PHILADELPHIA — The City of Philadelphia’s Office of Economic Opportunity (OEO) released its Fiscal Year 2020 Annual Report, which details all City contracts with minority-, women-, and disabled-owned enterprises (M/W/DSBEs) during FY 2020. The overall City participation rate for FY 2020 was 30.08 percent, representing $271 million in contracts awarded to M/W/DSBE firms.
The FY 2020 Annual Report examines the portfolio mix of citywide contracts, including those from City departments, quasi-public agencies, and contracts paid through federal funds awarded during the period of July 1, 2019 through June 30, 2020. Participation is defined as the total contracts awarded to M/W/DSBEs as a percentage of available contracting dollars. The report also provides details on the performance of private sector contracts subject to an Economic Opportunity Plan (EOP), due to City-related approvals and contract size.
The City’s total M/W/DSBE participation (not including quasi-public and federally funded contracting) of $271 million was $16 million higher than FY 2019, an increase of 6.6 percent. MBE firms received more than $177 million in City contracts, up from $166 million in FY 2019; and WBEs received more than $93 million in City contracts, up from $88 million last year.
Personal and Professional Services (PPS) had the greatest increase of all contracting categories in FY 2020. Personal and Professional Services is the largest category in terms of dollars spent and provides a clear opportunity to drive growth. PPS participation grew by 5.8 percent, or $9.8 million, which is due in part to OEO’s continued efforts to engage City departments to utilize M/W/DSBEs on these contracts.
In FY 2020, the City and quasi-public agencies combined awarded nearly $316 million in contracts to M/W/DSBEs, which is a decrease from FY 2019. While City-only total spend increased by nearly $200 million from FY 2019’s $706 million to $901 million in FY 2020, the combined City and quasi-public agency total spend decreased by more than $375 million from FY 2019’s $1.9 billion in total spending to FY 2020’s $1.5 billion. That decrease in spending contributed to a $284 million decrease in the City’s overall contracting to the M/W/DSBE firms.
“After several years of strong economic growth in Philadelphia, the COVID-19 pandemic and resulting economic crisis have presented an unprecedented challenge for local businesses, especially minority-owned businesses that have traditionally faced barriers,” said Iola Harper, Deputy Director of Commerce for Entrepreneurship and the Office of Economic Opportunity. “As we work to drive an inclusive recovery in the wake of the pandemic, OEO remains committed to ensuring greater equity in the way the City of Philadelphia does business—working with more firms that reflect the diverse population we serve.”
The COVID-19 pandemic and civil unrest resulting from the country’s racial reckoning affected Philadelphia residents, and also put an incredible burden on the city’s small businesses—disproportionately impacting minority and disadvantaged businesses. OEO’s mission remains critical to supporting Philadelphia’s business community during one of the most uncertain periods in the city’s history. Over the coming year, OEO will continue to focus on capacity-building, tracking, and compliance.
Various efforts are implemented to help improve the participation of M/W/DSBE firms, including the Emerging Vendor Program (EVP) with Rebuild and oversight committees, as well as continued growth of the OEO Registry. In addition, OEO in collaboration with The Enterprise Center recently began 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 City contracts through the Local Business Purchasing Initiative (LBPI). Beginning in September, the threshold requiring formal bids for City contracts rose 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.
Due to outreach efforts by the Office of Economic Opportunity, the number of businesses that have been formally certified as minority-, women-, and disabled-owned enterprises by a City-approved certifying agency has expanded to 3,201—an increase of 86 in the past year. Philadelphia-based businesses make up 29 percent of the OEO Registry, and Pennsylvania firms (including those in Philadelphia) account for 57 percent of the Registry.