Common use of Supplier Diversity Clause in Contracts

Supplier Diversity. One of the components of the RPS Goals evaluation criterion is whether an Offer will contribute towards PG&E’s supplier diversity goals. The solicitation protocol states that “It is the policy of PG&E that Women-, Minority-, and Disabled Veteran-owned Business Enterprises (WMDVBE) shall have the maximum practicable opportunity to participate in the performance of Agreements resulting from this Solicitation. PG&E encourages Participants to carry out PG&E’s policy and contribute to PG&E’s goal by reaching greater than 30% of all procurement with WMDVBEs…The Supplier Diversity evaluation will take into account the Participant’s status as a WMDVBE, intent to subcontract with WMDVBEs, and the Participant’s own Supplier Diversity Program.” PG&E’s evaluation committee scored Offers based on the submittal of Attachment L, a Supplier Diversity Questionnaire. Historically, only a tiny proportion of IOUs’ short-listed Offers or executed PPAs have been executed with WMDVBEs, and PG&E’s policy of scoring Offers against this subcriterion is no doubt intended to help address the shortfall between actual procurement of renewable power from WMDVBE’s (or from prime contractors that use diverse suppliers as subcontractors) and PG&E’s overall supplier diversity goal. Among developers submitting to the 2011 RPS RFO, only three Participants were WMDVBEs that have been certified by the CPUC Clearinghouse. None of the Offers submitted by certified WMDVBEs scored above the valuation cutoff. Other Participants claimed to be WMDVBEs that had not yet obtained CPUC certification, but review of their ownership suggested that this claim was inaccurate for at least one entity. Not only were few Participants actual WMDVBEs, but only a subset of Participants agreed to pursue PG&E’s stated WMDVBE subcontracting goal (30% of spend). Some Participants whose Offer was shortlisted stated an intent to meet this goal in their proposals but others did not. Xxxxxx views the overall response from the renewable energy developer community towards PG&E’s diversity goals as rather weak. It appears that many Participants failed to take the supplier diversity criterion seriously. In future solicitations there may be opportunities to explain or communicate the diversity goal more clearly, and to more explicitly link Offer selection to a Participant’s willingness to commit to some subcontracting goal.

Supplier Diversity. One of the components of the RPS Goals evaluation criterion is whether an Offer a proposal will contribute towards PG&E’s supplier diversity goals. The solicitation protocol states that “It is the policy of PG&E that Women-, Minority-, and Disabled Veteran-owned Business Enterprises (WMDVBEWMDVBEs) shall have the maximum practicable opportunity to participate in the performance of Agreements resulting from this Solicitation. PG&E encourages Participants to carry out PG&E’s policy and contribute to PG&E’s supplier diversity goal by reaching greater than 30of 21.5% of all procurement with WMDVBEsprocurement…The Supplier Diversity evaluation will take into account the Participant’s status as a WMDVBE, WMDVBE and/or an intent to subcontract or policy of subcontracting with WMDVBEs, and the Participant’s own Supplier Diversity Program.” ”22 PG&E’s evaluation committee scored Offers based on the submittal of Attachment L, a the utility’s Supplier Diversity Questionnaire. Historically, only a tiny proportion of IOUs’ short-listed Offers or executed PPAs have been executed with WMDVBEs, and PG&E’s policy of scoring Offers against this subcriterion is no doubt intended to help address the shortfall between actual procurement of renewable power from WMDVBE’s (or from prime contractors that use diverse suppliers as subcontractors) and PG&E’s overall supplier diversity goalscore became part of the overall RPS Goals score. Among developers submitting In the response to the 2011 2009 RPS RFO, only three Participants very few Offers were submitted by WMDVBEs that have been certified by the CPUC Clearinghouse. More Offers provided answers to the Supplier Diversity Questionnaire that demonstrated the developers’ intent to provide outreach to WMDVBE subcontractors. None of the Offers submitted by certified WMDVBEs scored fell above either the valuation cutoffor viability cutoffs. Other The PG&E team decided to provide a special opportunity to the certified WMDVBE Participants claimed to improve their poor-scoring Offers. The team identified the most attractive 22 Pacific Gas and Electric Company, “Renewables Portfolio Standard: 2009 Solicitation Protocol”, June 29, 2009, pages 44-45 Offer from each certified WMDVBE developer based on the initial evaluation, and communicated that, though the Offer failed to provide an acceptable level of value to be WMDVBEs that had not yet obtained CPUC certificationshort-listed, but review of their ownership suggested that this claim was inaccurate for at least one entity. Not only were few Participants actual WMDVBEs, but only the developer would have a subset of Participants agreed chance to reduce the proposed contract price in order to pursue the possibility of selection. In the actual event, one of the certified WMDVBE developers improved the contract pricing of an Offer sufficiently to the point where its valuation fell above PG&E’s stated value cutoff, and it was accepted to PG&E’s short list. While the Project Viability Calculator score for this Offer fell below PG&E’s cutoff level, the gap between the score and the cutoff was within Xxxxxx’x estimate of the standard error of the Calculator. Also, no other non- shortlisted that met the value cutoff and had a viability score superior to this WMDVBE’s Offer was rejected on the basis