.

XIX. Presentation by Department of Administration, Office of Accounts and Controls Mr. Keenan went over the improvements on the processing time of invoices stating that 99.0% of invoices are paid within a 30 day period. He said that they will be discussing other changes that have been made to improve the process as well as providing a review of the current processes and proposals. Ms. Sawtelle began the presentation by reviewing the current prompt payment law of 30 working days. She said that they rolled out a pilot program last year through the Division of


Purchases which allows them to accept cash discounts on certain MPAs and that Accounts and Controls is looking to offer that program on other types of solicitations as well. She said they are in the process of updating policies and procedures to enforce centralized accounts payable rules. She then said that if invoices are not sent to accounts payable there is no way they can keep track of the payment and that sending a copy of the progress payment to the bill to address on the P.O. will allow them to insure that from day one it is being tracked. She said that particularly for construction projects it is important for the proper paperwork to be sent to the project managers or GCs on the project and that a copy of the invoice is also be sent to accounts payable. She said other barriers of prompt payment are working without a P.O. in place or working on the contract at faith and that Accounts & Controls cannot make a payment without a valid and open P.O. She then said that change orders have also been an issue Mr. Sinnott asked that if within the change order it reflects additional days needed, and if the change order is approved does that automatically push out the contract end date or P.O. end date Mr. Mitchell said there should be no work done without an approved changed order first and there should be no work done without a P.O. first but this is not something the Division of Purchases can control. He said that if DCAMM allows a vendor to start work without having a P.O. or change order Purchases doesn’t know about it until after that is a problem Mr. Sinnott asked what can be done to accelerate payments and is it possible to get the M/WBE paid faster if they are billed separately Ms. Sawtelle responded by stating that the terms are based on the entire contract Ms. Abelow asked if there was a way to carve that out to get payments more quickly to subs or sub subs Ms. Sawtelle said that when her office looks at making changes they look at how it will affect all payments made through Accounts & Controls and that the only way to carve anything out for M/WBEs is to add specific lines in each contract P.O to state that x amount of the contract is specifically for M/W/DBE payments Mr. Waldron said that sub subs are the primary concern. He said that prompt payment is within 30 days but that cash discount could be a benefit as much of payment of 10 days, but for the sub subs its 50 – 90 days. He asked if there is a possibility to speed up the payment to the third tier Ms. Sawtelle said that there would need to be a conversation with the Division of Purchases about how the P.O. contract and the P.O. releases are set up to insure that there are specific lines in the P.O. Mr. Mitchell said that the state does not hold the contract with the subcontractors so there is no way the Division of Purchases can control the downstream flow of funding. Mr. Sinnott asked if the subcontractors or sub subs have specific line items in the contract would Accounts & Controls be able to write a joint check Ms. Sawtelle said that she can only write a check to the vendor that holds the contract Ms. Wong suggested making the M/WBE portion of the payment included in the payment to the prime Mr. Bueno asked if the balance is not fully paid to the prime and they receive an invoice again is there a way to verify that payment was provided to the subcontractor


Mr. Sinnott responded by stating that the language is already there with the release process Ms. Sawtelle said that she would speak with DOIT and the Division of Purchases about how we can move forward Ms. Wright stated that RIDOT currently has a system were DBEs have special provisions that accompany every contract and in the provisions it states that the prime has to comply with prompt payment; and if they violate it they are violating the contract terms Mr. Sinnott said that after submitting an approved requisition there should be a payment made within 48 hours to the prime to then get to the subcontractor Mr. Fontes said that going back to the issue of the state being able to pay the sub subs directly, there is a concept in contracts were a portion of the contracts can be assigned. He asked if the primes could explore a provision of assignment where the MBE would have a certain percentage allotted in the contract which would serve at the legal mechanism and contractual mechanism to allow the state to pay the sub directly Mr. Sinnott asked Mr. Mitchell if a mechanism like that would be possible Mr. Mitchell responded by stating that he would have to have a more in‐depth discussion about that but it would still raise the question of purview of contract The committee discussed next steps to implement the changes discussed Ms. Sawtelle said that research will need to be done to find out what is possible with the existing systems and that they would update ODEO on the progress. She said that DOA, DOIT and the Division of Purchases would need to have a meeting in order to provide the committee with an answer. She also told the committee that Accounts & Controls has no objection to changing the wording in the language to 30 calendar days instead of 30 working days. Ms. Burrell said the committee is proposing 25 calendar days Mr. Sinnott asked what the extra five days gives them Ms. Sawtelle responded by stating that it is an industry standard and that the current cash discounts are set at 25 days and if we transition to a net 25 day standard they would be lost Mr. Waldron asked why the cash discounts couldn’t be bumped to 20 days Ms. Sawtelle said that cannot be done because that is not the current agreement with the vendor. She said that vendors offer different cash discount terms and that they can be tiered but that anyone that currently offers the state cash discounts at 25 days will get washed away Ms. Abelow asked if it would be more feasible for Accounts & Controls to reduce the time but not to 25 days and to commit to the group that the other strategies would be worked through to get payment to the MBEs more quickly Ms. Sawtelle agreed The committee discussed whether setting different deadlines throughout the month for requisition submission would assist the Accounts & Controls office with processing Mr. Keenan said that it is imperative that invoices be sent to the departmental representatives as well as to Accounts & Controls. He said that valuable time is lost when it doesn’t reach their office in a timely manner Ms. Thornton said that she has been discouraged from doing that by user agencies Ms. Sawtelle said that Accounts & Controls has no control over what happens to the paperwork if it is only sent to the agency


Ms. Thornton asked if there was a point of contact in accounts payable to reach out to with an outstanding invoice Ms. Sawtelle responded by stating that anyone in accounts payable can help at any time with any invoice that’s outstanding The committee discussed ways to communicate that information to both the agency and the vendors Mr. Bundy asked the committee to consider how the previously discussed suggestions would affect the primes Mr. Cardi said that most of Cardi Corporations contracts with the state are though RIDOT and that when the state usurps their authority to contract and control their vendors and subcontractors it becomes more difficult and more expensive. He said that he is open to looking at options to get the subcontractors paid faster but that when you put more burden on the primes it becomes more expensive for the state Mr. Sinnott said that if vendors want to work for the state they will follow the requirements and if they don’t like it they can take their business elsewhere. He said the committee is serious about change and that these changes may cost the state a little more money but it is an investment from the state into the industry Mr. Torrado said that he doesn’t think the changes would necessarily result in a higher cost for the state because minority contractors that are sure they are not going to have to wait four months for their payments are going to accept the lower bids

