5. Discussion of Other Issues

It is important to point out that the achievements by California utilities in opening up their procurement activities to the supplier diversity goals set forth in the 1986 statutes and in GO 156 are truly significant, especially when compared to other states and Fortune 500 companies.16 Although "nothing in GO 156 authorizes or permits a utility to utilize set-asides, preferences, or quotas,"17 several utilities have exceeded the voluntary target goals and the results are greater competition among suppliers and enhanced economic efficiencies in procurement by utilities and their regulated subsidiaries and affiliates.18 Even so, many utilities lag behind these target goals and offer various explanations for their limited results. Some, like water companies, who are just beginning to develop and report on their supplier diversity programs, seek advice and assistance. Others have individual factors like large foreign sourcing or no certified WMDVBEs for procurement categories in their service area.

More than a dozen non-utility parties (mostly CBOs and a few diverse businesses) actively participated in the OIR in order to seek changes they believe are necessary to fully realize the potential of §§8281-8285 and GO 156. Their participation was integral to the ensuing conversation which brought to light the necessity of utilities listening to CBOs and working with them in order to advance their supplier diversity goals. All CBOs contended that there were specific steps that utilities, the Clearinghouse, the Commission, and the organizations themselves could take to increase the number of certified bid-ready companies, to improve results in underutilized categories and in break-out target areas, and in addressing various identified barriers to small and diverse business success within utility procurement programs. We discuss these various issues and suggestions below.

In 2009, utility spending on WMDVBE procurement rose to $4.27 billion from $3.47 billion in 2008, an increase of $23.05%.19 The percentage of total procurement also increased from 13.19% in 2008 to 16.72% in 2009. Although the "traditional six" (PG&E, SoCalGas, SDG&E, SCE, AT&T wire line, and Verizon wire line) continue to surpass the aggregate target goal of 21.5%, it has never been met by all utilities on a collective basis.20 As discussed above, the utilities were asked to quantify and express their previously stated commitments towards improvements in supplier diversity for the oral argument held in this proceeding on June 23, 2010. A brief summary of their testimony is in Attachment B to this decision. The summary includes total 2009 procurement spend, 2009 reported WMDVBE results by category, and each company's own proposed interim steps both towards specific target goals and in their supplier diversity programs.

The large energy utilities offered some quantified goals and program initiatives, while most other companies offered only program initiatives and suggested that numerical goals were limited by actual procurement needs and WMDVBE availability. Despite CBO requests, none of the reporting companies identified any sub-category interim steps, e.g., Latino-owned, minority women-owned businesses, etc. CBOs provided a range of comments about the self-identified aspirational interim steps offered by the reporting companies. These comments are in the record but some highlights are described below:

· BEC, LBCGLA, and Mabuhay jointly commented that the proposals were "skimpy" and recommended:

_ A 15% target goal for Latino-owned businesses, 10% for Asian-owned businesses, 6.5% for Black-owned businesses, and 10% for women-of-color-owned businesses;

_ Double counting of minority DVBEs through 2013;

_ Support for women-of-color business initiatives by AT&T and Sempra;

_ Support for Sempra's TA plan for DVBEs, WMDVBE partnerships with large financial institutions, work with minority media, targeted categories for expansion;

_ Support for PG&E's 27% aspirational aggregate goal and offered to assist with minority DVBEs;

_ Rejection of Verizon's requests to adopt exclusions for some categories, and to include out-of-state DVBEs; and

_ Criticism of SCE's initiatives as "internal" rather than reaching out to CBOs.

· CAPCC: commented that few utility proposals included plans to coordinate or collaborate with CBOs, failing to utilize their strengths and recommended various means to improve this relationship.

· AICC: commented that only SDG&E provides procurement numbers for AI businesses and offered:

_ Support for AT&T, SDG&E, SoCalGas which have included AI woman-owned businesses in outreach and TA;

_ Support for AT&T which included AI DVBE-owned businesses in its outreach program;

_ Support for SCE for hosting an AICC matchmaking event; and

_ A recommendation for more outreach to AI community, e.g., AI woman-owned businesses, Native American Bar Association, AI-DVBEs.

· CHCC: commented that the interim proposals lacked a specific measure to increase outreach or commitment to work with CBOs to improve WMDVBE spend and recommended:

_ Requiring utilities to develop a strategic outreach campaign.

· Greenlining: commented that some utility plans have been effective while others have not, and recommended:

_ Support for utility-targeted demographic groups (e.g., Sempra & AT&T for minority woman-owned businesses, Sempra, AT&T, PG&E, and Verizon for DVBEs);

_ Support for Cox Cable for "great strides" and "proactive efforts" to improve supplier diversity; and "Wild Goose Storage" for its own aggressive goals;

_ Utilities identify specialties within professional categories and racial groups within the MBE category for targeted focus; and

_ Rejection of Verizon's request to re-adopt exclusions for some categories.

We applaud the utilities who stepped up to quantify their own self-identified aspirational steps for improvement in their supplier diversity programs. In particular, PG&E, SCE, SDG&E, SoCalGas, and Wild Goose took the impressive step of setting numerical targets for themselves which we think is an appropriate internal incentive. Other utilities may not get the kind of results they purport to seek when relying solely on program initiatives, although some initiatives are promising (e.g., AT&T's Women-of-Color, Operation Hand Salute.)

Several CBOs continued to argue that the decades-old voluntary target goals set forth in G0 156 must be increased to keep pace with demographic changes in California, the growth of minority businesses, and the actual results achieved by many reporting companies. Specifically, Joint Parties asked for a new aggregate goal of 40% instead of the old 21.5% set in 1988. It is notable that AT&T and Verizon recently reported that, in 2010, both exceeded an aggregate 40% WMDVBE spend.21 Similarly, SDG&E and SoCalGas, which offered 30% as an aggregate aspirational step to be met by 2011, actually reported more than 37% spend for 2010.22

These important achievements establish that the utilities can continue to challenge themselves to do better, and that working towards a 40% aggregate WMDVBE spend is reasonable and possible. Not every utility is able to make the same leaps and bounds that AT&T, Verizon, and the Sempra companies have done, partly because growth is constrained by procurement demands and other factors. Nonetheless, each utility could and should make its own annual assessment of how it can best continue to grow its WMDVBE spend, either by setting a new internal aggregate target or a definite annual percentage increase.

In addition, Joint Parties sought voluntary MBE targets of 15% Latino, 10% Asian, and 6.5% African American businesses. Joint Parties pointed to the fact that Verizon and AT&T have reached the 15% goal for Latino businesses, Verizon has met the 10% goal for Asian businesses, and both PG&E and Verizon have almost met the 6.5% African American business goal. Again, the results establish that these goals are achievable for some utilities and may, over time, be achievable for others.

