CITY COUNCIL OF PHILADELPHIA SPECIAL COMMITTEE ON CITY AND PRIVATE SECTOR DIVERSITY, EQUITY AND INCLUSION POLICIES Room 400, City Hall Philadelphia, Pennsylvania Monday, September 28, 2026 10:05 a.m. PRESENT: HAROLD T. EPPS, CO-CHAIR LYNN NEWSOME REGINA HAIRSTON, CO-CHAIR MICHAEL O'BRYAN KEN ANDERSON BRIAN OGLESBY BRIAN ANSARI ANGELO PERRYMAN JANIRA BARROSO DAN RHOTON BUTCH BENNETT DEAN ROBATEAU MACY BROOKS/ROBERT WRIGHT MELISSA ROBBINS GLENN BRYAN MARIA ROBERTS LYNN CUTLER JENNIFER RODRIGUEZ MICHELLE FLAMER BLANE STODDART GIANNA GROSSMANN NICOLE STOKES JODIE HARRIS JOHN THOMAS CATHERINE HICKS TOM WEBSTER JEFF HORNSTEIN ZACHARY WILCHA VICTORIA HOSENDORF/DELLA CLARK CRAIG WILLIAMS SHEILA IRELAND CAROL ZACHARY SMITH NICO MEYERING KHINE ZAW ARTHUR RESOLUTION: 240107
Good morning. It's 10:08 a.m. And again, good morning. This is the public hearing and public meeting of the Special Committee on City and Private Sector Diversity, Equity and Inclusion Policies. My name is Harold T. Epps. I serve as Co-Chair of the committee, along with my fellow Co-Chair Ms. Regina Hairston. This committee was created to examine city and private sector policies and to recommend ways to strengthen them for minority, women and disabled-owned businesses.
Good morning. I am Co-Chair Regina A. Hairston. Thank you, Co-Chair Epps. Mr. Groomes, will you please read the title of the resolution authorizing the committee (inaudible) and will take attendance.
Good morning. Resolution No. 240107, authorizing the creation of a Special Committee on City and Private Sector Diversity, Equity and Inclusion Policies to examine the impact of such policies and to provide practical, evidence-based recommendations to enhance policy effectiveness and the promotion of minority, women and disabled-owned businesses in the City of Philadelphia. I will now call the roll. Harold T. Epps.
Thank you. A quorum of the committee is present and this hearing is now called to order.
Before we begin, I want to frame the purpose of today's hearing. Again, this committee was created to examine city and private sector DEI policies. Our goal is to recommend ways to strengthen them for minority, women and disabled-owned businesses. Our review has found persistent structural barriers. The testimonies we receive today will help disclose in greater detail the findings set out in the committee's report. Today we hear from those closest to the work.
Thank you, Co-Chair Epps. We will now turn to our first panel. To make sure every voice is heard, we will follow a time limit. Each witness will have two to three minutes for spoken testimony.
We will now call the witnesses for the first panel: Donna Allie and Patricia Sanford. And could you please state your name and organization for the record. (Witnesses approached witness table.)
My name is Donna Allie and I am President and CEO of Team Clean, which is a building maintenance firm.
Patricia Sanford, CEO, Alexander Perry, Inc. a construction management and architectural design company.
Let's just clarify before you do that. This panel will discuss the nature of inclusive participation policies in municipal contracting opportunities. Witnesses will share success stories that illustrate the merits and benefits of strong, diverse participation programming. Ms. Allie, please proceed.
Well, first of all, thank you very much to the committee for allowing me to testify today. Let me just say that Team Clean has been providing janitorial services and ancillary services for the City of Philadelphia since 1993. When I began right after college, I began cleaning homes on the Main Line because I didn't have a job. And so, I started cleaning homes. Within three years, I was about up to 55 houses a week. But then I was introduced to a program MBEC, which is now OEO, which really changed my life. It really did. It changed my business and my life. And at that time, it was under the leadership of Councilmember Jones and supported by Leaders Marlon Hamilton and Jim Roundtree. So when I entered the program, it gave me an opportunity to subcontract on larger projects in the city. We did not simply wait for the next opportunity. We used those skills and the knowledge and the relationships that we gained through the program to pursue new opportunities, went on to the Convention Center, City Hall, Art Museum, Baltimore Convention Center. Things that I would never had an opportunity to do if I had not been introduced to MBEC. So over the years, we have built successful partnerships again, which I never, ever would have known if it wasn't for the program. We built partnerships with big firms, big local firms like Elliott-Lewis and PRWT and US Facilities. Those relationships made possible because we developed the skills. We didn't sit on our laurels. We didn't wait for the next OEO opportunities. We used our skills and capabilities to go out there and get more. So today, as I look to retire one day hopefully, I find myself reflecting on the next generation. I am not concerned about my own success right now. I am concerned about those who will follow, who is going to ensure that they have the opportunities that I have had. I understand that policies and priorities evolve and we may need to pivot away from certain terminology, but I -- and I don't have the plan. But I do know that if we go to local businesses and support local small businesses, and I'm thinking maybe that's in place of diversity, we have to make sure that they are truly local businesses. I recall going to D.C. one time to get an opportunity, and they flat out told me if you're a corporate staff was not paid from here, if your managers are not paid from here, sorry, you don't qualify. So I say that we really need to ensure if we're going to pivot to local, that these companies are truly local. So I close by emphasizing that our responsibility is really to the next generation. We must continue to create pathways for entrepreneurs and small businesses. We have to look to the private sector. They come to Philadelphia to do business. It makes sense to do business with local businesses. We live here. We care. We educate our kids here. I mean, what more can I say. But we need to absolutely make sure that we have -- that we're supporting our local businesses and our minority and small businesses. And with that, I'll turn it over to my friend --
I'll take a minute. Are there any questions coming from the panel to Ms. Allie? (No response.)
I don't see any. So of course those of you who know me, I always have a question. And so, my question is this: Can you share with us, with any reasonable range, the percentage of your employees that live in Philadelphia?
Thank you. I'll stop there. Thank you very much. Any other questions? (No response.)
All right. Thank you so much. Good morning, Council President in his absence, Co-Chairs, members of the committee and distinguished guests. Again, my name is Patricia Sanford. I'm the CEO and founder of Alexander Perry, Inc., and I'm honored to speak today about the impact that diversity, equity and inclusion policies have had on my company, my career and the communities that we serve. I stand before you or sit before you as proof that when opportunities are intentionally created, diverse businesses can compete, grow and contribute at highest levels. Over the years since 1992, Alexander Perry, Inc. has participated in supplier, diversity, cohort, mentoring, inclusion programs that open doors to meaningful public and private sector opportunities. Through these opportunities, we have successfully delivered projects for the School District of Philadelphia, energy service companies PGW, Exelon, Comcast, LF Driscoll and the City of Philadelphia. Our project that is especially meaningful to me is our construction management work at Alain Locke Elementary School. It is an honor to help improve a school where I attended kindergarten. DEI policies did more than create a contract opportunity. They created a full circle moment where a local student returned as a business owner, helping to improve the learning environment for future generations. We have also supported the city through work with the Mayor's Office for People with Disabilities, helping advance ADA compliance, accessibility throughout the entire City of Philadelphia. These efforts help ensure that public spaces and facilities serve all residents. Beyond my business, I have also served for 12 years as a Philadelphia Art Commissioner. That experience -- and appointed by two mayors. That experience reinforced the importance of ensuring that every community has a voice and an opportunity to participate in shaping our city. Our growth was made possible through mentorship, supplier diversity initiatives, and access to opportunities partnerships with some of the groups that are even here, PGW again, public entities have helped to build my capacity, strengthen our workforce and compete for increasingly larger and more complex projects. The value of DEI is not simply about awarding contracts. It's about creating pathways for businesses to gain experience, build financial strength, create jobs, and become long-term contributors to Philadelphia's economy. Relationships and access are equally important. Two decades ago, Ernest Jones, CEO of the Philadelphia Workforce Development Corporation, offered my firm an opportunity to provide architectural and construction management services for his organization, garnering a $6 million project back then and has allowed my firm to grow and be sustainable. One decision, one act. The current Administration, Chambers, city organizations provide influence and access, some of whom are here today. It does make a difference. One decision, one act caused me to still be sitting here today. Today Alexander Perry serves clients through education, energy, healthcare, transportation, hospitality, and public infrastructure. We partner with other diverse and non-diverse firms to help deliver projects that improve communities throughout our region. My story demonstrates when access meets opportunities and policies are implemented thoughtfully, they do not lower standards. They expand opportunities, strengthen competition, create economic impact, and allow businesses like mine to give back to the communities that helped shape us. Thank you for your leadership, your commitment to opportunity and for allowing me to share my story today. After all, if it wasn't for these programs, how could my business grow. Thank you.
Thank you, Ms. Sanford. And again to the panel, are there any questions before I get to my one? Ms. Rodriguez.
Good morning and thank you so much for being here with us. Your businesses have been now established for a number of decades. The environment is quickly changing. Today, what would you say from your perspective to emerging firms in the marketplace today what do you think or what is your opinion on what needs to be done for them to be able to scale in the way that you have, given the current environment?
Wow. Do you want to -- basically, I would think show up. Show up has always been, you know, a way for me to grow. Just show up, look for those opportunities. We don't have DIE anymore, but we just have to make sure that you are aware of all the opportunities. I still read the Philadelphia Business Journal. I read whatever it is, the Philadelphia Inquirer. I'm in janitorial, as you know. So if there's a building that's going to be built, I'm going to know about it. And I comb through, you know, look for the procurement agencies, the person in charge, start sending out letters. And so, I mean it's just show up as much as you can.
