Philly City Council advances controversial contracting bill that Mayor Parker’s administration opposes

A Philadelphia City Council panel on Wednesday advanced a controversial bill changing the city’s contracting rules despite strong opposition from Mayor Cherelle L. Parker’s administration.

The legislation would end the city’s practice of allowing some agencies to grant contracts to nonprofits without going through the usual competitive bidding process, and Council’s Finance Committee approved it unanimously.

The vote came after 11 Parker administration officials submitted testimony saying the change would significantly burden city operations and make it more difficult for agencies to respond to emergencies. A handful of nonprofit leaders testified that the change could severely affect their bottom lines.

And Alexander DeSantis, the inspector general who recently wrote in a report that the city should reexamine the nonprofit rule, called the bill “overly broad and unnecessarily penal.”

But Majority Leader Katherine Gilmore Richardson said the change was a needed adjustment to improve fiscal oversight following revelations last year that the Office of Homeless Services had overspent its budget by contracting with nonprofits for millions of dollars beyond its budget.

During a briefing with reporters earlier this week, Gilmore Richardson implied members of Parker’s administration were “fear mongering” over her legislation, saying people from “inside and outside government” have scared nonprofits into thinking they may not receive city work if they have to bid for it.

“People are afraid of change,” she said.

The bill, which would take effect in July 2025, is scheduled to be considered by Council on first reading Thursday.

» READ MORE: Overspending in Office of Homeless Services could prompt change to Philly’s contract process

The showdown between a key Democrat on Council and the mayor’s administration comes as both sides are negotiating Parker’s first budget proposal, a critical moment for the new mayor who took office in January. Lawmakers and administration officials were hammering out details Wednesday with the goal of finalizing a deal by the time Council meets for its weekly session Thursday morning.

Under city rules, departments are typically required to issue a request for proposals — or a solicitation for firms to bid on a contract to provide services to the city — and then select the most qualified vendor offering the best price. The goal of the process is to eliminate political interference and fraud.

The exemption for nonprofits, which has been in place for about 20 years, allows for them to contract directly with agencies that work in emergency management and human services.

The Parker administration said eliminating it would impose an 80% workload increase for the city’s procurement department and could jeopardize existing contracts with providers that operate in time-sensitive situations.

» READ MORE: How Philly’s Office of Homeless Services overspent $15 million: ‘Things got away from everybody’

For example, the Department of Human Services uses the exemption to contract with case management providers in other jurisdictions to support children who are moved out of the child welfare system to live with relatives outside Philadelphia, said Vanessa Garrett Harley, the director of the Office of Children and Families.

And in written testimony, interim Health Commissioner Frank Franklin said the Department of Public Health has more than 240 contracts through the nonprofit exemption, including with contractors that respond to infectious disease outbreaks.

In addition, he wrote, the department’s relationships with small nonprofits could be severed if those organizations don’t have resources to compete with larger organizations applying for city work through the bidding process.

Gilmore Richardson told administration officials the intent of the legislation is not “to make your lives more burdensome,” and would “never” be used to negatively impact children or other vulnerable residents.

Several nonprofit leaders testified against the bill Wednesday. David Childs, executive director of the Lutheran Settlement House, a shelter and domestic violence center in Fishtown, said nonprofits are “not afraid of accountability.”

“What we’re looking for is predictable revenue,” he said. “We need to know that we’re not going to have that contract pulled for reasons other than our ability to serve our clients.”

And Will Gonzalez, executive director of the Latino development collective Ceiba, said the bill amounts to a “cure that could be worse than the disease.”

“Our Philadelphia nonprofit ecosystem is strong,” he said, “and an overall good partner of city government.”