2018€¦ · Of the $125 .2 million spent with diverse suppliers in 2018, $102 .5 million, or 82 percent, was spent with Illinois-based firms . The table below depicts the 2016–2018

Supplier Diversity

A N N U A L R E P O R T2018

CONTENTSI. Executive Message . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

II. Dashboard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

III. Terms and Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

IV. Summary of Minority-, Women-, and Veteran-Owned Business Enterprise Goals and Spending in the Previous Calendar Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

V. Policies and Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

VI. Supplier Diversity Business Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

VII. Areas of Procurement for 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

VIII. Challenges and Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

IX. Certifications Accepted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

X. Point of Contact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

XI. Success Stories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

XII. Illinois Commerce Commission Website . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

XIII. Appendices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

1

I. Executive Message

2018 RESULTS • $125 .2 million spent with diverse suppliers, representing 21 .48 percent of our total

procurement spend—a record-high percentage .

• $33 .9 million spent on professional services with diverse suppliers, an increase of 8 .7 percent—a record-high spend .

• $56 .7 million spent with Tier I diverse suppliers, an increase of about 12 percent—a new record spend .

• $102 .5 million spent with diverse suppliers based in Illinois, representing 82 percent of our total diverse spend .

• $45 .5 million spent with WBEs, an increase of about 23 percent .

• $78 .5 million spent with MBEs, representing 62 .7 percent of our total diverse spend .

The Peoples Gas and North Shore Gas Supplier Diversity program built on its previous success in 2018, exceeding all of the program’s diverse spending goals for the year.

Our accomplishments in 2018 reflected the maturation of the program and resulted from the continued implementation of our long-term strategic plan to make significant gains in supplier diversity.

Among the most notable achievements: Overall spending on diverse suppliers represented more than 20 percent of total procurement for the first time ever for Peoples Gas and North Shore Gas. This is a significant milestone, indicating our Supplier Diversity program has become fully integrated into our procurement process.

2

FOCUS FOR 2019 The Peoples Gas and North Shore Gas Supplier Diversity program is poised for continued growth and success in 2019 and beyond .

This year we are looking for ways to further increase opportunities in professional services for diverse suppliers and to fully capitalize on our Facilities of the Future program to construct our new shop facilities .

We continue to partner with all diverse suppliers to identify new business opportunities and expand their capabilities . We also continue to develop our mentoring relationships with five diverse suppliers participating in Chicago United’s Five Forward Initiative .

We are proud of our many accomplishments since 2015 and confident our Supplier Diversity program is on a path of long-term sustainability . We look forward to working with the ICC and our other stakeholders to increase economic investment, employment and the quality of life in the communities we serve as we continue to grow the program .

Thank You,

Charles Matthews President & CEO Peoples Gas and North Shore Gas

I. Executive Message

3

II. DashboardDASHBOARD METRICS

Tier I diverse spending has increased by

From 2017 to 2018.12% $56,700,000TO

was spent withIllinois-based �rms.

In 2018

OVERALL PROCUREMENT spend with diverse suppliers went up

from

2017 to 2018.

from

21.5% of the totalprocurementspend.

with diversebusinesses at

�e Companies were able toachieve an overall spending of

$125,200,000

27%A increase

in the number of diverse suppliersin 2018 brought the total number to

243 .

Spending in 2018

$78.5M

MBE

Minorit

y-Ow

ned

Busin

ess Enterprise

$45.5M

WBE

Women

-Ow

ned

Busin

ess Enterprise

New Diverse Suppliers31

ProfessionalServices$33.9M

Veter

an-O

wne

d Bu

sin

ess Enterprise

$1.2M

VBE

TO

4

III. Terms and Definitions

The definitions of minority-, women- and veteran-owned business enterprise (“MWVBE”) and small business enterprise are derived from the U.S. Small Business Administration Code of Federal Regulations. Foreign-owned companies operating in or outside of the U.S. are not included.

MINORITY-OWNED BUSINESS ENTERPRISE “Minority-owned business enterprise” (“MBE”) means a business enterprise (1) that is at least 51 percent owned by a minority individual or group(s) or, if a publicly owned, for-profit business, has at least 51 percent of its stock of owned by one or more minority groups; and (2) whose management and daily business operations are controlled by one or more of those individuals . The contracting utility shall presume that minority includes, but is not limited to, Black Americans, Hispanic Americans, Native Americans, Asian Pacific Americans and other groups, as defined herein . The business holds a certificate by a third party who determined on the basis of firm-provided information and the representations therein that the business is a bona fide MBE .

WOMEN-OWNED BUSINESS ENTERPRISE “Women-owned business enterprise” (“WBE”) means a business enterprise (1) that is at least 51 percent owned by a woman or women or, if a publicly owned, for-profit business, has at least 51 percent of its stock owned by one or more women; and (2) whose management and daily business operations are controlled by one or more of those individuals . The business holds a certificate by a third party who determined on the basis of firm-provided information and the representations therein that the business is a bona fide WBE .