And I definitely echo that. And my friend here Donna Allie is very tenacious and has always been a go-getter the entire time. So I would say the skill set that she has is something that we all could emulate. In addition to that, I think relationships are important. Don't underestimate. You don't always have to talk to somebody about an opportunity. Maybe you're developing a relationship with them that they can help later. If I didn't have that relationship -- I use that as an example because that's such a clear indication where somebody had an opportunity and they had the sole decision on who would do the work. And that's because I had developed a relationship with Ernie Jones through different nonprofit organizations and a lot of the volunteer work that I did. So relationships, I would say, would be something that an emerging company should think about joining. Associations like the Chamber of Commerces, yours, African American Chamber of Commerce, because then you'll have connections again with people that can help facilitate you in the right way. And also, don't underestimate the industry that you're in. So if you're in HVAC, like Michael Brown, and in fact, you would want to maybe communicate with other people in your industry. So I would say that would be another way. But honestly, if there isn't a situation where someone says you should do business like Atlanta did, we will not build this airport unless X, Y, Z is on the project, unless those things are also in place, it will be difficult to navigate. You can do it, but it would be difficult.
Ms. Rodriguez, can I just say add one more thing? Pat is absolutely correct about relationships. Also, because I am a mature business, I often look for opportunities. Like if I'm combing through the Philadelphia Business Journal, if I know something, I will call on Maria Roberts. I will call on Pat. I will call on a janitorial firm that's maybe a tad bit smaller than we are. So I think that's important too, that we really need to support one another. We can't just depend on you all. We have to support one another. And knowing those businesses through the African American Chamber of Commerce helps.
I have a question. I look at two very polished and distinguished business leaders in Philadelphia. And between the two of you, I think you probably 20, 30 years, maybe a little more of business experience. I'm being generous, I know, because I'm sitting here because we're all part of the same cohort, right. And this is more of a question and it might dovetail into a statement. When you started off your company's or 30 years ago, 18 there were programs. So when I 19 hear you speak, I hear you speak 20 about your trajectory to your success. I hear you mentioned MBEC, Councilman Curtis Jones, Ernie. I hear you speak about leaders who were available, who were sort of guides. My question, and it's a statement in a way, because it leads into how do young people who are starting off today, because it's a very different ecosystem, it's a very different marketplace, where do they go to for guidance? And I'm saying this because when I started off, there was MBEC. And there were -- it may be a foul word to say some set-asides, right, there were percentages of contracts that were earmarked for women, minority and disabled individuals. If that doesn't exist today, let me -- I'm going to ask you ladies, because you're a lot of wisdom, how does this generation tap into that? How do they tap into the marketplace? We had guidance. I hear you say go to meetings, but somebody taught you that, right. Somebody explained that to you. Many of these young people didn't come out of homes where their parents were business owners or executives. Many of these people were just like us. We came from an average middle income, some lower-income homes. Let me ask you for your wisdom and guidance. I want to keep talking, but I want your vision for what the future holds and how can they be as successful as you?
Well, I would say first of all we need advocacy. We had advocacy back then and we had strong advocates. You heard Pat say, Ernie Jones, who also was advocating for my business. We had Bruce Crawley. We had Rotan Lee, I'm going way back now. You'll probably remember him. And so, we had all of the -- and I apologize if I'm forgetting any, but we had strong advocates. I remember when I was invited to a contract at the Convention Center and I was a subcontractor, but the boys wanted the whole pie. They didn't want to give up a part of the pie. And I recall the board sitting around, you know, the board. And they were asking us, how's things going? And everybody was talking about how things were going. And when they got to me -- because I knew that these boys didn't want me there. They used to do things like lock the door when you walk out of the meeting. When I was there, it was a lot. It was a lot that we went through, right, Pat?
We went through a lot. So what happened was in this board meeting, they came to me. Everybody else was hunky-dory, everything's going fine. When they got to me, they asked me, and this is a true story. They asked me how things were going. I don't know what possessed me to say that and where the tears came from, but I cried in that meeting -- I'm a cry baby -- but I cried in that meeting and let them know the discrimination and the hardship that I was having being a part of this contract. And after that, we had Amina Young, we had Carl, we had all those advocates, and they weren't having it. They were not having it. And they said, hit the pike, go out the door. And everything after that, things changed there. But we had those advocates who were really, really fighting for us and they didn't take any nonsense.
Yeah, 100%. I totally agree with that. And sorry I didn't mention Bruce Crawley, but definitely an advocate. And I was there from the beginning of the African American Chamber of Commerce. I would also say, to the pivot on what you're saying is I started out, I went right to Urban League, had a leadership training for young people right from college and leadership. I went right in there. I was always getting into whatever programs were available. But that taught me extreme leadership skills that I think is relevant today for any young person, that they join some kind of program that teaches them leadership skills, business development, things like that. But we also have industries like the Economy League of Philadelphia that has a department. I think we have everything in place that we need. We just need to -- and also, I'm sorry, I have to say, the Mayor's office, her whole organization is polished, ready to go, ready to support you. I am the recipient of upcoming city contracts because of the Mayor's office, this current Administration. So I feel like we have everything in place to move this agenda forward for the next ten years. We need to really be thinking about -- the one thing I want to say. I want to backtrack a bit. I've been in business three decades, which means I've seen the first decade and what happened the second and the third. Each decade we were promoting a small number of minority-owned businesses. These are the businesses that you do business with the next ten years, it was another group, and this next decade we're in. Now, I would say that because of the way the infrastructure is in the city, there seems to be more diversity spreading out of opportunities. But I really don't think we should think about there's only a tiny pie. I mean, there's trillions of dollars coming into the state of Pennsylvania. So if we don't have 100 companies that are million 18 and above, then we have failed. 19
Note. Thank 20 you. It's part of my duty to keep it moving so we could be out of here by 12:00 noon. And so, as you close, and I want to thank you, I want to ask you to answer the following question: The basic question is in your business relatively, what percent of it is the public sector and what percent is the private sector? This is not an audit so it doesn't have to be 100% accurate. Just give us a range.
Yeah. So for me, because I serve a construction industry and an architecture industry, I'm about 50/50 on corporate versus state/local government. But I will say for this next trajectory, '26 going to '28, it's going to be a little bit more city, state government and federal government. And that's because of the new policies that are in place. So corporations, unless at the top, the corporation is saying, I'm going to do business with somebody that has this expertise and I don't care what their nationality is, it's going to go state. My increase is going to be on the state/local government side.
And I would say I'm 80/20. And 80/20 meaning that 80% of our business is with the City of Philadelphia. 20% is the private sector. The City of Philadelphia, I must say Procurement and Public Property over the years. Because remember, I've been here 29 years, 30 years. And they have truly partnered with us and have been good partners. The challenge is the private sector. You know, I don't golf with them. I don't eat at the same restaurants. I ain't from the same neighborhood. So, you know, it's a challenge. I look at the Bellwether District. I was just talking to Kenyatta about that. I look at Hanwha. My office is across the street from Hanwha. I look at Rhoads. My office again is down the street from Rhoads. And so, I think that if the city or the committee could do a little bit more to encourage them, that it makes good sense to do business with local firms, you know, we're right here. We care, right. So there it is.
Thank you. I think at this point we'll need to put a pin in it. But that was outstanding. We appreciate that. And thank you for showing up on a rainy Monday morning. Ms. Hairston, I think you now have the baton.
Yes. Thank you. We now turn to Panel 2. Mr. Groomes, will you please call the witnesses for this panel.
Before calling the witnesses, would you describe the focus of this panel please?
Yes. So Panel 2, this panel examines the obstacles businesses face in municipal contracting processes and what allows some to expand and build capacities while others stall. Topics include access to capital, insurance and bonding, contract unbundling and other policy barriers. For this panel, we have Victoria Hosendorf, Craig Williams, Nadir Jones and Deborah Lawton. (Witnesses approached witness table.)
And as they come forward, Ms. Hosendorf is Executive Vice-President of the Enterprise Center of New Jersey, and she also is co-lead at the Enterprise Center with Ms. Della Clerk; Craig Williams is founder of Pride Enterprises; Nadir Jones, new to Philadelphia, Director of Office of Business Impact and Economic Advancement, and Deborah Lawton, Director of Insurance and Contracts of Finance Risk Management.
Good morning. Please state your name and organization for the record and proceed with your testimony.
First, Craig Williams, owner and President of Pride Enterprises as well as American Power Electrical Supply.
Nadir Jones, Director of the Office of Business Impact and Economic Advancement.
Debbie Lawton, City of Philadelphia Risk Management Service Director.
