Barriers Facing Minority- and Women-Owned Businesses in Pennsylvania

Chapter 2

Contracting and Procurement of Goods and Services in Pennsylvania

Overview of the Contracting and Procurement Process

When a state or municipal agency wishes to obtain a particular product or service, the agency either buys the product directly or solicits the best price from supply companies. Frequently, the agency contracts with a prime contractor, who in turn subcontracts portions of the work to smaller firms. An agency, or a prime contractor hired for the job, will issue a “request for proposal” (RFP), which announces to the public that it wishes to receive bids from firms interested in performing the work. The RFP must be sufficiently detailed in describing the supply or service being sought so that bidders can submit responsive proposals and prices.

Each proposal or offer includes a proposed timeline for completing the job and may list a firm’s unique qualifications. Firms wanting to perform the work must meet prequalification requirements in addition to furnishing bid and performance bonds and other items.[1] Prequalification means a municipality has given a rating to a business regarding its ability to perform specified work.[2] Once ratings are issued, firms can bid on the projects.[3]

Most bidders must be bonded at the time of the bid. A “bid bond,” guarantees that the bidder will enter into the contract if awarded.[4] A “performance bond,” guarantees that a firm will complete the terms of the contract. Bonds are a necessary protection for the agency because they ensure that in the event firms cannot complete the project, the bonding company will reimburse the project owner for the portions of the job left undone. Virtually all firms include the bond cost in their bid. A project owner or municipality will issue a notice to the prime contractor to proceed; the prime contractor will advise subcontractors to begin work on their portions of the job.

Contractors are encouraged, but not required, to do business with M/WBEs. Additional procedures have been established to help prime contractors and municipal agencies identify and contract with M/WBEs. State and municipal governments certify businesses as minority- or women-owned or disadvantaged, a process known as “certification.”

In Pennsylvania, certification can be obtained either through the state Bureau of Contract Administration and Business Development (BCABD) or from local agencies such as the Minority Business Enterprise Council in Philadelphia (see below).[5] Once certified, a firm is placed on a list of subcontractors, which is referred to the prime contractor, who can then direct bid opportunities to these firms. Municipal projects may include participation goals for minority workers on the project.[6]

Contracting with the State of Pennsylvania[7]

In 1998, the state revised the contract and procurement procedures that had been in place for 60 years on the grounds that they resulted in inefficiency, delay, and barriers to productive business.[8] The new procedures consolidate various state agency practices into a unified method of procurement administered by the Pennsylvania Department of General Services. The department is the primary purchasing agency for executive and independent state agencies for supplies, services, and construction that exceed prescribed limits.[9] BCABD is an agency of the Department of General Services and the primary state agency charged with assisting M/WBEs.[10] It administers the statewide M/WBE and contract compliance programs, provides training and consulting to M/WBEs, and investigates businesses and contracts to ensure fairness.[11]

State agencies are required to purchase goods[12] and services through a competitive process using invitations for bid (IFB) or a request for proposal (RFP).[13] An IFB is used when the supply, service, or construction is satisfactorily described and the price is the only factor in the award. Contracts are awarded to the qualified firm offering the lowest price. An RFP, on the other hand, is issued when an agency recognizes a need for a service and wants to determine the best way to secure the service. Contractors respond with a written proposal that recommends how the agency can best fulfill that need. Proposals are evaluated by a committee of experts.

Small purchase contracts—procurements for supplies, services, and construction under $3,000—can proceed without soliciting bids. For goods under $10,000, agencies can make their own procurements using an informal bid procedure. For contracts over $10,000, the Department of General Services awards contracts to the lowest “responsible and responsive” bidder based on a competitive, sealed bid process—the IFBs are announced to the public.[14]

There is an expressed statewide commitment that state agencies are to use M/WBEs as suppliers of goods and services.[15] The state encourages all contractors to recruit M/WBEs to serve as subcontractors on the project or use M/WBEs that have a substantial number of minority employees. No mandatory percentage of M/WBE utilization is imposed.[16] All state contracts include suggested minimum M/WBE participation levels specified in each IFB. Except for construction, the state standard for M/WBE participation is five minority- and three women-owned firms per project.[17] For those IFBs where the total estimated amount is expected to exceed $100,000, BCABD establishes recommended participation levels for M/WBEs.

