MINUTES OF THE MEETING
THE GOVERNANCE COMMITTEE
A meeting of the Governance Committee was held via videoconference at the Authority’s offices at the St. Lawrence/FDR Power Project, 830 Barnhart Island, Massena, New York, the Niagara Power Project, 5777 Lewiston Road, Lewiston, New York; the Clarence D. Rappleyea Building, 123 Main Street, White Plains, New York and 30 South Pearl Street, Albany, New York at approximately 10:00 a.m.
The following Members of the Governance Committee were present:
Gil Quiniones Chief Operating Officer
Terryl Brown Executive Vice President and General Counsel
Joseph Del Sindaco Executive Vice President and Chief Financial Officer
Joan Tursi Senior
Vice President –
Patricia Leto Vice President - Procurement
Lesly Pardo Vice President – Internal Audit
Karen Delince Corporate Secretary
Angela Graves Deputy Corporate Secretary
Mark O’Connor Director – Real Estate
James Ondishin Manager – Fuel Operations
Mary Jean Frank Associate Corporate Secretary
Lorna Johnson Assistant Corporate Secretary
Louise Nestler Assistant Ethics Officer
Shannon Galloway Senior
1. Minutes of the Regular Meeting of July 27, 2009
The minutes of the Committee’s meeting of July 27, 2009 were adopted.
2. Procurement and Real Estate Division Report
Overviews were presented as follows:
Procurement Contract Activity through September 30, 2009 (Ms. Patricia Leto)
· 1,833 contracts (excluding fossil fuel) greater than $5,000 in value were active.
· The overall value of these contracts is more than $1.27 billion, with more than $222 million in contract expenditures for the first three quarters of the year.
· More than 43% of the contracts are for the purchase of equipment and commodities.
· Services such as technician work and contracted personnel accounted for 33% of the contracts.
· More than 15% of the contracts are for consulting services (e.g., engineering, design, and specialized analysis).
· Approximately 9% of the contracts are for construction work.
· Based on the total value of the contracts included in the summary, approximately 94% of the total dollars expended (excluding fuels and corporate finances) were for contracts that were competitively bid
· In terms of the number of contracts processed, 69% of the contracts were competitively bid, while 31% were sole-source awards, including the purchase of highly specialized spare parts and services from original equipment manufacturers and procurement of services on an emergency basis and from proprietary sources.
In response to a question from Chairman Nicandri, Ms. Leto said that contracts under
$5,000 were procured on a vendor-of-choice basis, which is a more conservative approach than that of the State of New York, which allows vendor of choice for contracts up to $15,000 in value. She said that generally three to five bids were solicited for Authority contracts between $5,000 and $15,000. Responding to another question from Chairman Nicandri, Ms. Leto said that the Authority can choose to “piggyback” on contracts procured by the New York State Office of General Services (“OGS”), rather than go through a competitive procurement process. She said that the Authority will often ask OGS contract vehicle vendors to bid against each other.
Fuel Purchases (Mr. James Ondishin)
· From July 1 through September 30, 2009, a total of $60 million was spent on fuel purchases, all but $2,000 for natural gas and related costs. These fuel purchases were carried out through 47 contracts for natural gas and fuel oil, as well as pipeline transportation and related services.
The price of natural gas for the
· Current oil prices on a per-barrel basis are as follows:
- Crude - $79
- #6 residual (Poletti) - $77
- #2 (Flynn) - $87
- Jet/kero (500 MW) - $94
· Staff expects continued softness in natural gas prices through January due to the weak economy, declining demand and increased inventories, with prices increasing early in 2010 on a seasonal basis. Oil prices have been relatively flat for the past month or so.
· During the third quarter, the Authority spent $1.5 million on natural gas sold by Allied, a New York State Certified Minority/Women-Owned Business; year-to-date expenditures with Allied are $2.8 million. Staff is committee to further developing the Authority’s M/WBE program for fuel purchases.
Corporate Finance Activity (Ms. Shannon Galloway)
In the first three quarters of 2009, $1.8 million was paid for non-procurement financial services requiring a broad depth of knowledge and expertise that are provided by a limited group of firms. The non-procurement items include trustees and paying agent services, commercial paper remarketing services, escrow agent services and fees paid for revolving credit agreements supporting the Authority’s Commercial Paper and Adjustable Rate Tender Notes Programs. Of the year-to-date amount spent, approximately $1.4 million is associated with the Authority’s revolving credit agreements. Staff expects to finish the year at approximately $2.5 million, which would be consistent with year-end 2008 spending. In response to a question from Chairman Nicandri, Ms. Galloway said that when Lehman Brothers filed for bankruptcy in September 2008, Barclay’s Capital acquired certain segments of Lehman Brothers’ North American operations, including the remarketing of municipal commercial paper notes.
Supplier Diversity Program (Ms. Joan Tursi)
· During the third quarter of 2009, the Authority awarded $12.4 million (or 16.7% of its Reportable Expenditures) on contracts with New York State Certified Minority/Women-Owned Businesses (“M/WBEs”), representing both direct contracts and subcontracts and including construction-related work.
· The Authority’s annual goal for the use of M/WBEs is 6% of its non-specialty procurements. The Authority does not include specialty procurements such as turbine runners, transformers, circuit breakers, other large electrical equipment, natural gas and other specialized goods and services since there are no M/WBEs available to provide these goods and services. Excluding such items, the Authority has attained 19.6% of its Reportable Expenditures as M/WBE expenditures through the third quarter of the year.
