Philly’s small businesses face hurdles in winning contracts

While Philadelphia and some universities have streamlined the contracting process to make local, smaller firms more competitive, some business owners said they still face burdensome requirements that keep them from competing.

El Merkury owner Sofia Deleon said registering as a woman- or Latino-owned business has been too time-consuming to complete while running a Center City restaurant. Just a portion of the application required 34 pages of information, she said.

“As a business owner who is working on the business all the time, it’s really hard to actually finish, unless I had a secretary, an assistant, or a team whose job was specifically to be filing these forms,” she said.

Winning a contract from one of Philadelphia’s big companies, nonprofits, or government agencies represents a breakthrough for a small business, giving a boost in revenue and credibility. But among the obstacles in getting a contract is the size of the business itself. That’s an issue in a city where more than three-quarters of stores or workplaces belonged to small businesses in 2016, according to the latest figures from Pew Charitable Trusts. And most businesses owned by people of color are small.

“It’s a really important area that needs attention if we’re going to stabilize and rebuild our economy with localism and equity,” said Anna Shipp, executive director of the Sustainable Business Network (SBN) of Greater Philadelphia, a small business advocacy group.

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A 2018 SBN survey found that local small businesses face many challenges in securing contracts, from weak professional networks to not knowing about opportunities. A small business typically doesn’t have employees dedicated to seeking out contracts. Then there’s the cumbersome and confusing paperwork that comes with submitting a proposal or getting certified as a woman- or minority-owned business, costing time and money.

The Kenney administration has rolled out an online procurement system, where companies can find and apply for contracts. After always awarding certain contracts to the lowest bid, the city shifted its priority to “best value” in 2017, considering additional factors such as expertise and diversity, said Stephanie Tipton, the city’s chief administrative officer. And as of last year, the city can undergo an informal solicitation process for contracts worth $34,000 or less, such as simply emailing vendors to obtain proposals.

“We’ve tried to modernize different aspects of the process,” Tipton said. “We recognized that as a city, we were really behind the times when it came to how we awarded certain types of bid contracts.”

Last year, the city awarded 58% of its supplies, equipment, and public works contracts to local businesses, or more than $200 million, said city spokesperson Mike Dunn. For professional services contracts, 65.2% were awarded to businesses having a Philadelphia zip code in fiscal 2020.

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Still, winning a contract is not easy, some business owners said. James Jackson, who owns a Philly-based photo production business, said he sought a $30,000 city contract to shoot photos for the Water Department. The city’s request for proposals (RFP) asked for a copy of an annual audit, he said, even though he could carry the contract’s cost on his credit card. He said his business is too small to be regularly audited.

“The RFP process is really designed for larger businesses,” Jackson said.

Jackson, who is Black, registered his Light Thief Productions as a minority-owned business, so companies looking to diversify their vendors can easily find him online. But even that was a hassle. The application asked for copies of his parents’ birth certificates, tax returns, and bank documents for the last few years

“They asked me for more information than I needed for my FBI background check” for international travel, he said.

Drexel University hopes to address these barriers. The school accepts vendors who self-identify as minority-owned businesses without requiring official certifications, said Julie Jones, Drexel’s associate vice president of accounts payable and procurement service.

A few years ago, Jones hired a “director for supplier inclusion” who aids businesses with the proposal process and helps firms become certified, so they can pursue opportunities outside Drexel, too.

“I look at it more from the challenges that our suppliers face to even get to be known or get their information out there,” Jones said. “How frustrating it must be for them.”