In summary, we do not adopt any specific new target goals for reporting companies today. Instead we strongly encourage each reporting company to annually assess current WMDVBE spend and set their own voluntary numerical goals by looking to other utilities with successful programs. Whether it is a five-year plan to achieve 40% aggregate spend, or a three-year plan to grow MBEs by 25%, or Latino businesses by 10% per year, each company has room to improve and we strongly support a numerical commitment by which the utilities challenge themselves, and the Commission and public can measure the effectiveness of each utility's actions. We agree with the Staff recommendation that these voluntary targets be implemented on a gradual and increasing basis over time.23

Furthermore, it is reasonable for the CBOs to ask for more utility coordination and collaboration with community groups because they are connected to a wide variety of small and diverse businesses.24 The CBOs are likely able to identify potentially competitive businesses and help channel them to certification, training, and into position to submit qualifying bids for contracts. Failure to reach out and work with these groups is simply a waste of valuable resources.

We urge the CBOs to carefully review the identified interim steps and programs to find where they can maximize the opportunities to channel small and diverse businesses into utility initiatives. Most utilities said they already work with, or intend to immediately work with, community groups to identify procurement needs and WMDVBEs. The CBOs themselves are in the best position to hold the reporting companies to their own promises during the coming year and we strongly encourage them to do so. We look forward to discussing the progress of each company at the 2011 en banc proceeding and having a conversation about the effectiveness of their own self-developed strategies.

Accordingly, based on the record, we find that it will advance the goals and policies of GO 156 if the reporting companies annually assess their WMDVBE spend and set their own voluntary numerical goals to be included in the next annual GO 156 report, pursuant to §9.1.4, and reviewed at the Commission's next en banc hearing.

Reporting companies are required by Section 9 of GO 156 to annually file reports that contain specific information about their supplier diversity programs. Several parties recommended or agreed that certain changes be made to these requirements. Proposed changes that seem reasonable and are supported by the record are:

· Add separate line item report on electric procurement spend;

· Require electronic filing of annual reports and posting on the Commission's website;

· Require reporting of the total number of WMDVBEs that received direct spend during the reporting period;

· Require reporting, to the extent available, of the approximate amount of funds directly expended on development and distribution of technical assistance to WMDVBEs and small businesses;

· Require at least one random audit every two years of an annual GO 156 report in the designated industry group for that two-year period;

· Require reporting of total number of WMDVBEs that received contracts in addition to total value of WMDVBE contracts;25 and

· Make changes to conform to AB 2758:

_ Add wireless providers,26 include renewable energy procurement, wireless, broadband, smartgrid, & rail projects;

_ Identify procurement from WMDVBEs with California-majority workforce to extent readily accessible; and

_ Conform to DGS criteria for DVBEs.

Other CBO ideas were problematic, vigorously opposed, or insufficiently developed to adopt here. Rejected ideas about annual reports, and the reasons therefore, include:

· Require reporting of economic benefits of the supplier diversity programs because economic benefits were thought to be obvious, quantification of benefits would be difficult and fail to include non-economic benefits, and it would drain available program funds;

· Expand definition of minorities to include disabled and LBGT27 because it would require statutory changes;

· Require cable companies to report because it would require statutory changes;

· Exclude from reported base services those products and services "demonstrably lacking" in diverse suppliers because it would dilute incentives to improve results, and no corroborating availability studies have been done;

· Examine reporting of real estate transactions to separately identify commissions to encourage use of diverse brokers and agents because there is insufficient information; issue needs to be further developed; and

· Replace Standard Industrial Classification (SIC) codes, which are outdated and falling out of use, with the North American Industrial Classification System (NAICS) because there is insufficient information; issue needs to be further developed.

No annual GO 156 report has ever been audited. Several groups asked the Commission to order such audits, and some sought specific audit authorization in GO 156.28 For example, Greenlining promoted audits as a "standard financial and informational housekeeping procedure that simply ensures that all is as it should be."29 The Commission already has audit authority for reports filed by the utilities, and despite some utility objections, we agree that audits are an appropriate oversight tool for the annual GO 156 reports.

In order to provide additional confidence in the accuracy of the reports, we add a requirement that a minimum of one random audit of an annual GO 156 report be conducted every two years. Beginning in 2012, the Commission's Division of Water and Audits, Utility, Audit, Financial, and Complaint Branch, (Audit Division) will segregate reporting companies by industry and, beginning with energy companies, followed by telecommunications and water in subsequent two-year periods, will determine the random selection process and audit methodology to be used. The Audit Division will conduct the audit and report its findings to the Commission by letter to the Executive Director. Nothing in this requirement shall be construed to limit in any way, the Commission's authority to undertake additional audits at any time for other reasons.

Other proposed amendments to GO 156 include an addition to §9.1.2 which requires utility annual reports to include the number of WMDVBEs with a majority of their workforce in California "to the extent such information is readily accessible," and the number of WMDVBEs that actually received direct spend during the reporting year. It also includes a requirement to report the total number of WMDVBEs that received contract dollars during the reporting period and total dollars awarded. The latter change raised utility concerns that it was duplicative of the requirement in D.06-11-028. In fact, it is a "clean-up" amendment to conform to that decision and imposes no new requirements.

In addition, §9.1.10 is added to require a summary of WMDVBE purchases in product or service categories that include renewable and non-renewable energy, wireless communications, broadband, smartgrid, and rail projects, and gave the utilities discretion on segregating overlapping dollars. The identified categories are directly drawn from AB 2758.

In comments on the proposed decision, Greenlining specifically supported all of the amendments to GO 156, including those to achieve conformity with AB 2758. However, some utilities raised concerns about §9.1.2 and §9.1.10. For example, AT&T and Verizon contended it is legal error for the Commission to incorporate language from the new law into GO 156 due to a lack of notice and opportunity to comment. PG&E, Sempra, and SCE did not object to the elements of AB 2758 but wanted clarification of the expanded reporting requirements either in the decision or in a post-decision workshop.

We reject the position that enacting changes to GO 156 to conform with a valid statute is a surprise to the utilities, which carefully monitor legislative activity related to the Commission's authority. Furthermore, the proceeding record supports the amendments which are well within the scope of the proceeding, even absent the passage of AB 2758. Contrary to comments by AT&T and Verizon, Greenlining and the Joint Parties raised issues of expanding reporting categories and referred to AB 2758 specifically, at various points in the proceeding. For example, inclusion of electric procurement, renewable energy, and smart grid spend were raised in the first round of comments by parties.30 Additionally, the bill's author, the Hon. Steven Bradford, joined the Commission at the en banc hearing where he and other participants referred either to AB 2758 or its requirements for reporting purchases and/or contracts in categories that include renewable and non-renewable energy procurement, wireless, broadband, and smart grid projects.31 For example, Sprint expressly said that separate reporting on wireless was "fair" and SCE agreed with reporting energy procurement. Furthermore, in D. 10-06-047, the Commission stated that the current language of GO 156 already required such reporting for Smart grid projects.32 Lastly, all parties had an opportunity to file comments after the en banc hearing, and were directed to focus the comments on issues raised there.

AT&T's characterization that they would unfairly be required to report whether WMDVBE contract partners have a majority California workforce is a misstatement of the new law and the amendment to GO 156. Both the law and the amendment state such data is reportable only to the extent it is "readily accessible." The Commission recognizes the data is not currently collected. As a part of this decision, the Commission sets in motion the Clearinghouse collection of this data for its business profiles which will be accessible to the utilities in the future. Several utilities agreed that the Clearinghouse was in the best position to collect the information from businesses.