VETERAN-OWNED BUSINESS ENTERPRISE“Veteran-owned small business” (“VBE”) means a small business (1) that is at least 51 percent unconditionally owned by one or more veterans, or in the case of a publicly owned, for-profit business, has at least 51 percent of its stock unconditionally owned by one or more veterans; and (2) whose management and daily business operations are controlled by one or more veterans . The business holds a certificate by a third party who determined on the basis of firm-provided information and the representations therein that the business is a bona fide VBE .

SMALL BUSINESS ENTERPRISE A small business enterprise, as defined by the Small Business Act, is independently owned and operated, not dominant in its field and within the size standards established by the Small Business Administration (SBA) .

5

TIER I SUPPLIERA Tier I supplier is a contractor, supplier or professional service business that is considered a prime supplier, or one that has a direct contractual relationship with (a) Peoples Gas and/or North Shore Gas or (b) WEC Business Services LLC (WBS) and supports Peoples Gas or North Shore Gas . These companies are paid directly by Peoples Gas, North Shore Gas or WBS and are considered a direct contractor of Peoples Gas, North Shore Gas or WBS .

TIER II SUPPLIERA Tier II supplier is a contractor, supplier or professional services business that has a direct contractual relationship with or otherwise performs certain services or provides materials to a prime supplier, and therefore is not being directly compensated by Peoples Gas, North Shore Gas or WBS .

ILLINOIS-BASED SUPPLIERAn Illinois-based supplier, for purposes of this report, is defined as a supplier whose remittance address is in the state of Illinois, regardless of where its corporate or sales office is located .

PROFESSIONAL SERVICESThe services offered in the tertiary sector of the economy requiring special training to provide support to businesses and provide management advice are referred to as “professional services .” Service providers included in the professional services field are typically required to hold a professional license or advanced degree . The following commodities are considered professional services under the companies’ Supplier Diversity Initiative: consulting, engineering/tech services (environmental), finance- accounting-auditing (investment banking), human resources, information technology services, legal, marketing and advertising .


6

THE PEOPLES GAS LIGHT & COKE COMPANYThe Peoples Gas Light & Coke Co . (Peoples Gas) is a regulated gas utility company serving the city of Chicago . Collectively, Peoples Gas and North Shore Gas may be referred to as the “companies .”

NORTH SHORE GAS COMPANYNorth Shore Gas Co . (North Shore Gas) is a natural gas utility company serving 54 communities within the northern suburbs of Chicago . Collectively, North Shore Gas and Peoples Gas may be referred to as the “companies .”

WEC BUSINESS SERVICES LLCWEC Business Services LLC (WBS) is a subsidiary of WEC Energy Group Inc . (WEC) . WBS provides support services such as human resources, finance, legal and governance, and supply chain to WEC’s subsidiaries . The spending amounts indicated herein include WBS diverse spending for Peoples Gas and North Shore Gas projects .

WEC ENERGY GROUP, INC .WEC Energy Group Inc . (WEC) is an energy holding company based in Milwaukee, Wisconsin . Its operating subsidiaries provide natural gas and electricity in regulated and nonregulated markets . WEC is the holding company of Peoples Gas, North Shore Gas and WBS .


7

IV. Summary of Minority-, Women-, and Veteran-Owned Business Enterprise Goals and Spending in the Previous Calendar Year

2018 Spend and Vendor Utilization

Company Expenditures with All Suppliers

Spend Category Total (in thousands)$582,698Overall

Direct Tier II Total Actual Goal

MBE $36,032 $42,456 $78,488 13.47% 12.00%

WBE $19,606 $25,884 $45,491 7.81% 4.40%

VBE $1,032 $179 $1,212 0.21% 0.30%

Total M/W/VBE $56,671 $68,520 $125,191 21.48% 16.70%

Company Expenditures with Illinois-Based Suppliers

Spend Category Total (in thousands)$319,059Overall

Direct Tier II Total Actual* Goal

MBE $29,915 $36,118 $66,033 20.70% 12.00%

WBE $12,848 $23,382 $36,230 11.40% 4.40%

VBE $23 $177 $200 0.10% 0.30%

Total M/W/VBE $42,786 $59,677 $102,463 32.20% 16.70%

*Note: Illinois actual percentage is expressed as a percentage of total spend with Illinois-based suppliers .

8

$0

$30

$60

$90

$120

$150

0

50

100

150

200

250

Peoples Gas and North Shore Gas set the goal of achieving $100 million in diverse spending for 2018, and the companies were able to achieve an overall spend of $125 .2 million with diverse businesses at 21 .48 percent of the total procurement spend . The 2018 total percentage represented the highest spend percentage achieved with diverse suppliers since the inception of the formalized supplier diversity process .