In the RFP process, contracts are awarded according to a point system. Each proposal is evaluated, and points are assigned for the technical aspect of the proposal, cost, socially and economically restricted business (SERB) participation, and other possible factors.[18] The total of these points determines which firm will be awarded the contract. Firms that qualify as SERBs or prime contractors that partner with a SERB—a small business with annual revenue not exceeding $8 million, and whose economic growth and development have been restricted because of social or economic bias—in a joint venture or subcontracts to them are ranked ahead of other bidders for the job. BCABD-certifies such businesses as minority-and women-owned business enterprises, other disadvantaged businesses, or businesses with a primary headquarters facility within one of the state’s 42 enterprise zones.[19] Many SERB companies are too small to bid as prime contractors; however, they can serve as subcontractors and enter into joint ventures with other businesses.[20] The SERB program encourages prime contractors to consider SERBs when seeking supplies and services that the prime contractor cannot provide.[21]

Four units within BCABD support M/WBEs by offering certification, evaluation, investigation, and training services:

Certification Unit. This unit identifies and certifies M/WBE vendors for the state’s procurement needs and forwards names of certified M/WBEs to federal, state, and local government agencies for possible contracting opportunities. The number of certified firms fluctuates. As of January 2000, there were 1,103 businesses (332 minority, 763 women) certified by BCABD as M/WBE vendors, a decline of 65 businesses since reported by the agency in December 1998.[22] To be certified as an M/WBE, the firm must be one of the following:

The Certification Unit maintains a list of certified M/WBEs and monitors state contract awards to ensure sufficient M/WBE utilization.

Evaluation Unit. This unit examines the participation of SERBs in state contracting and reviews firms applying for certification. Before issuing an RFP, the unit recommends a desired level of SERB participation.[24] The unit returns the RFP to the state agency, which then awards the contract to the bidder with the highest score. The score is based on points assigned for various technical aspects of each proposal, including SERB participation.[25]

Investigation Unit. This unit performs on-site reviews of firms that apply for M/WBE certification, responds to complaints of discrimination in fulfilling state contracts, and investigates alleged fraud in programs involving M/WBEs.[26] As of December 2001, it was reported that the unit reviews four complaints a month.[27] The unit will initiate an on-site review if it is unclear whether minorities or women have a sufficient ownership interest and/or control in the firm. The unit recommends to a certification board that it rescind or deny certification. In 2000, the board denied 216 certification files.[28]

Training and Development Unit. This unit provides free training programs, counseling, and resource material to certified M/WBEs and organizations that assist small businesses.[29] In 1999, the unit conducted more than 100 training workshops with approximately 1,000 participants. In 2000, the unit held 121 events, reaching 1,402 participants, 853 of whom were MBEs and WBEs.[30] Training is also provided to state agency purchasing agents, and referral lists of certified M/WBEs are given to state and local government agencies and private companies.[31] The unit encourages business owners to seek certification in order to compete for state government contracts.[32]

Five other offices in state government provide financing and assistance to M/WBEs, and are located in the Department of Community and Economic Development and the governor’s office:[33]

Entrepreneurial Assistance Office. In 1995, then-Governor Tom Ridge created the Entrepreneurial Assistance Office to serve as the lead state agency for small-business development. The office encourages and supports entrepreneurs and small-business owners by offering technical assistance and services to promote the creation, expansion, and retention of successful small businesses. Through a toll-free number and Web site, small-business counselors provide information and answer questions about starting and operating a business in Pennsylvania, including licenses, permits, certification, and state and federal funding sources.