of viability alone; these other Offers with better viability than that Offer were also rejected based on factors such as delivery point, timing of on-line date, or supplier concentration. Thus, no other Participant had a non-shortlisted Offer that was disadvantaged by the selection of this one WMDVBE subcontracting goal Offer (30% of spendother than by the special opportunity to reprice the proposal, which was not offered to other non-WMDVBE Participants). Some Participants whose No other certified WMDVBE developer improved its Offer was shortlisted stated an intent pricing sufficiently in the repricing opportunity to meet this goal in their proposals but others did not. Xxxxxx views the overall response from point where the renewable energy developer community net valuation of the revised Offer rose sufficiently towards PG&E’s diversity goals as rather weak. It appears that many Participants failed the value cutoff to take make the supplier diversity criterion seriously. In future solicitations there may be opportunities Offer acceptable to explain or communicate the diversity goal more clearly, and to more explicitly link Offer selection to a Participant’s willingness to commit to some subcontracting goal.PG&E.

Supplier Diversity. One of the components of the RPS Goals evaluation criterion is whether an Offer a proposal will contribute towards PG&E’s supplier diversity goals. The solicitation protocol states that “It is the policy of PG&E that Women-, Minority-, and Disabled Veteran-owned Business Enterprises (WMDVBEWMDVBEs) shall have the maximum practicable opportunity to participate in the performance of Agreements resulting from this Solicitation. PG&E encourages Participants to carry out PG&E’s policy and contribute to PG&E’s supplier diversity goal by reaching greater than 30of 21.5% of all procurement with WMDVBEsprocurement…The Supplier Diversity evaluation will take into account the Participant’s status as a WMDVBE, WMDVBE and/or an intent to subcontract or policy of subcontracting with WMDVBEs, and the Participant’s own Supplier Diversity Program.” ”23 PG&E’s evaluation committee scored Offers based on the submittal of Attachment L, a the utility’s Supplier Diversity Questionnaire. Historically, only a tiny proportion of IOUs’ short-listed Offers or executed PPAs have been executed with WMDVBEs, and PG&E’s policy of scoring Offers against this subcriterion is no doubt intended to help address the shortfall between actual procurement of renewable power from WMDVBE’s (or from prime contractors that use diverse suppliers as subcontractors) and PG&E’s overall supplier diversity goalscore became part of the overall RPS Goals score. Among developers submitting In the response to the 2011 2009 RPS RFO, only three Participants very few Offers were submitted by WMDVBEs that have been certified by the CPUC Clearinghouse. More Offers provided answers to the Supplier Diversity Questionnaire that demonstrated the developers’ intent to provide outreach to WMDVBE subcontractors. None of the Offers submitted by certified WMDVBEs scored fell above either the valuation cutoffor viability cutoffs. Other The PG&E team decided to provide a special opportunity to the certified WMDVBE Participants claimed to improve their poor-scoring Offers. The team identified the most attractive 23 Pacific Gas and Electric Company, “Renewables Portfolio Standard: 2009 Solicitation Protocol”, June 29, 2009, pages 44-45 Offer from each certified WMDVBE developer based on the initial evaluation, and communicated that, though the Offer failed to provide an acceptable level of value to be WMDVBEs that had not yet obtained CPUC certificationshort-listed, but review of their ownership suggested that this claim was inaccurate for at least one entity. Not only were few Participants actual WMDVBEs, but only the developer would have a subset of Participants agreed chance to reduce the proposed contract price in order to pursue the possibility of selection. In the actual event, one of the certified WMDVBE developers improved the contract pricing of an Offer sufficiently to the point where its valuation fell above PG&E’s stated value cutoff, and it was accepted to PG&E’s short list. While the Project Viability Calculator score for this Offer fell below PG&E’s cutoff level, the gap between the score and the cutoff was within Xxxxxx’x estimate of the standard error of the Calculator. Also, no other non- shortlisted that met the value cutoff and had a viability score superior to this WMDVBE’s Offer was rejected on the basis of viability alone; these other Offers with better viability than that Offer were also rejected based on factors such as delivery point, timing of on-line date, or supplier concentration. Thus, no other Participant had a non-shortlisted Offer that was disadvantaged by the selection of this one WMDVBE subcontracting goal Offer (30% of spendother than by the special opportunity to reprice the proposal, which was not offered to other non-WMDVBE Participants). Some Participants whose No other certified WMDVBE developer improved its Offer was shortlisted stated an intent pricing sufficiently in the repricing opportunity to meet this goal in their proposals but others did not. Xxxxxx views the overall response from point where the renewable energy developer community net valuation of the revised Offer rose sufficiently towards PG&E’s diversity goals as rather weak. It appears that many Participants failed the value cutoff to take make the supplier diversity criterion seriously. In future solicitations there may be opportunities Offer acceptable to explain or communicate the diversity goal more clearly, and to more explicitly link Offer selection to a Participant’s willingness to commit to some subcontracting goal.PG&E.