Good morning. Again, my name is Craig Williams. I am the owner and CEO of Pride Enterprises, Inc., a general contractor and construction manager operating primarily in Philadelphia and the Greater Delaware Valley, as well as American Power Electrical Supply Company, a full-service electrical supplier with operations in Philadelphia and New York. In November of 2025, Mayor Parker announced a major shift in Philadelphia's contracting approach, moving away from race and gender-based participation goals toward a local and small business framework. This change reflects broader legal and political pressures, reshaping how cities can structure inclusion policies. While the new terminology is intended to retain support for diverse businesses, it also removes the intentional mechanisms that once created predictable access for them. The shift in terminology will likely result in an increase in opportunities for non-diverse firms, widening the disparity gap. As a result, many capable, diverse and women-owned businesses now face greater uncertainty, not because demand has disappeared, but because continuity is no longer explicitly designed into the system. Pride has been in business for 30 years this year. We emerged from the public sector on a solid footing with capacity and proven track record, which is something of a rarity in this market. American Power is in its eighth year of operation, and it has established a significant presence in Philadelphia, and we expanded into New York two years ago. Both companies represent a positive story within the diversity, equity and inclusion narrative. Pride Enterprises has been a celebrated organization participating in several high- profile projects, for example, the Live Casino and Hotel, the Morgan Center, 30th Street Station, to name a few. We have worked with major builders like Gilbane Building Company, Turner Construction, LF Driscoll and Whiting-Turner. We have also continued to perform work independently for clients like the University of Pennsylvania, Temple University, PECO, Exelon, Children's Hospital and Jefferson Hospital. We are the contractor who renovated the facility that is now known as Philadelphia Youth Basketball Sixth Man Center, a $25 million, 100,000 square-foot basketball-focused community center that has become a focal point for the City of Philadelphia. We did that project entirely on our own, with no 10 partner or backer of any kind. American Power has provided electrical equipment and materials for a host of projects in the region and was a central participant in Philadelphia's streetlighting upgrades project, converting the old halogen lights to energy-efficient LED lights throughout the city, improving the quality of life in Philadelphia and creating jobs for at risk youth. Shift in policy as it relates to diversity, equity and inclusion has had a significant impact on both businesses. Pride has seen a sharp decline in the kinds of opportunities that helped us grow over the last several years. Partnering with large firms have all but dried up. Consistent opportunities with the city's institutions has always been elusive, and that is now more the case than ever. American Power has seen a local decline, the Philadelphia market in revenue year over year of about 40%. In contrast, American Power has seen the revenue of our New York warehouse double over the last year. New York State remains a DEI stronghold in spite of the national policies of the current administration. Both of my companies have benefited tremendously from affirmative action and diversity, equity and inclusion policies and initiatives. As Donna Allie of Team Clean expressed earlier, my concern is primarily focused on the emerging businesses that need that support to scale and the generations that are coming behind us that may not have the resources available to them that were so critical to the development of my businesses. Thank you.
Mr. Williams, thank you for your testimony. We will now hear the testimony for the entire panel and then we'll have questions. Mr. Jones, please state your name for the record and proceed.
Excuse me, Chair Hairston. Just one second. Just for the witnesses, when you guys have one minute left, I will raise my hand just to notify you that you have a minute left in your testimony.
Nadir Jones, Director of Business Impact and Economic Advancement for the City of Philadelphia. So good morning, members of the Special Committee on City and Private Sector Diversity, Equity and Inclusion Policies. My name is Nadir Jones. I'm the Director of Business Impact and Economic Advancement for the City of Philadelphia. I'm here today to provide testimony on Resolution No. 14 240107, which allows the special committee to examine the impact of such policies and to provide evidence-based recommendations to enhance policy effectiveness in the promotion of economic opportunity for all businesses in the City of Philadelphia. I want to thank you for this opportunity to testify today. The Office of Business Impact and Economic Advancement is proud to be working closely with the Special Committee and City Council, and we welcome your report and continued attention as it brings to the barriers affecting small, local and diverse, underrepresented businesses across the City of Philadelphia. First, I would like to provide an overview of my office and hundreds of small, local and diverse businesses we support. The Office of Business Impact and Economic Advancement develops policies and programs that support access to contracting opportunities and promote business growth across all sectors. This office works to strengthen business capacity, connect businesses to resources, and support their participation in city opportunities. Through these efforts, BIEA helps foster a strong and competitive business environment across Philadelphia. BIEA oversees both the Office of Business Growth and the Office of Economic Opportunity, allowing us to integrate business development opportunities and capacity building with contracting access. This work is embodied in the Philadelphia Small and Local Business Program, established through Executive Order 0625, which provides a broader framework for expanding access to contracting opportunities for small and specialty local businesses. I would like to point out some of the critical barriers to entry and growth for our small, local and diverse businesses, which historically have included limited access to capital, inadequate back office support, bond requirements, and contract bundling. Small, local and diverse businesses often face significant challenges accessing working capital needed to grow and could compete for larger opportunities. As a result, entrepreneurs are more likely to be denied traditional financing from lenders regardless of income level, indicating systemic exclusion. Surety bonding requirements act as a major barrier to entry, demanding financial track records, working capital and project experience. The Office of Business Impact and Economic Advancement, in collaboration with the Infrastructure Solutions Team, has developed a capital access fund and bonding program aimed to position businesses with limited access to contracting opportunities to successfully compete for and complete public works projects in Philadelphia by providing targeted, project-specific support and resources. The program will combine financial education and funds management control with access to bonding, lines of credit and other project-specific financial resources needed to successfully perform city work. The Office of Business Impact and Economic Advancement, along with our public-private partners, have set forth initiatives to equip small, economically emerging businesses with the tools, knowledge and resources needed to grow and thrive through these strategic partnerships. Local and small businesses are receiving the technical assistance, resources and support needed to strengthen their operations, improve contracting readiness, and position themselves for growth. This work is grounded in equity for small businesses, economic inclusion for all, and measurable outcomes that drive real impact in underserved communities. Bundled contracts historically have locked out small and local businesses.
Locked out of prime bids, small and local businesses are forced into lower margins, subcontracting opportunities. We support expanding contracting tools that create more opportunities for small, local businesses, including the use of small business set-asides or sheltered market contracts or professional service contracts to allow greater flexibility around certain requirements for construction projects. We understand that vendor payment can also present a challenge for small and local businesses and in some cases affect their ability for that business to work with the city. However, we are working in partnership with relevant city agencies to create achievable solutions regarding payment delays and process improvement. We have appreciated the feedback and recommendations from the members of the business community, some of which are on this committee. We want to make it clear that the City of Philadelphia is open for business and that we are being more intentional and serious about how we support our small, local and diverse business community. We are working towards a more business-friendly ecosystem that strengthens Philadelphia businesses and workers, while helping the city deliver goods and services more effectively to our residents. Thank you.
Thank you for your testimony. Ms. Lawton, if you can state your name for the record and proceed.
Good morning. I'm Debbie Lawton from the Office of Risk Management, Division of Finance, City of Philadelphia. I'm going to submit my testimony. Good morning, City Councilmembers and members of the Special Committee on City and Private Sector Diversity, Equity and Inclusion Policies. I am providing testimony regarding barriers to entry and growth as it relates to contracting with the city. Specifically, I will address the role of government agencies, particularly risk management, in helping small and local business enhance their footprint in municipal contracting area. As your report findings indicate, since the pandemic there has been participation by underrepresented businesses in the city's procurement process. Risk management has continued to help small businesses navigate insurance requirements and to reduce any disparities across our business community. To enhance small and local participation, Risk Management has maintained minimum insurance requirements for more than a decade, probably more than two decades, which are more lower than industry standards, by which the city provides adequate protection. Unlike traditional rigid insurance mandates, which often create additional barriers, Risk Management's minimum insurance requirements level the playing field by reducing those barriers. Risk Management has also scaled insurance requirements based on the nature and level of contract risk and contract value, rather than applying a high blanket limit for all contracts. Risk has structured various Owner-Controlled Insurance Programs, OCIPS, also known as wrap-ups, which eliminate insurance barriers. Because the wrap-up insurance covers the city, it covers the contractors, it covers subcontractors at lower rates than individually obtained. Risk has waived specific high-cost insurance lines like cyber liability and professional liability for smaller contractors whose specific scope of work does not involve those risks. Over the years, Risk has mentored small businesses within the brokerage sector by providing hands-on operational oversight and strategic industry insights to drive their growth. Importantly, Risk is committed to even greater partnerships with insurance brokers to provide risk management training for small businesses, thereby enabling small businesses to build portfolios that qualify for preferred commercial insurance rates and increase the pool of small businesses able to participate in city contracting. In conclusion, in conjunction with programs managed by the Office of Business Impact and Economic Advancement, Risk will sustain and enhance its efforts to widen the scale of participation among small and local businesses.
Thank you for your testimony. Ms. Hosendorf, would you please state your name for the record and proceed with your testimony.
Good morning. I am Victoria Hosendorf at the Enterprise Center. We've all heard a lot about DEI and many ways that Philadelphia is a beautiful, diverse city; race, gender, ethnicity, age and ability. However, on one area where Philadelphia is not diverse is in its economic class diversity. We are the second, poorest, largest city. And over 90% of the city's Black- and Latino-owned firms are solopreneurs with no W-2 employees. If we are ever to achieve the economic equality and inclusion side of DEI, then we have to think differently about achieving economic mobility in our city and recognize that access to capital is the key to the missing ingredient. This is the part that gets lost when capital access falls under small business support alongside workshops, mentorship and ribbon-cuttings. Low economic mobility is not a training program. Most small businesses start by running out of their home. So what's missing when they're ready to grow is capital; capital on terms that match reality, not a bank's risk model. A city that wants its residents to move up doesn't just need more entrepreneurs. It needs entrepreneurs who can get finance. Every business that gets the loan becomes an employer. So if a business can't get finance, no one gets a paycheck, including the owner. Eventually, that owner begins to take owner's withdrawal, and any employees of theirs or anyone that works for them really becomes a 1099. This isn't about a job program. It isn't about another round of the same old technical assistance that has failed to improve entrepreneurs' balance sheet. Capital pushed deliberately to the people and the places it does not ordinarily flow is the fastest, most durable path this city has to move its residents from surviving to owning. Fund the pipeline that gets capital to homegrown businesses so that our next Urban Outfitters or Comcast can come outside of Parkside, Grays Ferry or even Kensington. Do that and you are not just funding one business. You are funding every job, every tax dollar and every family that business will carry with it for the next ten years. This is the bet that the Enterprise Center is asking the city to make. It is the one we only already -- the one we have already made. We just need partners with the reach that City Hall has. Thank you.
