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Episode #2012
Minority Contractors
Lewis: Mitchell Lewis/Moderator
Hall: Tammy Hall
Burton: Garland Burton
Bullock: Mark Bullock
Harris: Shari Harris
M: Unidentified male speaker
[VOICEOVER]
M: Well, once the bond referendum was passed, I saw it as a great opportunity to take my company to the commercial arena to be able to take part in billions of dollars that had been allocated by the state to all these university projects.
Lewis: It's been four years since you, the voters, approved a 43.1 billion dollar higher education bond. A substantial portion of which would be used to remodel and build new buildings on the 16 campuses of the University of North Carolina and the campuses of the 59 North Carolina Community College system. How is the bond program progressing? And what economic impact is the program having on minority owned construction companies? We'll answer these questions and more next on Black Issues Forum.
[THEME MUSIC]
[VOICEOVER]
Funding for this program is made possible in part by UNC-TV members
Lewis: Good evening and welcome to Black Issues Forum. I'm Mitchell Lewis. Four years ago North Carolina voters approved a $3.1 billion higher education bond referendum. The bond's funding has made it possible to remodel and build new facilities throughout the state's community college system, the 16 UNC college campuses, and three affiliates including UNC TV. In order to get a more in depth discussion on tonight's topic we are focusing in on the University of North Carolina's portion of the bond referendum. Tonight we'll give you an update on the bond program's progress and find out how minority owned construction companies have fared with this economic opportunity. Before I introduce our panel, I would like to note that UNC TV is a part of the UNC Higher Education Bond Program and has received over $65 million to convert out television facilities to digital technology. Now here to help us examine the issues are; Tammy Hall, Director of the Historically Under-utilized Business Program or HUB at North Carolina Central University; Garland Burton Jr., Program Director of HUB at the University of North Carolina-Chapel Hill; Shari Harris, Assistant Vice President for Finance from the Office of the President; and Mark Bullock, President of Bullock Building Company located in Durham. And to all of you, thanks for joining us this evening. Sherry, I'll start off with you. Refresh our viewer's memories as to how the higher education bond was created and passed here in North Carolina.
Harris: Well, Mitch, in 1998 the General Assembly requested that the University review all of its facilities on our 16 campuses. As a result of that review it was determined, it was developed a 10 year capital plan that demonstrated a $6.9 billion need. The combination of the plan, the large enrollment growth that continues on our campuses, and also the President and the Board of Governors commitment to access for all North Carolinians to quality facilities, resulted in the Board of Governors putting forth this tremendous plan. The General Assembly approved the plan and also a $3.1 billion bond referendum for both universities and the community colleges. The voters also were very supportive. They showed their overwhelming support by 3 out of 4 voting in favor of the referendum. It's also important to note that initially the Legislative Black Caucus had concerns about inequities and inadequate facilities on some of the historically black campuses. And that really spearheaded the whole initiative to review all the facilities.
Hall: Mitch, I'd also like to take this opportunity just to reiterate our thanks to the Black Caucus for being supportive in our endeavors to utilize this funding in showing the confidence in us to build the types of facilities that our students would need.
Lewis: Now of course we have a graphic up about how the moneys have been split up but since you are part of the HUB, you, along with Garland, tell me about some of the projects that's being done, especially over at Central.
Hall: Certainly. We have been very fortunate in adding a number of facilities to our campus. We've done many renovations to current buildings, facilities. We've also built a brand new $36 million science complex along with resident facilities for our students. We're just tremendously grateful for the opportunity.
Lewis: And Garland, what's going on over at UNC-Chapel Hill?
Burton: Well we've got a ton or work. I think right now we've got almost $500 million worth of projects in construction right now; science complexes, student academic services buildings, infrastructure projects, a variety of different types of construction.
Lewis: Now Mark, I want to get you in on this. As a contractor, what was the process that you had to go through in order to get some of the contracts that you're working on. And tell us some of the projects that you're working on.
Bullock: Mitch, the process, really I guess, is becoming familiar with a lot of the paperwork and we participate mainly in the CM at Risk and we try on that. That's been a great area for us to participate because it allows us to be our own trade contractor and we're participating over at UNC, North Carolina Central, NC State, and various types of work without going into great detail right now.