Supplier Diversity. One of the components of the RPS Goals evaluation criterion is whether an Offer will contribute towards PG&E’s supplier diversity goals. The solicitation protocol states that “It is the policy of PG&E that Women-, Minority-, and Disabled Veteran-owned Business Enterprises (WMDVBE) shall have the maximum practicable opportunity to participate in the performance of Agreements resulting from this Solicitation. PG&E encourages Participants to carry out PG&E’s policy and contribute to PG&E’s goal by reaching greater than 30% of all procurement with WMDVBEs…The Supplier Diversity evaluation will take into account the Participant’s status as a WMDVBE, intent to subcontract with WMDVBEs, and the Participant’s own Supplier Diversity Program.” ”21 PG&E’s evaluation committee scored Offers based on the submittal of Attachment L, a Supplier Diversity Questionnaire. Historically, only a tiny proportion of IOUs’ short-listed Offers or executed PPAs have been executed with WMDVBEs, and PG&E’s policy of scoring Offers against this subcriterion is no doubt intended to help address Questionnaire that the shortfall between actual procurement of renewable power from WMDVBE’s (or from prime contractors that use diverse suppliers as subcontractors) and PG&E’s overall supplier diversity goalutility routinely uses in solicitations. Among developers submitting to the 2011 2012 RPS RFO, only three Participants none were WMDVBEs that have been certified by the CPUC Clearinghouse. None Some developers proposed to set up project entities that would qualify as diverse enterprises and later be certified by the CPUC as diverse, but no Offers were received from entities that are currently CPUC-certified WMDVBEs. This compares unfavorably to prior years in which PG&E received proposals from development companies that are already CPUC-certified diverse business enterprises. '' 21 Pacific Gas and Electric Company, “Renewables Portfolio Standard: 2011 Solicitation Protocol, May 11, 2011 (Updated June 7, 2011), page 42. Figure 6. Number of Offers Histogram of Scores for Supplier Diversity All Offers Shortlisted Offers Total Score Figure 6 displays a histogram of numerical supplier diversity scores assigned to all Offers and to shortlisted Offers. The distribution was bimodal; either proposals scored quite high or quite low against PG&E’s subcriteria for supplier diversity. Some of the Offers submitted by certified WMDVBEs proposals scored above the valuation cutoff. Other Participants claimed to be WMDVBEs that had not yet obtained CPUC certification, but review of their ownership suggested that this claim was inaccurate at zero for at least one entity. Not only were few Participants actual WMDVBEs, but only a subset of Participants agreed to pursue PG&E’s stated WMDVBE subcontracting goal (30% of spend). Some Participants whose Offer was shortlisted stated an intent to meet this goal in their proposals but others did not. Xxxxxx views the overall response from the renewable energy developer community towards PG&E’s diversity goals as rather weak. It appears that many Participants failed to take the supplier diversity criterion seriouslywere from existing plants that might face challenges achieving a numerical target for subcontracting or employing a diverse workforce given modest needs for subcontracting and the non-diverse composition of an existing workforce. In future solicitations there may be opportunities However, some developers proposing new projects, declined to explain propose a numerical objective for construction subcontracting with diverse suppliers or communicate to complete the diversity goal more clearlySupplier Diversity questionnaire at all, and to more explicitly link Offer selection to resulting in a Participant’s willingness to commit to some subcontracting goalzero score.

