Governor’s Working Group on Diversity in Constructionodeo.ri.gov/documents/governors-wgdc-progress-report-2-15-19.pdf · Appendix C – Minutes of the WGDC Full Committee and Sub-Committee

Governor’s Working Group on Diversity in Construction

Prepared by:

Department of Administration Office of Diversity, Equity and Opportunity

February 15, 2019

Progress Report

2019

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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. Overview of Focus Areas 5-8

III. 2019 Legislative Proposals 9

IV. Next Steps 10

V. Working Group on Diversity in Construction Members 11

Appendix A – Executive Order 18-07 “Extension of Working Group on Diversity in Construction” 12-13

Appendix B – PowerPoint – “ODEO Contractor’s Meeting” hosted by Governor’s Working Group on Diversity in Construction 14-22

Appendix C – Minutes of the WGDC Full Committee and Sub-Committee Meetings 23-52


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


II. Overview of Focus Areas

The Governor’s Working Group on Diversity in Construction (WGDC) reconvened on October 10, 2018. Members reviewed and discussed the legislation that had been submitted during the previous legislative session on bonding, prompt payment, and retainage. It was noted that none of the proposed changes had been approved by the legislature. The WGDC agreed to continue its advocacy for changes to these laws and to consider possible improvements and/or additions before re-submitting the proposals for consideration during the upcoming legislative session. The WGDC also discussed the need to develop strategies to address the remaining barriers identified during the group’s previous work. Topics included:

• Access to financing/working capital • Training • Insurance • Language needs • Enforcement and compliance • Mentor protégé/joint ventures • Minority participation in apprenticeship programs • Communications on access to bid opportunities • Disparity study

To enhance discussions on the above topics, members discussed the need for additional individuals with subject matter expertise to be recommended for appointment to the WGDC. Members were encouraged to submit the names of those individuals who they had in mind for consideration.

Contractor’s Meeting

The WGDC hosted a contractor’s meeting to present information on the progress that had been made to date on efforts to identify and address barriers to MBE participation on State funded projects. The meeting was facilitated by the Office of Diversity, Equity and Opportunity (ODEO) and included a panel discussion on specific efforts that had been made by ODEO and the WGDC. Panelist also shared information about on-going projects, as well as anticipated projects, with a focus on the specific type of products and services that would be needed.

The panel members included John Sinnott, Vice President of Gilbane Building Company; Carole Cornelison, Division Director, RI Department of Administration, Division of Capitol Asset Management and Maintenance; Doug Peckham, Project Executive, Dimeo Construction Company; and, Christine Lopes Metcalf, Chief Executive Officer, RI Department of Education, School Building Authority. Contractors were very engaged and posed several questions to the panelists. Appendix B is the PowerPoint deck that was shared at the event.


Disparity Study:

The WGDC was provided an update on the status of the disparity study. It was noted that the kick-off meeting was held on September 10, 2018 at the Department of Administration and was widely attended by several State agency representatives. The consultant, Eleanor Mason Ramsey, Ph.D., President and Project Manager of Mason Tillman Associates, LTD, provided an overview of the process and answered several questions posed by those in attendance. Attendees were also provided with a detailed list of the information and data that would be needed for the analysis.

On January 18, 2019, Mason Tillman Associates, LTD, received all prime contract data for the study period, and the review is currently underway.

Training:

At the December 10, 2018 meeting of the WGDC, several individuals were invited to attend to provide information on the various training programs they administered.

• CCRI – Julian Allsid provided information on several programs being offered that are relevant to the construction industry; i.e. pipefitting, sheet metal, electrical, plumbing. He also indicated that CCRI was looking into providing project management, project planning, and field supervisor and management training programs

• Skills for RI’s Future – Nina Pande shared information about her organization, which is a non-profit entity focused on demand driven talent sourcing. She indicated that her program started working with employers around the state to identify the skills they needed and began placing people of color into those jobs. She also talked about Prepare RI, which is a program that places high school students into paid internships. The students receive hands-on training and exposure to real life experience in the workplace. They also offer career awareness and readiness workshops for the students.

• DLT’s Real Jobs RI Program – Alyssa Alvarado presented information on this program, which makes investments in intermediaries that help operate workforce training programs and other innovative workforce solutions. She indicated that she works closely with Skills for RI’s Future and other similar programs. She also shared that DLT is kicking off a workforce effort to promote the commercial construction sector. Their plan is to assess the demands of the construction industry in RI as it relates to roadworks projects and school construction to determine what type of workers will be in demand for those jobs. She also indicated that they are partnering with the Associated General Contractors (AGC) of RI, who has donated resources to hire a


consultant to work with companies and the unions to develop the workforce needed. There will be three major components to this effort:

1. The high school career and technical education programs 2. Adult workforce training programs 3. Training and resources for minority owned small businesses to grow and

develop

Construction Career Pathways:

The WGDC identified the need to develop information and charts that outline the career pathways for jobs in the construction industry. Such information and charts would need to include the K-12 level through apprenticeship programming, and extending to trade schools, colleges and universities for the many trades and associated professions within construction.

Currently, a one-stop-shop for every single trade or apprenticeship program, which outlines the career pathway, does not exist. The WGDC recommended that a central repository or site be developed where this information could be made readily available to those who may be considering a career in construction. It was emphasized that there currently exists a high demand for those interested in the construction industry, which means that action must be taken quickly to meet the shortage of talent that currently exists.

MBE Access to Capital:

Denise Barge, Commerce RI, shared information with the WGDC on the financial services programs currently available through her agency. Denise stated that they offer small business loans ranging between $50,000 - $500,000 through the Small Business Loan fund. They also offer a Small Business Assistance program with micro loans from $5,000 - $25,000 and they also have additional programs that lend from $25,000 - $250,000. She indicated that Commerce RI is working with five (5) different lenders, none of which currently offer a line of credit program at this time. The WGDC felt that there is a need for loan programs specifically targeted to meet the needs of minority- and women-owned businesses. The WGDC felt that more must be done to develop and offer such funding programs.

Project Labor Agreements:

To address long standing beliefs held by many individuals in the MBE community that project labor agreements (PLAs) prevent minority- and women-owned firms from participating in publicly funded construction projects, members of the WGDC provided information that addressed many of the concerns. It was noted, for example, that PLAs provide project stabilization and efficiency, especially on larger projects, where the likelihood of something


going wrong is greater. They also provide an assurance of a well-trained, skilled pool of workers that receive prevailing wages and a full benefits package.

Michael Sabitoni shared information on the unions practices around permitting open shops to participate on projects through language contained in PLAs, referred to as the “Single-Man Clause”. This clause grants permission to small companies, such as MBEs, to participate on the project, provided they agree to the conditions outlined in the PLA contract.

Legislative Proposals:

Since the December 10, 2018 meeting of the WGDC, the members have focused their discussion primarily on the proposed legislation for the 2019 session of the General Assembly. The WGDC agreed to resubmit legislative amendments to the laws on bonding, prompt payment, and retainage. A legislative subcommittee was formed, and discussion on these and other possible legislative amendments ensued. The group agreed that they needed to develop a plan of action and strategy that brought opponents to the table to determine what needed to be done to improve the proposals and win their support. The group also agreed to meet with the bills previous sponsor to determine what went wrong and what could be done to win the support of the legislature during the upcoming session.

After much discussion and debate, as well as conversation with several stakeholders, including members of the general assembly, the WGDC agreed to propose amendments to the bonding and prompt payment laws, and to postpone any amendments to the retainage law at this time.


III. 2019 Legislative Proposals

Below are a few of the legislative proposals that have been discussed and will be submitted by the Department of Administration, Office of Diversity, Equity and Opportunity, on behalf of the Governor’s Working Group on Diversity in Construction. We ask that the legislature move swiftly to enact the following legislative changes based on the findings of this group: Proposal A – Bonding: Bill Title: Contractors’ Bond Current law establishes requirement for the submission of bond, with surety, for all public construction contracts exceeding $50,000 Statutory revision raising the bonding requirement to $200,000 is needed in order to reflect inflation and to achieve parity with bonding requirements in surrounding states. Proposal B – Prompt Payment: Bill Title: Prompt Payment by Department of Administration Current law establishes requirement for the prompt and timely payment to vendors, construction contractors, and providers of serve to the State of Rhode Island. Revision to statutory prompt payment requirement is needed in order to improve prompt payment between contractors and subcontractors and to provide a mechanism for the timely payment of invoices to subcontractors and suppliers, with stronger enforcement and penalties for non-compliance.


IV. Next Steps

Over the next six months, the WGDC will continue its work on several target areas, including those outlined in its Initial Findings report dated October 23, 2017, as well as those highlighted in the Report of Recommendations dated April 27, 2018.

The topics include, but are not limited to:

• Training • Access to capital • Deposit/Up-front Payments and Mobilization • Communication on Access to Bid Opportunities • Mentor Protégé Programs • Joint Ventures • MBE Utilization Reporting Requirements


V. Working Group on Diversity in Construction Members

The following individuals were originally appointed by Governor Raimondo or newly appointed by Director DiBiase to serve as a member of the Working Group on Diversity in Construction:

F Name L Name Title Organization Kerry Bennett* Executive Director RI Association of General Contractors

Mario Bueno Executive Director Progreso Latino

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

Associated Builders and Contractors, Inc.

Stephen Cardi, Jr. Treasurer Cardi Corporation

Channavy Chhay Executive Director Center for Southeast Asians

Bob Cooper Executive Secretary Governor’s Commission on Disabilities

Andrew Cortés Director Building Futures

Ron Crosson Executive Director Urban Ventures

Lindsay Desjarlais Chapter President National Association of Women in Construction

Justin Kelley Business Representative, Local 195 of District Council 11

International Union of Painter's and Allied Trades

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

Oscar Mejias* Board of Directors, President RI Hispanic Chamber of Commerce

Dan O’Connell* Estimator Dimeo Construction Company

Douglas Peckham Project Executive Dimeo Construction Company

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

John Sinnott, Co-Chair Vice President Gilbane Building Company

Barbara Thornton Principal Brewster Thornton Group Architects

Luis Torrado President Latino Contractors Association

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

Joseph Wanat Managing Director Vanasse Hangen Brustlin, Inc.