Of the $125 .2 million spent with diverse suppliers in 2018, $102 .5 million, or 82 percent, was spent with Illinois-based firms .

The table below depicts the 2016–2018 historical spend with diverse suppliers . A total of 243 diverse suppliers were utilized in 2018, an increase of 27 percent from 2017, all contributing to the $125 .2 million diverse spend .


Year-Over-Year SDI Comparison ($ in Millions)

MWVBE 2016

MWVBE 2017

MWVBE 2018

$125 .2$125 .5$69 .8

243

192

153

$ Spending # of Suppliers

9

MINORITY-OWNED BUSINESS ENTERPRISE (MBE)Diverse spending in the minority-owned business enterprise (MBE) category totaled $78 .5 million, or 13 .47% of the total procurement spend .

MBE—Year Over Year ($ in Thousands)

$0

$20,000

$40,000

$60,000

$80,000

$100,000

20

40

60

80

120

0

100

2016 2017 2018$78,488$87,028$46,905

109

114

91



10

WOMEN-OWNED BUSINESS ENTERPRISE (WBE)In 2018, spending in the WBE category increased by $8 .7 million, or 23 percent . Previously, the companies unbundled or reduced the size of contracts to enable more women-owned firms to compete based on their capacity and resources . The strategy to unbundle contracts significantly contributed to the $8 .7 million increase in spend with women-owned businesses .

$0

$10,000

$20,000

$30,000

$40,000

$50,000

20

40

60

80

120

0

100

140

WBE—Year Over Year ($ in Thousands)

2018$45,491

125

2017$36,887

66

2016$21,838

59


Additionally, while not reflected in the WBE category, spending with minority-women-owned businesses was $8 million in 2018 .


11

$0

$500

$1,000

$1,500

$2,000

VETERAN-OWNED BUSINESS ENTERPRISE (VBE)In 2018, we accomplished spending of $1 .2 million with veteran-owned businesses .

VBE—Year Over Year ($ in Thousands)

2018$1,212

2017$1,627

2016$1,103

$ Spending


12

PROFESSIONAL SERVICES SPENDINGProfessional services spending totaled $33 .9 million in 2018, an increase of 8 .3 percent . Human Resources, Engineering Tech Services, and Consulting represented the top three spending categories, accounting for 95% of the total spending in this category .

Engineering/ Tech Services

Human Resources (Staffing)

Consulting Legal Marketing & Advertising

Finance, Accounting,

Auditing

Information Tech Services

2016 $13.6 $0.1 $2.2 $0.1 $0.3 $0.3 $0.12017 $13.5 $11.9 $4.7 $0.4 $0.3 $0.2 $0.22018 $15.1 $12.2 $5.0 $0.6 $0.8 $0.0 $0.2

Professional Services SDI Year-Over-Year Comparison ($ in Millions)

$0

$2

$4

$6

$8

$10

$12

$14

$16

TIER II RESULTSIn 2018, the companies continued to execute on strategies to achieve the collective 20% goal that has been set for prime supplier spending with diverse companies . These efforts resulted in Tier II spending of 29 .8%, our most successful year to date in Tier II spend as a percentage of overall spend . This significantly exceeded our previous best of 18 .3% in 2017 . This result was accomplished through relationship management with our prime supplier partners and improved metrics and reporting oversight .


13

SYSTEM MODERNIZATION PROGRAMFor 169 years, Chicagoans have depended on Peoples Gas to deliver natural gas safely, reliably and affordably to their homes and businesses . The System Modernization Program (SMP) is critical to improving the long-term safety and reliability of Peoples Gas’ infrastructure . Peoples Gas spent nearly $100 million—approximately 30 percent with diverse suppliers—completing work on the System Modernization Program and Transmission projects . Diverse spend associated with systems modernization served as the foundation of our supplier diversity program in 2018 .

PEOPLES GAS AND NORTH SHORE GAS ENERGY EFFICIENCY PROGRAMThe Peoples Gas and North Shore Gas Energy Efficiency programs provide residential and business customers with free and discounted products, energy assessments and incentives to encourage the adoption of energy efficiency improvements in homes and buildings . Customers can reduce their energy use, save money on energy costs, and make their environments more comfortable by taking advantage of energy efficiency incentives . In 2018, 2 .7 percent of the companies’ total Energy Efficiency program was committed to Tier II diverse suppliers providing program marketing services or acting as trade ally partners performing in-house field services and energy audits .

NEW SUPPLIERS The companies contracted with a net total of 31 new diverse suppliers in 2018 . These suppliers represent a wide variety of categories, such as Construction, Marketing and Advertising, Consulting Services, Environmental Services and Law .