XX. Review Amendments to Legislative Proposals The committee discussed the proposed changes to reduce the processing time from 30 working days to 30 calendar days for prompt payment as well as cutting the current 10 day processing time for subcontractors in half Mr. Cardi said that 5 days is not realistic but that he would speak to his internal team about it Mr. Peckham said that reducing to 5 days would be no problem for Dimeo Mr. Kelly and Mr. Bueno said that the proposed language has exceptions to RIDOT projects so it would not affect most of the work that Cardi is awarded Mr. Waldron made a motion to change the proposed language in Title 32‐11.1 on prompt payment from 25 calendar days to 30 calendar days. The Motion was seconded by Mr. Bueno. No abstentions recorded. The committee unanimously approved Mr. Mitchell reviewed the language he added to the proposed changes on Title 37‐12‐10 on retainage and 37‐12‐1 on bonding Director Yarn made a motion to approve the language proposed by Mr. Mitchell for 37‐12‐10 and 37‐12‐1. The Motion was properly seconded. No abstentions recorded. The committee unanimously approved


XXI. Review: “Recommendations of the Rhode Island School Building Task Force” Ms. Byrne provided the committee with an update on the work the School Building Task Force has been doing. She said that there are two main recommendations that would affect M/WBEs 1. Clearly mandating that all schools, facilities and projects receiving state funding comply

with state law and that ODEO be the enforcement agency to insure it is followed 2. The prequalification of contractors for projects over 10 million Ms. Burrell thanked Mr. Torrado and the community leaders for bringing the school building issue forward Mr. Torrado said that he is amazed at the speed in which these changes have been made and thanked everyone who played a part in making it happen Mr. Waldron said that Rhode Island scores the poorest generally when compared to surrounding states. He said that this is the beginning of something that has been long overdue Ms. Burrell asked Ms. Byrne to provide information on the Bank Local Program Ms. Byrne said that the Treasury has decided to move the states on‐hand cash into banks and credit unions to help support the local economy. She said they have allocated approximately 30 million dollars in deposits to local banks and credit unions, so when they grant small loans to small businesses the Treasurer’s office matches that deposit by putting that money back into the bank. She said that they will do a 2 to 1 match to banks and credit unions that grant loans to minority owned and women owned business up to $250k per loan. She also said that so far they have matched loans for about 200 small businesses and deposited more than $22 million dollars in cash back into local banks and credit unions Mr. Waldron asked what the interest rates are for these loans Ms. Byrne said that rates are set by the banks Ms. Burrell asked if the Treasurer is able to influence the interest rates or requirements in anyway Ms. Byrne said that the program is not intended to influence rates, the purpose is to provide more capitol on the banks side to be able to grant loans Ms. Chhay asked if there was a way to track who is and is not being approved for loans Mr. Waldron asked if there was a way to track the loans and meet with the banks at our next meeting Ms. Byrne said that she would look into inviting the banks to the next meeting

XXII. Comments and Announcements Ms. Thornton brought up concerns about the state not paying deposits such as for construction materials Ms. Burrell said that the committee can add that to the agenda for a future meeting Mr. Waldron asked for a disparity study update Ms. Abelow said the state is continuing to try to locate funding but there is not update on the funding at this time Mr. Waldron asked why it is so difficult to locate the funding Ms. Burrell said that she doesn’t think it’s a cost issue she said that she thinks it’s a funding issue for Rhode Island


Mr. Kelly asked how the state can close the gap and locate the remaining funding necessary for the study. He also asked if there were national groups that would be interested in helping us fund the study Mr. Waldron asked if there is a payment plan offered by the selected firm Ms. Burrell said that purchasing would have to find out if that is an option Mr. Cortés said that it is an embarrassment that the state cannot find the funding for this study. He then said that he doesn’t think that the state should rely on philanthropies to locate the funding. He said it is a state issue as so pointed out at previous meetings the state would own the results and be held responsible for it, which means that the state should be paying for it. He said that he understands that it is a challenging budget time and that looking at the gap would help to spread the cost around others who would be positively impacted by the results. He said that asking the private sector to look at a public sector issue may be challenging Mr. Bueno asked if there was any information about the details of the study the state would be able to share Mr. Yarn suggested made a motion to draft a letter to the Governor’s office to make a recommendation and to highlight the importance of a disparity study being funded. He also suggested siting the example that was put together regarding the recommendations for the Rhode Island School Task Building Force Mr. Waldron made a motion. The Motion was properly seconded. The committee discussed the motion Mr. Torrado stated that he has had informal discussions with the Chairs of the House of Representatives Black and Latino Caucus and they have expressed interest in helping the state fund the disparity study. He asked if it would be appropriate to invite them to an upcoming meeting Mr. Cortés motioned in support of Mr. Torrado’s request but asked that the committee determine what the gap is prior to inviting the Chairs to a meeting so that the committee is able to show best faith efforts Mr. Bundy said that he doesn’t think the committee is ready to reach out to the Chairs Ms. Abelow said that before any formal public letters are sent out she would like the opportunity to go back to the leadership Mr. Sinnott suggested sending a letter to the Governor, House and Senate Mr. Bundy suggested that the committee pull together a letter stating that the funding for the disparity study is a significant issue that the committee has uncovered Mr. Cortés asked for clarification as to where the motion stands Mr. Waldron said that the committee will be drafting a letter after the committee is provided with the current standings of the funding A motioned was made to draft a letter. The motion was properly seconded. No abstentions recorded. The motion was unanimously approved Mr. Cortés asked ODEO staff to work directly with the subcommittee Chairs appointed at the last meeting to convene the next subcommittee meetings to be scheduled

XXIII. Adjournment Meeting adjourned at 4:10 p.m.



Legal, Policy and Regulatory Sub‐Committee Meeting March 1, 2018

Committee members present: John Sinnott ‐ Co‐Chair, Darrell Waldron – Co‐Chair, Doug Peckham, Belinda Wong, Christine Rancourt Bruzzi, Barbara Thornton, Stanford Cameron, and Mario Bueno

Committee members absent: John Marcantonio, Charles Byrne, Justin Kelly, William Bundy, Andrew Cortés, Kasim Yarn, and Luis Torrado

Internal State Staff present: Cheryl Burrell, Elvys Ruiz, Sean Fontes, Mike Mitchell, Krystal Waters, Andrew Marcaccio, Dorinda Keene, Dan Jennings, Vilma Peguero, and Jean Heiss

Internal State Staff absent: Kathleen Corbishley, Carole Cornelison, Ryan Erickson, Hannah Abelow, Morris Akinfolarin, and Richard Palmieri

Guests: None

Keywords: Construction Manager at Risk (CMaR), Owner Controlled Insurance Program (OCIP), Contractor Controlled Insurance Program (CCIP), General Liability (GL), Center for Biology and Life Sciences (CBLS)

Quorum Present: Yes

I. Call to Order Mr. Sinnott called the meeting to order at 8:30 a.m.

II. Introductions

III. Developing Recommendations for the following target areas:

Insurance Law – Mr. Peckham began his presentation discussing general liability insurance coverage. He proposed having staged contracts of less than $500k require a $2 million dollar total general liability / umbrella combined coverage. He said for contracts between $500k and $1.5 million, $5 million would be adequate for combined general liability / umbrella coverage. He also said that any contracts greater than $1.5 million would require a combined $10 million GL / umbrella. He said that on larger projects the utilization of the Contractor’s Controlled Insurance Program or Owner’s Controlled Insurance Program would provide all subcontractors with adequate insurance coverage. Mr. Sinnott said that one of the issues that he runs into with OCIPs is getting some contractors qualified. He suggested adding something to address prequalification. Mr. Cameron said that every contractor in RI is supposed to register with the state Contractors Registration and Licensing Board and submit an insurance certificate as part of their requirement. He asked how the limits outlined in the presentation compare to the insurance requirements for contractor registration.


