Office of Economic Opportunity Releases FY17 Disparity Study
City and quasi-public contracts reach near parity for utilization
of minority and women-owned firms

PHILADELPHIA – The City’s Office of Economic Opportunity released its Annual Disparity Study and Equal Opportunity Plan (EOP) Analysis companion reports for Fiscal Year 2017 (FY17), examining data from July 2016 to June 2017. The Disparity Study looks at availability and utilization of minority, women, and disabled-owned enterprises (M/W/DSBEs) on City and quasi-public contracts. The accompanying EOP Analyses report on participation of M/W/DSBE firms and the construction labor force on projects that require EOPs, those where the contract exceeds $100,000.

The FY17 Disparity Study, performed by Philadelphia-based firms Econsult Solutions, Inc. and Milligan & Company, LLC, analyzed the inclusion of M/W/DSBEs on $976 million in City and quasi-public contracts. The Study determined that 31.7% of this spending went to M/W/DSBEs, up from 30.7% in FY16 and moving closer to the participation goal of 35%. The value of contracts awarded to M/W/DSBE firms increased by 13.4%, from $216 million in FY16 to nearly $245 million in FY17. Philadelphia-based M/W/DSBEs accounted for 17% of City contracts in FY17, up from 15% in FY16.

Utilization trends are positive, with the report showing moderate growth in the availability of M/W/DSBE firms – 26.3%, up 0.7 percentage points over the prior year. When compared to M/W/DSBE availability in the Philadelphia MSA, FY17 utilization numbers yielded a disparity ratio of 0.99 – an improvement from the FY16 ratio of 0.90, but still slightly below the optimal disparity ratio of 1.0. Based on the near parity of availability and utilization, aggressive participation goals have been set for future years – 35% overall, 19.3% for MBEs, and 16.9% for WBEs.

“Once again, the annual Disparity Study shows Philadelphia making incremental progress towards providing equal access to opportunity for minority, women and disabled-owned firms, but we are not yet satisfied with where the City stands,” said Iola Harper, Deputy Commerce Director for the Office of Economic Opportunity. “Ambitious goals were set for FY17 and beyond with the expectation that it would take us some time to reach 35% participation. The Kenney administration is deeply dedicated to raising the bar for inclusion, and we will do all we can to ensure that more M/W/DSBEs are engaged on City and quasi-public contracting opportunities until the targeted disparity ratio is reached. While we experienced an improved disparity ratio of 0.99 in FY17, there is still a considerable amount of work to do. We want to increase capacity for available M/W/DSBEs to serve in the role of prime contractors and support aspiring business owners who could help to further diversify the pool of firms available to the City and quasi-public agencies.”

The study also identified a positive trend in the percentage of contract dollars with M/W/DSBEs serving in the primary position – 12.9% in FY17, up from 11.4% in FY16. Another notable trend, the average contract size for M/W/DSBEs primes, rose from $260,000 to $280,000. Despite the significant increase in contract size for M/W/DSBE primes, this still lags behind the value of non-M/W/DSBE primes, which average $390,000.

In addition to the analysis of M/W/DSBE availability and utilization, the Disparity Study also includes two EOP Analysis companion reports focused on usage of M/W/DSBEs relative to commitment levels and employment composition on EOP projects.

A review of contractor compliance on 469 active and closed projects with EOPs that reported data in FY17 showed 53.5% of the EOP projects met or exceeded their M/W/DSBE participation goals, while 77.1% of the projects achieved 90% or more of their participation goals based on contract dollars. When examining the number of contracts, 45.8% of projects met or exceeded their goals, while 78.3% achieved participation of 90% or more.

The companion report on employment composition includes the distillation of 887,000 employment hours worked by various trades on construction contracts from July 1, 2016 to June 30, 2017. Overall minority workforce participation was 31.1% for FY17, short of the stated 40% goal. With current availability at 45%, the recommended goal for minority participation in the workforce remains at 40% for FY18. The Study recommends African Americans be targeted for 22% of the workforce, Hispanic and Latino Americans for 15%, and Asian Americans for 3%. Women accounted for just 0.7% of workforce participation, well below the goal of 5%. Although current availability is just 3.3%, the recommended goal for FY18 has been set to 5%.

The FY17 Disparity Study and EOP Analysis supplements (participation and workforce) can be found online. An Executive Summary of all three reports is also available. The Office of Economic Opportunity commissions the studies on an annual basis in compliance with legislative requirements.

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