External Initiatives

The companies participated in the following successful outreach events during 2018:

• Jan. 16: Illinois Utilities Business Diversity Council (IUBDC) Strategic Planning Workshop

• Jan. 23: IUBDC Legislative Reception

• March 14: Hispanic American Construction Industry Association (HACIA) 39th Annual Awards Banquet

• April 11–12: American Water Supply Chain Summit & Supplier Diversity Forum

• April 24–25: Chicago Minority Supplier Development Council Annual Business Opportunity Fair (BOF)

• May 9: HACIA Monthly Members Meeting

• July 18: IUBDC Utilities Industry Best Practices Workshop—Supplier Performance & Score Carding

• Aug. 2: Illinois Hispanic Chamber of Commerce (IHCC)—Make-The-Connection Business Conference

• Aug. 8–9: Illinois Black Chamber of Commerce Annual Statewide Convention

• Sept. 14: Women’s Business Development Center—Chicago Annual Women’s Entrepreneurial Conference

• Oct. 14–17: National Minority Supplier Development Council (NMSDC) Annual Business Opportunity Fair

• Nov. 19: IUBDC Materials and O&M Supplier Best Practices Workshop

• Dec. 7: Chicago Minority Supplier Development Council Annual Meeting


14

Internal Initiatives

Peoples Gas and North Shore Gas continue to engage internal leaders on multiple levels to grow and enhance our Supplier Diversity Initiative . Our buyers are also very involved in ensuring that diverse suppliers are involved in all sourcing and bid opportunities . We are also committed to working directly with diverse suppliers who inquire about opportunities through our supplier diversity website and through our active participation at external networking and advocacy events . We continue to interview suppliers on a regular basis and seek to provide access to our buyers and to end users of the goods and services we utilize through our core business processes as well as corporate and professional goods and services .

We continue to focus on our Five Forward partnerships and are working with our Five Forward sponsors and their staffs, our prime suppliers and with the participating Five Forward companies to leverage existing skills and expertise—and to grow capacity through recommendations and guidance—to position these and other suppliers for long-term success .

In addition, we have identified short- and medium-term growth and opportunity areas and will host our next Supplier Symposium in 2019 .


15

V. Policies and Methodology

COMPANY SUPPLIER DIVERSITY POLICIES The companies’ SDI is governed by the Corporate Supplier Diversity Policy Statement . Detailed guidelines provide necessary structure to align procurement practices in order to encourage and promote the development, utilization and growth of minority-, women-, service-disabled-veteran- and veteran-owned businesses that want to provide quality products and services .

The Corporate Supplier Diversity Policy Statement resides on various WEC company websites, including: www .peoplesgasdelivery .com/sdi and www .northshoregasdelivery .com/sdi .

METHODOLOGYThe Corporate Supplier Diversity Policy continues to focus on improving overall supplier performance with the certified diverse firms that we do business with through the following strategies:

We have developed supplier performance scorecards for critical suppliers as a mechanism to ensure our suppliers receive timely feedback on their overall performance .

• We are meeting with our prime suppliers on a quarterly basis and our new suppliers semiannually to communicate their performance against the service-level expectations .

• Tier II spending and subcontractor development is a criterion and part of the scorecard .

IMPLEMENTATION: Expanded guidelines to target medium contracts ($0 .5M–$1M) .

Tier II diverse spend: $23 .8 million

IMPLEMENTATION: Tier II spending requirements on competitively bid contracts greater than $100,000 .


IMPLEMENTATION: Continued managing prime suppliers’ Tier II contracting goals


2015

2016

2018

16

Tier II plans (diversity utilization plans) are required during the request for proposal (RFP) process as part of the competitive bidding practice . The plans submitted by invited bidders also are used to formulate realistic targets for diversity spending, monitor supplier spend achievement, and utilize diverse subcontractors . If a Tier I supplier does not fulfill its commitments to the agreed-upon subcontracting plan terms outlined in its contract with the companies, the following action will be taken:

• Communicate the expectations with the Tier I supplier and confirm that the results to date are not meeting expectations to meet the goals .

• Hold meetings to identify the barriers that are making it difficult to achieve the goals .

• Collaborate with Tier I supplier to identify additional Tier II suppliers, and/or any other needed assistance .

If the companies do not see improvement after initial communication and follow-up with the Tier I supplier, future work may be reallocated to another Tier I supplier with a proven track record of successfully meeting the committed diversity goals . The companies will also consider the Tier I supplier’s inability to meet its subcontracting targets in future contracting opportunities .

SCHEDULE OF EXCLUSIONSPayments made for the goods and services listed below are not considered “expenditures” and therefore are not included in any of the calculations made in this report .

Employee expenses (salary, benefits, expense reimbursements, performance awards, petty cash, etc .)

Parent, associated and/or subsidiary companies (charges for services rendered to the parent, e .g ., accounting, engineering, tax, advertising costs, etc .)

Government agencies (taxes, street opening fees, license fees, etc .)

Other fees for utility services (natural gas, electric, water and phone)

Fines

Purchases from foreign-owned companies outside of the United States that do not add value to a product once shipped to the U .S . or manufacture a product in the U .S .

