City Of Philadelphia Releases Annual Disparity Study, Recommends Increased Minority Business Participation Goal Of 30%

Mayor Michael A. Nutter announced the release of the Fiscal Year (FY) 2013 Annual Disparity Study that analyzes the utilization of Minority, Women and Disabled Owned Business Enterprises (M/W/DBEs) on City contracts and the availability of these businesses across the region.  The study, conducted by Econsult Solutions, Inc. and Milligan & Company, LLC.,  found that in FY 2013 the City awarded $237 million to M/W/DSBEs representing 28% of the contracts for which the Office of Economic Opportunity (OEO) reported having M/W/DSBEs available to service the City.  The study recommended that the City increase its M/W/DSBE goal from 25% to 30% based on availability and the City’s recent track record of inclusion.

“Every dollar spent by the City represents an economic opportunity for minority, women, and disabled owned businesses in Philadelphia,” said Mayor Nutter.  “We want to expand the markets they serve and their capacity to grow their businesses and put people to work.  Increasing the goal to 30% participation is our way of showing our continued commitment to these entrepreneurs.”

The study, which profiles contracts awarded to M/W/DSBEs located in the City of Philadelphia, across the eleven county region and nationwide, found that contracts awarded to City based M/W/DSBEs were up 17% in FY 2013.  This study is the cornerstone of the citywide goal setting process that drives the inclusion of disadvantaged businesses on City contracts.  The Office of Economic Opportunity within the Department of Commerce is responsible for monitoring and promoting M/W/DBE participation.

“This Disparity Study substantiates the City’s ability to establish participation in areas where we can generate authentic M/WDSBE utilization.  In instances where M/W/DSBEs do not have a market presence, we invite small businesses to consider new ventures and business relationships that support their business growth and development.” said Angela Dowd-Burton, Director of the Office of Economic Opportunity.

The study also documented 59 contracts representing $155 million that do not have enough disadvantaged businesses to compete for these contracting opportunities, including contracts related to electric energy supply, water treatment chemicals and sole source purchases where there are few or no M/W/DSBEs.  As a result of the limited number of M/W/DSBEs in these markets, the City has not included these contracts in goal setting.  Rather, the City focuses on setting goals in markets where there is an ample supply of small businesses ready, willing and able to complete for City business.

One of the companies helped by the Office of Economic Opportunity is MFR Consultants, Inc., whose founder Maria Frizelle Roberts, was named the Eastern Pennsylvania Small Business Person of the Year by the Small Business Administration earlier this week.

“For MFR, the City of Philadelphia’s OEO has given us tremendous opportunities to participate on countless large-scale projects,” said Ms. Roberts.  “For firms of our size, it can be challenging to get opportunities of this magnitude, and without the City’s continued commitment to assisting small businesses, MFR certainly would not be one of the premier small businesses in the region that it is today.  OEO has provided us  not only with the opportunity to grow into larger markets but has also allowed us to take the next steps in elevating our business to a new level, expanding our footprint regionally, nationally and beyond.  I am proud to have worked with the OEO in building the business and look forward to having them by our side in the next stages of our growth that are to come.”

In addition to the disparity analysis and recommendations for increasing M/W/DSBE participation, the FY 2013 Disparity Study also includes an unprecedented analysis of the Economic Opportunity Plans for Public, Private and Non-profit sector Public Works projects.   The study found that 85% of all EOPs have achieved at least 90% compliance on contract payments.

Highlights from the FY 2013 Annual Disparity Study include:

1.      Utilization Higher on Contracts for Which the City Had More Goal-Setting Influence – There was higher M/W/DSBE utilization on City contracts and on quasi-public contracts than on federally funded City contracts, for which the City has limited goal-setting influence. M/W/DSBE utilization was 27.7 percent for City contracts and 29.4 percent for quasi-public contracts, versus 17.3 percent for federally funded City contracts.

2.      Overall M/W/DSBE Utilization Levels Remained at 28% – M/W/DSBEs were awarded $237 million out of $841 million in contracts in FY 2013, compared to $264 million out of $939 million in contracts in FY 2012. Utilization decreased by 0.1 percentage points to 28.1 percent in FY 2013 from 28.2 percent in FY 2012.

3.      Continued Increased Use of M/W/DSBEs within the City – There was an increase in the participation of M/W/DSBEs located inside the City of Philadelphia. City-based participation increased by 1.8 percentage points to 12.5 percent in FY 2013 from 10.7 percent in FY 2012, while participation by M/W/DSBEs located within the Philadelphia Metropolitan Statistical Area (MSA) increased by 0.8 percentage points to 17.8 percent in FY 2013 from 17.0 percent in FY 2012.

4.      M/W/DSBE Prime Contractor Participation Increased in Dollar Amount of Contracts — In FY 2013, M/W/DSBE prime contractors received 8.4 percent of contract dollars, an increase of 0.8 percentage points from 7.6 percent in FY 2012. This yielded an increase in average contract size, to $210,000 in FY 2013 (vs. $360,000 for non-M/W/DSBE prime contractors) up from $130,000 in FY 2012 (vs. $330,000 for non-M/W/DSBE prime contractors). The percentage of contracts primed by M/W/DSBEs decreased: M/W/DSBEs primed 14.6 percent of City contracts in FY 2013, down 2.1 percentage points from 16.7 percent in FY 2012. The percentage of contracts with at least one M/W/DSBE sub-contractor increased, from 11.0 percent in FY 2012 to 15.6 percent in FY 2013.

5.      M/W/DSBE Availability Increased Slightly, and Overall Disparity Remains an Issue – It is estimated that M/W/DSBEs represented 22.9 percent of “ready, willing, and able” firms within the Philadelphia MSA, up 2.2 percentage points from 20.7 percent in FY 2012.  Since MSA utilization had a smaller increase than MSA availability, there was a decrease in the disparity ratio, from 0.82 in FY 2012 to 0.78 in FY 2013 when looking at all contracts. An overall disparity ratio of less than 1 means that M/W/DSBE utilization is still not in parity with M/W/DSBE availability.

6.      Utilization Rates Would Be Lower if “Few or No” Opportunity Contracts Were Included – Excluded from the $841 million in contracts analyzed in this report are 59 contracts totaling $156 million for which there are few or no M/W/DSBEs available to participate and therefore very little chance for M/W/DSBE utilization. Including these contracts in the analysis, the utilization of M/W/DSBEs in the US would be 22.0 percent (rather than 27.7 percent) and the utilization of M/W/DSBEs in the MSA would be 14.1 percent (rather than 17.8 percent), which would yield a disparity ratio of 0.62 instead of 0.78.

The Office of Economic Opportunity promotes the economic development of Minority- Women- and Disabled-owned business enterprises through its OEO Registry, bid/RFP participation targets and contract compliance activities.  In addition, OEO has ongoing interaction with other City departments, quasi-public agencies and the private and non-profit sectors.  Monthly meetings are held to educate vendors and contractors about opportunities to do business with the City, Goldman Sachs 10,000 Small Businesses, the Minority Business Development Agency, Office of Business Services, the Philadelphia Industrial Development Corporation, the U.S. Small Business Administration, and Temple University Technical Assistance Center. 

To view the Fiscal Year 2013 Annual Disparity Study, please visit www.phila.gov/oeo. For additional information on monthly meetings to educate vendors and contractors about opportunities to do business with the City, please visit the OEO website or call 215-683-2057.

Posted in Mayor's Press Releases, Press Release
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