Mr. Peckham said that typically the project specific defines what the insurance limits are and many times the insurance limits are well above what a smaller contractor can manage. Mr. Sinnott suggested that the committee look into what the differences are for insurance requirements on private and public projects. Ms. Keene said that according to the Contractors Registration and Licensing Board website, they require $500,000.00 for general liability insurance. Ms. Burrell asked Mr. Peckham if he was proposing to increase that amount substantially. Mr. Peckham said that $500,000.00 is required to obtain a license, but when the contractor goes to bid on a project, the project requirements are going to specify what the insurance requirements are, and it’s usually much higher than $500,000.00. Mr. Sinnott asked if the requirements put in undue burden upon the smaller subcontractors and if so, how can we offset the additional cost. He then suggested offsetting the cost through a CCIP or OCIP. Mr. Peckham asked if the state has ever looked into an OCIP. Mr. Sinnott responded by stating the state has done a CBLS OCIP. Deposit/up –front payments – Mr. Peckham said what he looked at is how to funnel money to a smaller contractor to start up a job before they mobilize. He said that the contractor would have to work for it and request it in advance. He then said that the proposed recommendations assume that all contracts above $250,000.000 are bonded. He said that all subcontractors and lower tier subcontractors with contracts under $1 million should be allowed to apply for a deposit in the amount no greater than 2% of the total contract value within one week after signing the subcontract. He said that no retainage would be withheld on that deposit. He said that one month prior to project mobilization the subcontractor and lower tier subcontractors shall be allowed to apply for a mobilization amount of 1% of the total contract value. He said that no retainage would be withheld on that deposit. He then said that for same size contracts under $1 million the state, the GC or CMaR would allow bi‐weekly payments. Mr. Sinnott asked if it would be for specific subcontractors or the entire project. Mr. Peckham replied by saying that it would be for contacts $1 million and under. The committee further discussed details for the proposed recommendations. Mr. Peckham asked if instead of going by a dollar value threshold, if it could be set up to say all M/WBEs are entitled to this. Ms. Burrell said that what we decide to do must be driven by the MBE program. Ms. Thornton asked if we would get challenged if it were to be called SBE. Ms. Burrell said that the SBE program is not the program that the committee is promoting. She said the committee is promoting M/W/DisBE programs and our intent is to come up with ways to enhance opportunities for these groups. Mr. Peckham said he would be happy to remove the $1 million dollar threshold and revise the language to say M/W/DisBEs only are entitled to this special condition. Mr. Marcaccio said that when you create a policy that is not race neutral you run the risk of litigation. Ms. Burrell said that in the absence of a current disparity study we would not be able to defend that.


Mr. Marcaccio said that we would have to be able to make the argument that the program is beyond race and includes veterans, people with disabilities, etc. Mr. Fontes asked if it would be possible for the prime to request a certain amount of upfront money from the state without identifying whether it’s for MBEs and give that mobilization money to them. Ms. Wong said that what would happen is that the prime would not pass that down the money to the subcontractors and instead they would float it for themselves. Mr. Mitchell said that it is counterintuitive that the Division of Purchases does not work with the contracting industry to make advance payments because the state is protected by the bond, and if you don’t deliver we can call the bond on it. He said that another concern would be that not all general contractors are in enlightened, and they could put in for an advancement process but it wouldn’t always necessarily go downstream to the MBEs who need it. Mr. Peckham asked if the M/WBE monthly reporting includes the payments they’ve received. Mr. Sinnott said that there could be language included to require that a request be submitted with both signatures on it. Mr. Peckham continued his presentation stating that no retainage shall be withheld on all monthly payments up to 50% complete. He then said on the back half of the 50% he proposes holding 10% retainage so that when you get to 100% it fine tunes itself down to 5% on the total contract. Mr. Sinnott asked if language could be added to ensure that the subcontractor’s sub‐tier subcontractors also receive their retainage. Ms. Keene said that language is included in the legislative proposal. Ms. Thornton stated that the legislative proposal relative to retainage adds language to allow for regulations on how to determine the interim release of retainage. Mr. Peckham said that his proposal addresses that, although it’s primarily for the prime contractors. He suggested a graduated release once you get beyond 100% complete with 5% retainage, and then allowing them to apply for a reduced retainage amount of 2.5%. Then determine what the amount of incomplete or unaccepted work is worth and multiply that by 1.5, and if that figure exceeds 2.5% then they cannot bench down to 2.5% but maybe they can bench down to 3%. He said when more work is completed they can gradually bench down to 0%. He also said lower‐tired contractors could be included in the proposal Set‐asides – Mr. Peckham asked if a CM can break up a project and set‐aside packages on the project for MBEs. Mr. Marcaccio said that the constitutional requirements only apply to state action. Mr. Sinnott said that there was a recent project where the apparent low bidder was not awarded the project and it instead it went to an MBE that bid higher, so it seems like there was a decision made based on status. Mr. Marcaccio said that you can give preferences based on race; however, you have to meet a certain legal standard to do so. He said when its solely based on race you have to meet the highest standard the court uses which means the program would have to narrowly tailored to achieve or remedy a compelling interest, so discrimination or underutilization is a