We are sensitive to concerns that the language of the new law may have some ambiguity regarding what the utilities are required to separately report in the new categories. That is the basis for §9.1.10 providing utilities discretion to segregate overlapping dollars when reporting. However, given the concern raised in comments on the proposed decision, the Commission Staff should convene a workshop with the utilities shortly after the decision becomes final in order to reach a common understanding of what is separately reported.

Accordingly, based on the record, we find that it will advance the goals and policies of GO 156 to adopt the identified changes to annual GO 156 reporting to require (1) electronic filing, (2) posting of annual reports on the Commission's website,(3) inclusion of electric procurement spend,33 (4) the number of WMDVBEs that received direct spend, (5) the approximate direct expenditures for the development and distribution of technical assistance to WMDVBEs and small businesses (as discussed in section 4.6 above), and
(6) annual voluntary numerical goals to the extent adopted (as discussed in Section 5.1.1 above). In addition, it will advance the goals and policies of
GO 156 to amend GO 156 to require at least one random audit of a GO 156 report every two years in one of the industry groups, to make changes in conformity with AB 2758, and to require an annual en banc hearing by the Commission (as discussed in section 5.10.1 below).

The topic of prime contractors/suppliers (primes) was broadly considered during the course of the OIR both for expanding use of small and diverse businesses as subcontractors and for verification that primes follow through on contract commitments to hire WMDVBE subcontractors. Section 6.3 of GO 156 tells each covered utility to establish a subcontracting program to encourage its primes to use WMDVBE contractors. Section 6.3.4 asks utilities to encourage primes to develop their own supplier diversity plans for subcontracting and authorizes a utility to incorporate these plans into their contracts with primes, should they choose to.

Nearly all parties agreed that primes are the key to opening up large contracts in some way to small and diverse businesses. Several parties, including AT&T, SDG&E, CWA and some CBOs, urged the Commission to take a stronger role supporting utility programs to improve use of WMDVBEs by primes. Early comments asked the Commission to hold a workshop for primes to explain the benefits of expanding their sub-contractor pool, and another for utilities to share best practices. In WSR#1, the USPD staff (Staff) agreed that the Commission should encourage primes to use small and diverse businesses, and that utilities may encourage primes to develop diversity programs. Staff echoed the common CBO view that if primes have a diversity program, they are more likely to use it. Joint Parties and CAPCC wanted such programs mandated by the Commission.

However, a mandate is problematic for several reasons, including potential legal limits and the voluntary nature of much of the Commission's GO 156 program. Nonetheless, all of the major utilities have some sort of prime supplier program. A few like Sempra and PG&E include contract language to assure a portion of subcontracting goes to WMDVBEs, and others have now identified the issue for action.34 CBOs want access to the identities of each utility company's primes so they can access these large suppliers directly. This seems like a good idea, although utilities state that some have non-disclosure agreements and the Commission may lack authority to order public dissemination of this information. However, there is no reason why the utilities could not hold networking events where primes and potential sub-contractors are invited and voluntarily disclose their identities and make connections for future contracting opportunities.

Another proposal widely supported by CBOs is that the Commission audit the prime contracts because many stated the primes do not follow through with using WMDVBE subcontractors which they promised when getting the prime contract. In WSR#2, Staff recommended that utilities engage in follow-through and verification of prime contractor claims to use WMDVBEs. Several utilities, like PG&E and Sempra, said they already do so and may enhance verification measures in the future, including possible audits. We agree these are essential steps to assure the integrity of their prime supplier programs and encourage all utilities who work with their primes on expanding the diversity of subcontractors to follow suit. In any event, §6.3.7 of GO 156, requires each utility to include a summary of prime contractor progress in its annual report, including any results from its own audits.

There was insufficient information in the record about other recommendations related to primes. For example, AICC sought focused development of WMDVBE primes and Greenlining recommended bringing renewable energy providers into prime supplier programs. The development of WMDVBE prime contractors may be valuable, but there is no information in the record on the availability of potential WMDVBE primes or methods of development. Similarly, whether renewable energy providers could be folded into prime supplier programs was unexplored during the proceeding. Thus, we are unable to thoughtfully evaluate these proposals at this time.

Accordingly, we adopt no changes to GO 156 in this area. However, based on the record, we find that it will advance the goals and policies of GO 156 to recommend that the utilities, CBOs, and Staff work together to develop a networking event model where primes and potential sub-contractors meet to discuss (1) future large procurement projects, (2) the benefits to primes of greater use of a diverse supplier base for subcontracts, and (3) best practices for verification of prime contractor commitments to use diverse businesses.

An important issue for most parties is the matter of certain areas of procurement which are "underutilized," meaning where procurement spending levels are below the aggregate WMDVBE percentage total for the company. The Commission has assisted the utilities and CBOs in prior years with workshops and networking events in the areas of legal and financial spend. During the course of this proceeding, including the May 5, 2010 workshop, the parties also identified advertising, insurance, and consulting as underutilized areas where procurement spend could be improved.

In 2009, the Commission co-sponsored two events for legal services and three for financial services. The most recent utility annual reports on GO 156 show progress during 2009 in the areas of legal and financial services. SoCalGas showed the highest level of legal spend at 41.38%, with PG&E at 20.58%, and AT&T-CA at 16.29%.35 The results are less dramatic for financial spend with SDG&E highest at 7.63%, SCE at 6.84%, and SoCalGas at 6.31%, although SCE spent the most on diverse financial firms, $2.1 million, a 300% increase over 2008.36

The major energy and telecommunications companies have described a range of strategies, activities, and efforts undertaken to support the development of WMDVBEs in legal, financial, and technical procurement areas. The breadth of these programs is described fully in the record. Generally, these utilities seem satisfied with their progress and remain committed to their current programs (e.g., SCE's networking with WMDVBE law firms, Sempra's outreach to WMDVBE firms). There has been some creative progress in financial services as utilities have begun to use WMDVBEs for stock trading, auditing, investment management, and commercial paper transactions. We note that smaller utility companies have not made the same inroads, due in part (they say) to a lack of resources or unavailability of professional WMDVBEs in their geographic area.

To address utility claims that it is hard to find experienced WMDVBE professional firms, Verizon, CHCC, and Joint Parties suggested that the Commission allow reporting of "partial credit" for retention of women, minorities, and disabled veterans at majority professional firms or primes who have diversity programs. Sempra and PG&E opposed it on the grounds it could dilute incentives for primes and would require utility resources to design and implement an evaluation tool. This proposal is controversial and lacks sufficient development in the record, therefore, we decline to act on this proposal.