The office also serves as the state’s coordinating office for 14 Procurement Technical Assistance Centers, which offer one-on-one technical assistance to businesses seeking to secure local, state, and federal procurement opportunities. The centers assist M/WBEs by offering certification assistance, introducing them to prime contractors, and conducting workshops.[34]

Two advocate positions are housed within the Entrepreneurial Assistance Office, the minority business advocate and the women’s business advocate, which plan and implement strategies and programs to attract, retain, and expand M/WBE activity. These two full-time advocates promote the interests of M/WBEs by consulting and intervening with other state and government agencies, and networking and partnering with public and private entities on behalf of M/WBEs. They address unique challenges of M/WBEs through conferences, workshops, and statewide training programs.[35]

Coalition of Small Business Advocates. In 1998, the Ridge administration created the Coalition of Small Business Advocates composed of representatives from the Governor’s Advisory Commission on African American Affairs, the Governor’s Advisory Commission on Latino Affairs, BCABD, Pennsylvania Weed and Seed, and the Pennsylvania Commission for Women.[36] The Coalition promotes the interests of small, minority, and women businesses and identifies common barriers to their success. Coalition members assist M/WBEs by sponsoring marketing counseling, conferences/workshops on business development, and in collaboration with public and private entities, training programs.

Pennsylvania Capital Access Program (PennCAP). PennCAP provides loan guarantees (up to $500,000) to small businesses and nonprofit organizations that ordinarily might not qualify under traditional lending programs. Borrowers apply for the guaranteed loans through four participating banks. As of November 1999, the program had awarded 228 loans, totaling $8.9 million.[37]

Pennsylvania Minority Business Development Authority. The Authority provides loans ($25,000 to $750,000) to state residents who own or control a minority business enterprise. To be eligible for a loan, the funds must be intended to provide working capital, purchase machinery or equipment, or defray the cost of acquiring or renovating land or buildings.[38] For loans under $100,000, all firms must (within three years) create or preserve at least one permanent, full-time job (or equivalent part-time jobs) for each $15,000 in loan proceeds.[39] For instance, if a loan totaled $30,000, two staff positions must be created.

Small Business First Fund. The Fund, established in 1998, provides economic development loans to small businesses located within distressed communities. Loans are offered at a 2 percent interest rate and can be used for working capital or to finance the purchase of land, buildings, and equipment.[40]

Contracting with the City of Philadelphia

Philadelphia also uses a competitive bidding system for the acquisition of services, supplies, equipment, and construction.[41] Eighty percent of the city’s goods and services are competitively purchased.[42] Procurements exceeding $11,000, must be publicly advertised in local newspapers. For large or complex procurements, the Procurement Department may utilize a prequalification process to review a vendor’s qualifications and ability to perform the job.[43] Bids must be “responsive” to the city’s bid requirements and any requirements for M/WBE participation.[44] Goals and participation ranges are established for each bid to ensure participation of M/WBEs and businesses owned by people with disabilities.

The city created the Minority Business Enterprise Council (MBEC) to ensure the inclusion of businesses owned by minorities, women, and people with disabilities in city contracts for goods and services. In addition to implementing and monitoring the city’s affirmative action policies, MBEC certifies minority-, women- and disabled-owned business enterprises,[45] evaluates bid packages and potential contract awards, and monitors these awards.[46]

The average processing time for MBEC certification is four to six months.[47] Certified businesses are reviewed every three years, and MBEC publishes a directory of certified firms for use by prime contractors and developers of city agency projects. MBEC reviews purchase requisitions, bids and contract documents, compliance plans, and monthly compliance reports of 36 boards and agencies.[48] It also reviews all bids to ascertain whether discrimination had occurred in the solicitation of contractors, tracks M/WBE participation in city contracts, and performs investigations and site visits to uncover incidents of discrimination.[49] And since 1996, MBEC has provided sensitivity and diversity training to city and quasi-city agencies, and offered technical assistance and training to encourage the use of M/WBEs and small businesses. For M/WBEs, it has held one-on-one development sessions and conducted seminars and forums on contracting opportunities.[50]

History of the Philadelphia Set-Aside Program

In 1982 the Philadelphia City Council enacted ordinance 17-500, which mandated specific set-aside goals for M/WBEs in all city contracts (15 percent for minority-owned, 10 percent for women-owned). In addition, the program created a sheltered market—designating a class of contracts on which only certified M/WBEs could apply.[51] In the late 1980s, the ordinance was amended to require that participating businesses be disadvantaged[52] and added a 2 percent contracting goal for businesses owned by persons with disabilities.[53]