Thank you for your testimony. Are there any questions or comments from the committee? Ms. Rodriguez.
So I have a question for Craig. Craig, today given the description of the situation and the state of your business, what do you need more? If you had to prioritize resources for your business in this current environment, would you prioritize relationships over capital or capital over relationships?
For me, it's relationships over capital. We are a mature business so we do have significant resources, could always use more capital. But in this environment, the most critical thing is access to opportunity. And I think that's a direct derivative of relationships.
Would you say that an emerging business might say that relationships are more important to capital or capital more important than relationships?
I would say all of the above, because a startup company or a young company needs everything, you know, needs that next project, needs that next loan to be able to do that project. So it's all of the above when you're in the beginning stages.
Mr. Jones, foundational questions for you. We're talking about capital. One of the elements of capital that's always a challenge is proper pay and accounts receivable. So can you share with us two foundational questions. One is what is the current position of the Administration on prompt pay in accounts receivable? And secondly, currently in the state of flux, what's the language that's currently in RFPs as it relates to local and diverse sourcing?
So for the first question, I'm going to bring in Commissioner Ron Hovey who's going to answer the prompt payment issue. To your second question, Mr. Epps, we do have small local business participation plan language in our contractual provisions that does set targeted ranges for small and local businesses.
Mr. Jones, while he's coming forward, for the record can you explain to us what small is considered?
So how the city defines small business is actually a four-tiered approach. So we actually have four different levels of small business based upon the firm's revenues. The first tier is called a micro small business who gross revenues do not exceed 1 million. The second tier is called an emerging small business, where your gross revenues do not exceed 5 million. And then you have what we call macro and legacy small businesses whose gross revenues are not to exceed 23.5, and 47 million over a three-year grace period. The reason why we took this approach was because as we engage the small business community, we understand that one size does not fit all. We want to meet businesses where they are to give them the proper support that they need.
I have a follow-up. What I did not hear -- that third category, the cap was what?
All right. I'm not sure how we have this conversation, but I'd like to at least have it on the record that those caps put significant, significant impediments on businesses having a potential to scale and the system led by the federal government, followed by the state. And now, it seems the city has also fallen into the same trap of predetermining how large a business that has any elements of diversity can be. And I know I'm Co-Chair, but I would raise that as something for the record that needs to be addressed so that we are not predetermining when people cap out of progress. I'll just say one other thing. I was expecting to hear something about a middle market program. And if you can make reference to that, I would appreciate it.
Yes. So the Administration has been having conversations on developing a middle market program. For once, a legacy small business does graduate out of the small business program. We do have a set-aside program for middle market. We're not there yet. We're still going through some market data and data research, but it is something that's on the book that we're taking a very close, intentional, serious look at. COMMISSIONER HOVEY: Good morning. My name is Ronald Hovey and I'm the Procurement Commissioner. And I forgot the question. Could you repeat the question please?
I'm sorry? COMMISSIONER HOVEY: Could you repeat the question please?
Yes. The question was what is the current policy as it relates to prompt pay? How fast should small and local businesses expect to get paid? COMMISSIONER HOVEY: So ideally, it should be no longer than 60 days. And that's what we're heading to in our new implementation of our ERP system, with a plan to reduce that once that's implemented down to 45 and with an ultimate goal of 30. Right now there are hurdles to prompt payment that are structural in nature that we're working on to resolve, primarily getting contracts conformed in a timely manner. We have both a working group on that, that is sort of focusing through heavy lifting to resolve that matter. And we've reduced it significantly. But we're also drafting changes both in our systems, our business processes and our rules to address this, to get contract conformance basically off of the critical path of payment. In parallel with that, that hides a lot of the day-to-day delays in payment because of the large number of contracts that get lost there. So we're working in parallel with that. So as we resolve that bigger issue that exists today, we don't bump up against the more transactional impediments to quick payment. And I know the accounts payable team is looking at their business processes so that we embed new processes in the new systems that will go live next July. And I think that kind of sums up where it is today.
I have a question. First of all, thank you, Commissioner, for coming and -- COMMISSIONER HOVEY: My pleasure.
-- letting us understand the process. My question is around subcontractor reimbursement. That always seems to be an impediment as a prime vendor. You're certainly able to submit your invoices and have a contact with the department. But as a sub, they frequently are not permitted to do so. They have to go through their prime. Is there some sort of legislation or mandate about payment from primes to subs? And if so, what does that look like today? COMMISSIONER HOVEY: So today in our -- it's more of a contractual issue. Generally, we try to restrain ourselves from really -- it's called privity of contract. So a direct relationship between ourselves and the subcontractors. However, in the DEI space with regard to subcontractors, we want to be more articulate in what we require. So we have pay-when-paid requirements in our contracts, first of all. I will say that today because of this, the impediments to vendors getting paid, a lot of that gets lost in the unclarity of the situation. So that is something we are working to resolve. In parallel to this, the Procurement Department, in conjunction with the Law Department, just embarked on a contract with a firm to assist us in rewriting all of our contract templates. And that's a topic that we're building into the pay-when- paid requirements and looking at how we build our teeth into that clause going forward. So we're broadly looking at the content of the contracts across the board. But I know that's one of the topics included.
The reason why I'm saying this is that when you have a prime/sub, I want to say a prime and a sub relationship, frequently when the proposal is presented, its presented obviously as work. But it's also the whole financial package, the work that's being done, the delivery. And I'm speaking from experience here, if I may, where the work is being done -- for example, if a prime submits a proposal of $100,000 and the sub completed its work, if the prime does not submit invoicing to cover the sub's work, then the subcontractor does not get paid for an extended period of time. What I'm asking is, as you look at legislation, as you look at this new view of how this policy is going to be written, I'm just asking if there could be some sort of language focused at the prime's relationship to pay the sub for work completed and not wait for them to decide when to submit the invoice. Having some controls put in place would protect the subcontractor. And many of them work on small margins and they also don't have the sort of cash reserves that the prime does to sort of protect it. So I'm just asking you to look at those. And there's a few others and I'm happy to have those conversations with you because I know we're caught for time. Thank you, Commissioner. Again, thank you for coming. COMMISSIONER HOVEY: We are open to that.
Thank you. Is there any further questions from the committee?
A very quick question. You mentioned that currently the goal is to pay contracts in 60 days? COMMISSIONER HOVEY: So right now because of the current systems, the detailed visibility isn't in our systems to drive that rigorously. But it will be going live with a new system in July. And we are building it around an initial start-of-pay within 60 days.
So you don't know how long it's taking? COMMISSIONER HOVEY: It's not my area. I would have to get back to you because Procurement doesn't handle payments. Accounts Payable does. So I couldn't give you an answer, but we'd be happy to get an answer for you, what our average is.
We talked earlier about, and that is, capital. I want to tie it back to receivables. So what we are saying is that a business has to have 60 days of cash flow in order to finance the period in which they're going to get paid. And those of us -- I have a business but I also get a paycheck. So I understand both sides of the equation. But imagine those of you who get a paycheck, you work in January, you get your money in March. That's fundamentally what we're saying. We would encourage those in the Administration to do whatever you can to speed up that process, because those small businesses cannot afford to carry 60 days of receivables.
Craig, I found your testimony compelling in a variety of different ways. But you talked very specifically around resources not being available today as you had experienced in the past. So we're government and we are used to incremental progress. If resources were not a barrier, what would you suggest we do to provide significant advancement in support of businesses?
So as I mentioned earlier, my company is 30 years old. So there are programs and initiatives at a variety of levels that we have participated in that may or may not still exist. We were an 8(a) certified company under the Small Business Administration. We participated in the HUBZone initiative, again under the Small Business Administration. And that was critical to laying the foundation for our company. As I mentioned, we emerged in the private market and the local city market with bonding, insurance, track record, financing and key relationships that were critical to our ability to transition into the private sector. To your question -- most recently, I neglected to mention in my testimony, we have been a prime contractor on several Rebuild projects. At its inception, it was targeted at minority- and women- owned businesses for specific support. And I don't know that that's an ongoing initiative in the city as well. And as much as focused efforts to support the growth and development of minority- and women-owned businesses is under fire from the current administration in Washington and the shift in language has been made locally and it's difficult to direct opportunities to companies like ours in the current environment. But the simple answer to your question is finding a way to continue to do that. You know, we are currently awarded a public works project for PGW thankfully. It's a sizable job, down and adjacent to the Bellwether District. So we continue to find a way forward, but we're a seasoned firm. There are a lot of companies that don't have the experience, know-how and resources to be able to secure opportunities as readily as a company like mine or companies like mine. And it's challenging for us. I don't want to make it sound like it's easy. So to the extent that the city can continue to target opportunities for the other firms, that's what's needed.
Thank you. Thank you for your testimony. Mr. Epps, if you will take us to Panel 3.