Osmond Weekes* Carpenter Steward Local Union 67

Derek Winslow* Real Estate Project Developer/Manager West Elmwood Housing Development

Belinda Wong President Care Technology LLC Kasim Yarn Director Rhode Island Office of Veterans Affairs

* Appointed on December 19, 2018 by Director Michael DiBiase, Department of Administration


Appendix A



Appendix B










Appendix C

Overview of Governor’s Diversity in Construction Working Group

Full Committee Meeting

October 10, 2018

Committee members present: John Sinnott - Co-Chair, Darrell Waldron – Co-Chair, Barbara Thornton, Belinda Wong, Joseph Wanat, Christine Rancourt Bruzzi

Committee members absent: Stephen Cardi, Angus Leary, Michael Sabitoni, William Bundy, John Marcantonio, Andrew Cortés, Channavy Chayy, Lindsay Desjarlais, Stanford Cameron, Luis Torrado, Justin Kelley, Charles Byrne, Julius Kolawole, Mario Bueno, Ron Crosson, Michael Van Leesten

Internal State Staff present: Dorinda Keene, Cheryl Burrell, Sean Fontes, Melody Weeks, Andrew Marcaccio, Vilma Peguero, Armindo Goncalves, Kasim Yarn, Sabina Matos, Mike Mitchell, Jean Heiss, Tony A’Vant, Krystal Waters

Internal State Staff absent: Richard Sparks, Carole Cornelison, Kathleen Corbishley, Elvys Ruiz, Caroline Skuncik, Richard Palmieri, Morris Akinfolarin

Keywords:

Guests: Dan O’Connell, Osmond Weekes

Quorum Present: No

I. Call to Order/ Introductions Mr. Sinnott called the committee meeting to order at 3:00 p.m.

II. Review Executive Order 18-07 Extension of Working Group on Diversity in Construction Mr. Sinnott said, that executive order gives the working group the ground work for where they want to end up. He said, that one of the stumbling blocks has been trust and that we must those that have not been engaged believing that this work is going to make a difference. He said, that the work the group did last year was major and everyone put a lot of energy and effort in last year.

III. Review Legislative Proposals

Ms. Burrell reviewed the three proposals that were put forth by the working group on bonding, prompt payment and retainage Mr. Sinnott said, that often you’ll have the M/WBE compete a portion of the site work and because they’re working for the major subcontractor they hold 10%. The smaller subs may


have started their work in the first phase and then be left waiting for the last 5% – 10% of their money until the entire project is done. He said, the hardest part for the smaller subs is having their money held for so long Ms. Thornton asked if the proposals died from a lack of sponsorship or timing or another reason Ms. Burrell said, that it was a combination of many factors and that these are three important pieces of legislation and that the committee needs to continue to support them. She said, that she is hoping the committee will agree to resubmit the legislation Ms. Thornton asked who the right person is to sponsor any legislation proposed by the committee. Mr. Sinnott suggested waiting until after the election. He said, that we may want to consider improving or adding to the legislation Ms. Thornton suggested sticking with what we’ve got and try to get to deposit requirements Mr. Sinnott said, one of the major issues M/WBEs have is a lack of working capital and if they’re a working subcontractor/ vendor they may have to put a deposit down. He said, the committee should look into how we can put a mechanism in place to get the funding for them Ms. Thornton suggested putting something in place that would insure the state against non-performance on the delivery of goods Mr. O’Connell said, that in a difficult situation they will back some of that out of their own pocket. He said, that it goes beyond deposits where a small minority owned company will try to mobilize onto a job site and not get paid for a minimum of 8 weeks, which means they have to finance their payroll, and in order to do that you have to have a pretty sizable bankroll and letter of credit to manage that process, and if there are any hiccups they could be out for a longer period of time Ms. Burrell suggested doing some research on what other states are doing in that area. She asked Mr. Goncalves about a program he had mentioned at a previous meeting Mr. Goncalves said, that there are two programs, one is a non-profit called Boston Capital that can give you a line of credit and there is a community revolving loan fund at the Boston Redevelopment Authority that would allow you to borrow money at 0% - 2% Mr. Fontes mentioned that a quasi-state agency, the MA Development Finance Agency, provides contract-based financing in MA, using the subcontract/contract as collateral for the financing

IV. Discuss Strategies to Address Remaining Barriers Mr. Sinnott said, that the committee needs to look at strategies to address remaining barriers. He said, that the committee discussed interim financing / working capital, training, bonding, insurance and language Ms. Burrell added enforcement and compliance, mentor protégé, joint ventures, minority participation in apprenticeship programs, communications on access to bid opportunities and finding ways to expand that process Mr. Sinnott mentioned that he had attended a meeting where an individual made a comment on the lack of internship programs or apprenticeship programs in the state. He said that the Prepare Rhode Island and Rebuild Rhode Island internship and apprenticeship program information is not getting out to the community, so communication is a major issue


Mr. Yarn suggested having a representative from Commissioner Wagner’s Office attend a future meeting to see what can be done for those in grades K-12. He said, that not everyone is destined for college but 7 out of the 10 jobs that are created require a credential higher than a high school diploma, and construction work also requires something higher than a high school diploma The committee discussed language impediments and comprehension issues Mr. Weekes said they had English as a second language classes for members that didn’t speak English. He said, that they’re also working on converting some of the programs into Spanish, and that there are a couple of members working with Chinese. He said, that some people on the job site are not very patient with people who don’t speak the same language. He also said, that they’re trying to work with everyone but that being bilingual is important Mr. Waldron said, that the committee should be looking at a holistic approach. He said, that Rhode Island’s children are poorly educated young people who are not at the level they should be Mr. Sinnott said, that he is on the education committee for the Providence Chamber of Commerce and Doctor Wagner spoke to the committee last Friday. He said, Rhode Island is about 25 years behind Massachusetts. He also said, they’re putting more focus on student pathways and teacher pathways Mr. Yarn said, that based on the barriers the committee addressed, can we legislate some of the items Ms. Rancourt suggested doing case studies from young people who have graduated from some of these training or apprenticeship programs as testimonials Mr. Yarn suggested involving those institutions of higher learner that involve construction field paths, such as the New England Tech and CCRI training programs as well because they have the younger generation from the veteran perspective Mr. Waldron asked if we can get data on how much money is being spent on training right now in the State of Rhode Island, and what the activities are, as well as the success rates for those training programs Ms. Keene said, it’s not something ODEO tracks, but we can certainly request that information

V. Comments and Announcements

The committee discussed pending appointments Ms. Burrell provided an update on the disparity study

VI. Adjournment

Meeting adjourned at 4:28 p.m. by Ms. Burrell




December 10, 2018

Committee members present: Darrell Waldron, John Sinnott, Mario Bueno, Justin Kelly, Michael Sabitoni, Ron Crosson, Channavy Chhay, Belinda Wong, Andrew Cortés, Christine Rancourt Bruzzi, Julius Kolawole, Barbara Thornton

Committee members absent: Angus Leary, Charles Byrne, William Bundy Internal State Staff present: Cheryl Burrell, Krystal Waters, Elvys Ruiz, Sabina Matos, Victor Mendoza, Jean Heiss, Dorinda Keene, Vilma Peguero, Mike Mitchell, Armindo Goncalves, Muraina Akinfolarin, Amanda Clarke, Sean Fontes Internal State Staff absent: Andrew Marcaccio, Carole Cornelison, Caroline Skuncik, Keywords: Community Development Corporations (CDCs)

Guests: Osmond Weeks, Julian Allsid, Nina Pande, Kerrie Bennett, Denise Barge, Alyssa Alvarado, and Laura Hasting, Derek Winslow, Sol Taubin, Tony A’Vant, Cindy Macz

Quorum Present: Yes

I. Call to Order/ Introductions Meeting called to order at 2:11 p.m.

II. Training – DLT, CCRI, Building Skills for RI Future, Prepare RI Mr. Allsid provided information on the work CCRI is doing. He said, that CCRI has launched several programs that are relevant to the working group around pipeline training, pipe fitting, sheet metal and electrical for the maritime industry, fast track to CNC manufacturing programs, electrical and plumbing apprenticeship programs and DOC trainings. In addition to that there are other areas related to construction that CCRI is looking into such as project management and project planning, as well as field supervisor training and management training. He also said, that they’re working on enrolling individuals in M/WBE programs. Mr. Sinnott said, that there is approximately $4.8 billion in planned infrastructure for roads over the next ten years, and about $4 billion in school work, and $3-$4 billion in private sector work. He said that we don’t have a sufficient workforce, and we don’t have enough MBEs and WBEs with sufficient capacity to handle that this volume of work. He said that people need to know about the training programs available so that they can access these opportunities. Ms. Pande spoke about the Building Skills for RI and Prepare RI. She said that Skills for Rhode Island’s Future is a non-profit organization, which is essentially a demand driven talent sourcing entity. She said they start by working with employers around the state and they currently have 83 employer partnerships, including both small and large employers and