The Philadelphia program was soon affected by national developments in affirmative action. The U.S. Supreme Court’s 1989 Croson decision, declaring the city of Richmond’s set-aside program unconstitutional, ushered in a strict standard of review for all state and local set-aside programs.[54] That same year, nine Philadelphia area contractors’ associations challenged the constitutionality of ordinance 17-500 in federal district court.[55] In defending the ordinance, the city claimed that private and city prime contractors and contractors’ associations discriminated against minority- and women-owned businesses and that two prior programs—the early Philadelphia Plan and a Philadelphia Urban Coalition model—had failed to remedy past discrimination in the construction industry, thus justifying the need for ordinance 17-500.[56] The court ruled that the ordinance was unconstitutional. On appeal, the Third Circuit partially vacated the district court ruling. A new trial was ordered to determine if there was sufficient evidence of discrimination to support the city’s use of goals for African American-owned business participation in city construction contracts.[57] The new trial, held in 1994, resulted in a ruling favoring the contractors’ associations. The court found that the city failed to identify racial discrimination in the Philadelphia construction industry to warrant the use of a race-based remedy for African American construction firms.[58] The city appealed unsuccessfully to the Third Circuit and the U.S. Supreme Court.[59] (Appendix 3 provides a detailed timeline of court developments.)

The Brimmer Disparity Study

In response to the legal challenge by the contractors’ associations in 1989, the city initiated a disparity study to support its argument that M/WBEs experienced discrimination in city contracting. The study conducted by Brimmer & Company Inc. (a financial and economic consulting firm) was completed in 1992 and was presented to the district court. Brimmer’s analysis compared the percentage of participation (in dollars) of minority groups in citywide public works contracts with their percentage composition in the Philadelphia area construction business to reach a disparity index.[60]

From this analysis, Brimmer concluded that:

Ultimately, the U.S. Court of Appeals for the Third Circuit ruled in 1996 that the city’s set-aside program for minorities and women was unconstitutional based on the Croson standard.[65] The court noted that even with Brimmer’s findings, the city lacked evidence to prove that the ordinance (17-500) was passed with more than a generalized assertion of past discrimination, and that the city could have attempted to include race-neutral or less burdensome measures but chose not to. This ruling eliminated the city’s set-aside program and left the city to find new evidence that discrimination existed in city contracting for this class of minority- and women-owned businesses.

D.J. Miller & Associates—The Second Disparity Study

In September 1995, prior to the Third Circuit’s ruling, the city of Philadelphia and a group of quasi-public city agencies decided to conduct a business utilization study (covering the period 1983 to 1995) to determine if there was underutilization of M/WBEs that could be traced to discriminatory practices by the participants. The underlying rationale was that if the study were to conclude that discrimination did exist, this finding could be used to justify adopting a race- and gender-conscious preference program to correct discrimination in contracting, consistent with the Croson standards.[66] Under the terms of the request for proposal (RFP), the city sought a consultant who could:

D.J. Miller & Associates (a Georgia-based consulting firm) was selected in 1995 to complete the study within 12 months at an initial cost of nearly $1 million.[68] Among other things, D.J. Miller contracted to:

To fulfill its contractual obligations, D.J. Miller agreed to interview city agency officials, prime contractors, M/WBE owners, and professional association and educational institution officials; analyze prior utilization studies and records held by public agencies as to allegations of discrimination made against contractors, subcontractors, vendors, consultants, and local government agencies; compile and analyze hiring and other employment data; and assist the city, if necessary, in revising its existing M/WBE programs.

Status of the D.J. Miller Disparity Study

Although the original target date for the completion of the D.J. Miller study was November 1996 (12 months from the date the contract was signed),[69] the current status of the study is unclear and its findings are not available to the public. In April 1999, the Advisory Committee was informed that the report was unavailable for distribution—two and a half years after the deadline—because the city did not “consider” the computerized database provided by D.J. Miller complete.[70] The Committee also learned that an outside consultant from the University of Pennsylvania was chosen to review the D.J. Miller study findings.