compelling interest and the program would need to be narrowly tailored to remedy that problem. Ms. Thornton said that we don’t have a disparity study to support the claim currently but we still found a way around it in the situation Mr. Sinnott spoke about. Mr. Marcaccio said that without the support of the study you run the risk of litigation. Mr. Peckham asked if he can legally carve out packages on projects that are only for M/W/DisBEs. Mr. Sinnott suggested creating caveats where if an MBE is within 5% of the lowest bid then the project could be awarded at the discretion of the agency. Ms. Wong said that if it’s done as a carve out it’s simply a strategy to fulfil the 10% requirement. Ms. Burrell said that as a vendor you have a legal requirement to meet the 10% law, so if you put out a bid package that’s specific to MBEs you’re doing that to meet and comply with the law. Mr. Bueno said that language could be added to the front end documents to state that the bidder is going to use x, y, z strategies in order to achieve the 10%. Mr. Sinnott asked if you can add extra points on the procurement side for contractors who fulfill the requirement. Ms. Keene said that the state instituted the ISBE points system that went into effect on April of 2017. She then said that all evaluated bids now have 6 points awarded for MBE participation. Mr. Sinnott suggested we increase the points. Mr. Mitchell said that the point system are bonus points and are not a part of the 100 points Ms. Keene said the existing good faith regulations already address everything Mr. Peckham has proposed. She said that when looking at a vendor’s good faith efforts after the project is awarded one of the first things they look at it is whether you subdivided contracts up to make it easier for MBEs to bid on. She said they also compare bids and look at whether the MBE was within a competitive range according to the state’s definition. She said that just because the MBE is slightly more expensive does not mean you can’t choose them. She also said that most construction projects are not evaluated bids and are based on price. Mr. Sinnott suggested that the good faith effort be changed into a requirement. Ms. Keene said that the 10% is a requirement but it is a requirement that you can get relief from by demonstrating good faith efforts, and the good faith effort process is all part of the constitutionality. She then said that the state wouldn’t be looking to remove the good faith efforts because companies shouldn’t be penalized for doing the right thing. Mr. Sinnott said that it’s not difficult for vendors to get away with saying they couldn’t find qualified bidders. Ms. Keene said that if vendors can’t prove that they’ve completed all of the necessary steps of the good faith regulations, then they will not waive it. Mr. Fontes asked if there was anything that restricts the state form putting in that MBE incentive piece with the RFQs similar to the evaluated bids. Ms. Keene said that no points are given on RFQs and the process is based solely on cost. Ms. Thornton asked if the RFQ process could be changed. Ms. Keene said in theory you could but you would be changing all RFQs to RFPs.


Mr. Mitchell said that changing RFQs to RFPs would slow down the process. He said that slowing down to an RFP process probably wouldn’t make the industry or the state happy. Ms. Thornton asked if it was a labor shortage and processing problem or a legal/ philosophical problem. Mr. Mitchel said in theory the state could pre‐qualify on every project. The committee discussed mechanisms for RFQs and how to best incorporate the MBE participation requirement. Mr. Sinnott said it comes down to what kind of investment the state is willing to make to create this market. He said that if the state isn’t willing to do what needs to be done, these people are either going to be selling drugs or be unemployed and not able to contribute, Mr. Peckham asked if there is a certain volume where you fall out of MBE status, Ms. Keene responded by saying that the state uses small business size standards set by the US Small Business Administration as well as economic disadvantage criteria. She said that the smallest construction contractor related size standard is $15 million in gross sales per year for a three‐year average. She also said that for MBEs they look at their 3 year average gross sales, and if the average exceeds the applicable size standard, the MBE graduates from the program. Mr. Marcaccio said that the point system is a new program. However, if it does work, it is something that the state may look into on the construction side possibly by replacing the 10% requirement with 90 points for cost and 10 points for utilization. He said that by not having that set number of 10% you’re finding creative ways to grow that pool of subcontractors. Mr. Waldron asked if there was a way to make minority participation equal to cost. Breaking up projects /PLAs/ Carve outs – Mr. Peckham said that breaking out projects will allow the M/WBE trade contractors to have more trust in the system and embrace the unions as a resource for labor. He also said that if/ when a private opportunity comes up they can consider signing up to the union effort. Ms. Burrell asked if that has to be the goal because many MBEs are open shops and have no interest in joining a union. Mr. Sinnott said that anything is possible and that if there pushing for PLAs the last thing they want to do is upset anyone and demonstrate a lack of flexibility. Mr. Peckham asked if you have to be a union contractor to be on a PLA job. Ms. Burrell replied by stating that historically non‐union contractors are not selected on PLA projects. She then said that the Governor is in support of PLAs but the problem is the language within the PLA to accommodate the MBE. Mr. Mitchell said the language in the PLA is the negotiated language between multiple parties. Mr. Sinnott said that being part of a union is not for everyone and some businesses that may be interested in becoming part of the union may not be ready to sustain that. He said that it’s only for the good of the industry that we keep this dialogue going and that we look towards the goal of total diversity and integration in the construction industry. Ms. Burrell asked the committee if they agree that the PLA needs to be negotiated to be more inclusive. The committee agreed.


Enforcement/compliance policies – Mr. Peckham said that if the subcontractor’s work has a duration of one year or less then the monthly utilization report will be required, but if the duration is more than a year, it should be filed quarterly. He then said that the subcontractor would require the report from their lower tier subcontractors in the same intervals. Ms. Keene said that the reporting document presented by Mr. Peckham does not capture all of the required information that the state’s current report does. Mr. Peckham agreed to make the necessary amendments. MBE Utilization Reporting Requirements by state and quasi‐state agencies – Ms. Burrell said that the state is looking to implement the policy that requires agencies to appoint an MBE coordinator to work alongside the vendor to ensure compliance and completion. The committee discussed compliance/ enforcement and sanctions. Ms. Burrell said that one of the biggest concerns the states grappled with is agencies that believe that their not subject to the MBE law. She said that the law makes no distinction and that state and quasi state agencies are, in fact, subject to the law. Mr. Marcaccio said that he believes there are two issues, one being some state agencies may believe that they are not subject to the law, and two, they might acknowledge that they are under the law, but may not want to use the forms ODEO provides and instead develop their own forms that may not be capturing all of the necessary data. He then said that we need reporting and policy to ensure that agencies are reporting, and then once we get the reporting and the results of the disparity study we’ll have something to compare to see where we need to improve. Mr. Mitchell said that quasi agencies are required by law to follow the state purchases act. However they are not required to follow the state procurement regulations, so they have the discretion to draft their own procurement regulations. Ms. Burrell said that the state has affectively changed one of the biggest regulations that the school board introduced, which was to exempt any project valued at under $500,000.00 which included 95% of the projects Ms. Burrell asked if it was possible to say that you’re subject to the law, and that as much as you’re subject to the law, there are reporting requirements that must be met. Mr. Marcaccio said the only challenge with saying you’re subject to the law is that the laws are already in place, so there’s no need to have another law to reiterate it. Ms. Burrell suggested more frequent reporting. Mr. Waldron asked for clarification on what topics the committee plans to present at the next full committee meeting. Mr. Burrell asked that the topic of insurance be tabled for further discussion and that more research be done before presenting to the full committee. Mr. Ruiz suggested creating a glossary of terminology to include in the final report. The committee agreed to address the below topics at the next full committee meeting: ‐ Mentor Protégé/joint ventures ‐ Training ‐ Access to capital ‐ Minority participation in apprenticeship programs, licensing laws and regulations ‐ Communication on access top bid opportunities


Ms. Burrell asked Mr. Peckham to send the recommendations that the committee agreed to directly to her.