Lewis: And of course there is a bidding process involved in that and, Garland, I know you've been very close to that and I think there's a graphic we have where you can explain how that takes place.
Burton: Right. Basically, the two most popular delivery systems that we're using right now, one is called single prime bidding and then, of course, the Construction Manager at Risk Delivery System. With single prime bidding, the owner, the university, typically contracts with an individual entity; a general contractor, to bid the building. They're responsible for the construction of that, complete construction of that project. That general contractor will subsequently sub-contract out work to vendors and suppliers and sub-contractors. But the general contractor himself is fully responsible for the completion of the project. Now Construction Manager at Risk is relatively new. Senate Bill 914 authorized the use of the CM at Risk Delivery System. With a Construction Manager at Risk Delivery System the CM, or construction manager, provides services to the university, managerial services, project oversight services, but doesn't actually perform any of the construction. The construction manager breaks the job down into individual trade packages and the trade package bidders are then responsible for bidding their trade package and subsequently sub-contracting work out to vendors, sub-contractors, and suppliers. The CM at Risk methodology really has enabled us to enroll many more contractors on a project, especially minority contractors.
Lewis: Shari, could you give us a breakdown as to the current UNC construction projects that have been secured by minority companies?
Harris: Well, currently we have approximately $54 million that have been awarded in construction contracts to African American firms. We have $115 million that have been awarded to women owned businesses. And in other categories we have about $50 [ph] million that have been awarded there as well. Overall, we're at about 14.7% which is above the state's goal of 10% in construction contracts to our HUB or minority firms.
Lewis: Now you were talking about 10%. Explain, there is a rule involving that. Could you explain that please?
Harris: Well, the 10% primarily is a result of Senate Bill 914 which was effective January 1, 2002 and it set a 10% goal for state contracts. It also put into place the new construction mechanism, CM at Risk that Garland spoke about earlier.
Lewis: Now getting back to you, Tammy and Garland; at Central, has anything changed, especially in the number of minority contractors prior to when the bond referendum was passed?
Hall: Mitch, I think that the program has seen tremendous progress and success. This was, Senate Bill 914, was a mandate issued and at Central we've been very fortunate to see our numbers surpass the 10% goal and we're very thankful for that and that comes from the leadership of our Chancellor. We are historically a black college and therefore we do expect to provide opportunities.
Lewis: Garland, what does it look like on UNC-Chapel Hill's campus?
Burton: Well, Mitch, the impact of the HUB Program has really been dramatic. When I started at UNC-Chapel Hill, we were averaging about 4.3% HUB participation. We are now over 15% overall on our projects and on our Construction Manager at Risk projects, we are nearly 20% participation. Now, this is interesting. I think it's clear that the HUB program has done more than to simply increase minority participation. We've created opportunities and helped to train contractors and helped to grow minority businesses. Now they're able to take the skills they've gained and the information they've gained, the training we've provided, and work elsewhere so there's a residual benefit to the entire state, I think.
Bullock: Now, Mark being a minority contractor, how has working on these types of projects, especially involving the bond referendum, has it been a help to your company as far as the process you go through? How have you been impacted by it?
Bullock: It's been a great help. I want to say it's a world of difference. We participated in single prime fairly only single prime before the CM and the bond referendum. Now CM at Risk is pretty much all we try to go after. It's on all the campuses. We look for CM projects and we're looking for them all the time. When there's one we want to try to make sure we're getting involved in a CM project. It's allowed our company to become more organized because we have to be more structured. You have to understand estimating a little bit more, the administrative paperwork, and just the things that makes your company focused and become more organized.
Burton: Can I add one thing? I think it's interesting. We're seeing that many minority contractors-many more now-are participating in the Construction Manager at Risk Delivery System because it gives them an opportunity to essentially function as a prime contractor but they're only responsible for their trade package. So it's a little bit easier fit. A firm that specializes in drywall, for instance, can bid as a principal over a drywall package and has full managerial responsibility only over that package and I think that for minority contractors, it's a good way for them to initially engage and begin doing work with the state. You know, long range our goals naturally are to increase the capacity of minority firms to bid larger packages and to ultimately bid as principals on a project.