Concerned about the unexplained, prolonged delay, the Committee has worked diligently to learn the reason for the delay in completing and releasing the study. The Advisory Committee encountered unusual difficulty from city officials in obtaining specifics of the D.J. Miller and Brimmer disparity studies, and the nature of the audit by the University of Pennsylvania consultant. The following observations are made to illustrate the Committee’s difficulty.

In April 1999, the Advisory Committee requested that MBEC provide a copy of the Brimmer report, public records concerning the D.J. Miller contract, and any initial findings given to the city.[71] In June 1999, MBEC forwarded a copy of the RFP, D.J. Miller’s proposal, and the signed contract.[72] However, MBEC elected not to furnish any initial findings by D.J. Miller, claiming that since the contract had not been completed, release of information relating the study would violate provisions of the contract.[73] MBEC also claimed that it was not the custodian of the Brimmer report and that the city of Philadelphia’s Law Department could not locate a copy.[74] When attempts were made to obtain a copy from Brimmer & Company directly, Commission staff was told the report could only be forwarded by the city. The Committee next turned to the Department of Records, the primary city agency charged with maintaining city records. The Department of Records advised staff that it also did not have a copy of the report. Because MBEC, the city’s Law Department, and the Philadelphia Department of Records could not locate the Brimmer report, the Advisory Committee resorted to contacting a witness in the contractors’ associations case, who forwarded a copy to staff.

This inability to locate a document key to the city raises concerns about the record keeping in both MBEC and the Law Department. Even though city records are required to be maintained for a specific time period and can be disposed of, the Brimmer report is central to MBEC’s historical record and should have been retained and ultimately forwarded to the Department of Records for archiving.[75]

Second, in early July 2000, the Advisory Committee solicited responses to its draft report from agencies mentioned in the report, including MBEC, and provided them an opportunity to comment on the draft sections. As part of this request, the Committee again posed detailed questions about the D.J. Miller study. Receiving no response, the Committee contacted Philadelphia Mayor John Street’s office for assistance, inviting him to its July 2000 planning meeting. The Committee wanted his help to obtain details regarding the D.J. Miller report and invited him to make comments concerning his administration’s efforts to assist M/WBEs.[76] Although the mayor could not attend, a representative from the office of the city attorney spoke with the Committee and suggested a meeting between the members and MBEC representatives.

In September 2000, staff and members of the Committee met with James Roundtree, director of MBEC, to seek clarification of MBEC’s role and the current status of the D.J. Miller study.[77] Roundtree informed the Committee that MBEC expected the consultant to complete his review by January 2001. Once the disparity study was completed, Roundtree said he planned to request that City Council members conduct hearings in
winter 2001 on M/WBE development.[78] He believed hearings would set the stage for the city to assess what changes in procurement are necessary and discuss new programs that could be developed to assist M/WBEs.[79] Mr. Roundtree also made assurances that he would forward information to the Committee regarding the D.J. Miller study and the audit.

As follow-up to this meeting, staff wrote to MBEC in October 2000 requesting various documents that would describe MBEC’s activities, future plans, and details concerning the audit of the D.J. Miller study.[80] The request noted the Committee’s urgent need for this information so that it could timely complete its report. In fulfilling the request in November (almost two months after the Committee’s meeting with Mr. Roundtree), MBEC forwarded financial plans and disadvantaged business enterprise utilization annual reports to the Committee. However, these documents merely reference the study and audit, and provide no details. Thus, once again, no adequate response was given to the Committee’s request for information about the D.J. Miller study or audit (see chapter 6, findings and recommendations).[81]

[1] Additional required items include financial statements, a list of corporate officers, and references.

[2] Note that in city of Philadelphia contracts, prequalification is done project by project. See Michelle D. Flamer, senior attorney, City of Philadelphia Law Department, written comments to the Pennsylvania Advisory Committee regarding draft report, submitted at the Committee’s Aug. 17, 2000, planning meeting (hereafter cited as Flamer Comments).