across all industries. She said that in the 2 ½ years Building Skills for RI Future has been open they have placed 1,200 people in jobs or train to hire programs. She also said that 53 of the people they have placed are people of color and a good number of those individuals come from zip codes that have traditionally been known as our low-income high-risk communities. She said that for full time entry level jobs on average the starting salary came in at just under $34,000 a year. She said that their total economic impact for this calendar year is roughly $14 million in wages earned by people that they have placed, and that goes right back into the local economy. All services are free, both for candidates coming in the doors and free for the employers as well. Ms. Pande also spoke about the development of the Prepare RI high school internship program, which is a paid internship for high school juniors. She said that 162 students were placed into paid internships with 46 employers last year, and all students graduated. Students were trained in workplace skills so that they were ready to participate. She said that the program is looking to double its participation this summer by placing 300 students. They are already in the recruitment phase and have had over 500 students apply within a week. Ms. Pande encouraged those present to refer eligible students to apply on the Prepare RI website, where the application is open. The Prepare RI team is prioritizing the urban core schools and has been going out to those schools to discuss the internship program. They are also doing career awareness and career readiness workshops. Ms. Alvarez spoke about the Real Jobs RI Program with the Dept. of Labor & Training. She said that the program makes investments in intermediaries to help operate workforce training programs and other innovative workforce solutions. Skills for Rhode Island’s Future is a close partner, and DLT invests in what they are doing. She also said that DLT kicked off a workforce effort in the commercial construction sector and the process they’re embarking on is a planning process by which they assess the demand across the construction sector, more specifically the roadworks projects and the school construction fund, and we need to have the workers to do those jobs. She said that we need to understand how many workers are going to be needed and when we’re going to need them. DLT has brought in the RI Associated General Contractors (AGC) who have donated resources to help hire a consultant to work with companies and the unions to develop that demand assessment. She said that there are going to be three major components - the high school career and technical education programs, adult workforce training programs, and training and resources for minority owned small businesses to grow and develop. DLT is hoping to kick off this effort in approximately 90 days. Ms. Alvarez also discussed the work done around the needs for Electric Boat and said that state/ quasi agencies have come together to determine what resources they’re able to provide. The result has been 10 new career and technical education programs statewide in maritime construction trades, with over 500 kids enrolled in those programs. She said that there are over 1200 Rhode Islanders who have been trained through the adult workforce training programs. DLT is hoping to now do something similar in the commercial construction space. Mr. Sabitoni said that the average age of a trade worker across the country is anywhere from 48-52 years old. He said that he has been working with Building Futures as well as the national building trades on inserting their curriculum into the career and technical schools across the state. He said that we need to get into the career and technical schools within the state to meet these needs with pipelines and career paths through awareness in 11th and 12th grades, and then through pre-apprenticeship and apprenticeship programs, and then into our local unions and journey person populations. He also said that a large majority of the increases in their current workforce has come from urban centers.


Mr. Cortes said that almost 300 individuals in his program have come just from the urban force centers, 60% of which are from Providence, 80% are people of color and 53% have former incarceration issues. The vast majority of the individuals who come to their programs are unemployed or under-employed.

III. Construction Career Pathways

Mr. Yarn disseminated several documents to the committee to show some of the options that other states or others have done to map out construction career pathways, including a sample of work done in 2017 RIDOT to put together a mapping exercise to connect potential customers to available services. Mr. Yarn said that one of his recommendations is that once DLT’s initiative as previously discussed by Ms. Alvarez is completed, they should report back to the working group, which would then assist the committee in the development of next steps. He said that we should create a list of critical jobs required in each industry or trade and then map out the pertinent career pathway which must include the K-12 level. He said that he has seen a strong push for internships and apprenticeship programs. He suggested creating an apprenticeship program based on the various industries. He said that we should also look at the trades schools, colleges and universities, to see where they fit in on the career pathway. He asked what the overall governing body for the trade industry was. Mr. Cortes said that there are various contractor trade organizations, such as the RI Associated General Contractors, and there are member organizations, such as the trade labor unions. Mr. Yarn asked if those organizations are listed somewhere. Ms. Bennett said that some of the information can be found on the AGC website. Mr. Kelley indicated that some information is available on the Build RI website. Mr. Cortés said that currently there is not a one-stop-shop for every single trade or apprenticeship program, although that is an initiative that they are working on. Mr. Yarn said that we need to make a recommendation to create a repository or site where this type of information is readily available, and if there are organizations currently working on this, we need to find out when it’s going to happen and who’s driving it. He said that there are states/countries that do have a site like this in place, such as Canada, Minnesota and Colorado. Ms. Pande asked how we can make a platform like that more interactive where people can get information and register. Mr. Sabitoni said that the good news is that the opportunities for a career in the construction industry are here, but the problem is that the demand for more people in the industry is going to increase rapidly. He said that he needs more people to meet these growing demands, and opportunities exist for veterans, for younger people that are looking to go onto the workforce such as those that are between 25-30, for people with prior incarcerations, for people currently in pre-apprenticeship programs, and for CTEs in order to fulfill the need of the construction industry. Mr. Cortés said that the point of this working group is to tackle issues for MBEs and WBEs and their capacity to bid on State projects, so recommendations here should be kicked to that group for consideration. He said that he just wants to be clear on what the purpose of the Governor’s Working Group on Diversity in Construction is, and to not look at the people side of the equation so much, although there is broadening of the focus to do that. However, the specific task that the Governor gave the working group is around business enterprises.


Ms. Pande said that currently there is no single website for MBEs to go to in order to find this type of information either, so the recommendations may need to get elevated, because if there is going to be money invested in these type of initiatives, how do we make sure that the end product is an accessible website. Mr. Bueno asked if Mr. Yarn would like the committee to make a recommendation to the Governor. The committee further discussed making a motion for recommendation to the Governor to fund an initiative which will craft a comprehensive construction career path mapping system in a one-stop location. Ms. Thornton added that we’re trying to create access for members of the minority community to get into the trades, and also for contractors and subcontractors, including MBE and WBEs, to have access to labor. Mr. Waldron recommended that a sub-committee be formed to fine tune this topic and to draft a recommendation for the Governor.

IV. MBE Access to Capital Ms. Barge provided an overview of RI Commerce Corporation’s financial services. She said that they offer small business loans ranging between $50,000 - $500,000 under their Small Business Loan fund, which is funded with federal money. She also said that they have the Small Business Assistance program with offerings to smaller businesses, including micro loans from $5,000 - $25,000, and they also have another bucket from $25,000 – $250,000, which is money that was appropriated from the legislature and has been pushed out to 5 different lenders. She said that Commerce has a billing system for term loans only, and their system isn’t capable of tracking or billing for a line of credit at this point. She said that she looked at models that were already out there but could not find CDCs that are doing lines of credit for commercial small businesses. Ms. Thornton asked why banks or loan programs would not provide a loan to a contractor against the materials needed on a job that the loan is going to buy. Ms. Barge said that the problem is that you have to have the money to make the money, and usually in a situation such as lending against materials, the contractor would only get so many cents on the dollar. She indicated that is the way that lending works, and that you’re not ever giving 100% of the purchase price for these things as a loan. She said the situation is further complicated in that a determination must be made regarding who is going to go out and assess the value of the materials. She said that it could probably be done, but it is very complicated and expensive, which is why the banks will generally only do it for larger customers. Ms. Wong asked about loans against contract receivables. Ms. Barge said that the contract is a different type of receivable, but the lender has to be comfortable that the contract is going to be performed. If they’re not sure about that, they may not want to lend against a contract either. Mr. Waldron discussed a former RIDOT bridge financing loan program, administered through MIDC, that had a 1% interest rate on guaranteed contracts. He asked if that model could be resurrected. Ms. Barge said that it was RIDOT who had guaranteed the loan, usually for the purchase of equipment such as a truck, but MIDC would lend based on having the guarantee of RIDOT. She noted that it was also RIDOT’s money, not MIDC’s money, used for this program.


Mr. Waldron asked if legislation could be written to create a revolving loan, using a percentage of the funding for all the construction work that is planned. Ms. Barge said that a revolving loan fund is a little bit different from the financial line of credit piece. We would need to think of some creative ways to put the mechanics in place. Mr. Sinnott said that two issues that are constantly thrown back in our face is the cost of capital and bonding. He asked if there was a way that we could create a mechanism so that the Construction Manager (CM) or General Contractor (GC) could submit their certified MBEs and WBEs to ODEO, and then be able to have the money associated with those MBE and WBE subcontracts dispersed as a separate line item in their requisitions and paid down on a weekly basis, so that MBE or WBE contractors or suppliers could start building up their capacity over the years and outgrow the program. Ms. Barge asked who they would be paying that to. Mr. Sinnott said that there would be a line item that would be paid by the owner to the CM, who would then pay the MBE or WBE. On a weekly basis the CM would be collecting lien releases from the MBE or WBE. At the end of the month the CM would submit those lien releases to the owner with their next requisition. Ms. Barge said that you could do it that way, but you’re assuming all the jobs the smaller contractors will have will lead up to a GC who is willing to do this. Mr. Waldron recommended creating a committee to discuss this matter further and asked committee members that would like to volunteer to submit their names to ODEO. Mr. Sabitoni added that the Owner’s Project Manager (OPM) would sign off and certify that these things have been done, and then the requisition would be released.