IV. Adjournment Mr. Sinnott adjourned the meeting at 10:40



March 5, 2018

Committee members present: John Sinnott ‐ Co‐Chair, Darrell Waldron – Co‐Chair, Mario Bueno, Julius Kolawole, Doug Peckham, Belinda Wong, Andrew Cortés, Kasim Yarn, Luis Torrado, Christine Rancourt Bruzzi, Lindsey Desjarlais, and Michael Van Leesten

Committee members absent: Carmen Diaz‐Jusino, Angus Leary, John Marcantonio, Stanford Cameron, Charles Byrne, Bob Cooper, Michael Sabitoni, Barbara Thornton, Channavy Chhay, Justin Kelly, Joseph Wanat, William Bundy, and Stephen Cardi

Internal State Staff present: Cheryl Burrell, Elvys Ruiz, Sean Fontes, Hannah Abelow, Mike Mitchell, Krystal Waters, Morris Akinfolarin, Richard Palmieri, Armindo Goncalves, Andrew Marcaccio, and Dorinda Keene

Internal State Staff absent: Kathleen Corbishley, Dan Jennings, Caroline Skuncik, Kelly Caesar, Carole Cornelison, Denise Correy, Melody Weeks, Jean Heiss, Vilma Peguero, and Ryan Erickson

Guests: Ron Crosson, Kerrie Bennett, Andre Gill, Jose Marcano, Steven Laughlin, Victor Costa, and David Costa

Keywords: Project Labor Agreement (PLA) Division of Information Technology (DOIT)

User Agency – Agency in which the contract is held


I. Call to Order Mr. Waldron called the meeting to order at 2:07 p.m.

II. Approval of Minutes Mr. Waldron motioned to approve the minutes. The motion was seconded by Mr. Yarn. No abstentions recorded. Minutes were unanimously approved.

III. Update on Status of Disparity Study Ms. Burrell announced to the committee the funding for the disparity study had been secured and thanked the committee for their hard work and commitment

IV. Update on Mechanism to Expedite Payments to MBEs Mr. Fontes provided an update on the subcommittee meetings that took place with Accounts and Control and DOIT, following the full committee meeting on January 22, 2018. He said that during the meetings the subcommittee discussed processing payments,


administrative issues related to the RIFANS system, tax reporting, liability on the state for failure to pay, as well as the state’s involvement in private contracts. He said that the subcommittee conducted research on best practices in Maryland, Massachusetts, New York and Pennsylvania finding that Massachusetts is the only state that had a mechanism for the state to pay a subcontractor directly. He said that the process is triggered after an administrative procedure which is triggered by a dispute between the GC and subcontractor. He said that after the state reviews the claim and it is determined that the subcontractor is owed money, then the state is able to process that payment directly. He said that Massachusetts also identifies the subcontractors at the front‐end by which of the prime contractor at time of bid or in certain circumstances the subcontractor can bid on the project at the time the prime bids on the project. He said during the meeting with the state’s Information Technology Division they came up with three significant findings, the average time from the date invoices are submitted by vendors to the date they are received by Accounts & Control and entered into the system, which is 30 days. He said that once it does reach Accounts & Controls, the invoice must be approved by the user agency and once it’s approved then the payment is processed. He then said that on average it takes 4 days once it is received by Accounts and Control to be approved. He said that once the user agency approves the invoice it takes 9 days for Accounts and Control to issue the payment to the GC. Mr. Fontes said that the committee has proposed shortening period of payment, however, there are other issues that arise such as the invoices reaching the user agency and sitting there before it is submitted to Accounts and Control. He said that the committee came up with two solutions to this problem; the first would be to have the invoice submitted to Accounts and Control at the time that it’s submitted to the user agency so that they can begin tracing it right away, and the second would be to have the state invest in a similar program like that of the RIDOT which has a contract management unit that is staffed with people that can take care of the administrative piece. He said that with the people power we currently have it is very difficult to take care of the administrative part of the process. Mr. Bueno asked about electronic payments instead of checks. Ms. Keene said that the state currently processes electronically as well, but it’s the tracking process that has become a burden. Mr. Sinnott said that every M/WBE should have a special tracking number and that it should be automatically put into the RIFANS system. Mr. Cortés said from his understanding there are logistical issues with setting up direct payments to subcontractors and if we could speed up the payment to the prime by setting up the double invoicing system, then it may not be necessary to focus on direct payment. Mr. Fontes said that another issue that was identified is lien releases. He said that it is sometimes difficult to get the subcontractor to sign off on it to then get it to the project manager and to the user agency. Mr. Sinnott said that it comes down to what we are willing to spend to correct the problem. Mr. Waldron said that given the right political will it’s accomplishable. He said that we keep running into processing problems and if increasing people power is a solution, then we should do it


Mr. Yarn said that the internal process must be streamlined. He said that Massachusetts is driving the market and thus it indirectly impacts the market in Rhode Island Mr. Sinnott said that the 30 days isn’t going to help because the contractors and subcontractors that the committee is focused on do not have the capacity to last 30 days. Mr. Yarn put forth a motion to adapt the recommendations and findings presented by Mr. Fontes on behalf of the subcommittee. Mr. Sinnott seconded the motion. The committee discussed the motion Mr. Torrado said that the penalties for not complying with prompt payment must be enforced otherwise it will not matter what the days are reduced to. He said that most of the contracts have interest payment after 30 days, but that it is never enforced Mr. Waldron said that the Legal Subcommittee discussed options during the meeting that took place on March 1, 2018. He said that the committee can continue discussions at a later time Mr. Cortés said that there is a potential that we may be looking at an extension of the working group and that if approved the committee should consider making recommendations on pilots around improving concepts, around improving efficiencies, around getting MBE’s paid Mr. Yarn said that going back to his initial motion in moving the ball forward, we may need to put together a separate motion to address Mr. Tornado’s concerns Mr. Bueno suggested amending the motion to state that we approve the recommendations presented by Mr. Fontes to speed up the process with the caveat that the committee will be looking at other avenues as well, specifically the interest rate The committee discussed creating a separate motion to address penalties Ms. Keene said that when they took the data that came from DOIT on construction invoices, they found that the delay is at the agency level. She said that the way the law reads is that the state is to pay an approved invoice within 30 days, and that an approved invoice doesn’t start until it’s submitted to Accounts and Control. She said that by the time Accounts and Control receives an invoice until the payment is made is only averaging 13 calendar days, and the delay is that it’s taking agencies 30 plus days to submit it to Accounts and Control. She said that the recommendation is to send the invoices to Accounts and Control at the front end and then Accounts and Control can use their tickler system to make sure it continues to go through the process Mr. Cortés asked for clarification on the motion Mr. Yarn made a motion to adapt all the recommendations presented by Mr. Fontes on behalf of the subcommittee to be submitted to the Governor for review Mr. Sinnott asked to add that managers at the agency level, be held accountable as part of their review. He then asked if everyone was clear on the motion being made which would include invoices being submitted concurrently to Accounts and Control and the user agency, and that a contract management unit be created to manage and track invoices and to rate managers upon their efficiency in turning over the invoices in a timely manner. The motion was properly seconded. The motion passed unanimously Mr. Waldron asked to go back to Mr. Tornado’s recommendations to enforce penalties The committee discussed the motion