In WSR#1, Staff agreed some of the current utility outreach seems effective, and recommended utilities host industry-specific workshops and set voluntary goals for specific underutilized areas. Greenlining supported voluntary goals in underutilized categories and also sought to expand these categories, preferably through some sort of formal assessment.37 During the proceeding, and specifically at the May 2010 workshop, CBOs expressed concern over the pace of utility results, and offered recommendations on how to improve spend in underutilized areas. Some of these ideas are discussed below:

Joint Parties asked the Commission to acknowledge that voluntary efforts by utilities have been unsuccessful and to order utilities to (i) provide information on minorities at contract law firms, and (ii) develop alternative strategies and methods for improving spend in legal services (e.g., consortiums of WMDVBEs). We decline to order the utilities to gather this information as part of the voluntary program, in favor of recommending utilities reach out and work with their contract firms, as SCE did for legal services. Utilities are well-positioned to gain voluntary cooperation from contracted non-WMDVBE firms, and it likely helped SCE that it had a diverse in-house legal department. Other utilities could follow SCE's model for success, which SCE could also replicate in other professional categories. CBOs could also benefit from working with utilities and WMDVBEs to stimulate development of partnerships and consortiums of WMDVBEs.

Joint Parties made the same comments as for Legal Services and we decline to mandate such data collection. Some utilities have been very creative in finding ways to use small and diverse businesses and we encourage other utilities to learn from those experiences. The use of minority banks, particularly for customer deposits, is significant because it may have the added benefit of making more capital funds available within minority and low-income communities, an important part of business growth (e.g., Sempra placed $14 million in customer deposits at a minority bank).38 We endorse the Staff recommendation that utilities share information on experienced financial services WMDVBEs and suggest all utilities carefully review the reported range of opportunities for growth in this area. Similarly, CBOs can alert WMDVBEs to potential contract areas based on newly reported financial services procurement.

Several parties agreed that low spend in advertising should be addressed, particularly by more use of minority/ethnic media. We decline to adopt the request by Joint Parties to order utilities to gather information about minorities employed at majority advertising firms. Sempra committed to developing opportunities as contracts expire, while PG&E encouraged WMDVBEs to develop partnerships with non-minority firms. We agree with the observations in WSR#1 that the advertising landscape is changing due to technology and financial economies. Therefore, small and diverse businesses in this category should consider reaching out to the utilities to better understand available opportunities, for assistance in creating partnerships, and to attend or host networking events.

There were differences of opinion on how to tackle low spend in this area. PG&E suggested WMDVBEs partner with large brokers, while SCE advised brokers to narrow their focus to an industry group. Sempra disagreed with SCE and recommended more networking events that included utility project managers. Staff agreed with Sempra in WSR #1 that networking is effective. This is a category ripe for a workshop since utilities appear to have very different ideas about their procurement needs in this area. We again decline to order data collection at non-WMDVBE firms.

AT&T asked the Commission to host a workshop on consulting services and SCE suggested more WMDVBE partnering with non-minority firms. Sempra reported on its programmatic approach which emphasizes small internal networking with high potential WMDVBEs, executives, and non-WMDVBE primes that has led to WMDVBE consultants for project management, scheduling, information technology development, mapping, and quality assurance. We agree that consulting services may be an appropriate category for a workshop and recommend that the utilities, CBOs, and USPD staff work together to identify relevant consulting specialties and best practices of target programs like the one at Sempra.

We commend the utilities for the wide-ranging strategies and activities they have recently developed to address underutilized categories. There has been significant improvement in the areas of legal and financial services for some utilities as they, and their community partners, think more creatively and work together. On the other hand, the facts are that some procurement categories, particularly professional services, continue to have very low spend relative to overall WMDVBE procurement.

We adopt no changes to GO 156 in this area. However, based on the record, we find that it will advance the goals and policies of GO 156 to recommend that the utilities, the CBOs, and Staff work together to develop workshops that identify best practices, including showcasing successful programs, encourage utilities to share experienced WMDVBEs, explore the mechanics of bid partnerships, review the current state of advertising spend, and identify relevant consulting specialties.

Many parties, both utilities and CBOs, were concerned about DVBE spend because nearly all utilities report less than the 1.5% target. Some DVBE organizations participated early in the proceeding, often providing information about initiatives the DVA or the organizations themselves had undertaken. For example, DVA and DVBEA supported an increased target goal of 3% for DVBE procurement, similar to a procurement program through the DGS. Elite SDVOB thought the goal was less important than changing attitudes at the utilities which they claimed routinely ignored veteran-owned businesses.

DVBEA and the Elite SDVOB both took issue with utility claims they could not find many DVBEs in their procurement categories. It appears one problem is establishing an up-to-date database. These veterans' groups are working together to complete the database and make it available to utilities. Furthermore, they have initiated discussions with utilities and the Commission about improving DVBE access to contracts and an effort has been launched to update business profiles of more than 1000 DVBEs. In general, DVBEs raise many of the same issues as other CBOs on barriers to competing for contracts. For example, all these groups agreed with other CBOs that more TA and CB was needed and unbundling contracts would open up more bid opportunities.

As discussed in Section 4 above, we decline to adopt any change to the target goal for DVBEs in GO 156, but we agree there has been disappointing progress to date in this area. We strongly encourage the utilities to continue their outreach to DVA and veterans organizations, and work to incorporate the DVBE business profiles into the publicly available database of WMDVBEs at the Clearinghouse or otherwise make them readily accessible.

From the inception of this proceeding, the CBOs have uniformly argued that there are numerous barriers preventing small and diverse businesses from effectively competing for contracts. Most of these issues were addressed in the TA and CB program section above. Other issues involve utility business practices and requirements which are discussed here.

As amended in 1990, the Pub. Util. Code anticipates that utilities may choose to modify some payment practices and bonding requirements as they open contracting to more small businesses.

Section 8286 provides:

(a) In order to facilitate the participation of women-owned businesses, minority-owned businesses, disabled veteran-owned businesses, and small businesses in contract procurement, any corporation subject to this article may consider the following measures to include those businesses in all phases of their contracting:

(1) Timely or progressive payments to those businesses.

(2) An amendment of the performance bond requirements so that bond requirements of electrical, gas, and telephone corporations do not prohibitively burden those businesses from procuring the corporation's business.

(3) The provision of assistance to those businesses by securing contract payments to those businesses with letters of credit, negotiable securities, or other financing arrangements or measures.

(b) This section does not restrict a corporation's ability to require a bond.

AICC and CSBA asked the Commission to order the utilities to establish a "prompt pay" provision (i.e., 30 days, 2% discount in 10 days, 1.5% interest after 30 days.) AICC also suggested we examine whether utilities can develop a surety bond program for small business contractors.

We agree that prompt payment and flexible bond requirements are important to small businesses and may remove barriers to competing for contracts. However, no changes to GO 156 are required because the utilities are already authorized to consider and implement these suggestions pursuant to §8286(a).

The parties also reviewed utility insurance requirements for suppliers which many CBOs said were too expensive for small businesses. Sempra and SCE have held meetings to assist WMDVBEs in getting insurance, but the telecommunications companies have not been similarly active. Instead, Verizon offers referrals and AT&T supports working with others on the issue. We agree with the CBOs that this is an obstacle that needs further inquiry and recommend a workshop or seminar for WMDVBEs to explore opportunities to form cooperatives and identify other cost-cutting options.

On the other hand, we decline to endorse suggestions that utilities create a development fund to extend small business credit or otherwise ask utility ratepayers to provide capital to small and diverse businesses. The utilities see this matter as beyond the scope of GO 156 and outside their role. Some CBOs seemed to agree and instead asked for a workshop by lenders and community banks on loan criteria, microlending, and access to capital. The Staff agreed that a seminar for CBOs could be useful to them and we recommend that the CBOs develop a workshop with lenders, CBOs, and small and diverse businesses to learn how to access credit. Utilities that have business relationships with minority and community banks may be able to offer some assistance in identifying these institutions and encouraging their participation.