Again, thank you very much. And we look forward to hearing about the progress that some of these subjects need to have to continue to make progress. We will now move on to Panel No. 3, which is focused on private sector participation. Mr. Groomes, you will now call the witness to the panel. But this panel will have discussion on the private sector, how it develops its incentives, practices, procedures and models for implementing diverse participation goals. Witnesses may speak to how these industries develop baselines and benchmarks that may be replicated at best practices. Mr. Groomes, please call the witnesses of the panel.
Mia Fioravanti, Senior Vice-President of Corporate Affairs at HRP Group. (Witness approached witness table.)
And just for the record, if you would state your name and your organization and then proceed.
Sure. Mia Fioravanti, Senior Vice- President of Corporate Affairs for HRP Group.
Good morning, Chairperson and members of the committee. Thank you for the opportunity to speak today. My name is Mia Fioravanti and I serve as Senior Vice-President of Corporate Affairs for HRP Group, a vertically integrated redevelopment firm focused on transforming complex and obsolete industrial sites into modern economic engines. The largest project in our portfolio is here in Philadelphia, where we are transforming what was once a 150-year-old oil refinery into a 1300-acre sustainable campus for logistics, advanced manufacturing, life sciences and innovation. At the end of its life, the refinery employed just over 1000 people. When fully built out, the Bellwether District is expected to support between 10,000 and 19,000 permanent jobs, in addition to more than 20,000 construction jobs. However, our impact extends beyond job creation. We are investing significantly in onsite and offsite infrastructure, improving transportation access and reconnecting a site that was once walled off from surrounding communities back into the fabric of the city. We have contributed more than $3 million to date to community and workforce development initiatives, primarily focused on South and Southwest Philadelphia. We are developing the site to LEED- certifiable standards, incorporating solar rooftops and planting more than 10,000 trees. And as a result of the refinery's closure and demolition, the city's Office of Sustainability reported a 16% reduction in citywide carbon emissions. Most importantly, we are focused on ensuring that the benefits of this investment are shared broadly by Philadelphians, particularly our neighbors in South and Southwest Philadelphia. At HRP, we view inclusive procurement as both a business imperative and a community responsibility. A project of this scale requires a diverse network of contractors, suppliers, consultants and professional services firms, and expanding access to opportunity ultimately strengthens the project itself. Our work is guided by ambitious economic inclusion goals for both contracting and workforce participation. , a woman and minority-owned firm. Results are reviewed regularly by an oversight committee that includes representatives from the City of Philadelphia, the School District of Philadelphia and local elected officials offices. We also meet routinely with our contractor partners to review performance, identify opportunities and ensure best efforts are being made towards our project goals. This emphasis on transparency, accountability and measurable outcomes helps ensure inclusion remains a priority throughout the life of the project. Equally important is outreach and engagement. We work closely with our general contractors, the Diverse Chambers Coalition, community organizations and industry groups to ensure local, minority-owned and women- owned businesses are aware of and connected to project opportunities. At the same time, we recognize that access alone is not enough. On projects of this size and complexity, some firms may not yet have the capacity, bonding or experience required for certain scopes of work, and that is why we partner with organizations like Maven, the Economy League of Philadelphia and Everybody Builds to help businesses strengthen their capabilities and compete successfully for opportunities over time as the project progresses. Workforce development is an equally important focus. Through our career-connected learning commitment with the School District of Philadelphia, students are gaining hands-on exposure to careers through internships, site visits and career exploration opportunities both on our campus and in the classroom. We've engaged thousands of students to date and provided paid internship opportunities to 220 middle and high school students.
We are also investing in construction workforce development programs like CARP and Rosie's Girls, which are helping create pathways into high-earning, family- sustaining careers in the trades, particularly for women and people of color. And we are connecting future employers like our first tenant DrinkPAK with workforce development organizations, training partners and other resources to help them access Philadelphia's incredible talent pool. Ultimately, we believe the success of the Bellwether District will be measured not simply by what we build, but by the opportunities we create for local businesses, residents and surrounding communities. We look forward to continuing our partnership with the City of Philadelphia, the business community, workforce development partners and our neighbors in South and Southwest Philadelphia to ensure this investment creates lasting opportunity for generations to come. Thank you.
Thank you, Mia, and welcome. This is another statement, I guess. I think that, you know, I did chair this committee and I think it speaks to the challenges of having true private sector participation. When I hear your testimony, I hear a lot about construction. What I don't see and I don't hear are the other important industries that make up our private sector, manufacturing, the biopharm, hospitality, technology. And I'd love to see those players sitting in this room 14 talking about how they're actively participating in ensuring that everyone has a seat at the table. And this is one of the issues. I see Jeff Hornstein here and we have a conference coming up called GPLEX. And one of the things that we are going to focus on and talk about is the whole focus on private industry and the entrepreneurial industry, the entrepreneurial focus in this region because it is sorely lacking. And I am praising you for all that you're doing. But I think there should be five of you sitting up here talking about that. So I want to go on record that this city, this region has got to do better in supporting its women, minorities and all of its citizens in making sure that everyone is sitting and has equal participation, an equal opportunity to participate in not just the government sectors, which I see the government is doing the best it can, but private industry has got to put its hand in the ring and be an active participant in this too. And I'm a little disquieted not to have seen a few others participate. But, Mia, thank you for being a champion and thank your organization for being a champion.
Question: Against the plan, what percent of completion has been achieved thus far?
The project is anticipated to take 10 to years to develop. And we're 15 in roughly Year 5 or 6 of that process. So we have another decade to go.
We now turn to Panel 4. Mr. Groomes, will you please call the witnesses for the panel. This panel examines whether large-scale, public-private developments in the city have created contracting and growth opportunities for small and diverse businesses. Witnesses will speak to whether prime and subcontract work reach diverse firms, whether firms moved from subcontractor to prime, and what capital bonding or mentorship support was available to help firms compete.
Calling Kenyatta James, Deputy Executive Director at the Economy League; Mike Herbstman, Chief Financial Officer, Philadelphia School District. (Witnesses approached witness table.)
Good morning. Please state your name and organization for the record and proceed with your testimony.
Kenyatta James. I'm the Deputy Executive Director at the Economy League for Greater Philadelphia.
Mike Herbstman, Chief Financial Officer for the School District of Philadelphia.
Co-Chairs Epps and Hairston as well as Council President and his representatives and members of the Special Committee, thank you for the opportunity to offer testimony today. My name is Kenyatta James. I serve as the Deputy Executive Director at the Economy League of Greater Philadelphia. In that role, I lead and support our PAGE and SupplyPHL work, which helps small, local and diverse businesses navigate institutional supply chains and connect to contracting opportunities with anchor institutions, public sector partners and major private sector buyers. Over the past several years, that work has given me a ground level view of what helps firms grow and what keeps capable firms from reaching scale. I am not here as a developer or a contractor on one specific project. I'm here from the perspective of an intermediary that sees the ecosystem, the small firms trying to understand where they fit, the institutions trying to find qualified vendors and the gaps in between. From that perspective, I would like to offer three main points: First, Philadelphia should judge public-private partnerships not only by whether they include diverse firms once, but whether they help those firms grow over time. A small or diverse firm's participation in a major project should be a step towards larger business trajectory; more revenue, more employees, larger contract values, repeat work, stronger back- office systems and, where appropriate, movement from subcontractor to prime. If we only measure aggregated participation percentages, we can miss whether opportunity is broadly distributed or concentrated among a small number of firms and we can miss whether firms are actually building capacity. Second, public leverage should be used earlier and more intentionally when projects benefit from public land subsidy approvals, infrastructure or public convening power. The city has a legitimate interest in ensuring that the economic benefits are shared, but that has to happen before scopes are finalized, before primes are selected and before small firms are asked to fit into opportunities that were not designed with them in mind. Public-private projects should have a clear, inclusive procurement plan from the beginning; early outreach, unbundled scopes where appropriate, prompt payment expectations, bonding and insurance support and transparent progress and close-out reporting. Third, procurement access has to be paired with business capacity-building. Many firms do not fail to compete because they lack talent or ambition. They struggle because they lack working capital, bonding capacity, are legal and/or accounting support, HR systems, technology, certifications or the ability to carry payroll while waiting for payment. A serious strategy should include capacity-building grants, discounted shared services, bid coaching, bonding assistance and capital tied to actual opportunities. Mentorship is useful when it leads to work, feedback and measurable growth, not when it's disconnected from procurement. I would also encourage the committee to think about public-private partnerships as part of a broader, place-based economic development strategy. Major projects should not only produce project-level compliance. They should help build business districts, local hiring pipelines, employee wealth and neighborhood economic capacity, especially in communities that have historically been excluded from major investment. So the questions I would encourage the city to ask after every publicly supported development is not simply did we meet a percentage goal. It should be which firms participated, who got paid, how long did it take them to get paid, who grew, who moved from subcontractor to prime, were workers paid family-sustaining wages and did the project leave behind a stronger local business ecosystem than existed before? Thank you.
Thank you for your testimony. Mr. Herbstman, if you could restate your name and organization for the record and proceed.