Mr. Torrado made a motion to enforce penalties once the duration of the payment is established, that the user agency will pay the legal daily interest rate for any days beyond the 30 days and that the 30 days has a starting point of agreement between the designated representative from the state agency, the designer and the CM and Subcontractor The committee further discussed the motion Mr. Cortés said that he doesn’t think that enough research has been done to make a motion to enforce a finer penalty structure for late payments Mr. Marcaccio said that there are current laws in place to enforce prompt payment and there are remedies available if you’re aggrieved by those laws whether you’re a subcontractor and you’re aggrieved because the prime missed the deadline, or you’re a prime that is aggrieved because the state missed the deadline. He said there are two hurdlers for that subcontractor to go after that remedy, one being if they sue the prime, they may not get future work from that prime, and two do they have the resources to hire an attorney to seek out those remedies. He said that another way to look at it is to consider ways that the state can help. He said it’s very difficult when you have a blanket fine when you don’t necessarily know who is harmed by it or who is to blame Ms. Abelow suggested having Accounts and Control in the room prior to voting on anything that may affect the process that was agreed to at the last meeting Mr. Cortés said that strong penalties and a good program make sense; however, in his work he has never been able to penalize someone into compliance. He said that showing them how to do the process better or revoking the whole thing has been the only thing that’s worked and that he’s not convinced that we have best practice reflected in the motion Mr. Sinnott said that with penalties we should discuss rewards and at the last meeting the committee discussed rewarding points. Mr. Waldron asked the committee to vote on the motion currently on the floor Ms. Abelow asked the committee to repeat the motion Mr. Torrado said that the motion previously made is for the subcontractor to receive the legal daily interest rates for payments not made on time and that trigger is started by the approval by owner, their representatives, and the subcontractors Mr. Waldron called for the motion. The motion was approved. One abstention recorded

V. Report of Legal Subcommittee on Recommendations Deposit/Up‐front Payments & Retainage ‐ Mr. Peckham presented on the first recommendation stating that any contract greater than $250k is bonded and there be an available deposit as requested by the M/WBE contractor of 2% and that once the contract is signed that becomes available and that no retainage shall be withheld on that deposit. He said that prior to mobilization as requested by the M/WBE contractor they would be able to ask for a requisition for a mobilization deposit of 1% of the total contract value and no retainage would be held on that. He discussed the recommendations to allow bi‐weekly applications for payment which may include reimbursement for items such as office management, supervision, material equipment submittals, insurance bonds and storage of fabricated materials specific to the project. He then moved onto retainage stating that projects will have 0% retainage for projects that are 50% complete and from 50% ‐ 100%


there will be a 10% retainage held until they get to 100% there at net 5% retainage. He then discussed retainage release beyond the usual 5% at 100% complete and how that trickles down to 0% retainage at final payment. He said they should be allowed to reduce retainage in the amount of 2.5% of the contract value upon substantial completion of their scope of work, provided the estimated amount of their work to complete exceeds 2.5% then that number shall hold. He then moved on to item 10 stating that when a contractor has two very different scopes of work with one being up‐front early in the schedule and one being later in the schedule, that the scope of work should be quantified and reduce retainage per the previously mentioned down to 0% and then the other balance of the contract could be on sequence work or partial scope of work. Ms. Burrell asked that Mr. Peckham amend item 1 by adding the second line in item number 5, so that it would also indicate the reimbursement items mentioned in previous discussions Mr. Torrado asked if the committee would consider the recommendation of holding the value of the punch list at its actual value Mr. Peckham said he would look into it Set‐asides – Skipped Breaking Up Projects – Mr. Peckham said that breaking up projects would allow the general contractor and/or construction manager to be creative by breaking up certain scopes of work into smaller packages that the M/WBE would be able to manage. He said that some of the projects that primes get involved with can become very difficult, so allowing the GC and CMAR to break out projects into smaller packages to put out for M/WBEs to bid on only, and any non M/WBE would be disqualified PLAs/Carve Outs – Mr. Peckham said allowing the CMAR or GC to create smaller packages for M/WBEs will allow the M/WBE community to be more engaged in state projects and PLAs Mr. Bueno asked for case scenarios for each of the suggested changes for the committee to include for review MBE Utilization Reporting Requirements by State Quasi‐State Agencies – Mr. Peckham said that the recommendation would be to have the GC or CMAR to provide with their bid the attached report for M/WBE utilization and then after contract award on a monthly basis the GC and CMAR provide a secondary report for confirmation of payments to their M/WBEs as well as all subcontractors providing the same form that designates payments to their second tier subcontractors Enforcement/Compliance Policies and Practices – Mr. Peckham said that the subcommittee requested that this item be further discussed Reporting Requirements by State Quasi‐State Agencies – Mr. Peckham said that it is a recommendation that all quasi state agencies of the State of Rhode Island follow procedures and reporting guidelines similar to that of the Department of Administration and that reporting criteria would be required to be submitted to DOA on a quarterly basis as opposed to a monthly basis Mr. Peckham also made a recommendation to extend the working group through April of this year and potentially another year as there are still several topic areas that need to be vetted Mr. Yarn suggested putting safe guards in based on the results of the disparity study


Mr. Marcaccio recommended reconvening once the disparity study has been completed Mr. Bueno asked if there could be interim reports provided in advance of the completion of the disparity study Mr. Cortés asked that the committee accept recommendations 1, 2, 3, 4, 6 and 7 and add into item 1.1 the language that Ms. Burrell suggested being included, and also that in item number 3 or any other place where there is no regulatory impact, that we note that the recommendation does not have regulatory impact and that in item number 7 an additional sentence to state that the extension is recommended for one year through April 2019 and we recommend reconvening the committee once we have the disparity study results. A motion was made and properly seconded. Ms. Burrell suggested adding municipalities that use state funds on item 6. The suggestion was approved and the motion passed unanimously

VI. Discussion on the Following Remaining Topics: ‐ Mentor Protégé/Joint Ventures ‐ Training ‐ Access to Capital ‐ Minority Participation in Apprenticeship Programs ‐ Communication on Access to Bid Opportunities Ms. Burrell suggested that the Chairs consider postponing the topic areas until the committee is granted an extension Mr. Waldron agreed Mr. Bueno asked if the state would be able to expedite the draft report to present at an earlier meeting Ms. Burrell agreed to send out a draft to committee members Mr. Yarn suggested adding an additional meeting at the end of the month The committee agreed Mr. Sinnott asked the committee to vote on the extension. The committee agreed The committee agreed to reconvene March 26, 2018 Mr. Yarn suggested scheduling a press release with the Governor to report out on the committee’s findings Ms. Burrell suggested scheduling the press release April 13, 2018

VII. Comments and Announcements None

VIII. Adjournment Meeting adjourned at 4:00 p.m.



March 26, 2018

Committee members present: John Sinnott ‐ Co‐Chair, Darrell Waldron – Co‐Chair, Doug Peckham, Christine Rancourt Bruzzi, Andrew Cortez, Belinda Wong, Ron Crosson, and Justin Kelley