Accordingly, based on the record, we find that it will advance the goals and policies of GO 156 to recommend that CBOs initiate a dialogue with utilities about prompt payment provisions and flexible bond requirements in some contracts. These are internal business decisions but flexibility is authorized by statute and the ideas may be workable. In addition, we recommend that CBOs develop a workshop for WMDVBEs on obtaining credit, particularly from community banks, and to work with the utilities and Staff to develop a workshop on cost effective options for small business insurance.

Capacity Building refers to the potential of a small but experienced business to increase its sophistication and performance capacity in order to become a competitive bidder on larger projects. The business development portions of this issue have been addressed as part of the TA and CB proposals in Section 4 above. However, the CBOs offered several suggestions and recommendations about actions that the utilities could take that would help existing suppliers to grow.

Perhaps the most frequent obstacle cited by CBOs was an inability to penetrate the largest contracts which tend to be awarded to big contractors with whom the utility has a procurement history. Several reasons for this result have been discussed and small supplier inexperience, pre-existing relationships, lack of bid transparency, and the broad scope of the large contracts were among the factors identified that keep these contracts out of reach. GO 156 anticipated this problem in Section 6.2.1(8) which requires utilities to encourage their procurement employees "to break apart purchases and contracts as appropriate to accommodate the capabilities of WMDVBEs."

Several CBOs favored requiring utilities to "unbundle" large contracts into somewhat smaller contracts for bid. It was one of the more controversial ideas because the utilities resist any mandate to expose the contracts for a variety of reasons, primarily that the decisions about the size of contracts are proprietary business judgments. However, according to the WSR#1, some utilities appear to understand that unbundling increases opportunities for small suppliers to grow, and have taken appropriate steps. For example, SCE committed to unbundling some consulting contracts and Sempra said it does some "strategic unbundling." On the other hand, AT&T, Verizon, SWG and PG&E oppose any directive for unbundling claiming it lacks legal authority, voids economies of scale, is a business decision, and is unlikely to work.

The Joint Parties asked the Commission to order utilities to unbundle contracts in excess of $1 million or explain why not. CAPCC argued that the Commission should adopt a comprehensive unbundling strategy, similar to one adopted by the federal Office of Management and Budget, that could be "codified and implemented within the framework of GO 156."39 Other ideas included AICC's suggestion to raise the minimum for "sole-source" purchase orders to $250,000 and CAPCC's proposal that the utilities and the Commission could implement a program which permits contracts less than $75,000 to be offered to WMDVBEs, similar to one at Sacramento Municipal Utilities District that reserves these small contracts for small businesses to "get their foot in the door."40 Such specific set-asides are currently prohibited by GO 156.41

As a result of the May 5, 2010 workshop, several utilities saw a new opportunity to work with CBOs and small and diverse businesses and agreed to voluntarily examine unbundling opportunities. In turn, CBOs may better understand why utilities have been reluctant to alter the scope of contracts entered with large primes with whom the utilities have a successful history. For this reason, Greenlining, AICC, and the Joint Parties argued that CBO access to executives and procurement decisionmakers to present the case for more unbundling was an integral step in WMDVBE growth. The WSR#1 also focused on supplier diversity staff involvement in all RFPs. Many utilities have described how they are working to engage their management in order to fully integrate supplier diversity at all levels of the procurement chain. CBOs confirmed the importance of management commitment and asked that utilities have programs to encourage internal awareness of supplier diversity. The large utilities claim they do this already, and §6.1.1 of GO 156 requires such training for procurement staff.

We agree that unbundling large contracts is another way to increase the number of contracts open to small and diverse businesses and we applaud the voluntary actions taken to date by SCE and Sempra. Based on our understanding of the sensitivity of existing procurement relationships within the limited world of large suppliers, we do not order the utilities to take any specific actions to unbundle contracts. However, we agree that utilities committed to the GO 156 program should carefully consider whether contracts greater than $1 million can be unbundled, and encourage conversations with CBOs about potentially fruitful procurement areas for unbundling. We also recommend that all reporting companies seeking to improve their results should educate their management on the value of the program and how to integrate supplier diversity into all business lines.

Another important area of discussion about capacity building was mentoring, particularly mentoring of high potential WMDVBEs by large, successful WMDVBEs, non-WMDVBE primes, and/or utility personnel. The idea is that mentors provide one-on-one assistance in developing industry expertise and relevant business sophistication, including bid preparation. This specialized and individual training advances the ability of a smaller WMDVBE to take on larger projects. CHCC recommended that the Commission encourage utilities to establish programs like the SBA Mentor-Protégé program. Alternatively, many utilities have already established some form of mentoring program (e.g., Sempra, SCE, PG&E, and AT&T). Sprint suggested that each utility identify the top 10 large non-diverse California suppliers and ask for their support in mentoring WMDVBEs to become sub-contractors.

We agree that individual mentoring can be of great benefit to a small business seeking to grow into larger contracts and support all the methods suggested by the parties: partnering with large WMDVBEs, large non-WMDVBE primes, and in utility programs. Industry expertise is essential and hard to come by outside mentoring or extended education and training. Therefore, we encourage all utilities to consider development of a mentoring program, if they do not have one, and recommend that interested CBOs and WMDVBEs reach out to the utilities to help them identify both large businesses and high potential, small businesses who could partner in a mentoring relationship. As an example, the Sprint proposal is a good idea. Similarly, water companies and small utilities can be good starting points for some WMDVBEs to gain initial experience. Matchmaking events hosted by CBOs and/or utilities could provide the opportunity for these potential mentoring partners to find each other.

Accordingly, based on the record, we recommend that utilities seeking to diversify their supplier base should (1) actively consider what contracts could be unbundled into two or more smaller contracts, particularly contracts greater than $1 million, (2) have conversations with CBOs about potentially fruitful procurement areas for unbundling, (3) educate their management on the value of the program and how to integrate supplier diversity into all business lines, and (4) develop or strengthen existing mentoring programs. In addition, we recommend that CBOs reach out to the reporting companies and ask to be included in new or existing programs. Both CBOs and utilities should consider hosting mentor-matchmaking events to link up small and large suppliers.

There was a vast amount of comment by parties on the transparency, or not, of utility procurement and the RFP process. Section 6.2.1(3) of GO 156 requires utilities to explain bid and contracting procedures and other procurement practices and procedures.

CBOs complained that it was difficult to find out when RFPs were issued and they wanted lead time to develop competitive WMDVBEs. GO 156 anticipated the value of advance notice in broadening the supplier pool in Section 6.2.1(5), which asks utilities to make high opportunity purchase categories available to WBDVBEs "to the extent possible." The parties explored whether procurement plans could be made accessible 6-12 months prior to an RFP being issued. At the June 5, 2010 workshop, the energy companies were best able to identify areas for near-term procurement and provide long lead times to CBOs (e.g., PG&E identified future procurement plans for transformer and helicopter contracts and photovoltaic generation). SCE was willing to publicize this type of information 12-18 months in advance. Water companies said they could publicize it within six months of an RFP. However, some companies, including the large telecommunications companies, declined to identify planned procurement areas and suggested WMDVBEs read the companies' annual reports, attend industry conventions, or stated that procurement plans were proprietary, nationally controlled, and/or unavailable to the public.

