Why the Controller's Office Conducted the Examination
The objective of this review is to determine the current status of the City’s diversity and inclusion (D&I) program and to assess the efficacy of the changes implemented over the last seven years.
In 2008, Mayor Michael A. Nutter initiated an overhaul of the City’s diversity and inclusion policies and practices. He announced his Administration’s commitment to increasing the number and participation of Minority, Women and Disabled Owned Businesses (collectively “M/W/DSBEs”) in the economy of Philadelphia and the region. Building on the Administration’s initial efforts, Mayor Nutter released the “2010 Inclusion Works: Economic Strategic Plan”. The Plan called for an increase in the OEO Registry of qualified firms; 25% M/W/DSBE participation on City contracts; 32% minority and 7% female workforce diversity on public works projects; and improved contract compliance.
What the Controller’s Office Found
The Administration’s new approach has produced some impressive gains and positive changes in the City’s D&I program over the past seven years, particularly in the areas of goal-setting, participation commitment rates, and data collection; however, we would be remiss if we did not indicate that challenges remain. Below is a summary of some of those positive changes and our findings regarding the remaining challenges.
The positive changes include the following:
- The Minority Business Enterprise Council (MBEC) was replaced with the Office of Economic Opportunity (OEO)
- OEO greatly expanded the City’s Registry of certified firms, and it began accepting third party certification of MBE and WBE businesses to the Registry
- Goal setting for M/W/DSBE participation on City contracts was greatly improved
- In 2010 the City began implementing best practices including project-specific Economic Opportunity Plans (EOPs) that specify:
-aspirational or ‘stretch’ goals for both M/W/DSBE contractor and workforce participation, and
-annual disparity and participation reports to track results and highlight the gaps between aspiration and achievement
- OEO’s annual reports suggest that participation numbers have substantially increased, at least for certain types of contracts
- OEO has developed a team of contract specialists who endeavor to establish data-driven goals and expectations, and to help project managers in their aim to achieve them
- The Administration convened the Mayors Advisory Commission on Construction Industry Diversity (MACCID), which produced a substantial report in March 2009 that made a wide range of recommendations regarding increasing diverse participation in the City’s public works projects
- The outsourcing of D&I monitoring to third-party organizations on several of the larger public works projects resulted in better than normal goal fulfillment at the subcontracting level and within the workforce
Remaining Challenges and Opportunities:
- There is a shortage of MBE and WBE contractors with the capacity to serve as primes and/or major subcontractors in many fields. A robust mentor-protégé program can be utilized to address this issue by enticing large prime contractors to partner with small businesses to offer the following: administrative, programmatic and technical training, guidance on how to compete in the marketplace outside of the City’s Economic Opportunity Plans, and build long-term relationships.
- There is a shortage of skilled unionized construction workers for the current and planned development projects in the Philadelphia metropolitan area. This shortage presents an opportunity for increasing diversity in the building and construction trades without undermining employment prospects for current members, perhaps through the establishment of construction preapprenticeship programs utilizing best practices.
- Implementation of the City’s electronic Contract Compliance Reporting System for tracking payments to M/W/DSBEs and the EOP monitoring process is incomplete; therefore, it is not an effective enforcement tool.
- OEO’s Annual Participation Report “reflects the dollar amount of commitments at time of the award” not the actual payments to M/W/DSBEs which can result in overstatement of actual participation data.
- Disparity reports produced by Econsult and participation reports produced by OEO staff reveal a disconnection between the two because the participation data don’t match.
- Contract monitoring and enforcement is an area of major concern for primes and subcontractors.
- Despite the move toward third-party certification, there remains a backlog for firms attempting to obtain certification as minority and women owned businesses in Philadelphia.
What the Controller’s Office Recommends
The Controller’s Office has developed a number of recommendations aimed at continuing the progress in
the City’s diversity & inclusion program. These recommendations can be found in the body of the report.