Charities and philanthropic contributions

U .S . Postal Service


17

Power or commodity purchases (natural gas and/or electricity for resale or nuclear fuels)

Damages

Lease buyouts

Easements

Garnishments

Tuition to colleges and universities

Memberships

Inter-entity payments

Revenue accounts (refunds due customers)


18

VI. Supplier Diversity Business Goals

PLAN TO INCREASE PARTICIPATION

Chicago United

The companies continued to engage our prime suppliers in the Five Forward program as “Champion Circles” to extend the concepts of mentoring and sustainable growth by formalizing a mentoring relationship with their selected diverse subcontractors .

The companies continue to adhere to an intentional selection and cultivation process when adding new suppliers to the Chicago United Five Forward program . This ensures that the relationships are formulated around the mutual alignment of success metrics to focus on projects that have a substantial impact on the companies’ and suppliers’ overall progress .

IMPROVED ENGAGEMENT AND REPORTING

The introduction of new and improved technology is a key factor in executing our short-term goals .

In 2019, the companies will continue to leverage new technology to give employees, specifically procurement professionals, more tools to engage more diverse suppliers in sourcing events . The open access supplier registration system provides access to a larger pool of diverse suppliers . The procurement team will engage with business unit decision makers to understand future business needs . This information will be used to identify diverse suppliers for opportunities .

Non-diverse Tier I suppliers will also utilize the system to report their Tier II spend, set up spend reports for specific projects and review their progress against established goals .

Our internal focus in 2019 also is intended to increase the level of engagement with internal key stakeholders by:

• Embedding the value proposition deeper into the Peoples Gas/North Shore Gas culture

• Expanding supplier diversity success metrics beyond spend to include:

— Business unit outreach

— Supplier development

— Capacity building

— Relationship management with key external stakeholders

19


PLAN TO ENGAGE AND ENCOURAGE POTENTIAL SUPPLIERS

Supplier Engagement

We continued to engage previously vetted suppliers in 2018 by providing access to our strategic buyers through the standard practices of our Supplier Diversity Initiative . Providing transparent information, formal and informal mentoring and ongoing access to buyers and end users is a practice that will continue to be developed and institutionalized throughout our organization .

The companies continue to partner with other Illinois utilities through the Illinois Utilities Business Diversity Council (IUBDC), collaborating to host events focused on growth initiatives, prime supplier engagement and accountability, providing uniform and streamlined access to all Illinois utilities, and facilitating access to buyers and decision makers within our respective organizations .

Advocacy Engagement

Additionally, the companies continue building relationships with local and national advocacy organizations to increase outreach and continue defining the organization’s short- and long-term plans to filter the procurement opportunities .

The companies will continue to partner with several diversity advocacy organizations in 2019, including the following:

• Chicago Minority Supplier Development Council • Edison Electric Institute • Federation of Women Contractors • Hispanic American Construction Industry Association • Illinois Black Chamber of Commerce • Illinois Hispanic Chamber of Commerce • National Association of Minority and Women Owned Law Firms • National Minority Supplier Development Council • Women’s Business Development Center—Chicago

At the local level, the Supplier Diversity team continues to communicate the SDI and long-term goals through speaking engagements at monthly advocacy group member meetings and events .

20

PLAN TO INCREASE COMPANY GOALS

2019 Goals

Peoples Gas and North Shore Gas established the goal of spending $110 million with minority-, women- and veteran-owned business enterprises in 2019 . The 2019 target goal represents a 10 percent increase over the 2018 goal of $100 million in diverse spending .

Supplier diversity goals are embedded in the overall corporate procurement policies and procedures as a standard part of all sourcing activities . The achievements of these goals are aligned with management performance plans and incentives .

The companies’ procurement goals are developed during the annualized budgeting process for long-term capital projects, annual operations and maintenance projects, as well as required services for internal departments that support the companies’ operations functions . The annual diversity goals are based on the following factors:

• Past-year budget to actual-spend performance • Current-year budgeted activities • Contract expiration dates • Existing Tier II contract commitment and achievement relative to commitment • Prior contract savings rates versus current market pricing • Limited pool of diverse suppliers for competitive bidding opportunities • Exclusion of one-time events that occurred in previous annual budgeted year


Goals ($ in Millons)

$0

$20

$40

$60

$80

$100

$120

$68M$75M

$100M$110M

2016 2017 2018 2019

21

• Inclusion of one-time events that are forecasted to occur and budgeted in the future year

Considering all of the above, the procurement and Supplier Diversity goals are determined with year-over-year performance metrics to calculate the overall percentage of increase or decrease in any given year .