V. Legislative Proposals

Ms. Burrell said that she provided two handouts on the legislative pieces introduced last session. Legislative Bill House 7809 Sub A on bonding, which was the legislation that was submitted in the last session. She said that it had been referred for hearing and then held for further study back on May 24, 2018. With respect to the issue of bonding, she said that the negotiated proposed change was to go to a bonding limit of $150,000, with the option to waive the bonding requirement for projects up to $200,000 at the discretion of the Chief Purchasing Officer. She said that neither the bonding or prompt payment bills passed. Mr. Bueno asked what the major concern was regarding the bonding bill. Ms. Burrell said that this was a concern for those involved in bonding. She said that she does not know the underlying reasons as to why it did not pass, but that the administration advocated very strongly for the bill. She said the question on the table now is do we go forward in this session and resubmit the legislation. The committee agreed to go forward and resubmit. Mr. Waldron suggested scheduling a meeting with those who opposed the previous bill and having a discussion as to why it didn’t pass. Mr. Sabitoni suggested resubmitting and getting the players at the table, including those who were for it and those who were against it. He said that this will come up with a better recommendation of the contingencies. He said that some of the contractors on the other side may not have been in favor of this previous proposal, and that it might make it more palatable if you have a more comprehensive approach to drafting the new proposal, including the recommendations that have been discussed regarding prompt payment line item payments for MBEs and WBEs as just discussed. He said that it would takes pressure off the contractors if its line items direct from purchasing and the contractors still get their


percentage to oversee and manage, so they’re not technically losing any money, and the line items and requisitions are going directly from Purchasing or RIDOT once you’ve fulfilled your requirements with respect to MBE and WBE subcontractors. Ms. Burrell said that she doesn’t think that resubmitting the bonding legislative proposal should be contingent upon that level of state involvement as previously described by Mr. Sinnott and Mr. Sabitoni regarding access to capital and payment to MBE and WBE subcontractors on projects. The bonding issue has been a barrier for several years and needs to be addressed. Ms. Clarke said that she likes the idea of an engagement strategy and having everyone at the table come out. She said that this needs to be front and center, and if we can get a bill we can always Sub A it if we need to make amendments, but we must get it in relatively soon, meaning by the end of the year. Ms. Burrell also mentioned that the prompt payment bill RIGL § 42-11.1-3 that did not pass had recommended changing the prompt payment language from 30 working days to 30 calendar days for payment, that subcontractor payment would be made in 5 days as opposed to 10 days, and that we add payment to lower tiered contractors. Mr. Waldron asked what the problem with that was. Ms. Burrell said that she doesn’t know the rational as to why it didn’t pass. With respect to the retainage law, she said that house bill 7855 Sub A went through several hearings, but it was not initially a concern for us here at DOA because it initially didn’t include public works projects. She said that she was under the impression that public works projects had been added to this legislation at the last minute, and it was passed and was signed by the Governor in July of 2018. Mr. Waldron asked where this bill came from. Ms. Burrell replied by stating that she was unsure of where it came from. Ms. Bennett said that this was introduced early by Representative Edwards along with the bills that he introduced out of this committee and is based upon the law in Massachusetts. Ms. Thornton asked what was inconsistent with our proposal vs. the bill that passed. Ms. Burrell said that the way the law is written, it talks about the project being substantially complete, which was not the thrust of our retainage bill. Ms. Thornton recommended amending the new retainage law to address the concerns and recommendations of the committee, to allow retainage to be released in the flow of the project, without requiring the entire project to be substantially complete. Ms. Clarke recommended writing up the impact of this bill and circulating it with the group to assist in making recommendations, as there is a section of the new legislation that may address the group’s area of concern. The committee discussed removing public works projects. Ms. Bennett said that you wouldn’t want to remove public works projects. She said that the goal of this is that it’s a public policy initiative, so why would you remove your own State’s projects. Ms. Burrell said that the committee was originally thinking that if public works projects were not included in this legislation as presented prior to the Sub A, the state could then develop regulations around public works projects specifically that would address the issues raised by the committee. Mr. Waldron recommended a sub-committee to draft recommended amendments to the new existing law. Ms. Burrell indicated that DOA would develop a summary of the new law and begin the draft for new legislative amendments to be discussed in sub-committee.


Mr. Yarn made a motion to discuss agenda items 7 and 8 at the next full committee meeting. The motion was properly seconded and passed unanimously Ms. Keene said that there are items that need to be addressed regarding the legislative proposals discussed at the last meeting. Handouts were provided regarding the up-front payment/deposit issue previously discussed by the committee. Mr. Waldron suggesting adding those items to sub-committee agenda. The committee approved the calendar of meetings. Ms. Keene made an announcement regarding a new solicitation out and available on the Division of Purchases’ website for Master Price Agreement (MPA) No. 52 – Construction Renovations – Minor. Bids are due December 21, 2018. Therefore, any vendors who does general construction, painting, plastering, carpentry or masonry work is encouraged to submit a proposal. MPA 52 covers minor construction work performed by state agencies, quasi-state agencies and municipalities valued at less than $50,000 and does not require a bond.

VI. Adjournment Meeting adjourned at 4:03 p.m.



Legislative Proposal Sub-Committee Meeting

December 20, 2018

Committee members present: John Sinnott - Co-Chair, Darrell Waldron – Co-Chair, Barbara Thornton, Belinda Wong, Lindsay Desjarlais, Dan O’Connell, Andrew Cortes, Julius Kolawole, Ron Crosson

Committee members absent: Luis Torrado, Mario Bueno, Charles Byrne, Channavy Chhay, Derek Winslow, Oscar Mejias

Internal State Staff present: Dorinda Keene, Cheryl Burrell, Sean Fontes, Krystal Waters, Dan Majcher, Jean Heiss, Elvys Ruiz

Guests: Cindy Macz

Quorum Present: Yes

I. Call to Order/ Introductions Mr. Sinnott called to order the sub-committee meeting at 11:00 a.m.

II. Summary and Impact of Retainage House Bill No. 7855 Sub A, as enacted Mr. Majcher provided a written summary analysis of House Bill No. 7855 Sub A as enacted. He advised the sub-committee that, once they determined whether or not this bill, now law, met the needs and original intent of the committee, they could recommend whatever changes they felt were necessary. The administration would then review those recommendations. He also said that there are two other proposals on the table that are unrelated to retainage and asked the committee if they’re looking to move forward with those as well. Ms. Burrell said that the committee had tasked the department with putting together a summary of the bill and Mr. Majcher took the liberty of doing that on behalf of DOA. Mr. Majcher said that House Bill No. 7855 was amended several times, and it was enacted by the General Assembly and signed into law by the Governor. He said that the legislation really provides policy and procedures relative to contractor and subcontractor retainage. The overall impact to the legislation is really to limit the amount of retainage that can be held to 5%, while it also allows for interim release of retainage. It applies to both public and private sector projects, and a big part of the bill is to create a very detailed and expedited dispute resolution process and procedure for releasing retainage on a tight time frame with very specific deadlines to complete certain tasks. The overall policy implications of the passage of this legislation would be to increase the total amount of money paid to the contractors in a timely manner, which would allow for contractors to have the money to pay their subcontractors. By allowing interim release, a sub-contractor who performed their work in the beginning of the project would be able to get their retainage sooner. Ms. Thornton asked about the variations between what was proposed last year and the bill that passed.


Mr. Majcher said that what was proposed last year was very high-level and broad, which simply gave the Department of Administration authority to adopt regulations governing retainage. That bill did not spell out a specific process to address the issue of the interim release of retainage for contractors and subcontractors. Rather, that would have been created by regulation. Mr. Cortés questioned whether or not the legislation that passed is broad reaching enough that the committee’s recommendations could still be implemented through the promulgation of regulations that spell out the policies and procedures. Mr. Fontes said that based on our discussions last year, the committee wanted to give more leverage to the lower tiered subcontractors. This legislation seems to set up a statutory scheme where retainage and releasing retainage must flow from the prime contractor, so from a policy stand point, that seems to differ from what was the aim of the committee. Mr. Sinnott asked if the committee can amend the law to include language that would make exceptions for the lower tiered subcontractors and vendors. Mr. Fontes said that he believes the committee can make that recommendation. Mr. Sinnott said that the language in the legislation needs to be modified to indicate that in order for the state to expand the resources and capacity of MBEs and WBEs, these rules will be followed at the discretion of the state. Mr. Cortés said that he feels as though there needs to be an amendment in there that allows for that to happen, such as a “with good cause” qualification, and then good cause could be defined through regulation, including the MBE and WBE capacity building program as sanctioned by the state. Mr. Crosson asked if the Sub A was the original bill submitted. Mr. Majcher replied by stating that it wasn’t the original bill. Mr. Crosson said that as the committee looks at why the bill was changed so dramatically they should also question who was making the decisions and what were some of the reasons that went into it. Mr. Majcher said that this was not DOA’s bill, but rather it was done independently from the administration, and there were various stakeholders involved. Ms. Thornton asked how this bill got substituted for the one the committee had intended to pass. Mr. Majcher said that it was not substituted, but rather was a separate and distinct bill from what the committee proposed last year. Ms. Thornton asked why this bill passed and the legislation the committee put forth did not move forward. Mr. Majcher said that it was the same subject matter on retainage, and there may be a few reasons why the other bill did not pass. He said that CIRI came in and opposed our legislation, and there was another objection from the bond companies on the bond threshold proposal. Ms. Burrell pointed out that the original House Bill 7855 did not include public works projects. Therefore, while the administration was aware of the bill, it was believed that it would not pertain to our projects. Since public works projects were not originally included in the legislation, it was believed that the committee’s proposals could be implemented by


promulgating rules and regulations, policies and procedures. However, the bill was amended at the last minute to incorporate public works projects. The committee further discussed possible concerns with last year’s bill and agreed to submit an amendment to the new retainage law. Mr. Sinnott said that it should be done in conjunction with the building trades, AIA, CIRI, etc. Mr. Waldron asked if there has been contact with those that voted against the bill. Mr. Sinnott suggested reaching out to Representative Edwards. Ms. Wong said that if the road builders are exempt from the bill, then the other primes may believe that they’re being favored. She said that maybe we should go back to advocate for MBEs and WBEs. The committee discussed who should be the sponsors of any legislative proposals coming from the committee. Mr. Majcher stated that agencies, board and commissions that want to introduce legislation or legislative amendments do not go directly to the legislature, but rather present their proposals to the Governor’s Office, who will review the proposals. The Governor’s Office then brings the proposals to the leadership of the Senate and House, who will decide who will be the sponsors of a particular bill. The committee discussed reaching out to the sponsors on House Bill 7855 SUB A. Ms. Thornton said that she would reach out to Representative Edwards and the AIA. Mr. Sinnott said that he would reach out to AGC, RIBA, CIRI, Speaker Mattiello and Senate President Ruggierio, and the League of Cities and Towns. The committee further discussed modifications to the law and asked Mr. Majcher and Mr. Fontes if they would be willing to assist with a draft. Mr. Waldron said that he will connect with the Black and Latino Caucus.

