PHILADELPHIA – The City’s Office of Economic Opportunity (OEO) released its Annual Disparity Study for Fiscal Year 2019 (FY19), using data from July 2018 to June 2019. The Disparity Study examines the availability and utilization of minority-, women-, and disabled-owned business enterprises (M/W/DSBEs) on City and quasi-public contracts. The FY19 study was performed by Miller3 Consulting, Inc., a firm selected through an open RFP process earlier this year.
The FY19 Disparity Study analyzed the inclusion of M/W/DSBEs on $821 million in City contracts. The Study determined that 31 percent of City for-profit spending went to M/W/DSBEs, which is just four percent short of the Citywide aspirational participation goal of 35 percent.
The COVID-19 pandemic presented challenges with data collection and impacted the timeline that the Miller3 team could engage with departmental staff to secure necessary information for its analysis. In addition, Miller3’s proposal contained a survey of local minority businesses, but the ensuing pandemic prevented this work from being performed.
Based on their findings, Miller3 recommended a goal of only 28 percent M/W/DSBE participation for FY21, as opposed to the current 35 percent goal, primarily due to the datasets upon which Miller3 calculated the availability of M/W/DSBE firms to engage in contracting with the City. The City has decided to maintain its 35 percent goal, in large part because Miller3 and the City both agree that the data relied upon for the study was incomplete, and because—despite a decrease in overall City spending from FY18 to FY19—there was less than a one-percent variation in overall utilization for the same time period, demonstrating that a reduction in spend does not necessitate lowering the City’s goal. Inequities that have been further exposed and exacerbated by the pandemic merit maintaining the City’s commitment to utilizing M/W/DSBEs. As such, the City will continue to aspire towards a 35 percent utilization goal for M/W/DSBE participation in all City contracts, excluding only federally assisted contracts.
The FY19 Disparity Study showed a continued positive trend in the percentage of contract dollars with M/W/DSBEs serving in the primary position—14.6 percent in FY19, similar to the 14.5 percent rate in FY18, and up from 12.9 percent in FY17.
“The FY19 Disparity Study findings show we’ve made progress towards providing equal access to opportunity for minority-, women-, and disabled-owned firms, but we still have a lot of work to do, particularly around increasing the number of minority firms available to serve as prime contractors on City contracts,” said Iola Harper, Deputy Commerce Director for Entrepreneurship and Economic Opportunity. “In the difficult economic times ahead, it is especially critical that we work to ensure local diverse firms have a fair chance to get business. That’s one of the reasons we’re keeping the City’s goal for M/W/DSBE participation on City contracts at 35 percent.”
Various efforts have been undertaken to increase the participation of M/W/DSBE firms, including the early success of the Emerging Vendor Program (EVP) with Rebuild and oversight committees, as well as continued growth of the OEO Registry. The Emerging Vendor Program places owners on the path to becoming a certified minority- or woman-owned business by allowing participants to count toward diversity goals on Rebuild contracts while providing the business with technical assistance to work toward their permanent certification. To date, there are 33 emerging vendors, including seven with executed contracts and five that have become certified.
In addition, this Fall, OEO is launching a new Mentor-Protege Program, which aims to connect large majority firms with smaller minority-owned firms for mentoring and guidance to scale. The program will allow small firms to hone skills, strengthen their back-end, secure introductions to key people in their industry, and potentially even work with their mentor on a contract.
To increase opportunities for small businesses, particularly M/W/DSBE firms, the Administration is working in close partnership with City Council to reduce barriers to entry for contracts thanks to the Local Business Purchasing Initiative (LBPI). Starting this fall, the threshold requiring formal bids for City contracts will rise from $34,000 to $75,000—and to $100,000 for local businesses. Philadelphia-based businesses must register as a Local Business Entity (LBE) to take advantage of the new local business threshold.
Another resource to promote exposure and increase accessibility to opportunities for M/W/DSBEs is the City of Philadelphia’s new Contracts Hub website. Prior to the creation of Contracts Hub, individuals had to visit multiple websites to see all the listings of professional services and commodities opportunities. Through Contracts Hub, users can now go to one website to explore both professional services and commodities opportunities, and find valuable information for vendors. Listing contracting and procurement opportunities in one place alleviates confusion among respondents and potentially increases respondents’ ability to apply for opportunities.
The Disparity Study’s companion report on workforce composition includes the distillation of 1,377,211 employment hours worked by various trades on construction contracts from July 1, 2018 to June 30, 2019. Overall minority workforce participation was 35.2 percent for FY19, short of the stated 40 percent goal. With current availability at 45 percent, the recommended goal for minority participation in the workforce remains at 40 percent for FY21.
The FY19 Disparity Study can be found online. The Office of Economic Opportunity commissions the study on an annual basis in compliance with legislative requirements.