Cultivating Inclusive Procurement in Philadelphia
How the city advanced equitable economic growth as a policy, practice, and culture
The following blog post is part of the City Accelerator initiative, a collaboration between Governing, the Citi Foundation and Living Cities that aims to speed the adoption of innovative local government projects within and across cities that will have a significant impact on the lives of their residents, especially those with low incomes.
Small businesses, particularly those owned by people of color, are especially threatened by the financial impact of COVID-19. A network of practitioners dedicated to the prosperity of small businesses matters now more than ever. Read on to learn how Philadelphia is working with the City Accelerator to use community feedback to inform its procurement processes. For more information on how Philadelphia is supporting small businesses during the COVID-19 pandemic, check out the resources on its website.
Given the recent coronavirus crisis and economic fallout, the City of Philadelphia is doubling down on its commitment to help businesses owned by people of color weather the storm — in part by using its power as a large institutional buyer.
The City is committed to advancing inclusive economic growth and equitable procurement as a policy, practice, and culture. Even with the Kenney Administration’s commitment to inclusive growth, businesses owned by people of color have told us they are frustrated by barriers they encountered when trying to raise capital to grow their businesses, lenders lack cultural competency, and City-funded technical assistance trainings are not targeted to their needs.
The City of Philadelphia acknowledges it faces challenges in leveraging its procurement power to achieve equitable contracting outcomes. In Philadelphia, people of color comprise 65 percent of the population. Yet, we know that businesses owned by people of color are underrepresented as prime contractors with the City. Furthermore, the number of businesses in Philadelphia owned by women and people of color are not proportional to their representation in the City’s population.
The factors leading to this lack of representation among business owners are complex and rooted in systemic and institutional racial discrimination which has resulted in, among other things, lack of access to capital, lower per capita personal wealth, historic denial of access to trades unions, and diminished educational opportunities. As a participant in the Living Cities’ City Accelerator, supported by Citi Foundation, we have focused on improving the inclusivity of our procurement practices and policies. Over the past year, we conducted an assessment of our policies, processes and procedures to address institutional barriers to inclusive procurement outcomes, engaged Minority-Owned Business Entities (MBEs) in a roundtable discussion and conducted focus groups, and took action to decrease the barriers and complexity the City imposes on them. Here are three things we learned and how we addressed it:
Prompt Payment: During our roundtable discussion, we heard that delayed payments to both prime and subcontractors are a burden on smaller businesses and discourage many from wanting to work with the City.
To address the payment issue, the Office of the Chief Administrative Officer (CAO) is currently implementing a vendor payment program to standardize invoice payment times to 30-60 days (from complete invoice submission to payment). The CAO mapped payment processes, identified gaps and breakdowns, and implemented a newer, less manual process. During the coronavirus outbreak, the City has expanded this process across all departments to continue payments while we work remotely and improve time-to-pay for vendors.
Contracts Hub: The vendor community also pointed out difficulty in learning about contracting opportunities. The City currently has at least four separate websites where different types of opportunities can be posted, making it challenging for new vendors to know where to start.
In response, the City worked to develop a more streamlined “Contracts Hub” website, which provides a modern, accessible, user-friendly front page for businesses to learn about contract opportunities. The contracts hub brings together listings for nearly all contract opportunities in an easy-to-search format, provides additional information to vendors in one place, and will be used to forecast certain upcoming opportunities. Accessibility to contract forecasts increases vendor awareness, can drive competition and sourcing, and enables businesses to prepare for potential opportunities.
Mentor-Protégé Program: We know we can’t do this work alone. As such, our Office of Economic Opportunity (OEO) is working to leverage external partnerships to increase inclusive outcomes.
OEO is partnering with the Eastern Minority Supplier Development Council (EMSDC) to ensure diverse firms within EMSDC’s registry also register with the City, and the Office will be working with other certifying agencies to establish similar relationships. OEO, in conjunction with The Enterprise Center, is implementing a Mentor-Protégé Program for minority-, women-, and disabled-owned (M/W/DSBE) firms as a part of its continuous effort to directly promote diversity and inclusion in Philadelphia’s private sector.
The protégé firms enter into a two-year mentorship with well-established, successful for-profit construction management companies and/or prime contractors in their respective industries. This relationship provides protégé’s with expert guidance in areas they determine most critical to their success — and mentors with diverse and inclusive subcontracting participants for upcoming projects.
A collective vision for inclusive growth
Through these strategies, and other efforts, the City will leverage its significant buying power to reinvest in our MBEs and grow Philadelphia’s economy equitably. Beyond reaching procurement participation goals, the ultimate ambition is wealth creation by and for communities of color and women. All of this is part of the Kenney Administration’s inclusive growth strategy — Growing with Equity: Philadelphia’s Vision for Inclusive Growth.
The economic crisis we currently face only increases the importance of intentional commitment to equitable growth. The Philadelphia COVID-19 Small Business Relief Fund approached its approvals with an equity lens, and ultimately 60 percent of businesses who received funds and reported their race were businesses owned by people of color. We continue to take this approach to operating our programs and procurement policies because supporting the City’s businesses owned by people of color will lead to a more just and stronger economy for everyone.