Committee members absent: Stanford Cameron, Stephen Cardi, Carmen Diaz‐Jusino, Angus Leary, Joseph Wanat, Luis Torrado , William Bundy, John Marcantonio, Lindsay Desjarlais, , Michael Van Leesten, Channavy Chhay, Mario Bueno, Julius Kolawole, Kasim Yarn, Barbara Thornton, Mario Bueno, Channavy Chhay, and Michael Sabitoni

Internal State Staff present: Andrew Marcaccio, Armindo Goncalves, Cheryl Burrell, Dorinda Keene, Elvys Ruiz, Jean Heiss, Melody Weeks, Morris Akinfolarin, Sabina Matos, Sean Fontes, and Vilma Peguero

Internal State Staff absent: Richard Sparks, Mike Mitchell, and Krystal Waters

Guests: Kerrie Bennett

Quorum Present: No

XXIV. Call to Order Mr. Waldron called the meeting to order at 2:10 p.m.

XXV. Approval of Minutes of Full Committee Meeting March 5, 2018 Mr. Cortes made a motion to approve the minutes. The motion was properly seconded. No abstentions recorded. Minutes were unanimously approved.

XXVI. Review Draft of Final Report to the Governor Ms. Burrell provided the committee with a draft of the final report to be submitted to the Governor on April 16, 2018 Mr. Waldron asked about the extension the committee discussed at a previous meeting Ms. Burrell said that it was not included in the version of the report disseminated but that she would be happy to add the request to the final version of report Mr. Waldron asked the committee how they feel about the work the committee has done Mr. Cortes said that there are several topics that the committee has yet to work through and that it makes sense to emphasize that the committee feels there is still work to be done Ms. Burrell asked Mr. Cortes if he would be able to draft a short paragraph to insert in the letter portion of the report The committee asked that the report not be called “final” due to the request to extend the working group Mr. Crosson said that the work the committee has accomplished so far is tremendous but there is still much work that needs to be done


Ms. Burrell said that she would make the suggested changes to the report. She said the work that the committee has done is reflected in the progress that has already been made towards the goals with 17.7% participation in the last quarter up from 4.0% Mr. Byrnes said that if the working group is granted an extension the best way to work through the remaining issues is to form subcommittees that would report directly to the full committee Mr. Cortes said that the submission of the report is a good indication of the progress the working group has made Ms. Burrell continued her review of the report by explaining the changes to the summary and target areas Mr. Waldron asked if ODEO added the recommendation that was made by Mr. Sinnott regarding the manager’s performance review which had been discussed at the last full committee meeting Ms. Burrell apologized for not including it in the version presented but said that it would be added to the final version The committee discussed where the suggestion should be added in the report Mr. Waldron asked how we can ensure that the review is also applied to unions Mr. Marcaccio said that you could shape it as a training instead of a review by showing managers what happens when their late with invoices Mr. Crosson asked if there is currently a review process in place Ms. Burrell said that there is a review process that has been piloted and it will be rolled out to other agencies within the executive branch Mr. Cortes said that as a policy body he still feels that the committee can make recommendations even if it’s not achievable. He suggested adding language to the recommendation to instruct all vendors to send all invoices to both the user agency and to the Office of Accounts and Controls and incorporate the expedience of processing invoices as a staff performance measure when possible. Ms. Bennett expressed support of the suggestion made by Mr. Cortes and said it will be a mindset and cultural change over time. She said making sure that people are educated and that information is accessible is important if we want to then hold them accountable Ms. Burrell said that agencies will have to identify the MBE coordinator giving us a point of contact for every solicitation Mr. Cortes said that he wants to keep track of the logistics of implementing the recommendation, strategy and intent the committee is trying to achieve. He suggested that instead of adding to the bullet as previously recommended, instead create a separate recommendation to state that when possible appropriately incorporate as a measure of staff performance the expedience of which the invoices are processed Ms. Burrell asked Mr. Cortes to assist with incorporating the suggested language The committee reviewed the remaining policy recommendations Mr. Sinnott asked who will be reviewing the report to approve or reject recommendations Ms. Burrell said that this report is to be submitted to the Governor for her review Mr. Sinnott asked how long it would take to hear back from the Governor’s Office Ms. Burrell said that she hopes to get a quick response from the Governor and suggested that the chairs inquire Mr. Cortes said that the report stands on its own and it will be a public document whether the recommendations are acted upon or not. He said getting it out there to the public is important


Mr. Waldron asked if there would be a document available to the public in reference to the work the committee has been doing Ms. Burrell said that the interim and final report will be a public document Mr. Waldron asked about sending a copy to the Mayor Ms. Burrell agreed Mr. Sinnott asked about the request to present the recommendations to the Governor Ms. Burrell said that at the last meeting there was discussion about hosting a press conference. She said that if the committee would like to proceed she would be happy to inquire about that Mr. Sinnott said that he would like to host a press conference to present the recommendations and request for an extension The committee agreed to request to host the conference the week of the 23rd of April, 2018 and to submit the report on its due date

XXVII. Comments and Announcements Mr. Waldron said that he met with some local trainers and mentioned some of the work the committee has done. He said they suggested getting together with other trainers to create a standard curriculum for the construction industry. He also said that there was a contractor at the last meeting that said that she would send a letter identifying the prime contractors who had not yet paid her Ms. Burrell said that if a vendor has a complaint for non‐payment it needs to be submitted to the Division of Purchases and that the MBE Office intervenes on behalf of the vendor The committee recognized Dorinda Keene for receiving the Rhody Service Award Mr. Sinnott asked if Rhode Island Foundation could assist with putting together a strategic plan Ms. Weeks said that she would inquire Ms. Bennett suggested broadening the request to the Rhode Island Foundation and ask to meet with some of the appropriate folks to discuss the areas where we think they can help Ms. Weeks said she would go back to Commerce and find out who has expertise in that area and get back to the committee Mr. Cortes said he would be happy to be a part of the meeting with the Rhode Island Foundation Ms. Keene said that she appreciates the suggestion to contact the Rhode Island Foundation but that it is important to not lose sight of the fact that this is the Governors working group and that recommendations discussed here are to be submitted to the Governor. She asked if it was premature to plan to have discussions with the Foundation The committee said that they would not plan to meet until after the Governor receives the report Ms. Keene also announced that the 2nd Annual Diversity Business Enterprise Forum would take place April 17, 2018 and asked that the committee members help to share information about the event Mr. Waldron asked Ms. Keene to resend information regarding the event


XIII. Adjournment Mr. Waldron made a motion to adjourn the meeting. The motion unanimously passed and the meeting adjoined at 3:45pm


Appendix D

Glossary of Terms

TERM DEFINITION

Airport Concession Disadvantaged Business Enterprise (ACDBE)

Airport Concession Disadvantaged Business Enterprise (ACDBE) means a concession that is a for‐profit small business concern that is at least fifty‐one percent (51%) owned by one or more individuals who are both socially and economically disadvantaged, or in the case of a corporation, in which fifty‐one percent (51%) of the stock is owned by one or more such individuals, and whose management and daily operations are controlled by one or more of the socially and economically disadvantaged individuals who own it.