Yes. Good morning. My name is Mike Herbstman and I'm the Chief Financial Officer for the School District of Philadelphia. I'm joined today by my colleague Throne Cropper, our Deputy CFO for the Office of Procurement Services, School District of Philadelphia. Appreciate the opportunity to testify today. Thank you for the work the Special Committee has done to support small, local and diverse group of businesses in our city. I'm happy to share some information about district procurement efforts with you all today. The district is committed to removing unnecessary barriers that can make it difficult for businesses to compete for and successfully do business with us. While we must maintain the processes and controls necessary to comply fully with state procurement law and safeguard public resources, we have taken deliberate steps to make these processes easier to understand and navigate for both current and prospective vendors. As I'll outline, we are achieving this through both improvements to our outreach strategy and providing ongoing support to current and potential vendors. As you know, the school district is required to operate within all applicable legal requirements pertaining to school district procurements, including the Pennsylvania Public School Law. The school district also strives to be good stewards of public dollars, including those raised from hard-working Philadelphia residents and businesses who effectively pay a significant portion of the taxes that fund the district. When local businesses and their employees thrive, we all benefit. We are pleased to share that local participation has increased over the past several years. In FY24, local participation dollars were approximately 25% of the district's contracted dollars from FY24 through the present. This percentage moved to 31%. This is driven in part by higher-value contract awards to vendors including Perryman Shoemaker for construction of Lewis Cassidy Academic Plus School; Mosaic Development Partners for work on AMY 5 at James Martin; SUPRA, Inc. for office supplies; and US Facilities, Inc. for building management services and cleaning services. We strive for continuing growth and our team is heavily- focused on developing strategies to help local businesses grow and successfully participate in school district procurements. The Office of Procurement Services has established procedures for identifying and connecting with external suppliers within the Philadelphia region. The school district contracts with supplier IO and B2Gnow platforms. These platforms allow for targeted outreach on available bidding and requests for proposal opportunities. They also help identify external suppliers through keyword searches and filtering by commodities or services offered, location, business size and types of business certifications. SDP's procurement team also includes partner agencies during the Bid or RFP posting phase for district contracts. All opportunities are shared through a Google group email, includes contracts from a range of groups such as the African American Chamber of Commerce, Eastern Minority Council and SupplyPHL. This process allows for expanded awareness outside of the district's established vendor network and access to external companies that may not be familiar with contracting opportunities within the district. The Office of Procurement Services includes this email group on all initially (inaudible) once bids or RFPs have been posted for vendor responses. The district has also hosted large vendor fairs designed to connect businesses directly with the school district and help them better understand opportunities to work with us. It also creates spaces for businesses to connect with one another, build relationships and explore opportunities to partner on future district work. Greater awareness among vendors supports a deeper, qualified pool and those interested in school district work.
The Office of Procurement Services has established inperson and virtual strategies to better connect, support and inform both existing and potential suppliers virtual office hours, during which vendors can join live sessions for support in the general supply registration process, bid and RFP response support and general procurement information sessions. These virtual office hours are held weekly and vendors can join at any time during the posted hours. In addition, the district hosts inperson knowledge sessions and informational sessions within a designated roundtable format. These are conducted in a classroom-like setting for current vendor pool, and newer or potential vendors for the district knowledge sessions are hosted quarterly and provide vendors with an opportunity to learn about general district procurement processes, types of business certifications and navigating the district's systems, including the vendor portal. Information sessions are bid- or RFP-specific. These sessions are meant to provide a space for vendors to engage directly with the lead program office and learn more about the scope of work, current needs, challenges and other key aspects of the procurement. These sessions also allow vendors a method to provide their capability statements and support businesses in developing their proposal response. The city and the School District of Philadelphia benefit from the growth, sustained success and diversity of local businesses and the school district will continue to support that goal. And we're happy to answer any questions at this time.
Thank you for your testimony. Now, we'll have questions and comments from the panel. Ms. Roberts.
Thank you very much. Kenyatta, thank you very much. Mike, how long have you been CFO?
Well, welcome. And what kind of systems or controls do you have in place for reimbursement of your contractors to making sure that invoices get processed promptly? And there's a follow-up.
Sure. So in general, we have a 30-day net pay for almost all of our contracts. Exception to that is our construction contracts, where there's additional controls and steps that need to take place. And that is typically 60 days net. We work through various processes in our accounts payable side to ensure that the three main matches are in place. But once items are received and invoiced, we pay promptly. And we do have -- as I know you mentioned in earlier testimony, we do have individual relationships also with some of our subcontractors and have taken extra steps when subcontractor payments from the prime were slower. We're able to slow down -- or able to withhold payments from the prime until they make that up.
And I appreciate that. And I will tell you that, I'm going to say this, I have an invoice sitting on someone's desk since March.
And I'm not saying that to put anybody in the hot seat or you. But when I asked those questions, it's because we get these pat answers that come through about the great programs or the processes that are in place. And there are many vendors -- and I'm a prime, I'm not a sub, I'm a prime -- where this has happened to. And there is no one to connect to for the next steps. They go sort of in a black hole. And that black hole in a company like mine that's been in existence for 30 years, has a chief financial officer, has all the systems in place, back office in place, is unable to get any answers on processing and invoices. So I would love to have somebody do an audit or at least, maybe not, or some sort of looking at doing some data analysis to seeing how well the school district is doing with processing its invoices. I hear what you're saying. But if it's affected me, I'm sure it's affected many others out there too.
Yes, I appreciate that. And we welcome any discussions on this. And of course, we'd like to directly connect with you to ensure that both for your specific case and any others that you know of that they get promptly through the system.
But I just have one other question for you. I know that when RFPs come out from the school district, the contracts awarded, and it may take quite a long time for those contracts to get amended or to get processed because they have to go before the school district, the school board; is that correct?
Yes. Prior to us negotiating contracts with vendors, we need authorization at a school board meeting to begin those contract negotiations.
Talking about the school board, so let's say within the last half decade or so we've taken back the school district under local control. And with that being a fact, has it changed the policies under which the school district sourcing strategy operates. You talked about the state. So my question, is policies driven by the state versus the city and how do you respond to that?
Sure. So in general, we have to of course comply with all of the state and city laws. Primarily on this side, it is the state procurement law for schools. The control under the School Reform Commission is well before my time here so I can't speak specifically to how things have changed. But within those laws, there is fairly broad ability for the school district itself to set our procedures and we have done that. In particular, our focus has been in breaking down barriers wherever possible to make it easier for businesses to really understand our processes. We recognize that we are a larger bureaucracy and it can be difficult to manage sometimes. So we are working -- and especially under the leadership of our Deputy Chief Mr. Cropper, who's here today, we've been working towards breaking down some of those barriers to make it easier for businesses to work with us, both as prospects and once they are selected as our vendors.
Madam Chair, if I could ask this to be recorded for the record, I would ask that the school district's office work with Mr. Jones' office to ensure that we have as much flexibility in the school system's policies that adhere to local sourcing and not be overridden by the state given that the school district is now under local control. I hear, I know just enough to be dangerous, that there are impediments to flexibility within the school district because they lean on the fact that these are state law. And I would like to see that evaluated to see is there any flexibility in that to bring it more under local control? Thank you.
So in your testimony, you talked a lot about facilitating the outreach and the information flow so that you can attract more bidders to your contracts. I did not hear a lot about process. I did not -- but you did mention that you're working in improving those, but you have not provided any details. So what are the priorities in improving the participation of locally-owned and perhaps minority-owned businesses in school district contracts?
Yes. And I'll ask our Deputy Chief Mr. Cropper to talk a little more about those procedures.
Good morning. Throne Cropper, Deputy Chief CFO for Procurement, School District of Philadelphia. So a lot of the awareness and our outreach strategies kind of tie back into our process. We're fully aware that our processes can be quite complex, mainly because we're a large government entity. So our goal is to build that awareness and knowledge of how to navigate through those processes to hopefully make it simpler and a bit more easier for both to access that information, to understand how to navigate through our processes. So the idea of our process is changing. We've simplified them as best we can, right, to a certain extent to ensure that we're obviously audit- ready and not really skipping over any processes. But the idea is that we tie back into the awareness and outreach and information on a consistent basis to not just our current pool of vendors, but vendors who may not have done business with the school district before, making them aware of what those processes are, giving them a point of contact, consistent weekly office hours that are open for anyone to join as well as those quarterly knowledge sessions that we mentioned that break down different phases of the procurement process to kind of help those better understand how to navigate through our process, which can be complex at times.
I think I hear the word process a lot and I don't know what that process looks like. I think what I want to say is there's a lot in those processes and just communicating them may not be sufficient in order to obtain the kinds of success stories that we want to see out of the school district. So we would like to hear more details around bonding practices, decoupling contracts. What are you affirmatively doing in order to improve the participation? In fact, I have not heard anything around whether you attract participation, whether you have goals for participation. So these are essential and foundational concepts that the school district should have and should be able to comment on.
Sure. So we do have participation goals. We don't have any set goals towards local participation necessarily. But within our bids and our RFP processes there are typically, depending on the services or the commodities being requested, set goals for participation that a prime contractor would be required to follow and adhere to. And if for some reason they're not a prime contractor themselves, right, a percentage will be subcontracted out to MWBEs. Nothing that currently exists for local, again at this point in time. But within those same bids and RFPs, there is what we call a vendor compliance form that ensures that the prime contractors, if they are subbing out to an MWBE, that they're paying them on time and promptly providing quarterly reports for status of payment and understanding that we have the right to withhold payment if we are notified that a subcontractor is not being paid on time. So we do have that built into our bid and our RFP processes for participation.
