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Philadelphia’s procurement function is undergoing a dramatic modernization, and it comes not a moment too soon. Traditional government procurement has led to a small vendor pool, with higher costs and inferior goods and services. Contracting opportunities were disproportionately skewed towards firms that had the knowledge and experience of navigating the murky, complex process.
Aggressive efforts are underway to reduce barriers to doing business with the city. Vendors will soon be able to submit bids online. Earlier this month, the City launched its eProcurement system, which will eliminate the requirement for manual, redundant, labor-intensive, and out-of-date business processes. For years, companies have had to submit their bids in person and submit hundreds of pages of documents. Companies can register now on ContractsPHL, and online bidding is expected to start in November.
The city is also launching a site called Contracts Hub to inventory all contracting opportunities in a single portal. Right now, companies must visit six different websites to view every opportunity.
The hope is streamlining the bidding process will promote price competition and increase supplier diversity, particularly among nonprofessional service vendors. In fiscal year 2016, an average of two to three bids were received for supply and equipment contracts worth $1 million or less, according to a recent analysis. Bringing more companies - specifically those owned by Philadelphia residents, women, and people of color - has been an expressed priority of the mayor.
There is considerable opportunity for growth in the social inclusiveness among City vendors. In Fiscal Year 2014, only 13.6 percent of City contracts were awarded to minority, women, and disabled-owned businesses (M/W/DSBE) located in Philadelphia. That same year, the disparity ratio for M/W/DSBE was 0.93. Inclusive of the entire Philadelphia Metropolitan Statistical Area, the disparity ratio compares the utilization of M/W/DSBE on City contracts to availability. An overall ratio of less than 1 means M/W/DSBE utilization is still not in parity with M/W/DSBE availability. These figures indicate an opportunity for growth.
Apart from easing the bidding process, city officials are hoping to shorten the time to finalize a contract and process payment. Philadelphia will start using electronic signatures to speed up approvals on its professional services contracts by up to 45 days. In addition to this, the city is making internal changes so it can pay vendors faster.
Increasing efficiencies in the way the city purchases products has been a keen focus of the Kenney administration. Philadelphia launched its reverse auction system in June. These auctions take place in real time. The city states it willingness to purchase a certain quantity of a product, and companies then take turns offering lower and lower prices for that contract. Philadelphia’s Chief Administrative Officer Rebecca Rhynhart expects the City to pay between 5 and 15 percent less for items that it buys through reverse auctions.
need to know about this emerging policy
For small businesses, where employees often work long hours and are earning more than $455 per week, the proposed rule could be significant. If multiple employees are routinely working beyond normal work hours, overtime pay could reasonably increase personnel expenses.
Changes to PHiladelphia Procurement Are Underway