Furthermore, some companies used the Clearinghouse data base and other public means to identify potential bidders for notice of an RFP, while others pre-qualified potential suppliers to streamline the RFP process. Each had its own methods for notice of an RFP to potential bidders. The CBO suggestion that utilities create a website notice system to WMDVBEs of relevant RFPs was dismissed by utilities as unworkable. CBOs offered other suggestions, including posting RFPs on the Supplier Clearinghouse website and requiring utilities to follow notice requirements for local government procurement. The utilities broadly opposed any standardized requirements for posting bids because they viewed how each contract is publicized as a business decision.

We agree that procurement practices vary between companies and industries so that a "one size fits all" recommendation to post procurement information is not likely to get widespread results. Therefore, as Staff recommended in WSRs #1 and #2, we encourage all reporting companies, otherwise unconstrained, to post information on their websites as early as possible about upcoming plans for procurement in specified categories of goods and services. Some parties may be interested in working together to develop a general framework or guideline for making planned procurement public. For example, CAPCC has a website that publishes RFP information and sends automatic notices to relevant WMDVBEs. CBOs are encouraged to regularly monitor the utility websites, attend industry conventions, review annual reports, and nurture relationships with utility supplier diversity personnel in order to get as much advance notice as possible of upcoming RFPs.

The actual bid preparation and RFP process continues to be a challenge for many small and diverse businesses. Utilities said that many WMDVBEs submit incomplete or poorly developed bids. Bid preparation is lengthy, time-consuming, and an art form all its own. Because the parties all seem to agree that this is a significant obstacle to success, education and training in this area is included in the TA and CB portion of this discussion.

The parties agreed that another key element in educating small and diverse businesses is giving feedback on losing bids. All utilities have a process available for unsuccessful bidders to get feedback upon request and suggested a qualified bidder is knowledgeable enough to use it. Sempra and SCE hold pre-bid conferences, an idea favored by the CBOs. Despite these mechanisms, the CBOs vigorously contend they are insufficient and often unknown. For example, CHCC and CAPCC want GO 156 amended to require utilities to tell businesses of their feedback rights in the RFP or in the notice of a losing bid. BEC requested the Commission establish an appeal process for losing bidders. The utilities responded that the present system is sufficient and no record exists to support additional notice.

It is a bit discouraging that there is a communications breakdown at this final stage of procurement. In WSR #2, Staff encouraged the utilities to standardize bid feedback and we agree that better notice to all bidders of their right to feedback should be unobjectionable. Therefore, we recommend that the utilities, CBOs, and WMDVBEs meet to consider whether notice of feedback rights is more useful to bidders in an RFP or rejection notice, and if consensus as to particular language can be reached. We also encourage other utilities to consider whether pre-bid conferences might improve the quality of bids received. However, we decline to order any particular notice in favor of discussion between the relevant parties. We also decline to adopt an appeal procedure for losing bidders because an award of a supply contract is within the utility's authority "to use its legitimate business judgment to select the supplier for a particular contract."42

Accordingly, based on the record, we find that it will advance the goals and policies of GO 156 to recommend that utilities (1) post future procurement plans on their websites to the extent possible, (2) work with CBOs to consider a general framework or guidelines for making planned procurement public,
(3) work with CBOs and WMDVBEs to develop routine notice to RFP participants of feedback rights on losing bids, and (4) consider pre-bid conferences and other means to improve the quality of submitted bids. We also recommend that CBOs proactively seek out procurement information, build working relationships with utility procurement personnel, and take the lead in timely informing their members and communities of bid opportunities.

Both utilities and CBOs have expressed some frustration and concern over past performance of the Supplier Clearinghouse (Clearinghouse) contractors. GO 156 authorized the creation of a clearinghouse for the sharing of WMDVBE identification and verification of status, particularly to audit and verify the status of women- and minority-owned businesses and to maintain a database of all certified WMDVBEs accessible to the utilities.43 Participating utilities contract with an entity for these services which are paid for by ratepayers. The current Clearinghouse vendor is PRWT Services, Inc., a Pennsylvania corporation operating in Los Angeles, California.

As a result of various concerns expressed by WMDVBEs and utilities, in 2008, the Commission contracted with a consultant, K&L Gates (Consultant) to identify how to make the application and verification process more efficient and user-friendly. The Commission also asked for ideas on how to increase the number of certified suppliers. The Consultant made four recommendations which have all now been implemented.44 These are (1) streamline the process for women and minority businesses already certified by the national organizations National Minority Supplier Development Council (NMSDC) and Women's Business Enterprise National Council (WBENC), (2) create a "fast-track" for small business certification, (3) reduce the number of required documents, and (4) create an on-line application. We commend the Clearinghouse for its responsiveness to these changes just as it took over the contract, and applaud its commitment to continued improvement of its services. These advancements have significantly reduced many of the concerns but not eliminated all suggestions for change.

During this proceeding, the utilities continued to request more certified WMDVBEs in the database and that informative profiles be provided for each certified business listed. The Clearinghouse is currently working with the utilities to create useful profiles that could assist the utilities, the public, primes, and WMDVBEs find detailed information about the certified businesses in the database. As we discussed before, this could be an important network tool for WMDVBEs looking for larger WMDVBEs to partner with when seeking larger contracts. It could also be an important resource for primes who choose to implement their own programs to increase use of small and diverse businesses as subcontractors. In WSR#2, the Staff supported the profile project and continued implementation of website improvements by the Clearinghouse.

Some CBOs, like CHCC, said that certification is still seen as cumbersome to certain applicants and the Clearinghouse database should be more accessible to the public and prime contractors. It is likely that some of this discontent arose before the most recent improvements enacted following the Consultant's recommendations. At the June 7, 2010 workshop, parties did not dispute that point, instead focusing more on getting contracts for certified businesses.

As described above, we think the Clearinghouse is on the right track in developing the business profiles and opening the WMDVBE database to the public. We also note that the timing for certifications has vastly improved to an average of less than two weeks. Recognition of NMSDC and WBENC certifications for one year by the Clearinghouse should have an immediate effect on increasing the number of businesses in the database. Several parties asked that these one-year certifications be recognized for the same three-year period Clearinghouse certifications are valid, but the idea of how to best utilize these certifications should be further developed, perhaps in a workshop, by the Clearinghouse, interested utilities and CBOs. However, a proposal for self-certification for small contracts seems fraught with the potential for mischief and lacks sufficient basis in the record.

The biggest shift in perspective surrounds the question of whether the role of the Clearinghouse should expand. During the proceeding there was a substantial difference of opinion between utilities, who firmly opposed it at the outset, and CBOs who proposed wide-ranging new responsibilities. Over the course of events, the parties' positions have evolved and moved toward common ground.

