The state’s oil and gas bill, Act 13, requires the annual completion of a survey on the use of Small Diverse Businesses by the industry. Along with female and minority-owned businesses, diversity also includes businesses owned by veterans, including those with service-related disabilities.
According to National Public Radio’s (NPR) StateImpact Pennsylvania reporting project, the oil and gas industry is among the worst when it comes to hiring women and African-Americans, both in actual employment numbers and pay gaps. Pressure by the Pennsylvania Department of General Services (DGS) is aiming to change that by shedding light on the hiring practices of the oil and gas industry.
Ignoring the Diversity Study
In 2015, NPR reported that 70 percent of oil and gas-related companies did not return the required survey. That year, of the 21 companies that did reply to the survey, eight reported that no diverse businesses were hired. Only 13 companies reported using the state database of such businesses created for this purpose. Companies that did not hire diverse businesses cited either geographic issues with the diverse businesses available or that their contractor hiring was already complete.
This year, reporting rates have soared to 81 percent. That is likely because the DGS has proved relentless in demanding compliance with Act 13, sending email reminders to companies about the reporting requirements until a response is received. One of the biggest natural gas trade groups, the Marcellus Shale Coalition (MSC), says all of the companies it works with have responded to the survey. Previously, an MSC spokeswoman said the trade group was committed to hiring locally whenever possible.
Now, the DGS is calling on the state legislature to permit the department to audit natural gas companies and examine the steps they have taken to hire diverse businesses. Should the companies fail to comply, DGS wants lawmakers to impose sanctions. The department sought the same auditing authority and sanctioning for non-compliance last year, to no avail. Without this authority, the DGS cannot enforce the reporting requirements outlined in Act 13, but the department’s persistence on the issue has made a difference.
Diverse Businesses Contracts in 2017
Last year, natural gas companies reported awarding 67 contracts to diverse businesses, for a total of $128.4 million. However, the DGS has only been able to verify the awarding of 15 such contracts, for a total of $4.3 million. DGS states the reason for this large discrepancy likely results from subcontractors who meet diverse business requirements, but have not filed the department’s verification and self-certification forms. The DGS is taking a proactive approach, seeing this as an opportunity to have these subcontractors fill out the forms and become certified and verified by working with the department.
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