III. Proposed Legislation on Bonding and Prompt Payment The committee discussed the previous legislative proposals relative to bonding and prompt payment and agreed that those items should be reintroduced this legislative session. Mr. Crosson discussed the concerns that were raised relative to the bonding proposal that would give the Chief Purchasing Agent the authority to waive the bonding requirement up to a certain limit. It was felt that there was opposition to granting such authority, and concern was raised whether such language would harm the potential for passage of the legislative amendment. Ms. Thornton indicated that the portion of the language regarding the discretionary waiver could be used as a bargaining point in negotiations. Mr. Sinnott indicated that he would rather simply increase the bonding limit to a higher level. The committee agreed to resubmit the legislation as previously drafted and to negotiate as needed with the legislature. Mr. Majcher indicated that the administration would be submitting the bonding and prompt payment items as one bill, rather than as two bills.


IV. Discussion on Any New Proposals for 2019 The committee discussed the potential of submitting legislation relative to the deposit / up-front payment issue. After some discussion, it was agreed that the committee needs more time to thoroughly develop this initiative, and, therefore would not be submitting a legislative proposal at this time. Mr. Sinnott said that he has been working with RIDE on inserting a line item on the front-end documents for school construction projects for MBE/WBE participation, so when your requisitioning, you’re always requisitioning ahead for your MBEs and WBEs. In this manner, the contractor would be able to pay MBEs and WBEs on a weekly basis. Ms. Thornton said that the committee has heard good suggestions about funding mechanisms within the State and capital pots that could be used for such items as the deposit/up-front money issue and the issue of creating some sort of a revolving fund to address the issue of prompt payments to MBEs and WBEs, but it’s not something were going to have language for in this legislative cycle. She suggested that the committee work on having a proposal by the end of August 2019 that could be presented to the administration. Mr. Waldron suggested creating a fund by utilizing a tax on something similar to the bill that Joe Newsome introduced in the 1990s that utilized a penny tax on tobacco products to create a fund for minority health at DOH.

V. Next Steps Mr. Waldron said that we discussed the amendments to submit and we have identified those that the committee will be reaching out to for meetings and support. Mr. Fontes indicated that he will prepare a draft amendment regarding the retainage law which will be distributed to the sub-committee for review.

VI. Comments and Announcements

Mr. Waldron said that he and Mr. Sinnott met with the administration prior to the full committee meeting held on December 10, 2018, and they discussed age of minority contractors and incoming minority contractors and there seems to be a good educational strategy and a plan moving forward in 90 days that will produce some positivity to the work that we’re doing. He said that there is a serious age problem in the construction trades, with about 70% of existing tradespeople being between the ages of 45-60. He said that the concern he had was that the individuals at the meeting were not representative of the community. Mr. Sinnott said there is a movement to increase the training opportunities for both tradespeople and businesses like the committee has been discussing over the last year. The AGC has provided funding for a facilitator to work with DLT, CCRI, Jobs RI, Building Futures, etc. regarding expanding these training opportunities. Mr. Waldron expressed concerns with the disconnect between the minority communities and these opportunities, and the importance of education and communication with the minority communities. Mr. Fontes said that Real Jobs has a business model that has an incentive at the end when it comes down to workforce. He said that you go through a facilitated training and the incentive is that there is a guaranteed job. He asked if the model that was being discussed focused on individuals seeking employment or on business enterprises.


Mr. Cortés indicated that the model being discussed addressed both individuals seeking training and employment in the trades as well as business enterprises working in the trades. He said that the critical piece on this is that the consultant that was hired by the AGC will perform a needs assessment of the construction industry. Once that’s done, it can be presented back to the state, and then specific initiatives can be designed to address those needs. Mr. Sinnott said that it’s going to be shaped by the stakeholders. He said that CCRI is at the table to help with the business training, and the plan is to include mentorship, coaching, imbedding people in scheduling and estimating, life skill classes, math and sciences specifically for construction. Ms. Thornton asked that the discussion on training can be held for the convening of the training sub-committee.

VII. Adjournment Meeting adjourned at 11:40 a.m.




December 27, 2018

Committee members present: John Sinnott - Co-Chair, Darrell Waldron – Co-Chair, Barbara Thornton, Belinda Wong, Andrew Cortés, Julius Kolawole, Ron Crosson, Osmond Weekes

Committee members absent: Luis Torrado, Mario Bueno, Charles Byrne, Channavy Chhay, Derek Winslow, Oscar Mejias, Dan O’Connell

Internal State Staff present: Dorinda Keene, Cheryl Burrell, Sean Fontes, Krystal Waters, Dan Majcher, Jean Heiss, Elvys Ruiz, Michael Mitchell, Sean Fontes, Amanda Clarke

Guests: Cindy Macz

Quorum Present: Yes

I. Call to Order/ Introductions Mr. Sinnott called to order the sub-committee meeting at 2:10 p.m.

II. Review Legislative Proposal on Bonding, Prompt Payment and Retainage Mr. Fontes stated that his approach in drafting this language was to incorporate the committee’s two policy thoughts. First, with respect to the issue of retainage, it was important for the subcontractors to have more of a direct relationship with respect to the owner of the project, so as not to be at the mercy of the prime contractor. He said the second policy concept was to look at the legislation that did pass and make an amendment from a strategic and tactical standpoint. He said that the concept was to essentially craft an exemption to the existing language that has passed in RIGL 37-12-10.1, which currently generally speaks to the process by which a prime contractor applies for and receives payment of retainage from the owner. The exemption to be added would provide for a more direct relationship between an M/WBE subcontractor and the owner, allowing for the M/WBE to make the application for payment of retainage directly to the owner, and be paid directly by the owner. He said that he looked at RIGL 37-12-10 which speaks to retainage and that there are two particular provisions in Section 10 that speak to payment to municipalities, particularly the Town of Warren, Rhode Island for traffic control on construction projects. He said that within those two provisions, there is a process whereby the town pays the police department directly and withholds out of retainage an amount that they believe the traffic control costs. He said that the town pays the police departments and then the town can seek reimbursement from the awarding authority. He said that we don’t want to try to reinvent the wheel, we should be looking at previous or existing legislative schemes that we can draw upon. He said that the idea is to mirror the language in Section 10.1, which was the language that did pass. He said that within 30 days of the project commencing the prime contractor certifies to the owner what portion of the retainage would apply to the M/WBE subcontractor. He said that after this amount is certified, not later than 30 days the subcontractor can submit to the owner directly that they’re substantially complete with the project and they can also submit their application


for release of retainage. He said that the thought was to combine the notice and the application into one form. In order to keep the prime contractor involved in the process, the thought is that the prime signs off on the notice and the application, and the owner is freed to pay out. However, if the prime has a dispute with the subcontractor because there is something outstanding, then the prime has the ability to reject by not signing off. He said that at that point they go to the dispute process which used the same mechanics that were in the original language. He said that the prime must notify the subcontractor as to what are the outstanding deliverables, and the same would apply for the owner and the prime. Ms. Thornton asked if there was going to be a form developed by the Division of Purchases or somewhere that has the subcontractor’s name, mailing address and FEIN. Mr. Fontes said that it brings us to the issue of privity of contract because on these projects the contract is between the prime and the owner, not the subcontractor and the owner, so what could be a workaround is to possibly have a clause or an amendment in that contract between the prime contractor and the owner where the prime is essentially saying we assign these retainage rights to this particular subcontractor. Mr. Mitchell said that you’re anticipating some of the comments that legal counsel has regarding the ideas and suggestions in the proposed legislation. He said that traditionally there is no privity of contract between the state or owner and the subcontractors or subcontractors or any lower tiered contractors on a project. He said the state has a contract with the general contractor / prime contractor and that’s all. We have payment bonds required to guarantee that subcontractors will be paid. He said the State understands that it’s not a perfect system. He said that he doesn’t think privity of contract should be solved through this type of legislation. He suggested requiring the certification at the beginning, but when it comes time to release that retainage to the general contractor because they hold the contract and put in the statute a requirement that the general contractor make payment to the subcontractor within a very short window of time. Mr. Crosson asked if it could be solved by the submission of the documentation to be submitted by the general contractor to the State with a direction to pay. Mr. Mitchell said that in this instance if you build it into the statute that the general contractor must pay within 10 days, that’s a statutory obligation and they can build that into their AIA contracts. He said that they can have some enforcement authority against a general contractor who is not paying their subcontractor. He also said that general contractors will have to pay their subcontractors within a certain period of time, and if they don’t then the Division of Purchases can suspend them from doing business with the State. Ms. Burrell said that she wants to be sure there is no confusion between prompt payment and retainage. Mr. Mitchell said that prompt payment is part and parcel of this and the prompt payment statute is relatively weak. He said that the prompt payment statute states that the State must pay within 30 days and the contractor must pay within 10 days, so the two are tied together. He also said that to make the State primarily responsible for releasing retainage to the subcontractor flies in the face of other statutes and the privity of contract. He said that we don’t have privity of contract to subcontractors and that we shouldn’t. Ms. Thornton asked how we can resolve the problem with contractors having the option to decide to pay the people that they believe are done, but not the people that they don’t and hold their retainage. Mr. Mitchell said that is the certification process and, in this situation, you have the subcontractor coming in and making application for release of retainage. He said that the general contractor must agree to that certification or they’ll go into dispute.


