Here’s how small businesses can get a bigger piece of the pie in Philly, advocates say
If you have experienced the magnificence of Cira Green, the 1.25-acre park nine stories above the bustle of Philadelphia's booming University City that offers lush lawns, refreshing breezes, and stunning views of downtown office towers, you have witnessed what extraordinary work the region's small-business community can do.
If only it could get more opportunities, advocates say.
Many obstacles stand in the way, including procurement processes by the city and major private-sector employers that aren't well-publicized and involve complex application procedures often beyond the capacity of resource-restricted small businesses. Those are among the findings in a new report by the Sustainable Business Network of Greater Philadelphia, an advocacy group.
"We're at least asking for a level playing field," said Melissa Muroff, an SBN board member and president of Roofmeadow, a 21-year-old, seven-member landscape architecture and engineering firm based in Mount Airy. Its most notable project is Cira Green, owned and developed by Brandywine Realty Trust. With an expertise in depth-limited environments, Roofmeadow was a subconsultant to Erdy McHenry Architecture on the $12 million project, the city's first elevated park, one that also includes a sophisticated storm water management system.
Philadelphia has 93,000 small-business owners, responsible for creating about 54 percent of all jobs, according to SBN. Yet for all their impact, they are a group feeling at a considerable disadvantage.
"Many businesses involved in the research indicated that they did not have the relationships they needed to successfully know about and bid on project opportunities," states the 17-page SBN report, "Local Procurement: An Evaluation of Barriers and Solutions from the Business Perspective." It contains nearly a dozen recommendations based on input from nearly 200 local independent businesses, with a particular focus on women, minority and/or disadvantaged-owned businesses.
"For the most part, we weren't surprised," Anna Shipp, executive director of SBN, founded in 2001, said of the research findings. "For the most part, this really validated what we've heard anecdotally."
The report was funded by $50,000 from the William Penn and Surdna Foundations and builds off SBN's 2011 call to action, Taking Care of Business: Improving Philadelphia's Small-Business Climate.
>> READ MORE: Diane Mastrull: Pointing out the obstacles
The goal of "Local Procurement" was to identify barriers that locally owned businesses face in accessing contract opportunities with local government and major companies and ways to help overcome them, Shipp said, citing a "perfect storm" of developments for its timing.
They included a 2014 report by the city Office of the Controller that found less than half of the more than $5 billion in annual purchases for goods and services by Philadelphia's universities and hospitals was spent on local businesses. That, combined with "a lot of anecdotal stories over the years from our members" about barriers to work with the city and its anchor institutions, along with a new city administration in January 2016, convinced SBN "it was the right time to do something more formal to engage our businesses and put on paper what some of these challenges were," Shipp said.
Overcoming them could be beneficial not only to small businesses but to the government entities and bigger businesses they want more chances to serve, Shipp said.
"We know there's a lot of highly capable, very brilliant businesses here in the city and the region, and to know that they're struggling to access these opportunities means that there's missed opportunities even for those anchors to connect with qualified local business," she said.
According to the 2014 Controller's Office report, every $1 million spent by anchor institutions with local vendors supports 10 additional local jobs, and if that spending increased by 25 percent, it would mean $1 billion in additional local expenditures each year, support an additional 4,400 jobs, and increase annual tax revenue for the city by about $14 million.
The SBN report acknowledges that progress has been made since then, such as Mayor Kenney creating the Chief Administrative Office, tasked with modernizing and improving the efficiency of city services. And in May 2017, Philadelphia voters approved a ballot question that gives small businesses a better shot at nonprofessional services contracts by allowing for such work to be awarded based on "best value" rather than lowest price. Pricing is often where small businesses are at the greatest competitive disadvantage.
Among SBN's recommendations:
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• Help businesses build stronger relationships with important procurement contacts.
• Support collaborations between small businesses to enhance their ability to successfully respond to requests for proposals (RFPs).
• Increase local businesses' awareness of relevant RFPs.
• Provide overview training on the procurement processes followed by the city and other major employers.
• Create more opportunities for small businesses to bid directly through smaller contracts or as subcontractors on projects.
"At the end of the day, we want to be a good vendor partner," said Christine Derenick-Lopez, Philadelphia's chief administrative officer. "The city needs services from folks out there. … The more competition, the better pricing we're going to have."
Derenick-Lopez said the SBN report "reaffirms" some of the changes her office has been working on with the Office of Economic Opportunity to improve the process for engaging the vendor community. That includes speeding up payments to businesses doing work for the city, and executing contracts faster.
Derenick-Lopez said her office intends to meet with chambers of commerce and other business advocacy groups to help demystify city procurement processes. It is also working with individual city departments to help ensure predictability and transparency around RFPs, and to provide small businesses with prebid opportunities to evaluate projects and network with larger companies for possible subcontracting opportunities.
Much like what Roofmeadow did on Cira Green, a private job. Muroff said she mostly avoids government work.
"My sense has been that there are sort of a handful of firms that do work for the city and the lead firms are going to be big firms and unless you're embedded with one of those handful of big firms already, it's not likely even worth the time [to respond to an RFP.] You're not likely to win," Muroff said.
Marc Coleman's Philadelphia-based software development company of 15 employees, the Tactile Group, has managed to get some substantial city work. Last year, that included designing and developing a website for Philadelphia's pitch to land Amazon's second headquarters.
"It's tricky," Coleman said of securing city work. "You have to really know where to look for the opportunities."
Winning private work is even harder, he said.
"The kind of larger enterprise businesses we'd work with have their set vendors they work with all the time, or they are lowest priced," Coleman said. "There's nothing I can do to win that work."
Muroff emphasized she and SBN are not advocating for pity work.