[3] Note that in city of Philadelphia contracts, subcontractors do not bid directly to the city. Ibid.

[4] Ibid.

[5] Certification can also be obtained through other state or federal agencies depending on the nature of the project. For instance, on transportation-related projects, certification can be issued by the South Eastern Pennsylvania Transit Authority or the U.S. Department of Transportation.

[6] Steven K. DiLiberto, “Setting Aside Set-Asides: The New Standard for Affirmative Action Programs in the Construction Industry,” Villanova Law Review, vol. 42, 1997, p. 2054.

[7] As part of its affected agency review, the Advisory Committee received useful suggestions and factual corrections to its report from Gary N. Lee, director, Bureau of Contract Administration and Business Development (BCABD). However, not every suggestion or issue raised was incorporated, and the unincorporated suggestions and issues are noted in the margins of appendix 6. Subsequent to this exchange, the Eastern Regional Office received in March 2002 Mr. Lee’s response dated Dec. 17, 2001. The factual clarifications provided in this letter have been incorporated, but the letter is not appended in this report.

[8] Gary E. Crowell and Gary F. Ankabrandt, Pennsylvania Department of General Services, Commonwealth Procurement Code: Statutory Blueprint for Modernizing and Streamlining the Commonwealth’s Purchasing Practices, 1998, p. 4. Procurement is defined as “buying, purchasing, renting, leasing, licensing or otherwise acquiring any supply, service, or construction. The term also includes all functions that pertain to the obtaining of any supply, service, or construction, including description of requirements, selection and solicitation of sources, preparation and award of contract and all phases of contract administration.” Pennsylvania Department of General Services, Field Procurement Handbook, 1998, p. 9.

[9] 62 Pa. Cons. Stat. § 301 (2001).

[10] The Bureau of Purchases and the Bureau of Public Works also deal with state contracts. The Bureau of Purchases contracts for the sale of commodities, such as agricultural machinery, electric and electronic products, furniture, and lumber, and handles all open market purchases valued over $10,000. The Bureau of Public Works administers the selection of architects and engineers, advertises projects for bids, obtains construction bids, executes construction contracts, manages budgets for construction projects, provides engineering and architectural services to state agencies, etc. See Pennsylvania Department of Community and Economic Development, How to Secure Contracts with Pennsylvania Agencies, May 3, 1999, accessed at <>.

[11] BCABD is also required to develop and maintain a list of certified M/WBEs, provide technical assistance, prepare reports, and develop a computerized management system.

[12] If goods are not available from a central warehouse, state agencies (through their purchasing agents) can solicit bids and make awards for purchases up to $10,000. Firms must be on a bidders list maintained by the Bureau of Purchases.

[13] Pennsylvania Department of Community and Economic Development, How to Secure Contracts with Pennsylvania Agencies.

[14] See 62 Pa. Cons. Stat. §§ 511, 512 (1999).

[15] 62 Pa. Cons. Stat. § 2101 (1999).

[16] Pennsylvania Department of General Services, “General Conditions and Instructions to Bidders,” Feb. 17, 1999.

[17] Betty Miller, BCABD, telephone interview with Marc Pentino, Eastern Regional Office, USCCR, Jan. 6, 2000.

[18] Gary N. Lee, director, BCABD, letter to Marc Pentino, Eastern Regional Office, USCCR, Oct. 11, 2001, in response to affected agency review request.

[19] Pennsylvania Department of General Services, Field Procurement Handbook, 1998, p. 11. The number of enterprise zones is expected to be reduced to 20 by July 1, 2004. One staff person is assigned as the enterprise zone coordinator. See David Messner, program manager, Pennsylvania Department of Community and Economic Development, Office of Community Development, Enterprise Zone Program, letter to Marc Pentino, Eastern Regional Office, USCCR, June 30, 2000; and Messner, telephone interview with Marc Pentino, Eastern Regional Office, USCCR, Jan. 4, 2000.

[20] Gary N. Lee, director, BCABD, letter to Marc Pentino, Eastern Regional Office, USCCR, Oct. 11, 2001, in response to affected agency review request.

[21] Ibid.