Supplier Diversity. One of the components of the RPS Goals evaluation criterion is whether an Offer a proposal will contribute towards PG&E’s supplier diversity goals. The solicitation protocol states that “It is the policy of PG&E that Women-, Minority-, and Disabled Veteran-owned Business Enterprises (WMDVBEWMDVBEs) shall have the maximum practicable opportunity to participate in the performance of Agreements resulting from this Solicitation. PG&E encourages Participants to carry out PG&E’s policy and contribute to PG&E’s supplier diversity goal by reaching greater than 30of 21.5% of all procurement with WMDVBEsprocurement…The Supplier Diversity evaluation will take into account the Participant’s status as a WMDVBE, WMDVBE and/or an intent to subcontract or policy of subcontracting with WMDVBEs, and the Participant’s own Supplier Diversity Program.” ”23 PG&E’s evaluation committee scored Offers based on the submittal of Attachment L, a the utility’s Supplier Diversity Questionnaire. Historically, only a tiny proportion of IOUs’ short-listed Offers or executed PPAs have been executed with WMDVBEs, and PG&E’s policy of scoring Offers against this subcriterion is no doubt intended to help address the shortfall between actual procurement of renewable power from WMDVBE’s (or from prime contractors that use diverse suppliers as subcontractors) and PG&E’s overall supplier diversity goalscore became part of the overall RPS Goals score. Among developers submitting In the response to the 2011 2009 RPS RFO, only three Participants very few Offers were submitted by WMDVBEs that have been certified by the CPUC Clearinghouse. More Offers provided answers to the Supplier Diversity Questionnaire that demonstrated the developers’ intent to provide outreach to WMDVBE subcontractors. None of the Offers submitted by certified WMDVBEs scored fell above either the valuation cutoffor viability cutoffs. Other The PG&E team decided to provide a special opportunity to the certified WMDVBE Participants claimed to improve their poor-scoring Offers. The team identified the most attractive 23 Pacific Gas and Electric Company, “Renewables Portfolio Standard: 2009 Solicitation Protocol”, June 29, 2009, pages 44-45 Offer from each certified WMDVBE developer based on the initial evaluation, and communicated that, though the Offer failed to provide an acceptable level of value to be WMDVBEs that had not yet obtained CPUC certificationshort-listed, but review of their ownership suggested that this claim was inaccurate for at least one entity. Not only were few Participants actual WMDVBEs, but only the developer would have a subset of Participants agreed chance to reduce the proposed contract price in order to pursue the possibility of selection. In the actual event, one of the certified WMDVBE developers improved the contract pricing of an Offer sufficiently to the point where its valuation fell above PG&E’s stated value cutoff, and it was accepted to PG&E’s short list. While the Project Viability Calculator score for this Offer fell below PG&E’s cutoff level, the gap between the score and the cutoff was within Arroyo’s estimate of the standard error of the Calculator. Also, no other non- shortlisted that met the value cutoff and had a viability score superior to this WMDVBE’s Offer was rejected on the basis of viability alone; these other Offers with better viability than that Offer were also rejected based on factors such as delivery point, timing of on-line date, or supplier concentration. Thus, no other Participant had a non-shortlisted Offer that was disadvantaged by the selection of this one WMDVBE subcontracting goal Offer (30% of spendother than by the special opportunity to reprice the proposal, which was not offered to other non-WMDVBE Participants). Some Participants whose No other certified WMDVBE developer improved its Offer was shortlisted stated an intent pricing sufficiently in the repricing opportunity to meet this goal in their proposals but others did not. Xxxxxx views the overall response from point where the renewable energy developer community net valuation of the revised Offer rose sufficiently towards PG&E’s diversity goals as rather weak. It appears that many Participants failed the value cutoff to take make the supplier diversity criterion seriously. In future solicitations there may be opportunities Offer acceptable to explain or communicate the diversity goal more clearly, and to more explicitly link Offer selection to a Participant’s willingness to commit to some subcontracting goal.PG&E.

