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Austin Energy project on hold due to MBE/WBE concerns

Friday, April 30, 2010 by Michael Kanin

The approval of a construction deal for Austin Energy’s new System Control Center has been put on hold thanks to Council concerns about minority business enterprise (MBE/WBE) involvement. The delay came as representatives of Hispanic and African-American contractors told the body that they’d been left out of the process.


The project, which will be built under the construction-manager-at-risk method, could be worth as much as $67 million, and represents three amendments to the current contract. The contractor is DPR Construction, whose Austin office is responsible for, among other notable efforts, portions of the Four Points Centre project.


Frank Fuentes of the U.S. Hispanic Contractors Association told Council members that the deal as-is goes against Austin tradition. “Participation is always what this city has been about,” he said. “(This proposed contract) is not that; it is a $67 million blank check, if you will, to Austin Energy and there will be no public participation from the minority community.”


Carol Hadnot of the Austin Black Contractors Association said that the contract did not meet the minimum general minority participation goals laid out in the city’s MBE/WBE ordinance.


“They should have used project specific ethnic goals,” she suggested, adding, “This is just a slap in our face.”


According to the Small and Minority Business Resources (SMBR) department’s web site, the annual participation goals for the city are 1.7 percent for African-Americans, 9.7 percent for Hispanics, 2.3 percent for Native/Asian Americans, and 13.8 percent for women business enterprises. As it stands, the current SCC project goals for minority involvement are 1.45 percent for African-Americans, 3.6 percent for Hispanics, 1.32 percent for Asians and Native Americans, and 1.98 for women business enterprises.


The site, however, also notes that “(g)oals for MBE, WBE & DBE participation differ from contract to contract based on the type of contract, the availability of MBEs, WBEs & DBEs to perform the functions of the contract and other factors.”


In a memo to the Council, Austin Energy said that the numbers in the pending contract had been set by SMBR based on “the estimated construction value and the availability of certified firms for trades identified by Austin Energy.”


“SMBR, in conjunction with Public Works,” it continues, “reviewed and verified the trade summary and the process used to establish the goals.”


Council Member Sheryl Cole asked Hadnot what action she would like for the council to take. After a brief exchange, Cole summed up what she’d heard. “Really, you just want us to postpone the item and give instructions to continue some negotiations with the minority contractors to meet the goals,” she said.


“Correct,” said Hadnot. “Meaningful goals.”


Cole asked Fuentes if that was the gist of his request. In response, Fuentes echoed both Hadnot’s statement, and his earlier remarks.


She then asked Austin Energy what “the implications of postponing the item for the electric utility would be.”


Austin Energy Deputy General Manager Cheryl Mele said that “postponing it a week or two is not going to have any significant impact.” She added that representatives from the utility had planned for more outreach, even if the contract was approved at the hearing.


“The project itself, the way that we are proposing to implement it with this approval, would require four separate solicitations to go out and those would be competitive bids,” she said. “Each one of those solicitations would actually come back with a compliance plan for the MBW/WBE program. So even as we’re asking for it today, we would see additional outreach to the subcontractors.”


Mele also noted that the utility had participated in minority outreach efforts. “We have actually participated…in some outreach programs,” she said. She specifically cited a regularly scheduled MBE/WBE large projects meeting that an Austin Energy project manager had attended with a representative from DPR. “I think we answered several questions from the community at that point,” she said.


In the end, the City Council postponed approval until the MBE/WBE advisory committee and a Council committee review the agreement. It could be back in front of the Council as early as May 27.


Whenever it returns to the chamber, the utility will bring back the contract in pieces, breaking up the $67 million into more detailed chunks. “They will be seeing during each phase of the project what the goals were versus what the compliance was for each of the phases of the project,” Mele told In Fact Daily.

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