[22] Note that some businesses are counted as both a minority- and women-owned firm. Betty Miller, BCABD, telephone interview with Marc Pentino, Eastern Regional Office, USCCR, Jan. 6, 2000. For the 1998 total, see BCABD Summary Report, forwarded by Gary N. Lee, director, BCABD, to Marc Pentino, Eastern Regional Office, USCCR, Dec. 21, 1998.

[23] Pennsylvania Department of Community and Economic Development, How to Secure Contracts with Pennsylvania Agencies. 

[24] Ibid., p. 90.

[25] Of the maximum number of points assignable, a company can earn up to 100 percent of the allowable points if the prime bidder qualifies as a SERB, up to 90 percent if the prime enters into a joint venture agreement with a SERB, or up to 50 percent if subcontracting to SERBs. See BCABD, “Socially and Economically Restricted Business Program (SERB),” fact sheet, n.d (hereafter cited as BCABD fact sheet).

[26] Ibid.

[27] Gary N. Lee, director, BCABD, letter to Marc Pentino, Eastern Regional Office, USCCR, Dec. 17, 2001.

[28] Ibid.

[29] BCABD fact sheet.

[30] “Annual Activities Statistics for 2000—BCABD Training and Development Unit,” Gary N. Lee, director, BCABD, letter to Marc Pentino, Eastern Regional Office, Oct. 11, 2001, in response to affected agency review request.

[31] Usha Hannigan, BCABD, telephone interview with Marc Pentino, Eastern Regional Office, USCCR, Jan. 6, 2000.

[32] For additional unit services, see appendix 6. “Annual Activities Statistics for 2000—BCABD Training and Development Unit,” Gary N. Lee, director, BCABD, letter to Marc Pentino, Eastern Regional Office, USCCR, Oct. 11, 2001, in response to affected agency review request.

[33] Additional offices not mentioned include the Office of Minority Lending, which provides loans and equity guarantees to disadvantaged firms, and the Governor’s Action Team, which serves as a primary contact for Fortune 500, manufacturing, and high-tech business expansion in Pennsylvania. As part of the initiative, staff recruits M/WBEs to participate in international trade missions.

By filling out a single application through the Department of Community and Economic Development, businesses can apply for funding from the various agencies. The application is on the Internet at <>.

[34] Joyce O’Brien, Entrepreneurial Assistance Office, Pennsylvania Department of Community and Economic Development, letter to Marc Pentino, Eastern Regional Office, USCCR, July 11, 2000. 

[35] In 1999–2000, “the Minority Business Advocate’s activities included a series of statewide ‘Practical Solutions’ seminars dealing with credit lines, low interest loans, technical assistance, and credit repair for minority business owners in six regions and a minority business plan competition held in Philadelphia which generated 84 business plans. Five winners received $25,000 each from the EAO resource funds. The women’s business advocate partnered with numerous Small Business Development Centers, professional women’s organizations, banks and chambers of commerce to sponsor workshops, annual awards for women entrepreneurs, women business owners networking luncheons and Entrepreneurs Ahead: Annual Women Business Owners conference. The office also sponsored the 5th Annual Pennsylvania Best 50 Women in Business program to honor women who share a commitment to business growth, professional excellence and the community. In addition, both advocates participated in numerous SBA economic development tours to meet with and counsel small business owners one-on-one.” Joyce O’Brien, Entrepreneurial Assistance Office, Pennsylvania Department of Community and Economic Development, letter to Marc Pentino, Eastern Regional Office, USCCR, July 11, 2000.

The Committee acknowledges the contribution to this section by Joyce O’Brien, Entrepreneurial Assistance Office, Pennsylvania Department of Community and Economic Development. See O’Brien letter to Marc Pentino, Eastern Regional Office, USCCR, July 11, 2000.

[36] Pennsylvania Department of Community and Economic Development, Coalition of Small Business Advocates, “Ridge Administration’s Coalition of Small Business Advocates Hosts Community Roundtable in Philadelphia,” press release, Mar. 13, 2000, accessed at <>.