Supplier Diversity. One of the components of the RPS Goals evaluation criterion is whether an Offer will contribute towards PG&E’s supplier diversity goals. The solicitation protocol states that “It is the policy of PG&E that Women-, Minority-, and Disabled Veteran-owned Business Enterprises (WMDVBEWMDVBEs) shall have the maximum practicable opportunity to participate in the performance of Agreements resulting from this Solicitation. PG&E encourages Participants to carry out PG&E’s policy and contribute to PG&E’s supplier diversity goal by reaching greater than 30of 21.5% of all procurement with WMDVBEsprocurement…The Supplier Diversity evaluation will take into account the Participant’s status as a WMDVBE, WMDVBE and/or an intent to subcontract or policy of subcontracting with WMDVBEs, and the Participant’s own Supplier Diversity Program.” ”28 PG&E’s evaluation committee scored Offers based on the submittal of Attachment L, a the utility’s Supplier Diversity Questionnaire, and the supplier diversity score became part of the overall RPS Goals score. Historically, only a tiny proportion of IOUs’ short-listed Offers or executed PPAs have been executed with WMDVBEsWMDVBE’s, and PG&E’s policy of scoring Offers against this subcriterion is no doubt intended to help address the shortfall between actual procurement of renewable power from WMDVBE’s (or from prime contractors that use diverse suppliers as subcontractors) and PG&E’s overall supplier diversity goal. Among developers submitting In the response to the 2011 2009 RPS RFO, only three Participants very few Offers were submitted by WMDVBEs that have been certified by the CPUC Clearinghouse. More Offers provided answers to the Supplier Diversity Questionnaire that demonstrated the developers’ intent to provide outreach to WMDVBE subcontractors. None of the Offers submitted by certified WMDVBEs scored above either the valuation or viability cutoffs. The PG&E team decided to provide a special opportunity to the certified WMDVBE Participants to improve their poor-scoring Offers. The team identified the most attractive Offer from each certified WMDVBE developer based on the initial evaluation, and communicated that, though the Offer failed to provide an acceptable level of value to be short-listed, the developer would have a chance to reduce the proposed contract price in order to pursue the possibility of selection. In the actual event, one of the certified WMDVBE developers improved the contract pricing of an Offer sufficiently to the point where its valuation rose above PG&E’s value cutoff, and it was accepted to PG&E’s short list. While the Project Viability Calculator score for this Offer fell below PG&E’s cutoff level, the gap between the score and the cutoff was within Xxxxxx’x estimate of the standard error of the Calculator. Also, no other non- shortlisted that met the value cutoff and had a viability score superior to this WMDVBE’s 28 Pacific Gas and Electric Company, “Renewables Portfolio Standard: 2009 Solicitation Protocol”, June 29, 2009, pages 44-45 Offer was rejected on the basis of viability alone; these other Offers with better viability than that Offer were also rejected based on factors such as delivery point, timing of on-line date, or supplier concentration. Thus, no other Participant had a non-shortlisted Offer that was disadvantaged by the selection of this one WMDVBE Offer (other than by the special opportunity to reprice the proposal, which was not offered to other non-WMDVBE Participants). No other certified WMDVBE developer improved its Offer pricing sufficiently in the repricing opportunity to the point where the net valuation of the revised Offer rose sufficiently towards the value cutoff to make the Offer acceptable to PG&E. While PG&E’s procedure to give these WMDVBE developers a chance to improve their Offers (when no other Participants were given such an opportunity) is exceptional, it is consistent with PG&E’s policy, stated in the 2009 solicitation protocol, to provide WMDVBEs with “the maximum practicable opportunity to participate in the performance of Agreements resulting from this Solicitation.”29 Other Participants might very well view such preferential treatment as unfair. Certainly during the process of debriefing non- shortlisted parties, several sought the opportunity to improve the price of their Offers in order to achieve late selection to the short list, and were denied such a special opportunity that was granted to WMDVBE Participants. While PG&E did not disclose in its solicitation protocol the specifics or mechanics of its approach to special evaluation of Offers from certified WMDVBEs, it did clearly disclose its intent to provide “maximum practicable opportunity” for such entities to participate in RPS contracts. Also, the proposed approach to providing an extra opportunity for certified WMDVBEs to improve their Offers was reviewed with PG&E’s PRG, which supported or at least did not object to the plan involving the extra opportunity to improve the contract prices. The fact that PG&E selected one WMDVBE Offer for the short list because it met the valuation cutoff. Other Participants claimed to be WMDVBEs that had not yet obtained CPUC certification, but review of their ownership suggested that this claim was inaccurate for at least one entity. Not only were few Participants actual WMDVBEs, but only a subset of Participants agreed to pursue PG&E’s stated WMDVBE subcontracting goal (30% of spend). Some Participants whose Offer was shortlisted stated an intent to meet this goal in their proposals but others did not. Xxxxxx views the overall response from the renewable energy developer community towards PG&E’s diversity goals as rather weak. It appears that many Participants failed to take the supplier diversity criterion seriously. In future solicitations there may be opportunities to explain or communicate the diversity goal more clearly, and did not select WMDVBE Offers that fell below the valuation cutoff, suggests that the preferential treatment offered to more explicitly link Offer this special category of developer did not lead to the selection to a Participant’s willingness to commit to some subcontracting goalof Offers that violate the use of Least-Cost, Best-Fit principles for selection.