The proposals are discussed below:

1. Central Calendar: By the time final comments were submitted, there was broad consensus in support of the Clearinghouse keeping a central public calendar with information from utilities, CBOs, and the Commission about all networking, matchmaking, training, and technical assistance events. Staff also supported this effort.

2. Pre-Screening of WMDVBEs: The CHCC and CAPCC suggestion that the Clearinghouse pre-screen certification applicants to determine the sophistication level of businesses and relevance to utility procurement is both problematic and opposed by the utilities as beyond the scope of GO 156. It is also premature. We recognize the problem these groups are trying to address, i.e., some businesses are simply not prepared or are ill-suited to seek utility contracts and will drain limited resources. However, standards would have to be set and the Clearinghouse would likely need costly new training and additional staff currently outside the Clearinghouse contract. This idea needs further development and utility support to fund the proposed activities.

3. TA materials: Greenlining and others supported a central repository at the Clearinghouse for TA information and resources based on their view that TA is a major necessity for new and small businesses and hard to find. Sempra and Verizon particularly opposed the idea as unjustified and duplicative, while PG&E merely said it was not likely to be effective. Some utilities have TA materials accessible on their own websites, but viewed the Clearinghouse as lacking expertise to evaluate TA materials and thought this expansion of the Clearinghouse role unnecessary. On the other hand, CBOs were generally united that TA materials should be more available, particularly online, so that small businesses could access them at any time, preferably in one place. We agree with the CBOs that better public access to TA materials will assist small and diverse businesses to identify necessary steps they should take to become competitive. Currently, the Clearinghouse has a webpage of links to utility supplier diversity programs which could be expanded for limited cost to include links to TA materials. We also agree that for a small business, the centralized website of the Clearinghouse is a very useful location to open the door to such information. We recommend that the Clearinghouse work with the utilities and CBOs to expand and improve the website to include links to utility and CBO training materials. In addition, we think the Joint Utility TA and CB proposal should be posted on the Clearinghouse website because it is an informative, multi-company, cross-industry consensus of what the utilities are looking for in baseline knowledge for a business to be considered competitive, i.e., part of their "legitimate business judgment" when selecting suppliers.

4. RFPs and Bid Information: We have already discussed the differences in procurement practices between companies and industries that make it difficult for small and diverse businesses to get timely notice of upcoming bid opportunities. The CBOs were so united during the June 7, 2010 workshop that the Staff recommended that the utilities post RFPs on the Clearinghouse website. In response to WSR#2, nearly all of the utilities objected on the grounds that it is far afield from the role of the Clearinghouse and internally unworkable with existing RFP procedures. Notably, PG&E said they post RFPs on their own website and the Commission recently posted notice of one of its own RFPs on the Clearinghouse website. We have heard a great deal of frustration from WMDVBEs and CBOs over the challenges in finding bid opportunities, at the same time we understand that some reporting companies have national procurement or internal screening for RFP notice. Another problem is that posting RFP information is a greater IT challenge than merely expanding a page of links and may require significant time and effort, should the utilities decide to participate. We agree that this information is not widely distributed and that has an adverse impact on utilities that seek to enlarge the pool of small and diverse businesses available to bid for contracts. As discussed above, we think the first priority is for the parties to begin a conversation about broader public notice of bid opportunities. Furthermore, we recommend that the parties explore whether there is common ground for some broader role for the Clearinghouse. For example, the Clearinghouse might develop a webpage of links directly to those utility procurement webpages where RFPs are listed. Utilities might consider trying out Clearinghouse notice of an RFP to see if their fears of excessive unqualified bids are realized.

The voluntary contract between the utilities and the Clearinghouse sets forth a current scope of activities to be delivered by the Clearinghouse. The proposals summarized above may require additional staff and/or funds and would need to become a topic of future negotiations between the parties. Moreover, some of the changes to scope are sufficiently significant that amendments to GO 156 might be required.

As discussed in section 5.2, AB 2758 requires utilities to report the number of WMDVBEs they do business with that have a California-majority workforce, if the information is "readily accessible." Such information is not now collected but there is some agreement by utilities that the Clearinghouse is in the best position to collect the data and include it in the business profiles. We consider a check-box or similar addition to the certification application to indicate location of the majority of a WMDVBE's workforce to be a minor change that could be implemented with little or no cost. Similarly, such data should be easily folded into the Clearinghouse's business profiles.

Accordingly, based on the record, we find that it will advance the goals and policies of GO 156 to recommend that the Clearinghouse (1) continue to implement the next phases of the website upgrades, including the public database and new business profiles, (2) keep a public calendar on its website with information voluntarily submitted by utilities, CBOs, and the Commission about all networking, matchmaking, training, and technical assistance events, (3) post on its website the Joint Utility TA and CB proposal, (4) at the next economically feasible opportunity, to amend the certification application to obtain the location of the majority of an applicant's workforce and to include the data in business profiles; and (5) work with the utilities and CBOs to expand the website to include links to available utility and CBO training materials. We also recommend that the utilities initiate a conversation with CBOs and the Clearinghouse over (1) the merits of incorporating NMSDC and WBENC certification renewals into the program, and (2) development of a webpage of links directly to utility procurement webpages where open RFPs are listed.

The GO 156 program is only as successful as the utilities, CBOs, and WMDVBEs make it with the assistance and guidance of the Commission. Thus, each participant has a role to play in its future growth and effectiveness at bringing in more competitive small and diverse businesses to the procurement system. For CBOs, their primary (not exclusive) role is to bring in more WMDVBEs for certification, advise and assist them on how and where to get useful resources, and to continue to collaborate with the utilities to improve supplier diversity programs.

At WSR#2, the CBOs each made a commitment to reach out to their communities and members to increase certification, although CSBA, BEC, and CHCC said funding would be either essential or helpful. The Joint Parties suggested that a particular goal be set (e.g., 40,000 by 12/31/11) to keep the parties focused on a bigger database. The Clearinghouse is taking the lead in certification training, however, some CBOs, like CHCC, asked that the Clearinghouse give them certification training to pass on to their communities. This seems reasonable and useful for local businesses who have limited time to seek assistance. As part of the discussion, the CBOs also committed to working with others in the same service territory to hold coordinated certification workshops.

We believe that the CBOs have an important up-front role in guiding their members and community businesses to certification and qualification as a competitive bidder. There are many ways to perform this role and we do not seek to establish one particular model. However, we think that the CBOs who committed to a certification outreach campaign should set clear goals for themselves and seek any needed funding from wherever available. In particular, the utilities who touted their community spending related to this program are encouraged to support and coordinate with CBOs who undertake certification and TA activities.

Similarly, at the June 7, 2010 workshop, the parties agreed to partner in workshops to inform businesses of expected experience and knowledge and where to get it. The Staff recommended the CBOs work with the utilities on expanding TA and CB and making it more accessible to small and diverse businesses. We agree and encourage all parties to consider sharing resources to avoid duplication, reduce costs, and improve the value of imparted assistance.