21

22

VII. Areas of Procurement for 2019

To ensure the overall procurement strategy is securing goods and services at the most economical prices, the companies will continue to engage in competitive bidding, and engage diverse suppliers in that process, for the following:

• Facility Construction services (e .g ., SMP Project)

• Consulting

• Engineering services related to facility projects:

— Architectural, Civil, MEP, Electrical Low Voltage and Technology

• Information Technology

• Energy Efficiency Marketing services

• Restoration services

• Inspection services

23

VIII. Challenges and Opportunities

The companies face several paramount challenges in finding qualified vendors that are not impeded by capital constraints, a less-than-skilled workforce, or the stringent safety and operational requirements of the utilities sector.

Additionally, many diverse business owners have significant internal business operational risks, such as:

• Changes in business ownership status when acquisitions by majority firms occur

• Balancing relationships and partnerships with larger majority firms who see diverse suppliers as potential threats in a competitive market

• Limited experience in the natural gas utility and pipeline industry, e .g ., gas pipe installation and hard restoration

The companies are continuing efforts to attract new suppliers and improve the efficiency and scale of existing suppliers . To complement the companies’ partnership with Five Forward, the companies have implemented the “Champion Circle,” a Chicago United mentoring initiative . This program provides the structure for Tier I partners to mentor Tier II suppliers .

24

IX. Certifications Accepted

The companies accept the following diverse business certifications:

• National Minority Supplier Development Council (NMSDC) and its regional Affiliate Councils

• Women Business Enterprise National Council (WBENC) and its partner organizations

• National Association of Women Business Owners (NAWBO)

• U .S . Small Business Administration 8(a) Program

• U .S . Department of Veterans Affairs

• State of Illinois Central Management Services Business Enterprise Program

• State of Illinois Department of Transportation Disadvantaged Business Enterprise

• Cook County Illinois Office of Compliance Supplier Diversity Program

• City of Chicago Certification and Compliance

• National Veteran Business Development Council (NVBDC)

• National Veteran Owned Business Association (NaVOBA)

25

X. Point of Contact

Walter Gore Supplier Diversity walter .gore@wecenergygroup .com (312) 240-4267

Jerry Fulmer Vice President, Supplier Diversity jerry .fulmer@wecenergygroup .com (414) 221-2614

For additional information on how to register as a MWVBE with Peoples Gas and North Shore Gas, please visit the Supplier Diversity Initiative page at either www .peoplesgasdelivery .com/sdi or www .northshoregasdelivery .com/sdi .

26

XI. Success Stories

Milhouse Engineering & Construction and OBG

Milhouse Engineering & Construction is an MBE that had performed engineering services—but not environmental work—for Peoples Gas as a Tier I supplier . O’Brien and Gere Limited (OBG) is a non-diverse company that was contracted by Peoples Gas for environmental remediation services at its Crawford site, once home to a manufactured gas facility on Chicago’s Southwest Side .

When OBG representatives learned that Milhouse was a supplier for Peoples Gas, and a participant in the Chicago United Five Forward program, they arranged a meeting to explore the possibility of collaborating on environmental projects . The meeting resulted in Milhouse serving as a Tier II supplier to OBG, performing air monitoring field work at the Crawford site . OBG subsequently contracted with Milhouse to assist with groundwater sampling for multiple projects in Chicago and Wisconsin .

OBG was recently acquired by Ramboll, which plans to engage Milhouse on numerous environmental projects for the Public Building Commission of Chicago in 2019 . Discussions between the two companies are ongoing about other opportunities to partner on projects in the Chicago area and other locations .

Our connection with Peoples Gas provided the initial opportunity to partner with OBG. Since then, our relationship with OBG/Ramboll has grown well beyond work related to Peoples Gas. It has evolved into a valued partnership that’s allowed us to dramatically expand our environmental business.

—Wilbur C . Milhouse III, chairman and CEO, Milhouse Engineering & Construction

27

XI. Success Stories

MZI Group, Inc.

MZI Group, Inc ., is an MBE proficient in electrical and mechanical construction, energy infrastructure, utility projects, design build, and facility services .

MZI has been deeply involved in the Smart Grid and Advanced Meter Infrastructure (AMI) implementation in Illinois, installing more than 90,000 electric Smart Meters and performing more than 5,000 meter repairs over the last five years . As one of the few veteran- and minority-owned companies with that expertise, MZI jumped at the chance to help Peoples Gas install new natural gas meter technology in its service area .

MZI invested more than $500,000 in equipment, opened a new facility in the deployment area and created employment opportunities for more than 40 people . Over 14 months, MZI completed 159,000 installations of Advanced Meter Reading (AMR) technology for Peoples Gas .

The project allowed MZI to grow exponentially and opened the door to pursuing new projects . MZI is now Midwest Energy Association-certified and looks forward to collaborating on future AMR and Advanced Meter Infrastructure projects throughout the nation .

Starting a new deployment always has its challenges, whether it’s finding the right people, purchasing equipment, or providing the best available training. Our biggest challenge was to complete all 159,000 installations in a short time period. Our previous experience and new partnership with a talented group of individuals helped us reach that goal.