The committee discussed the current penalties for breach of contract. Mr. Thornton said that if we fail this legislatively we might be able to add a clause into the AIA documents and handle it administratively. Mr. Mitchell said the Division of Purchases is looking into that. Ms. Clarke asked how this changes the dynamic between primes and subcontractors. She said that sometimes when you have a special carve out you can disadvantage the firms, because they might pick a different firm, so they don’t have to go through this administrative process. She asked why we’re not doing this for all subcontractors. Mr. Waldron responded that this working group has a responsibility to the M/WBEs. Ms. Clarke asked if there is an unintended consequence of MBE firms not being selected. Mr. Fontes said that is a real possibility if we’re only going to deal with the amendments to 10.1. He said the way to get around the MBEs being left out by a prime who doesn’t want to deal with the process is to look at our current MBE regulations that require 10%. He said that if we’re not enforcing it on that end, then this is going to be more of an incentive for them not to comply. He said that one of the biggest issues on racial classification is what might have historically helped is the 1989 U.S. Supreme Court’s Crosson decision, which essentially states that racial classification set-asides can only be upheld and not struck down if the authority or government that is proposing the legislation can show a compelling interest based upon race. If it can prove that it has a compelling interest, it has to create legislation that is narrowly tailored to meet that objective. He said that the case stated that for a government to create legislation or policy that has a specific set-aside, it has to have strong evidence of past racial discrimination of which they’re trying to remediate through legislation. He said that brings us to the issue of the disparity study that can show the numerical disparities, otherwise the drafted legislation may be challenged and/or overturned. Mr. Waldron said that Brown conducted a disparity study and the findings were horrible, and now it’s even worse Ms. Burrell said that one of the reasons the state wanted to conduct a disparity study is to support the existing legislation and to ensure that legislation such as what Mr. Fontes is proposing would have that legal footing to withstand any challenges. She said that the disparity study has been funded and the State is moving into the first phase. She said that the State is working on gathering the data they need to begin the analysis. She also said that the disparity study will take approximately 1 – 2 years to complete, so we’re still early in the process. Mr. Mitchell said that to not run the chance of a Crosson type of challenge to this would be to include all subcontractors instead of just M/WBEs, and to become an advocate for all subcontractors getting prompt payment and release of retainage early. He said that by advocating for this type of change for all subcontractors, you are benefiting M/WBEs as well. Ms. Clarke said that including all subcontractors in the language, vs. only M/WBEs, can increase your pool of allies at the General Assembly. Mr. Waldron asked if we have any data on how many minority contractors there are as opposed to non-minority contractors. Ms. Keene said she wasn’t familiar with any one repository for counting all contractors in the state but suggested looking at the various licensing entities and the contractor’s registration board, but they would have to be added together to get a cumulative number. Mr. Fontes said that in reading U.S. Supreme Court cases there was a case that did have a minority set-aside, which was funded by the federal government. He said that the Crosson case looked at section 8(a) of the Small Business Association law which essentially is a set-


aside but is more race neutral and still allows the administrators to apply race. He said that what they defined as a class to make it race neutral was small disadvantaged firms, and the law allowed for the federal government to create regulations to further define small disadvantaged firms. He also said that when you broke that down further it was socially and economically disadvantaged firms where you could consider race. The committee further discussed proposed legislative and administrative changes. Mr. Crosson asked if there was an opportunity to incorporate language which would direct the awarding agency to review the prompt delivery of payments. Ms. Wong said that it’s all included in the contract. Mr. Fontes said that you may need another set of eyes like DCAMM to be managing this process, but they need to have the capacity. Mr. Mitchell said DCAMM has become ever more professionalized in the past 5 years, and with their project managers and their capacity to manage projects, they are much better today than they were 5 years ago. Ms. Thornton said that they’re also very supportive with increasing M/WBE participation.

III. Next Steps

Ms. Clarke asked what the next steps are on the retainage bill. Mr. Fontes said that he is going to make some revisions, but he will need to know what revisions the committee is comfortable with. Ms. Burrell suggested reconvening following external meetings with Representative Edwards and the Black and Latino Caucus. Ms. Thornton asked if there were other groups the committee should be meeting with The committee identified CIRI, AGC, RI Builders Association, etc. Mr. Fontes agreed to work on the concept form discussed at the previous committee meeting.

IV. Comments and Announcements

None

V. Adjournment Meeting adjourned at 3:17 p.m.




January 3, 2019

Committee members present: John Sinnott - Co-Chair, Darrell Waldron – Co-Chair, Barbara Thornton, Belinda Wong, Ron Crosson, Osmond Weekes, Christine Rancourt Bruzzi

Committee members absent: Luis Torrado, Mario Bueno, Charles Byrne, Channavy Chhay, Derek Winslow, Oscar Mejias, Dan O’Connell, Andrew Cortés

Internal State Staff present: Dorinda Keene, Cheryl Burrell, Sean Fontes, Elvys Ruiz, Michael Mitchell, Sean Fontes, Amanda Clarke, Andrew Marcaccio, Brenna McCabe

Guests: Cindy Macz

Quorum Present: Yes

I. Call to Order/ Introductions Mr. Sinnott called to order the sub-committee meeting at 2:09 p.m.

II. Update on 2019 Legislative Proposals Ms. Thornton said that she and a few committee members met with Representative Edwards and he will take whatever legislation DOA suggests but he is going to revise it before he puts it forth. Rep. Edwards also said the committee doesn’t need the prompt payment bill in his opinion, as he feels it was addressed in last’s years retainage bill, and that the only bill that needs to be worked on is the bonding limit bill. She said he is interested in adding the deposit language to that bill, so that all bonded jobs are eligible for advance of deposits. She said that Rep. Edwards also recommended that we shoot for $50k over the current federal bonding limits and negotiate back. She said that he recommended against giving DOA any more control. She also said he suggested creating language for one bill including bonding and deposits with a definition of emerging firms. She said that he was very resistant in doing anything that used the terms minority or women owned businesses because it isn’t legal, and it would lose support because it didn’t support their constituencies who aren’t minority. Mr. Fontes asked Ms. Thornton is she believes Rep. Edwards would be supportive of including language to cover M/WBE’s if we had the disparity study results. Ms. Thornton replied by stating that she believes he would be more supportive if we had a disparity study that could withstand a challenge. Mr. Waldron asked what happened with the study conducted by Brown. Ms. Burrell said that study was not really done through a professional or expert in the field. Ms. Keene asked if Rep. Edwards understood that the State’s MBE program required firms to be small business enterprises owned and controlled by socially and economically disadvantaged individuals, as well as does the DBE program. Ms. Thornton said that she had been told that wasn’t the case. Ms. Keene confirmed that the requirements for M/WBE certification as handles by ODEO. Ms. Burrell asked if you can be a certified MBE without being a DBE.


Ms. Keene replied by stating that there are two different certification application processes (MBE vs. DBE), and firms choose which programs for which they wish to apply. However, both programs use the same the definition of a small business enterprise owned and controlled by a socially and economically disadvantaged individual in the eligibility criteria. She said the requirements for certification as an MBE are consistent with the criteria for DBE certification. Mr. Fontes mentioned 8(a) of the Small Business Administration Act. Ms. Burrell asked about using the term ISBE’s. Mr. Marcaccio said that the ISBE definition includes MBEs, WBEs and DisBEs. He said that the more entities you have under the umbrella decreases the possibility of facing scrutiny if challenged, so if you have minorities you may face strict scrutiny, but if you have minorities and women you may not have that high tiered scrutiny if it gets challenged. Ms. Burrell asked if VBEs could be included under ISBEs. Mr. Sinnott asked if we can define these emerging businesses as ISBEs which would include. M/WBEs DisBEs and VBEs. Mr. Marcaccio replied by stating that it could be done. Ms. Burrell said that she is concerned that it may not be supported if it is not broadly defined. Ms. Thornton said that Rep. Edwards is looking to secure Rep. Almeida as a co-sponsor and the committee is looking to get the support of the Black and Latino Caucus, so they would be more supportive if we could define it. Mr. Waldron said that this whole issue is about minorities and for Rep. Edwards to say he doesn’t support it is to say he doesn’t support minorities. Mr. Crosson provided the committee with his thoughts from the meeting that took place with Rep. Edwards. He indicated that Rep. Edwards was very supportive. He said that regarding the bill on retainage that passed vs the bill the committee submitted, the retainage bill was Rep. Edward’s bill and he wanted to have the bonding bill, but that he had to devote his resources to one of them. He said he threw he resources behind his retainage bill. He also said that he doesn’t believe that Rep. Edwards doesn’t want to see language incorporated to cover M/WBE’s, but rather that he doesn’t want to see M/WBE as the defining language. He said that Rep. Edward is very open to us defining emerging businesses. He said Rep. Edwards also stressed the fact that he is not an attorney and is very open to the committee providing him with the suggested language. He said that Rep. Edwards is also open to amending the language on the definition of substantially complete. Mr. Sinnott said that Rep. Edwards comes from a construction manager’s background, so the language that was incorporated in the retainage bill is a step forward for a contractor. It just doesn’t do what we need it to do. Ms. Burrell said that we still have the issue of the prompt payment. Ms. Thornton said that Rep. Edwards is not going to reintroduce the issue of prompt payment because he believes that it is covered in his retainage bill. Several documents were disseminated to committee members. Mr. Burrell said that the prompt payment draft and existing language should be included in the handouts to highlight the changes with the working days to calendar days and the rule applying to lower tired contractors. Ms. Thornton said that Rep. Edwards is willing to put forth legislation as late as February. Mr. Waldron said that what we submit needs to be benefiting the community that we’re advocating for, or nothing should go forward.