Bullock: And I want to add one other thing to that, Garland. The CM structure of the bid opening process gives you the, I guess, the assurance and confidence because it's public bid openings and you're almost, like Garland said, you're your own trade, your own general contractor of your specific trade, the package that you're bidding. And it's public bid open and you know right then at that particular point the winners, second place, first place, third, so on.
Harris: Another point, too. Central, I believe, was the first one but we've been teaming relationships or partnerships between major companies and minority firms as CMs themselves so they get to learn that business inside and out.
Lewis: Now, I think I'll stop you right here for a moment because we're going to go to a piece featuring Quintin Munn of QM Enterprises and we'll take a look at the process he's going through as a minority contractor who has received some of the work with the university bonds. Let's take a look.
Munn: Well, in the beginning it was pretty tough. I had to understand how the whole process worked from the university standpoint; getting pre-qualified, understanding how to reach some of the prime bidders, to be able to submit the bids. It was surprising that there was so much competition and a lot of bidding going on even at the lower sub-contractor level. Trying to get in there and get a competitive bid out had been a bit more surprising than I though it would be. Over the past year or so, some of the things that we've done was to get involved with the university's HUB office to understand what it is that we can do and how we can give our information to other people who are prime contractors or construction managers and show them what we can do and how we can provide service to them.
Lewis: And we're back and the topic is minority contractors who are involved in the bond referendum as far as the contracts that have been awarded after the bond referendum passed. And Mark, I want to ask you a question: what is it like for contractors who perhaps have been involved in, say, smaller projects and then they get invited to do a larger contract along with the campus system. What type of challenges do they face?
Bullock: Mitch, if you take our company for example; you were smaller or we started out as a one, two man band, in order to move up into some these larger projects, we need to try to understand that we needed to be able to do the work, also do the administrative side, be able to get the plans, do the estimating, and so it's a process that's involved, a three, four step process here, and it's basically a revolving circle in each bid and once you've got that down, you know, it's repetitive.
Burton: And this is where we HUB coordinators come in. We provide assistance to minority businesses. You know, there are all kinds of minority businesses. We talk about providing assistance to minority businesses. There are firms that need no assistance. They've been functioning properly and they've got big, strong businesses and they've been at work in construction for any number of years prior to the bond referendum. Those companies are working and doing fine. There is another group, another set of contractors that has an intermediate skill set. They're capable of working on larger state construction projects but there is a knowledge base that they need access to; information about processes and procedures. How do you bid state projects? What are the requirements for insurance and bonding etc? HUB coordinators help to fill that gap, providing information, training resources and the like.
Hall: Not only those things, Garland, but many of our companies area able to do the larger projects but they lack the capital to branch out and do some of the things that would allow them to be successful on competitive bidding. Many of our companies are out there, the presidents are out there running the back hoes. They're on the phone trying to get an estimate or a quote in. So they're trying to do many of the things that a majority firm has the capital access to do by breaking down a total business structure and our minority firms, some of them, don't have that access to capital to do that.
Bullock: I'd like to add to that. The CM structure which creates your own, I guess, trade contractor in the different divisions also requires that each one of those trade contractors try to help another HUB contractor which now, before this smaller contractor wasn't able, and now is able to participate because before, of course, they were to small, they were a one man band, two man band, and now they're becoming a five, next thing you know, now they're a 25 man and so now..
Hall: So we're growing them through the bond program
Bullock: You start as a two, and now you're a five, and then now you're a 25 and you're growing.
Harris: I was just going to say, it's important to mention, too, that from a financial aspect which Tammy mentioned, there are resources out there. In particular, one example is Self Help which is located in Durham and we try to encourage contractors to take advantage of those resources.
Burton: And Sherry, that makes me think of a larger point here; there are many minorities business support agencies that are already in place. I think another thing that the HUB program is attempting to do is to bring these existing minority business resources together with us in an orchestrated effort to provide the kinds of services and support and assistance that minority contractors and minority businesses in general need to work on our construction projects. It's not something that the university can do alone.
Lewis: Sherry, I wanted to get back with you on the 10% minority business, the law there. How is it working? Because sometimes you may look at the numbers and the numbers to some people may seem like it's not working. How is it faring?