The Authority continues an active outreach program with
various M/WBE organizations and trade associations. In support of the Authority’s Environmental
Justice initiatives and in continued support of the Supplier Diversity Program,
the Authority, in conjunction with National Grid and the Empire State
Development Corporation, hosted an Upstate Purchasing Exchange in
· Ms. Debra White, the Authority’s Manager of Supplier Diversity was named the “2009 Champion for Diversity in the September/October issue of Diversity magazine.
Chairman Nicandri said that Ms. White and the other Authority staff working on this effort are to be commended for the outstanding job they’ve done. Trustee Cusack seconded Chairman Nicandri’s sentiments and said that the Authority’s Supplier Diversity accomplishments are something to be proud of.
Disposal of Personal Property (Joan Tursi)
Through the third quarter of 2009, the Authority received approximately $227,643 for all reportable personal property disposed of that had a value of more than $5,000, including approximately $156,532 from four sales of scrap material at the Niagara Power Project and $71,111 from the sale of the fourth Generator Step-Up transformer at the Blenheim-Gilboa Project. Also during this period, 41 disposals conducted on behalf of the Authority’s Fleet Operations resulted in net income of $359,247. The year-to-date total amount received by the Authority for all personal property with a value in excess of $5,000 that was disposed of in 2009 is approximately $586,890. In response to a question from Chairman Nicandri, Ms. Tursi said that the fleet vehicles and equipment disposals were conducted in open auctions run by JJ Kane Auctioneers, which has a significant business in utility disposals.
Acquisition and Disposal of Real Property (Mr. Mark O’Connor)
The Real Estate group finalized a
four-year search by closing on July 16, 2009 on a 10/3-acre parcel in
The St. Lawrence Lands Program
continues to progress, with 487 of 599 acres of former Project land conveyed to
adjoining landowners to date in 332 separate parcels. A total of 27 additional parcels remain to be
conveyed. The Authority has sent out
approximately 96 letters to landowners in the Towns of Waddington and
Inventory (Ms. Tursi)
As of September 30, 2009, overall inventory levels at all of the Authority’s operating facilities totaled approximately $86.29 million, compared to a year-end total in 2008 of $88.17 million (which included $9 million in capital spare parts added into inventory at the 500 MW project). The current inventory level includes $1.7 million for field poles issued to the Niagara Rotor Poles Replacement project in February.
A Request for Quotes for construction of the new Niagara Warehouse was issued on July 27th and proposals were received on October 6, 2009. The bids are currently being evaluated and staff’s recommendation for the construction contract will be presented to the Trustees for approval at their December meeting.
3. Recent Developments and Status of Authority’s Ethics Programs
Ms. Louise Nestler provided an overview of the Ethics Office’s key initiatives, saying that the principal substantive issues arising under the Ethics Law and/or the Authority’s Code of Conduct since the last report to the Governance Committee on July 27, 2009, included the following:
Appearance of impropriety 4
Company policy 2
Conflicts of interest 2
Outside activities 2
Outside employment 6
Unwarranted privilege 1
She said that the number of cases handled through the third quarter of 2009 has exceeded the total caseload for 2008 and that it is projected that the number of ethics cases for 2009 will total more than 100, a 20% increase over last year.
One case involved an anonymous allegation that a salaried site employee was selling “pirated” movies to fellow employees during working hours. The Ethics Office consulted with the New York State Office of the Inspector General (“NYS OIG”), which recommended that the Authority investigate the allegation and report back to NYS OIG on the findings and any needed corrective actions taken. The allegations were substantiated after an investigation that included interviews with various Authority employees. Discipline was administered by site management.
In another case, an Energy Services and Technology employee involved with the formulation of Requests for Proposals and the selection of contractors inquired whether it would be a conflict of interest for him to hire past, present or future Authority contractors to install photovoltaic (“PV”) panels at his home. The employee was only interested in pursuing the PV installation if he could apply for grants offered by the New York State Energy Research and Development Authority (“NYSERDA”). The Authority partners with NYSERDA on many energy projects, including those where work is performed by NYSERDA-approved contractors. The Ethics Office advised the employee that since there are a limited number of qualified contractors who receive NYSERDA incentives and the employee and his staff do not control who may bid on Authority Energy Services and Technology contracts, he should not be precluded from hiring a NYSERDA-qualified contractor. Any appearance of a conflict of interest or receipt of unwarranted privileges could be addressed with full disclosure and a reallocation of work responsibilities related to particular contractors.
A question also arose about the business need for
employees to attend legislative receptions in
Ms. Nestler said that training on the newly approved Authority Code of Conduct would be rolled out soon for all Authority employees and Trustees, with the goal of having all such training completed by the end of the year.
4. Motion to Conduct an Executive Session
“Mr. Chairman, I move that the Governance Committee conduct an executive session pursuant to Section 105 of the Public Officers Law of the State of New York to discuss matters leading to the appointment, employment, promotion, discipline, suspension, dismissal or removal of a particular person or corporation.” Upon motion made and seconded, an Executive Session was held.
5. Motion to Resume Meeting in Open Session
“Mr. Chairman, I move to resume the meeting in Open Session.” Upon motion made and seconded, the meeting resumed in Open Session.
6. Amendments to Charter
It was agreed that a revised version of the Governance Committee charter would be presented to the Trustees for their approval at the December meeting.
7. Next Meeting
The next regular meeting of the Governance Committee will be held on February 23, 2010 at a location to be determined.