I encourage you not to miss the moment. As I read and hear, and that is starting in January, the school district will begin to spend significant dollars on its massive restructuring and repair plan. And I don't see a better opportunity for local and diverse sourcing than that one. And we would highly encourage Mr. Jones that we be proactive, aggressive and intentional to ensure that those dollars stay in our local community. And what I'm concerned about, again knowing just enough to be dangerous, is we will allow policy and bureaucracy and slowness to affect our progress while POs are being cut every day and every week under old policies that do not advantage those that are in desperate need to participate in the best dollars that I can see that can be sourced locally.
I just want to echo our Co-Chair Mr. Epps. I don't think -- that was very well said. Thank you.
Thank you. I hope the record gets these action items because I can guarantee you some of us will be circling back to ensure that there is movement.
Yes. Having concluded our invited panels, we will now take public testimony. Before proceeding, we must lay out a few ground rules. Your testimony should be pertinent to the subject of today's hearing. Once your name is called, you will have up to two minutes to speak. To be fair to all of those wishing to speak, we intend to hold you to the two-minute limit. Once your time has passed, you will be asked to conclude. Mr. Groomes, please read the names of our first speakers for public testimony.
We have Charlie Goehl and Michelle Flamer. (Witnesses approached witness table.)
Good morning, committee members. My name is Charlie Goehl and I am the Government and Labor Relations Coordinator at the General Building Contractors Association. And I'm here to express support for the Special Committee on City and Private Sector Diversity, Equity and Inclusion Policies. GBCA believes that increasing participation among minority, women and disabled-owned businesses in Philadelphia is not only the right thing to do, but it is an economic imperative. A strong and growing business community requires that all of Philadelphia's entrepreneurs and businesses have meaningful opportunities to compete, grow and contribute to the city's economy. Philadelphia's economic future is directly tied to the success of its diverse residents and businesses. When these businesses grow, they create jobs, expand the tax base, reinvest in their communities and help strengthen the city's overall economy. In short, the growth of Philadelphians will directly translate to the growth of Philadelphia. We commend City Council for creating a forum to examine existing diversity, equity and inclusion policies and importantly, identify practical, evidence-based recommendations for making those policies more effective. A thoughtful examination of current programs can help ensure that the city's resources and policies are producing meaningful opportunities for businesses, while supporting a competitive and healthy local economy. As an organization representing signatory contractors, construction industry leaders and construction service providers throughout the Philadelphia region, GBCA understands the importance of creating pathways for businesses of all sizes and backgrounds to participate in Philadelphia's economic growth. We believe that expanding opportunities for minority, women and disabled-owned businesses can strengthen the city's contracting community, support workforce development and create opportunities for the next generation of Philadelphia businesses. GBCA looks forward to supporting the committee's work and contributing to the perspective of the Philadelphia construction industry. As the city evaluates ways to promote greater minority, women and disabled-owned business participation and economic opportunity, we welcome any chance to be a source of information or a collaborative partner in this effort. Thank you.
Good morning, everyone. My name is Michelle Flamer. I am a Philadelphia native and a retired city attorney. I have really two points that I wanted to underscore this morning having heard all of the testimony and also having participated in this esteemed committee. Two things: We have to keep laser-focused on the Procurement Department. They will be charged with implementing these policies, these rules, these regulations, whatever City Council puts into ordinance, whatever the electors vote on, on that ballot question, on the Procurement Department, it will ultimately remain the responsibility of the Procurement Department to implement many of these rules. Unbundling is necessary. You cannot have a set-aside for small and local businesses, which to me is critical to the advancement of minority and women- owned businesses in the City of Philadelphia. Unless you have departments that are willing to unbundle contracts, and that requires a very strong Procurement Commissioner, to make sure that those departments, those middle management people in those departments are unbundling the contracts, because it won't happen. We've had a set-aside available for local businesses on the books for about maybe four years. And I defy the city to tell me that it's ever actually been implemented. Now, we're going forward with a set-aside for small and local paired together, which is the brilliant work in part of this committee, and hopefully everyone will vote yes to that when it's on, you know, the ballot. However, it's not going to do anything unless it's actually implemented. So I'm just saying again stay laser-focused on the Procurement Department. They certify local businesses and they also implement these rules. The second thing, and even more important, is data, data, data, data. We have to continue to have data collected. My understanding is the City Solicitor has opined that city departments cannot keep information on who is bidding on a contract. They will only look at the data, the demographic information at the time of award. That's too late. It's too late. We need to know not just who's participating in the city contracts. As a colleague from the Economy League stated, it's not a matter of just who participates, but it's a matter of who knocked on the door and who didn't get in. We need to have this information. We're in a period, a time period in this country of great distress, of really unbridled racist behavior. But this will not last forever. And we have to continue to collect this data. So we will be prepared for a new day. But if we don't have it, we won't be able to hold anyone accountable. Data holds those responsible for soliciting bids and awarding contracts accountable. Without the data, we have only memories and good intentions that are rarely documented. And lastly, we did hear testimony about scaling growth and capacity. How could you ever assess that unless you have the data. You won't know if somebody went from $100,000 capacity to $1 million capacity unless you actually have the data. So again, I'm just saying that we have a new city solicitor coming in. Hopefully, she will be confirmed by this esteemed body, Monique Galloway. And I am hopeful that the solicitor will look at some of these decisions and agree that it is necessary, particularly on sealed procurement bids that are awarded to the lowest responsive bidder, that we know who these bidders are at the time of bid, not just at the time of award. Thank you very much.
Thank you. Are there any other witnesses present who wish to testify?
Yes. We have Sabrina Tate, Dean Robateau, Michael Brown and Billy McCann. (Witnesses approached witness table.)
Again, we ask that you honor the two-minute limit please. Thank you.
Good morning, Special Committee. My name is Sabrina Tate. I'm the Executive Director of Everybody Builds. I've been in my position for all of seven weeks, and these are my observations. At Everybody Builds, we believe that people who live in Philadelphia should have the fair chance to help Philadelphia and benefit from its growth. Philadelphia has made a commitment, a commitment to creating opportunities for minority, women and disabled-owned businesses. But having a goal is only the first step. We also have to look at what happens after the goal is set. Can a small contractor get the money needed to take on large projects? Can they get the bonding and insurance? Do they know about opportunities early enough to compete? Can they build relationships with larger contractors? And when they do good work, are they given the chance to grow from a small subcontractor into a large contractor that can compete for bigger projects? These are real issues for small businesses. A business may have the skill and expertise to do the work, but still not have the cash needed to carry payroll while waiting to be paid. Another business may be ready to grow but need help with estimating, building, insurance bonding or back-office support. When we remove those barriers, the impact becomes greater. Large organizations, you know, building relationships with smaller organizations can help them increase their capacity. Businesses can hire one worker and grow from five employees to ten. A small subcontractor can become a prime contractor. More money can stay in our neighborhoods and help families build generational wealth. This is also about workforce. As Philadelphia continues to build, we have an opportunity to connect more residents to apprenticeships, training, good-paying construction careers, and we must make sure that people from our communities often have the opportunity that they need in order to obtain this goal. At Everybody Builds, we see diversity and inclusion as more than just numbers on a report. The real question is who's getting the opportunity, who's growing, who's getting the jobs and contracts and are we helping businesses become strong enough to compete without needing special assistance forever. That is the impact I hope this committee will continue to examine. We support looking closely at what is working, where the barriers still exist and how the city and private sector can work together to create real and lasting opportunities. Everybody Builds is ready to partner with you all in this work and because we like to help small businesses grow, not just in building businesses, but building jobs, families, these neighborhoods and a stronger Philadelphia. Thank you for the opportunity to share my perspective.
Thank you. Please state your name for the record and proceed with your testimony.
Michael Brown, CEO and founder of The 360 Group. Honorable members of City Council and committee members, thank you for the opportunity to address you today. I'm here representing minority businesses in the construction industry, specifically in the union trades, specialty trades such as mechanical, HVAC, plumbing and electrical. Today, minority businesses across Philadelphia are witnessing a catastrophic erosion of market share, pushing foundational enterprises to the brink of collapse. This crisis has amplified nationally by the dismantling of the federal diversity programs, such as the ADA program and locally by institutional indifference across agencies such as the School District of Philadelphia. Firms face a hostile procurement maze. Change orders are stalled, task orders are inadequate and equitably distributed, and agencies turn a blind eye to predatory business and discriminatory practices. More destructive is the manipulation of the usage of the term DEI. It is now being used to erode the core competencies of Black and Hispanic businesses. Ms. Flamer spoke of data. The Commonwealth Disparity Study done by Secretary Kerry Kirkland exposed a grim reality: Baseline state contracting utilization for African American and Hispanic firms languishes at razor thin percentages 1% Black, 2% with Hispanic. Philadelphia's slowly sleepwalking down the same exact destructive path if we do not change our practices with diversity. We know that distribution of resources is central to governance. Our 6 Council Districts each represent 7 roughly equal communities of 8 160,000 constituents. If 9 Philadelphia is entering another 10 era of major infrastructure investment, we must build durable architecture of shared prosperity, moving beyond the check-the-box metrics towards a strict economic distribution framework backed by heat maps showing precisely where the capital flows. Union Black and Hispanic businesses create Black and Hispanic Union jobs. We don't have pre-apprenticeship programs. We have apprenticeship programs that take you to journeyman positions. You are in danger of losing all of your minority union self-performing contracting firms. I make up one of the largest ones in the city and we will probably close that business down by the end of next year. So thank you all and I appreciate your time.