Harris: Well, Mitch, I think we've made tremendous strides. Initially when the bond program started, we were very low on participation for minorities. And we've by a factor of seven, as an example, increased the dollars awarded to African American contractors. And when you look at the percentages, the percentages seem small numbers, but we're talking about a $2.5 billion program so the dollar amounts are larger and they continue to grow. But that's not to say that we still don't have work to do. There are some hurdles and we are continuing in our efforts.
Lewis: Now, I'm going to go to you Mark. How do you get black contractors prepared to get involved in this type of work, especially moving up to another level. How do they get prepared?
Bullock: Mitch, the one thing that the CM program does, and Garland enforces this a lot or, I guess tries to enforce this when he's explaining some of the processes and that is, just like we are participating with some of the larger contractors, the smaller contractors need to be participating with us and we have been fairly successful with that by reaching out to some of the smaller companies and helping them because most of them just don't have the resources in place, administrative person to do the paperwork. Of course, we're doing that, I could say we're doing it for them, and we're helping bringing them in and now they're learning so now they're branching out on their own and actually becoming competition with, in some instances, but.
Burton: And Mark's absolutely right. It's about building relationships. We are fostering joint ventures among minority businesses. But relationships, that's the key thing there. It's about building relationships with your customers. Identifying your customers and creating win-win situations. For instance, the universities have placed a lot of emphasis on recruiting minority contracts so our prime contractors our majority owned firms understand our wishes. They understand that it's important to us so many of them are actively seeking collaborative relationships with minority businesses and they are, in fact, the customers for companies like Martin Bullock. We help to foster those kinds of relationships and that's the way you get your foot in the door.
Hall: And also if we take a look at over all the disparity numbers that are available to us which indicate to us what our available minority pool of contractors is, for North Carolina Central University, ours is about 7% available to us, where we're dong an African American sector we're doing over 12% and overall, close to 22%. So we look at the disparity study, it indicates to us what the available pool is out there in terms of contractors available. And we're all striving very hard to find contractors that can do business with us despite those numbers and what the indications are.
Burton: You know this is an interesting point. But currently at UNC-Chapel Hill we've got over 200 individual HUB firms that work on campus. Now we're, I think, 90% of the projects in this phase of the bond program are 95-97% on some phase of design or construction, we've got 63% in construction right now so a lot of people are already working and we're noticing that many of our bid openings now we're seeing fewer and fewer people show up-HUB and non-HUB people are busy so we are recruiting new people and trying to raise the skills of those firms out there that heretofore had not participated.
Lewis: Sherry, I understand that there is an outreach program designed for these contractors as well. Tell us about that.
Harris: We have a number of outreach programs, Mitch, but I think you're in particular talking about the HUB Contractor Academy which we recently did. We did that in partnership with the Carolina Associated General Contractors and sponsorship from some of the major corporations or construction companies that are on our campuses. The overall concept of the Academy was to empower these minority contractors who maybe had not been successful on winning bids, may need some help with estimating skills, understanding the overall process and being successful on projects and the Academy itself was very, very successful and we plan to do this for other times throughout the state of North Carolina.
Lewis: And Mark I'm going to leave it with you because we are about a minute left here. As far as minority contractors moving up to the big ticket items, if you will, what advice would you give them on becoming prepared to do that?
Bullock: Mainly, Mitch, I would say concentrate on their estimating because they really need to know when they're bidding these projects they need to know everything about it. That would probably be number one. Estimating is number one for us. We try to estimate, check it twice, and get involved in the program.
Hall: And my suggestion would be joint venturing. Find you a majority company that you can build a good relationship with and joint venture with them and learn everything that they know. And it will tremendously help your business in terms of moving you to the next level.
Harris: And also small companies can partner and joint venture together. I think that provides a substantial advantage as well.
Lewis: And we'll have to stop it right here. Thank you so very much for the information. We'd like to thank our guests for being on tonight's show and if you'd like to know more about this topic or get an update on the bid program, you can visit our website at www.unctv.or/bif You can also contact us by telephone with your comments or questions at 919-549-7167. Thanks for watching tonight and tune in next Friday night at 9:30 for more Black Issues Forum. Good night.
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