—Arthur Miller, president and CEO, MZI Group, Inc .

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Tecnica Environmental Services

Tecnica Environmental Services, Inc . is an MBE and remediation firm specializing in soil excavation, underground storage tank decommissioning, site preparation and abatement services .

In 2011, Tecnica was hired as a Tier II supplier by Burns & McDonnell to perform remediation of soils at the Peoples Gas Crawford Site . Tecnica knew it was a great opportunity to show it had the expertise to perform a large-scale project .

As the project grew, so did Tecnica . The company expanded the capabilities of its site remediation division, hire additional employees, purchased more equipment, and become more efficient at providing services to its customers .

Tecnica’s expansion helped it grow from a Tier II into a Tier I company, allowing it to bid as a prime contractor on larger projects with Peoples Gas and other organizations in the commercial, industrial, and public arenas . Tecnica is a participant in the Chicago United Five Forward program .

XI. Success Stories

We gained immense knowledge from our relationship with Peoples Gas and our work on the Crawford site. The project made us more productive, increased our problem-solving capabilities, and provided our staff with the expertise to implement a complex, large-scale remediation of a manufactured gas plant site.

—Sergio Munoz, co-founder and principal, Tecnica Environmental Services

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XII. Illinois Commerce Commission Website

As required in Section 5-117(f) of the Public Utilities Act 220 ILCS 5/5-117, the Illinois Commerce Commission (ICC) Supplier Diversity webpage, http://www .icc .illinois .gov/filings/mwvs/, will provide links to the following Companies’ information:

• List of points of contact as noted in Section X of this report .

• Annual reports for a period of five years .

• List of certifications recognized and accepted as noted in Section IX of this report .

The annual reports required by Section 5-117 are due annually on April 15, beginning in 2015 .

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XIII. Appendices

APPENDIX A

Minority Men ($ in Thousands)

Direct Sub-Contractor Total $Total % To

Total Purchases

Asian Pacific American $40 $234 $274 0.05%

Asian Indian American $466 $263 $729 0.13%

African American $10,935 $14,460 $25,395 4.36%

Hispanic American $21,202 $22,646 $43,848 7.53%

Native American $30 $190 $220 0.04%

Total: Minority Men $32,673 $37,793 $70,466 12.09%

Minority Women ($ in Thousands)

Direct Sub-Contractor Total $Total % To

Total Purchases

Asian Pacific American $184 $15 $199 0.03%

Asian Indian American $0 $231 $231 0.04%

African American $336 $1,783 $2,119 0.36%

Hispanic American $2,839 $2,634 $5,473 0.94%

Native American $0 $0 $0 0.00%

Total: Minority Women $3,358 $4,663 $8,021 1.38%

Expenditures by Product/Service Category and Ethnicity/Gender

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XIII. Appendices

Total Expenditures ($ In Thousands)

Direct Sub-Contractor Total $ Total

Minority Business Enterprise—MBE $36,032 $42,456 $78,488 13.47%

Women Business Enterprise—WBE $19,606 $25,884 $45,490 7.81%

Subtotal MBE & WBE $55,639 $68,340 $123,979 21.28%

Veteran Business Enterprise—VBE $1,032 $179 $1,212 0.21%

Total: MBE, WBE, VBE $56,671 $68,520 $125,191 21.49%

Small Business Enterprise—SBE $20,542 $0 $20,542 3.52%

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APPENDIX B

XIII. Appendices

Tier 1 & Tier II African American Asian Hispanic Native American

Product Service Description Men Women Men Women Men Women Men Women

Analysis & Testing $2,288,401 $93,516 $4,371,044

Automotive $939,197

Building Services $51,015

Building Supplies $110,199

Computer and Office $93,226 $199,256

Construction $14,964,480 $1,621,952 $360,679 $15,230 $13,693,646 $2,601,746 $219,106

Consulting $146,356 $14,867 $121,759 $230,820 $57,778

Credit & Collections $48,050

Energy Efficiency

Engineering/Tech Services $4,179,925 $380,548 $276,303 $183,698 $1,603,164 $136,500 $180

Equipment Rental $308 $10,753

Equipment Repair

Finance, Accounting, Auditing

Freight Services

Gas Distribution $29,211 $2,502,867

Gas Storage $579,596

Human Resources (Staffing) $92,628 $5,600,676

Information Tech Services $553,010

Legal $256,554 $146,529

Marketing & Advertising $121,726

Printing Services

Restoration $10,071,203

Safety $17,017

Security $35,735 $58,958

Software Maintenance

Tools $961 $3,583 $275

Trucking/Transportation $1,753,016 $5,813 $6,698,052 $21,125

Vehicle Maintenance

Waste Disposal $925,984

Grand Total $ $25,395,696 $2,119,391 $1,003,469 $430,056 $43,848,071 $5,472,247 $219,286