Mr. Sinnott said that because we have this school bond we have a huge opportunity to wrap this whole program around it. Mr. Fontes said that they spoke with Mr. Crosson regarding some of the ideas that came about in the meeting with Rep Edwards. He said that he worked on some language that he was hoping would satisfy some of the interests that Rep. Edwards had particularly regarding the definition of emerging businesses. He directed the committee to look at a draft amendment to Chapter 37-12-10.1 with regard to retainage. He said he drafted language regarding the General Assembly’s intent in passing these amendments, and he said that he took out the language referencing MBE and WBE and replaced it with the concept of emerging businesses. He said that in the last paragraph he attempted to define emerging businesses, which shall consist of businesses that are socially and economically disadvantaged, which may include but not be limited to, businesses that are 51% owned by someone or persons that are minorities, women and or persons whose net worth is $250,000 or less. He said that language essentially comes from a combination of concepts that come from Section 8(a) of the Small Business Administration Act. He said that in paragraph 5 they took out substantial completion and replaced it with the language to state that if you’re an emerging business as defined in paragraph 6, you can make your application to be paid retainage after you have completed your scope of work. The committee further discussed revisions to the proposed changes on retainage. Ms. Keene suggested changing the definition to include small businesses enterprises that are owned and controlled by socially and economically disadvantaged individuals who include minorities, women or other individuals who make an individual showing of social and economic disadvantage. The committee agreed to make the changes. Mr. Sinnott asked who is going to enforce the 10% of M/WBE participation when a contractor doesn’t pay the subcontractor. Mr. Mitchell said that if you have a state statute that says retainage can be released, we have paid you the retainage and you have not paid the retainage to your subcontractor, you have therefore breached your contract by violating state statute. The State will then terminate their contract and suspend them from doing business because they lack integrity to continue to do business with the State. Mr. Sinnott said that there are contractors who may be violating their contract but are still doing business with the State because they’re the lowest bidder. Mr. Mitchell said that contract awards are to be made to the lowest responsive and responsible bidder. He said that they’re telling them by statute now that contractors must pay the retainage to subcontractors when they get it, and that is the tool we can use for enforcement. The committee further discussed the issue of enforcement. Mr. Fontes suggested the idea of the state creating a fund administered by a third party. Mr. Marcaccio said that would address the problem better than some of the other suggestions. He said that he doesn’t think that the laws would change the insider trading that goes on, but if there was some type of revolving fund available for subcontractor, those subcontractors wouldn’t have to take the cut, and would therefore submit a complaint if they’re not paid by the prime. The committee discussed paragraph 3 of the bonding language. Mr. Mitchell said that he doesn’t believe that the State should be held responsible for making the retainage payments. Mr. Sinnott asked about issuing joint checks.


Mr. Mitchell said that the issuance of joint checks has always been a problem and indicated that the committee would need to speak with Accounts and Controls regarding that matter. Mr. Waldron said that we need to compromise somewhere. Mr. Mitchell said that from his experience in state government, putting the onus on the State to make the retainage payments would cause problems. Mr. Waldron said that allowing the prime contractors to have that type of authority has not worked either. He asked what the repercussions would be if we were to put in language to have the State be held responsible. Mr. Marcaccio said that he thinks it is a good idea to have the retainage language indicate that once a contactor completes their work they submit their payment request and the State pays the prime contractor for that portion of work, at which time the prime contractor must pay the subcontractor. He said that the problem will be how the State can address the issue of prime contractors that don’t pay subcontractors right away, or those that have the leverage over subcontractors to say they’ll give their subcontractors 50 cents on the dollar for paying their retainage on time. He said that there will always be ways around the law and we need to give the subcontractor some leverage policy wise. He said that it would be better to have some type of third party administered fund or revolving loan rather than to put it on the State. Ms. Keene suggested a contract-based financing program where the small company can go to the fund and pledge their contract against it, get paid directly from the fund, and the prime contractor must pay the fund. Mr. Crosson asked if we can put the onus on the State to require receipt of payments that have been made. He said he believes that it puts the State in a bad situation and opens you up to lawsuits anyway because you’re continuing to give money to contractors that are essentially putting other contractors out of business with bad business practices, and you’re not catching it, so we need to strengthen that in legislation. Mr. Sinnott suggested putting the prime contractors on notice to correct it within a certain number of days. Mr. Weekes suggested also sending confirmation of payment when they are made on time directly to the State for monitoring purposes. Mr. Waldron asked how many sub-tier subcontractors there on are average Mr. Sinnott said that on just one job they have at least 100. He also suggested revising the RFQ and RFP language to reflect the changes the committee would like to make. He said that the prime contractor should prove that they have a clean track record and if there were ever any disputes, that they submit the details regarding those disputes. Ms. Clarke said that she will put forth the groups suggestions to the Administration. Mr. Fontes reviewed his proposed language on RIGL 42-11.1-3 on prompt payment. He said that he replaced language referencing minority businesses with emerging businesses. He said he added paragraph F which states that the State shall pay a deposit to prime contractors either prior to the commencement of the construction project or shortly before the commencement of the scope of the work of the emerging businesses solely for the purpose of the prime contractor making prearranged scheduled payments. He said this will allow the owner or the State to pay to the prime contractor a deposit so that the prime can pay the emerging subcontractors on a weekly basis. Mr. Mitchell asked how the deposit amount will be established. Mr. Fontes said the prearranged scheduled payments would be pursuant to the written contract with the prime and the subcontractor, but that’s just one piece of evidence that the prime would have to show to the State


Ms. Keene said that the State approves the M/WBE’s in advance, so we know who they are, and we know what their contract values are. However, the existing draft language referencing emerging businesses is not limited to M/WBE’s, so the question would be how to address the non-M/WBEs. Ms. Thornton asked if the definition was enough. Ms. Keene said that it’s not exclusive. Mr. Thornton suggested incorporating language to say that if you want to take advantage of this statute you also must tell us who the emerging businesses are up-front, and they must be verified by going through the certification process. The committee discussed how to further eliminate bad business practices. Mr. Waldron asked if the committee would be open to establishing a subcommittee to prepare and review PowerPoint presentations to better prepare us to testify. Mr. Fontes reviewed draft amendments to RIGL 37-12-1 on bonding. He said that he replaced $200,000 with $150,000. Ms. Burrell asked if the federal language with regard to construction contracts permits up to $150,000 why wouldn’t we go to $200,000 and then negotiate down to $150,000 if necessary. Mr. Fontes said that the $150,000 is for performance, but across the board the federal government sets $100,000, so that’s why we put $150,000. He said that the concept in writing in the $150,000 is for the emerging businesses. Ms. Keene said that the existing legislation indicates a threshold of $50,000, so why are we not increasing that to $100,000 for all contractors, with the ability to go to $150,000 for MBE businesses. The committee agreed to revise the langue to incorporate Ms. Keene’s suggestion. Mr. Mitchell asked to include additional language somewhere to ensure that the onus is on the bonding company to pay any claims.

III. Next Steps None

IV. Comments and Announcements

None

V. Adjournment Meeting adjourned at 4:11 p.m.




January 23, 2019

Committee members present: John Sinnott - Co-Chair, Darrell Waldron – Co-Chair, Barbara Thornton, Belinda Wong, Ron Crosson, Osmond Weekes, Christine Rancourt Bruzzi, Derek Winslow, Justin Kelley, Andrew Cortés, Kerrie Bennett, Dan O’Connell, Kasim Yarn, Michael Sabitoni, Luis Torrado

Committee members absent: Mario Bueno, Charles Byrne, Channavy Chhay, Oscar Mejias

Internal State Staff present: Dorinda Keene, Cheryl Burrell, Elvys Ruiz, Michael Mitchell, Sean Fontes, Amanda Clarke, Andrew Marcaccio, Jean Heiss, Armindo Goncalves, Krystal Waters, Melody Weeks

Guests: Cindy Macz, Orlander Hustle, Greg Mancini

Quorum Present: Yes

I. Call to Order/ Introductions Mr. Waldron called the committee meeting to order at 2:09 p.m.

II. Legislative Proposals – Bonding, Prompt Payment, Retainage Ms. Burrell said the sub-committee has met several times since the last full committee meeting and deferred to Ms. Clarke on recapping the discussions. Ms. Clarke said that there needs to be more vendor accountability regarding holding prime contractors accountable when they don’t pay their subcontractors. She said that the State is looking at the procurement regulations on vendor prequalification’s for solicitations. She said that the legal team has been working on language to streamline and enhance our mechanisms to hold vendors accountable and to build robust prequalification standards. She said that she would make sure that the working group would have advanced notice for review before it goes out to official public comment. Ms. Thornton asked about the legislation on deposits. Mr. Waldron requested a motion to add deposits to the agenda. Ms. Thornton made a motion to add to the agenda the topic of deposits as discussed at the January 3, 2019 sub-committee meeting. The motion was properly seconded and passed unanimously. Ms. Clarke said that regarding bonding and prompt payment there was a submission from last year and there have been amendments to that through the work of the sub-committee. She said that the sub-committee made amendments specifically to address the definition of emerging business, which has been included in the draft bill. She asked Ms. Burrell to provide further details on the amendments that have been made. Ms. Burrell said that the more she and other internal state staff looked at the concept of the term emerging business, the more troubled they became by it. She said that emerging business is a new term that’s new to our administration and shouldn’t be included in the proposed language on bonding and promote payment. She said that the sub-committee discussed changing the bonding limit from $50,000 to an amount up to $200,000, which would be applicable to all firms conducting business with the state. She said that the introduction of the term emerging businesses would change the scope and definition of the


types of firms who would be eligible for these bonding limits, which she believed was never the original intent of the committee. She asked the committee to consider removing the definition around the term emerging businesses from the proposed legislation with respect to the legislative proposals regarding bonding and prompt payment. Mr. Waldron said that the concept of emerging business was never something the committee had previously discussed, but instead came from several meetings that took place with Representative Edwards. He said it was implied that if we did not have the term emerging businesses instead of M/WBEs, that we would have difficulty moving this forward. Ms. Thornton said that she is fine with taking out the term emerging businesses, but then there is nothing to replace it. She said that she Rep. Edwards’ protest was that if we try to limit it to M/WBE contractors that there would be a lack of support, and, therefore we were trying to use the new term as a compromise. She said that the other option is to drop any references to either emerging businesses or M/WBEs. She indicated that she felt it would pass easily if it were to be applied to all contractors and not limited to a small pool. Mr. Crosson said that introducing the new term emerging businesses as it relates to the bonding bill would mean that we’re heading down a slippery slope because this term has not been properly defined. He said that, as he sees it, you have the MBE program now, which is really structured well and is really operating well now. We have a disparity study underway which will provide further support for the MBE program. Instituting this new terminology of emerging business would merely be a way to destabilize the MBE program, and he recommended not including the term in any of the language that we submit. He said that he wouldn’t want to give anyone the opportunity to say that the working group endorsed the introduction of the language of emerging business. Ms. Thornton asked about how to craft proposed amendments to the existing retainage regulations in order to ensure that the language accomplishes regulatorily what is needed as discussed during the sub-committee meetings. She said the Division of Purchases has stated that they will be requiring prime vendors to make payments to subcontractors within 7 days of receiving payment from the state, and if they don’t comply, then the Division of Purchases will suspend the prime vendor. Mr. Sinnott asked if there were any regulations that indicate why the state can’t pay on a weekly basis. Ms. Clarke replied by stating that she would investigate that. Mr. Waldron asked what the problem is with the word minority. Ms. Thornton said that this topic was discussed at a previous sub-committee meeting, and the issue is that we would need to get a different sponsor to support that language, as Rep. Edwards clearly indicated that he would not support any regulation with language limited to M/WBEs. Mr. Weekes said that he aware of a situation where an organization sought out sponsorship from Rep. Edwards for a bill that had the term minority, but Rep. Edwards requested that they remove that language. The organization ultimately decided to secure a different sponsor. Mr. Cortés suggested carrying over the language incorporated in one of the other bills to define that contractors are small disadvantaged businesses as defined through the regulations. Mr. Fontes replied by stating that the sub-committee considered incorporating that language following the discussions with Rep. Edwards. He said that it was an attempt to make the concept race neutral. He also said that ultimately the situation that we may be