Yes. My name is Dean Robateau. I'm the Chief Development Officer for McKissack & McKissack. I reserve my statements only because I really wanted to participate and hear what was being discussed and I took down some notes. There were four bullet points that really jumped out at me. We talked about capacity building, workforce development, timely payments and contracts or capital. And I'll begin with the last. What would you prefer, a contract or a capital infusion? I think they go hand-in-hand at this point, because quite frankly, if you're in the room, and I think Donna Allie said it best where she noted that she doesn't play golf or live in those communities, but if we can have continued outreach with respect to some of the larger companies and partner them, mentor protege relationships, that would go a long way because access to capital is only through those relationships when you're on a golf course, living next door, at the shore or wherever it may be, just by observation. The second one is capacity building. We have mega projects and we don't have that capacity with respect to M, W or local business enterprises. And that's something we should continue pushing because there are very talented firms out here. And you've heard from several of them, but there are a lot more than that. So I think a continued push on this committee as far as DE&I to let those smaller companies, emerging companies, have access to us, and vice versa, would go a long way. Thirdly, workforce development. This is very near and dear to my heart. I've been in Philadelphia years. I 18 originally came from New York. My 19 first project was The School of The 20 Future, which was a carve-out of approximately 7 or 8 acres in Fairmount Park. And what I saw was a very successful relationship with regard to that workforce development to assure that those percentages were met. Not just the minimum, but exceeding the minimum. We really need to get back to that. Because as a prime example, we had a 36% share at the Terminal D and E connection- building over to years ago. 9 That's eroded. That's eroded now 10 to the point where a lot of these 11 larger companies, because there's 12 not a push from the federal 13 agencies or the federal government, 14 they don't see the need for it. 15 Several of them, to their credit, 16 have said, we will continue because 17 we're private companies. 18 And finally, timely 19 payments. This is the lifeblood of 20 any company, large or small. And I don't have to tell the business owners here, but anything over 90 days, you turn into a pumpkin because that goes against your borrowing base. But there's also a ripple effect. Because as prime contractors on a lot of the projects we have, if we don't get timely payment, we're often between a rock and a hard place. Do we try to advance payment to these smaller companies or just let them know it's a contractual obligation. We try to go with the first and try to see how we can pay them and take the hit ourselves, but it's a bottom-line business that we're in. So I appreciate your time. I welcome further meetings with this committee, but this is an excellent first, second and third start. Thank you.
Did we hear from Billy McCann? (Witnesses approached witness table.) MR. McCANN: Good morning.
Good afternoon. Please state your name. MR. McCANN: My name is Billy McCann. I am currently a committee person with the 45th Ward, 5th Division serving there. I'm currently running for City Council At-Large. I wanted to share a little bit of my story about my own disability and how a lot of times we find it hard to come out of the shadows. About ten years ago, I was serving at Universal Charter School as principal and I came down with bipolar disorder, a federally- recognized disability covered under the American Disabilities Act. Before that, I served as assistant principal at Universal Audenried in Grays Ferry. For me, coming down with a disability like that meant I needed to step out of the classroom and step out of a school because I needed to take care of myself before I can take care of kids, other people's kids. So I stepped into the construction world. I stepped into real estate. And I found myself having a hard time getting ahead, getting information, access to capital and really being discriminated against. To be honest with you, we are often a historically marginalized voice. That's not part of the conversation. I find it interesting. This morning I was watching Channel 6 News, and there was a segment on about the National Alliance on Mental Illness and streaming at The Marquee. At the bottom of the segment was information about this hearing today. So I came here with a wondering how often are our voices included in the conversation. Thank you.
Are there any other witnesses to come before this body? (No response.)
Going once. Well, the esteemed Chairperson and President of City Council just arrived. So, Councilman Johnson, you can't come into the room 14 without having something to say. Please take the mic.
I see my good friend Nadir back there, who I have supreme confidence who will make sure that we continue to address the issue of inclusion when it comes to small and local businesses as it relates to providing an opportunity for all businesses to have an opportunity to have a seat at the table. I just want to personally just thank my Co-Chairs of this task force, Mr. Harold Epps and Regina Hairston and all of the members who took time out of their schedule to address a very critically important issue. We're the second poorest, largest city in America. In order for us to address the issue of poverty, we have to make sure that we're making opportunities available for everyone here in the city of Philadelphia, regardless of their demographics, regardless of their zip code, regardless of their background. And so, I just want to thank all the members for your hard work. It's definitely a step in the right direction. Michelle, thank you for your legal expertise that you brought to the table. And like you reassured me early on, we've been here before. We know that there have been significant attacks from Washington, D.C. on Black and Brown people, to be quite frank with you, and also women and other individuals who have been marginalized in our society. And so, I remain committed to make sure we're leveling the playing field for everyone here in this great City of Philadelphia when it comes to making sure everybody has a seat at the table. And we have to be intentional about the changes that we want to see and this is why we are here. I'm a firm believer that power concedes nothing without a demand. It never has and it never will. And that's why we remain committed here. And to all the stakeholders who have participated in this process, I see the Economy League over there. Thank you, Jeff Hornstein, for stepping up to the plate, you and Kenyatta early on and saying we want to be a part of this conversation, but most importantly, not just a conversation and not just policy that sits on the shelf, but actually the action behind it to make sure we're addressing the issue. And so, with that being said, to everyone who took time out of your schedule on a very, very complex and I call it not-sexy issue, thank you for your dedication and making sure this is a priority. Thank you very much.
Council President Johnson, let me say this as the chronological senior person in the room, it's my experience that no system, no system is no 3 stronger than how it treats and deals with the least of us. And there is no demographic out there that will not suggest that the least of us in America are its disabled and Black and Brown citizens. Okay. That's just the facts. And so, the question is where does Philadelphia want to be going forward? What we just witnessed this summer shows what we can do when we work together. Philadelphia elevated its platform and got a positive reputation around the world. I can guarantee you that I was out of the country and people raved about their experiences and interactions with Philadelphia. But this issue right here is critical to the current and future determination, will we continue to evolve. Council President Johnson talked about the second lowest, poorest, what used to be the first. All right. So we've gotten ourselves one step above the bottom. Let's keep going. But if we don't deal with this, we won't get there. So we want to thank all of the witnesses for their participation today. Your testimony will help shape the committee's findings and the record supporting its final report. And absolutely know that we value your time and your insight. So, Councilman Johnson, I see you sitting down again. Is there anything else you want to say before we begin to wrap up?
I also just wanted to take a moment to acknowledge my staffer who has this particular issue in his portfolio. And he has stayed on this issue from day one. He has steadied the ship regarding this particular issue. And I work on a lot of issues in City Hall, right. And this is only near and dear to me because it's an opportunity for us to change people's lives. And the City of Philadelphia has always been a tale of two cities, where some folks are doing great and some folks aren't doing so great. And if we're not focusing on building generational wealth as a way to address the issue of poverty, institutional poverty that we have seen time and time again, then what's the purpose of us being here. So I just want to acknowledge Mr. Kareem Groomes for just taking time -- (Applause.)
-- staying on top of this issue. As my mentor Hardy Williams used to say, he stayed on the case consistently. And I just want to thank you, Kareem. It wasn't easy. This is not one of these issues where when you start working on it, people start coming out and just clapping and giving you kudos. Because we recognize part of it is us just addressing systemic and institutional racism and economic barriers for people of color and other marginalized people to have a seat at the table. But you stepped up to the plate and continuously stayed focused on making sure we got not only the report done, but also some legislation passed as well. And this is just the beginning. So thank you, Kareem. Continue to keep up the good work. And that's all I have. Thank you very much, Mr. Chairman.
Well, you always give your boss, in this case Councilman Johnson, the last word. And so, with that this concludes the public hearing portion of today's proceedings. We will now go into the public meeting of the Special Committee to consider adoption of the committee's final report. So, Mr. Groomes, will you please call the roll to take attendance for the public meeting.
Della Clark -- excuse me. We have Victoria Hosendorf for Della Clark.
Mr. Chair, thank you for recognizing the presence of the -- no, I'm the Chair. Sorry about that. I want to thank you for recognizing the presence of a quorum. The Chair now recognizes Co-Chair Hairston for a portion of the final report of the Special Committee.
I move that the Special Committee adopt its final report on the City's private sector diversity, equity and inclusion policies, that the Co-Chairs and Committee staff be authorized to make technical and editorial corrections to the report, including corrections to citations, figures and formatting, without further action of the committee and that the report, as corrected, be transmitted to Council President Johnson and the members of Council.
We have a first and a second. Ready for the question? So it has been moved and properly seconded that the Special Committee adopt its final report to authorize the Co-Chairs and staff to make technical and editorial corrections and to transmit the report as corrected to Council President Johnson and the members of Council. All those in favor of this motion will signify by saying aye. (Aye.)
Hearing none, the ayes have it. The final report is adopted. Technical corrections are authorized and the report will be transferred to Council President Johnson and the members of Council. Ms. Hairston, you have the final word.
This concludes the business before the Special Committee for today. On behalf of both Co-Chairs, thank you. And thank you to our witnesses, to the members of the Committee and to the public for your attendance. This hearing and public meeting are adjourned to reconvene at the call of the Chairs.
May you have a great Monday and not need your umbrellas. - - - (Special Committee on City and Private Sector Diversity Equity and Inclusion Policies adjourned at 12:15 p.m.) - - - C E R T I F I C A T I O N I, hereby certify that the proceedings and evidence noted are contained fully and accurately in the stenographic notes taken by me in the foregoing matter, and that this is a correct transcript of the same. ________________________________ TANEHA CARROLL