Accordingly, based on the record, we find that it will advance the goals and policies of GO 156 to recommend that willing CBOs (1) obtain certification training from the Clearinghouse and hold workshops in their communities to help grow WMDVBE certification, (2) set clear organizational goals for adding WMDVBEs to the database particularly in targeted underutilized areas, and
(3) work with the utilities to expand and improve their TA and CB to assure this training actually reaches potentially competitive businesses. We also recommend that utilities coordinate outreach and training spending with the CBOs actively working in their service territories to increase the number of certified WMDVBEs and to link small and diverse businesses to available TA and CB.

The Commission's role in implementing §§8281-8286 has manifested itself in several ways after enactment of GO 156. The Commission's USDP Staff have been very active in hosting, or helping others to host, informative workshops, seminars, networking and matchmaking events, monitoring Clearinghouse contracts and performance, coordinating with the CUDC, gathering utility data on program results, and preparing the Commission's annual report to the Legislature on utility WMDVBE procurement. The Commission has also periodically reviewed GO 156 to determine whether amendments or other actions could be useful towards better implementation of this largely voluntary program. In recent years, the full Commission has held an annual en banc hearing for all Commissioners to hear directly from top utility executives about their efforts, successes, and concerns about improving their programs results.

The CBOs had several ideas about the Commission's role including a request that it publish lists of large WMDVBEs receiving contracts, enter MOUs with cable companies who are not explicitly within the statutory framework of §§8281-8286, and amend GO 156 to add a requirement that the Commission hold an annual en banc hearing on GO 156 program performance.

Currently, the GO 156 reports submitted to the Commission do not contain specific contract information from which it could identify particular WMDVBEs that received contracts. This information is with the utilities and CBOs are free to ask for it, if utilities choose to make it available. The question of whether the Commission could or should enter into MOUs with cable companies was not developed in this proceeding.

Lastly, we agree with the parties that the recent annual en banc hearings have grown into a formidable and useful conversation at a high level about the benefits of, and obstacles to, a vibrant and growing supplier diversity program. The presence of top utility executives, in addition to supplier diversity employees, underscores the importance the Commission places on sustained commitment by top management. In 2010, CBOs were also invited to offer comments which we believe added an important voice to the event. We agree that GO 156 should be amended to require the annual en banc hearings with both top utility executive and experienced CBO leaders.

Throughout this decision, we have recommended a number of workshops be held on various topics to further explore and develop certain ideas, to provide training and education, showcase best practices, focus on specific problems, or resolve other matters. Generally, the parties were supportive of workshops as a fruitful method of getting interested parties together for needed conversation, information sharing, or resolution of differences.

Depending on the topic, the parties had differing ideas as to who should host a particular workshop, and we made our own recommendations in this decision. The key factors to success are whether the right people are there, it is properly facilitated, there is a funding source, and public access to the content. On the latter issue, some parties recommended that the workshops be recorded or webcast. We agree that this would be of benefit to small and diverse businesses, as well as smaller utilities, who have limited time and resources to attend distant events.

Workshops on best practices in several important areas of the program have occurred and parties found them useful. It was suggested that if reporting companies are invited to share their successes and problems in these workshops, that CBOs also be invited to offer constructive advice and new ideas. Furthermore, parties asked for useful advance information in order to make better use of available time. We agree with these suggestions and also invite hosts of best practices workshops to provide written summaries to the USDP staff which could be posted on the Commission's website and otherwise distributed to interested persons, companies, and organizations.

The parties were split along predictable lines at the beginning of the proceeding about whether to create an evaluation tool for utility programs. Utilities contended that the results of the programs were the best measure of success. On the other hand, CBOs complained they were never consulted and argued there was a significant disconnect between what the utilities offered and what WMDVBEs could access and use. We observe that some utilities entered the proceeding thinking that whatever ideas and plans they chose to implement were good ones and the CBOs must just be uninformed. Alternatively, some CBOs began the proceeding with broad, sweeping statements of discontent about the failings of most utility programs.

It is one measure of the success of this proceeding that the parties have become much more informed about each other's views and resources. Nonetheless, some concerns remained. CHCC recommended that the Commission create a review authority to evaluate the annual reports and utility program elements during an annual forum, followed by recommendations for improvement. The utilities disputed the need for any additional formal review because they claim they get lots of CBO feedback, submit annual program reports to the Commission, participate in the en banc hearings, and are reviewed by CUDC.

The Commission itself is the review body for GO 156 and no additional layer of review is necessary. We agree that the annual reports, en banc hearings, and Commission-hosted workshops and events generate a lot of information about how the utility programs are working. We have also authorized in this decision a periodic random audit of a GO 156 annual report. Moreover, the Commission has acted from time to time through its proceedings to examine GO 156, most prominently through this OIR. We see no value-added from creating an advisory panel or developing a metric to measure the success of the programs which would divert limited funds. Instead, we strongly recommend that the parties continue the dialogue stimulated by this rulemaking and continue to participate in any related Commission proceedings.

Accordingly, based on the record, we find that it will advance the goals and policies of GO 156 to recommend that (1) GO 156 be amended to require annual en banc hearings with both top utility executive and experienced CBO leaders, (2) hosts of seminars and workshops record or webcast the events and make them available online, (3) CBOs be invited to best practices workshops to offer constructive advice and new ideas, and (4) hosts of best practices workshops provide written summaries to USDP Staff for website posting and other public distribution.

16 Fortune 500 companies report about 10% procurement spending on diverse suppliers.

17 Section 6 of GO 156.

18 §8281(b)(2)(B).

19 CPUC Report to the Legislature on Utilities' Year 2009 WMDVBE Procurement (September 2010) (2009 Report) at 1.

20 Ibid.

21 Joint Parties Opening Comments on Proposed Decision at 2.

22 Ibid.

23 WSR#1 at 8.

24 E.g., SDG&E's representative testified that they would "start that process (of working with CBOs) today." Transcript of Oral Argument (June 23, 2010) at 13.

25 This conforms to the requirement adopted in D.06-11-028 and imposes no new requirements.

26 It is the Commission's position that wireless carriers are telephone corporations pursuant to Pub. Util. Code §234.

27 Lesbian, bisexual, gay, and transgender.

28 See, e.g., WSR #2 at 15; CHCC and CAPCC Joint Reply Comments to Joint Utilities' June 24, 2010 Rebuttal Remarks at 5-6; Reply Comments by Greenlining on Rebuttal Remarks of Reporting Companies at 5.

29 Reply Comments by Greenlining on Rebuttal Remarks of Reporting Companies at 5.

30 See, e.g., CHCC Opening Comments at 9; CHCC Reply Comments at 4; Greenlining Opening Comments at 15-17.

31 See, e.g., Greenlining's Comments on the 2010 GO 156 Diversity En Banc at 7, 9-10;

32 D.10-06-047 at 49.

33 AB 2758 requires reporting of renewable and non-renewable energy procurement which includes electric procurement.

34 Section 6.3.5 of GO 156 offers an example of optional prime contract language.

35 CPUC Report at 15.

36 Ibid.

37 WSR#1 at 18.

38 A list of minority banks is attached as Appendix E to the WSR#2.

39 CAPCC Opening Comments on WSR#1 at 4.

40 Ibid.

41 Section 6.

42 GO 156 at §6.

43 DVBEs are certified by the California Department of General Services.

44 Resolution Exec-001.

Previous PageTop Of PageNext PageGo To First Page