Grand Total % 4.36% .36% .17% .07% 7.53% .94% .03% 0.00%

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XIII. Appendices

Tier 1 & Tier IIVeteran WBE

Total MBE Total WBE Total Veteran Total Diverse Spend

Total Non‑Diverse

PrimeTotal SpendProduct Service

Description

Analysis & Testing $4,428 $46,347 $6,752,961 $46,347 $4,428 $6,803,736

Automotive $226,609 $939,197 $226,609 $1,165,806

Building Services $907,345 $2,150,903 $51,015 $2,150,903 $907,345 $3,109,263

Building Supplies $9,282 $4,964 $110,199 $4,964 $9,282 $124,445

Computer and Office $53,979 $292,482 $53,979 $346,461

Construction $28,270,444 $33,476,839 $28,270,444 $61,747,283

Consulting $36,795 $1,982,896 $571,580 $1,982,896 $36,795 $2,591,271

Credit & Collections $54,140 $48,050 $54,140 $102,190

Energy Efficiency

Engineering/Tech Services $92,712 $844,755 $6,760,318 $844,755 $92,712 $7,697,785

Equipment Rental $18,928 $62,738 $11,061 $62,738 $18,928 $92,727

Equipment Repair $6,810 $6,810 $6,810

Finance, Accounting, Auditing $101,193 $101,193 $101,193

Freight Services

Gas Distribution $22,709 $117,658 $2,532,078 $117,658 $22,709 $2,672,445

Gas Storage $59,406 $579,596 $59,406 $639,002

Human Resources (Staffing) $3,458,743 $5,693,304 $3,458,743 $9,152,047

Information Tech Services $9,733 $533,010 $9,733 $562,743

Legal $517,542 $403,083 $517,542 $920,625

Marketing & Advertising $738,919 $121,726 $738,919 $860,645

Printing Services $77,232 $77,232 $77,232

Restoration $3,049,583 $10,071,203 $3,049,583 $13,120,786

Safety $11,328 $17,012 $11,328 $28,340

Security $117,747 $94,693 $117,747 $212,440

Software Maintenance

Tools $1,624 $291,012 $4,819 $291,012 $1,624 $297,455

Trucking/Transportation $3,349,625 $8,478,006 $3,349,625 $11,827,631

Vehicle Maintenance

Waste Disposal $4,245 $925,984 $4,245 $930,229

Grand Total $ $1,211,570 $45,490,804 $78,488,216 $45,490,804 $1,211,570 $125,190,589 $457,507,410 $582,698,000

Grand Total % .21% 7.81% 13.47% 7.81% .21% 21.48% 78.52% 100%

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XIII. Appendices

APPENDIX C: DEFINITION OF SUPPLY CHAIN PROCUREMENT CATEGORIES

Category Description

Analysis & Testing Services related to the analysis or testing e .g ., water, soil

Automotive Any material related to the repair or maintenance of automotive fleet

Building Services Services related to the repair or maintenance of our buildings or offices

Building Supplies Any material related to miscellaneous building supplies e .g ., paint, lumber, filters

Computer and Office Any material related to computer and office supplies e .g ., computer hardware/software, envelopes, forms, office furniture

Construction Services related to underground construction

Consulting Consulting services related to Information Technology, Financial, Human Resources

Credit & Collections Services related to credit and collections of customer accounts

Energy Efficiency Services related to the delivery of energy efficiency e .g ., in-house field services and energy audits

Engineering/Tech Services Services for engineering/technical work, e .g ., design work, surveying

Equipment Rental Rental of equipment

Equipment Repair Repair of equipment

Finance, Accounting, Auditing Services related to finance, accounting, and auditing

Freight Services Services related to the transport of material

Gas Distribution Any material directly related to the repair or maintenance of the gas distribution system

Gas Storage Any material directly related to the repair or maintenance of the gas storage system

Human Resources Services related to staffing

Legal Services related to providing legal counsel

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Marketing & Advertising Services related to marketing and advertising, e .g ., media and print ads

Printing Services Services related to the printing of company material, e .g ., bill inserts

Restoration Services provided related to landscaping or paving

Safety Any material related to safety protection, e .g ., personal protective equipment, signs, spill containment

Security Services related to providing security protection, e .g ., guard services

Software Maintenance Services related to providing software maintenance, i .e ., software renewals

Tools Miscellaneous tools, e .g ., hand/power tools, flashlights, batteries, welding supplies

Training Services Services related to providing training seminars

Vehicle Maintenance Services provided for vehicle maintenance that cannot be done in-house, e .g ., body repair, windshield replacement

Waste Disposal Services related to the disposal of hazardous and non-hazardous material

Other Miscellaneous materials and services that do not fall into any of the categories above

XIII. Appendices

Documents

2018€¦ · Of the $125 .2 million spent with diverse suppliers in 2018, $102 .5 million, or 82 percent, was spent with Illinois-based firms . The table below depicts the 2016–2018