Affirmative Action Plan (AAP) A written positive management tool of a total equal opportunity program indicating the action steps for all organizational levels of a contractor to initiate and measure equal opportunity program progress and effectiveness.

Apprenticeship A combination of on‐the‐job training and related classroom instruction in which workers learn the practical and theoretical aspects of a highly skilled occupation.

Bond A three‐party contract (variously called bid bond, performance bond, or surety bond) in which the surety gives a guaranty to a contractor's customer that the contractor will fulfill all the conditions of the contract. If the contractor fails to perform according to the terms of the contract, the surety pays a sum (agreed upon in the contract and called liquidated damages) to the customer as compensation.

Capital Providers A person or company which provides capital to a business. Debt capital may be obtained from private sources, financial institutions, insurance companies or public sources, in the form of a loan. Equity capital is private investment by individuals or business owners derived by the sale of shares in a firm.


Construction Manager (CM) The contractor selected during the design phase of a public works project that may provide certain preconstruction expertise including cost estimating, value engineering, and scheduling and, during the construction phase of the project, coordination of all construction activities.

Construction Manager at Risk (CMaR) Under the CMaR method of construction management the State selects a contractor during the design phase of a public works project after thorough evaluation of the contractor’s previous experience and total costs/fees (guaranteed maximum price) for the project. The CMaR contractor is required to provide a number of essential services during the design phase of the project, including: constructability reviews, cost estimates, scheduling, etc. During the construction phase of the project the CMaR contractor assumes the role of general contractor by bidding out all the necessary material, equipment, and trade subcontracts so as to deliver the project on time and on budget.

Contractor Controlled Insurance Program (CCIP)

A program sponsored by a general contractor to provide general liability insurance, workers compensation and excess liability coverage for the length of a construction project for all or a majority of the parties involved, rather than requiring each participant to be responsible for the procurement of their own insurance.

Disadvantaged Business Enterprise (DBE) Disadvantaged Business Enterprise (DBE) means a concession that is a for‐profit small business concern that is at least fifty‐one percent (51%) owned by one or more individuals who are both socially and economically disadvantaged, or in the case of a corporation, in which fifty‐one percent (51%) of the stock is owned by one or more such individuals, and whose management and daily operations are controlled by one or more of the socially and economically disadvantaged individuals who own it.

Disability Business Enterprise (DisBE) A small business concern, which is at least fifty‐one percent (51%) owned by one or more person(s) with disabilities or, in the case of a publicly owned business, at least fifty‐one percent (51%) of the stock of which is owned by one or more disabled person, whose management and daily business operations are controlled by one or more person(s) with disabilities, and have fifty or fewer employees.


General Contractor (GC) The contractor with main responsibility for the construction, improvement, or renovation project under contract, and is the party signing the prime construction contract for the project. The general contractor is the person or entity who hires all of the subcontractors and suppliers for a project.

Individuals with Small Business (ISBEs) A small business enterprise that is owned and controlled by one or more individuals who are women or minorities as defined by R.I Gen. Laws 37‐14.1‐3 or a small business enterprise that is owned and controlled by one or more individuals with disabilities as defined by R.I. Gen. Laws 37‐2.2‐2.

Insurance (INS) A practice or arrangement by which a company provides a guarantee of compensation for specified loss or damage in return for payment of a premium.

ISBE A small business enterprise certified by the Office of Diversity, Equity and Opportunity (ODEO) that is owned and controlled by one or more individuals who are minorities or women as defined by R.I. Gen. Laws § 37‐14.1‐3 or a small business enterprise certified by the Governor’s Commission on Disabilities as owned and controlled by one or more individuals with disabilities as defined by R.I. Gen. Laws § 37‐2.2‐2.

Master Price Agreement (MPA) Master Price Agreements cover requirements for universal need for goods or services for a specified contract period on a state‐wide basis. They are solicited as Requests for Proposals or Requests for Quotes and may have cap limits for pricing and cap limits for project cost. MPAs provide agencies with access to qualified vendors, expedited process, and opportunity for mini‐bid. State and Quasi‐Public Agencies order their requirements for these items individually, as the need arises. There are approximately 200 MPAs in the portfolio, they are diverse in the goods and services provided; for example, road salt, office supplies, milk, small appliance repairs, automotive parts and batteries, energy efficiency services and stenographic services are all contracted as MPAs.


Minority/ Women Owned Business Enterprise (M/WBE)

A small business concern which is at least fifty‐one percent (51%) owned and controlled by one or more socially and economically disadvantaged individuals or in the case of a publicly owned business, at least fifty‐one (51%) of the stock of which is owned by one or more socially and economically disadvantaged individuals; and whose management and daily business operations are controlled by one or more such individuals who own it.

Mobilization Funding A financial tool commonly used by contractors in the construction industry to raise capital to cover costs; i.e. moving equipment onto job site, before work begins on a project or prior to invoicing.

Owner Controlled Insurance Program (OCIP) A program sponsored by the owner of a project to provide general liability insurance, workers compensation and excess liability coverage for the length of a construction project for all or a majority of the parties involved, rather than requiring each participant to be responsible for the procurement of their own insurance.

Project Labor Agreement (PLA) A pre‐hire collective bargaining agreement with one or more labor organizations that establishes the terms and conditions of employment for a specific construction project.

Mentorship/Protégé A relationship in which a successful firm or its employees provide business development assistance and lends expertise to a developing firm over a period of time, typically through a contractual agreement or program.

Rhode Island Financial Accounting System (RIFANS)

The State of Rhode Island's Financial and Accounting System. It includes an internet self‐service tool which gives the State's suppliers the ability to directly access their information and enter business transactions through a secured web site.

Rhode Island General Law (RIGL) The codified laws of the State of Rhode Island. Rhode Island Vendor Information Portal (RIVIP)

Rhode Island's personalized digital dashboard to view and watch Rhode Island Division of Purchases State solicitations and external solicitations.

Set‐aside Reserving an acquisition or limiting competition for certain contracts to a specified group, such as small business, or minority and women owned businesses.

Tax Stabilization Agreement (TSA) A short term tax incentive used by a government to reduce the tax burden on a property through a stabilization agreement in order to make the property more attractive for redevelopment.


User Agency The agency in which the contract is held.

Veteran Owned Business Enterprise (VBE) A small business concern which is at least fifty‐one percent (51%) owned and controlled by one or more socially and economically disadvantaged veterans or in the case of a publicly owned business, at least fifty‐one (51%) of the stock of which is owned by one or more socially and economically disadvantaged veterans; and whose management and daily business operations are controlled by one or more such veterans who own it.

Governors WGDC Report of Recommendations -...

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