encountering is including a concept that we haven’t used before, and what the potential ramifications could be based upon the use of this new terminology. Mr. Cortés said that using the term small disadvantaged accomplishes that goal. Ms. Thornton said that the term would cover the majority, but there would be business left out. Ms. Burrell said that she is inclined to eliminate all this language and keep the focus on the changes that were originally proposed such as the change from working days to calendar days. She also suggested making the changes to the language that we ultimately want to see in phases because we’re still waiting on the result of the disparity study. Ms. Burrell pointed out that Rep. Edwards’ main objection to inserting the term M/WBE was due to the fact that we did not have a current disparity study to support such language. Ms. Thornton said that Rep. Edwards would likely be more willing to make the changes once the results of the disparity study are released. Mr. Crosson said that his discomfort is the introduction of terminology that hasn’t been tested out and what potential impact that might have on the M/WBE program. He said that if DBE is something that’s defined and wouldn’t impact the M/WBE program, then Rep. Edwards would be comfortable with it and could be incorporated, but on the bonding bill there is no need to introduce such language. Mr. Waldron said that we had discussed creating language around prompt payment and retainage originally, and that based on previous discussion those two issues couldn’t be addressed through regulations. He said that he doesn’t want to deter from the goal of the working group because Rep. Edwards doesn’t want to include the term minority. Mr. Yarn said that if Rep. Edwards is a barrier to the proposed legislation, then there are plenty of others sponsor opportunities. He said that if it is a minority issue, let’s reach out to our minority leadership in the house. Ms. Clarke said that the Department of Administration can make recommendations for submission to the legislature, and then the legislature then has their own process on who the sponsors would be for a piece of legislation. She said that if we can get these bills introduced, we can then plan on how to mobilize the other members of the house and senate. Mr. Kelley said that if we need a new sponsor, let’s get a new sponsor. He said that the reality is that we must introduce something that helps M/WBEs. He said that he understands the concern with being challenged, but we have to submit something. Ms. Thornton said that Rep. Edwards is going to submit a bonding bill whether we hand him language or not. She said he was asking for suggestions on wording and what we would like in it. Mr. Waldron asked why the Governor formed this working group if not to create more opportunities for minority businesses. Mr. Yarn made a motion that the committee draft a letter to the Governor via Director DiBiase to address the legislative issues. The motion was properly seconded and passed with two abstentions on record. Ms. Keene said that, following the meetings with Rep. Edwards and following the sub-committee meetings, the internal state staff had several discussions regarding crafting language and a definition of emerging business that would address the concerns of Rep. Edwards and still remain true to the program. She said that, after extensive discussion, the staff concluded that any new language that they were to draft that didn’t specify M/WBE as the definition would alter the MBE program, and in the absence of the disparity study, staff felt it would not be the right avenue to take at this time. She said staff also felt that it was


not in the best interest of the MBE program to use the DBE program definition. The DBE program, while very, very similar to the MBE program, has some unique characteristics particularly as it relates to the certification of out-of-state firms. She said that the U.S. DOT DBE program was amended a few years ago, which created an Inter-State DBE certification process for DBE program. She said that the amendment essentially said that, if a company is certified as a DBE in their home state, regardless of whether that certification was erroneously granted by the home state, and regardless whether or not you had just cause to believe that the company does not actually meet the eligibility criteria for the program, you had to automatically accept their certification. Mr. O’Connell asked if that would be a bad thing. Ms. Keene said that by adopting such language in our legislative proposals, what we would essentially be doing is potentially altering the definition for eligibility for our state’s MBE program, which in turn could and would likely have an adverse impact on our local, Rhode Island based M/WBE business community. In the absence of a current disparity study, staff did not feel that it was the right avenue to take at this time. Adopting such language would be a disservice to our local M/WBE companies, which is opposite of the mission of this working group. Mr. Cortés asked if you have to define new terms in regulations before you introduce them. He said if emerging businesses isn’t the right term to use. can we define what emerging business is in regulations to the extent that we achieve the goals of this commission. Ms. Thornton said that Rep. Edwards is also waiting for the deposits wording. Mr. Sabitoni said that he believes that Rep. Edwards is trying to address situations that the construction industry has faced in the past. The committee discussed the education and training gaps in the construction industry. Mr. Cortés said that the letter to the Governor may be the best approach in terms of our next steps on this legislation. Mr. Sabitoni said that he thinks that the reason why we may be running into issues with gaining the support of Rep. Edwards is because without that education piece, he’s apprehensive to incorporate the language we need. He asked what state agency or what combination of state agencies could put together a program to address the training and business side, or to establish a sub-committee with other representatives from the construction industry to make it happen. Mr. Sinnott said that they have had discussions with DLT and CCRI regarding training. Mr. Sabitoni asked to put that in the letter to the Governor as well. Ms. Clarke said that we need to move forward on the legislation and then the sub-committee can continue its work. Mr. Waldron asked that the committee move to the next agenda item.

III. Project Labor Agreements (PLAs) Ms. Burrell said that they provided research that had been done around PLAs, which historically have posed barriers for M/WBE participation. She said there are several examples where there were little to no participation from MBEs on PLAs. She asked Mr. Sabitoni to give the committee a briefing on PLAs and the role that the union plays on those projects, and then the committee can discuss any core barriers to MBE participation and work through them to identify possible solutions. Mr. Sabitoni said that he believes that MBE participation has been low on PLA projects due to the size and complexity of those projects. He said that there have been in excess of 250


construction projects awarded by the state over the past several years, from which approximately 10 of those projects had PLAs, such as the URI College of Engineering. He said that in order to include a project labor agreement (PLA) on a state project, the state or quasi-state agency must conduct a feasibility study to determine if it’s feasible or not feasible to use a PLA on specific job. He said that most of the time it depends on the size, scope, duration and complexity of the project, which usually means they are large projects with large numbers. He said that you’ll usually see contactors break out projects to address the capacity requirements. He said that the problem with breaking up larger projects is that you would then have multiple contracts where companies will not warranty the work because a portion of the project has been completed by other subcontractors. He said that that these scopes and projects are typically awarded the more sophisticated companies that can handle those complex projects in order to avoid the issue of not having warranties on parts of the project. He said that PLAs are inclusionary allowing for any company, union or non-union, to bid on a project. He said that PLAs provide certainty and have an awesome track record and are utilized because they are concerned to be in the best interest of the entity, which is why the State uses them when it is purchasing certain construction services. With respect to public works projects, the only way that the unions can provide a guarantee in the PLA that no one will strike is to ensure that the union is the bargaining representative for all on the project. In order to do that, the contractors and subcontractors have to join that respective union for the duration of the project, and that may be one of the barriers to MBE participation. He said that all public works are subject to prevailing rate, so it becomes a hinderance when a company’s workforce goes from $25 hourly to $52 hourly. He said that PLAs themselves are not a hinderance to M/WBEs or any companies. Ms. Wong said that the general contractor or construction manager will ask if you’re union, then usually you don’t get the chance to bid on the project is you indicate that you are non-union. Mr. Sabitoni said that it is illegal for any general contractor to discriminate on a public works projects, with or without a PLA, based upon a company’s union status. He said that if you don’t agree to sign the PLA, which is in the best of the client, then they have the right to not give you to job. He said that when you bid to a union contractor or general contractor without the PLA you have to sign an agreement that says you would be union everywhere. Ms. Burrell said that there is a lot of misunderstanding and miscommunication around PLAs, which have led to an underutilization. Mr. O’Donnell asked how we can correct this miscommunication. Mr. Sabitoni provided a detailed explanation of the ‘key man’ clause in the PLA, and how it would work for a non-union company to work on a PLA project. He also said the biggest barrier for non-union companies to come in and work on a PLA project and then go back is the wage disparity. Companies don’t want to expose their employees to that pay and then go back. Ms. Burrell asked if we could consider building on the language to provide more clarity. Mr. Torrado asked if anyone has tried to have PLA project meet the M/WBE participation by having each contractor and subcontractor meet the minimum 10% participation. Mr. Sabitoni said that they have tried everything, including outreach, mentoring, and putting subcontractors together. Mr. Torrado said that some of the members of Latino Contractors Association are reluctant to approach the union because they’re afraid of the primes, but if they knew that there was an avenue where they could still be union grade, but only have to apply for the 10% of the subcontract it would be a lot easier.


IV. Master Price Agreements (MPAs) - A motion was made to table this item for the next full

committee meeting

V. Comments and Announcements

Mr. Cortes expressed his appreciation to Mr. Fontes for assisting the state apprenticeship council with its work and to Ms. Burrell for coordinating the Building Futures training on the topic of sexual harassment and discrimination.

VI. Adjournment Meeting adjourned at 4:11 p.m.

Documents

Governor’s Working Group on Diversity in Constructionodeo.ri.gov/documents/governors-wgdc-progress-report-2-15-19.pdf · Appendix C – Minutes of the WGDC Full Committee and Sub-Committee