[37] Cathy Onyeaka, program manager, Pennsylvania Economic Development Financing Authority, letters to Marc Pentino, Eastern Regional Office, USCCR, Jan. 4, 2000, and July 6, 2000. A one-time enrollment fee of 0.5 percent to 3 percent of the loan amount is charged.

[38] See generally Pa. Cons. Stat. §§ 390.1–390.18 (2001).

[39] Id. Generally, the process to receive a loan takes approximately 120 days from the application to receipt of funds.

[40] The department publishes a list of area loan organizations where applicants can apply for a loan.

[41] Bids are designated under five classifications: advertised, public works bids, small order purchases, concession bids, and surplus property bids.

[42] Minority Business Enterprise Council (MBEC), 1994 Annual Report, p. 3.

[43] City of Philadelphia Procurement Department, Vendor’s Guide, How to Do Business with the City of Philadelphia, June 1999, p. 10.

[44] Ibid., p. 25.

[45] MBEC uses the initials M/W/Ds-DBEs to refer to minority, women, disabled, and disadvantaged business enterprises.

[46] See City of Philadelphia Procurement Department, Vendor’s Guide, pp. 35–36; Exec. Order No. I-93, Philadelphia, Pa. Code § 17-500 (1999); City of Philadelphia, Five-Year Financial Plan (FY 2000–2004), Jan. 26, 1999, p. 366.

[47] MBEC, 1994 Annual Report, p. 2.

[48] Ibid.

[49] Exec. Order No. I-93 § 4, Philadelphia, Pa.

[50] James Roundtree, director, MBEC, interview, MBEC office, Sept. 25, 2000. See also City of Philadelphia, Five-Year Financial Plan (FY 2000–2004), Jan. 26, 1999, p. 369.

[51] MBEC, 1994 Annual Report.

[52] Disadvantaged business enterprises are businesses with at least 51 percent ownership by one or more socially and economically disadvantaged individuals. Philadelphia, Pa. Code § 17-500 (1999).

[53] MBEC, 1994 Annual Report, p. 1. See also Flamer Comments.

[54] See Steven K. DiLiberto, “Setting Aside Set-Asides: The New Standard for Affirmative Action Programs in the Construction Industry,” Villanova Law Review, vol. 42, 1997, p. 2039; City of Richmond v. J.A. Croson Co., 488 U.S. 469 (1989). See also Ohio Advisory Committee to the U.S. Commission on Civil Rights, The Impact of the City of Richmond v. J.A. Croson Decision Upon Minority and Female Business Programs in Selected Cities of Ohio, March 1997. See also Flamer Comments.

[55] See U.S. District Court for the Eastern District of Pennsylvania (D.C. Civil Action No. 89-CV-02737) (1989).

[56] Contractors Association of Eastern Pennsylvania Inc., et al. v. City of Philadelphia, et al., 91 F.3 at 586 (1996).

[57] “The Court of Appeals concluded that the city had not presented, at the summary judgment level, adequate evidence of discrimination against businesses owned by Hispanic, Native, Asian‑American and female persons in the Philadelphia construction industry so the city remained enjoined from applying the goals program for these businesses on city construction contracts.” Michelle D. Flamer, senior attorney, City of Philadelphia Law Department, timeline, submitted at the Committee’s Aug. 17, 2000, planning meeting (hereafter cited as Flamer Timeline).

[58] Flamer Timeline. See also Joseph A. Slobodizian, “Judge Rejects Set-Aside Law for Third Time,” Philadelphia Inquirer, Jan. 12, 1995, pp. B1, B4.

[59] Flamer Timeline.

[60] Contractors Association of Eastern Pennsylvania Inc., et al., v. City of Philadelphia, et al., 91 F.3 at 586, n.9 (1996). The disparity indices were calculated by “dividing the percentage participation in dollars of minority groups in the public works contracts awarded by the City of Philadelphia by their percentage availability or composition in the ‘population’ of Philadelphia area construction firms and multiplying the results by 100.” Brimmer Affidavit I, App. at 3941. Id.

[61] Brimmer & Company Inc., Disparities and Discrimination in the Marketplace, Philadelphia, Pennsylvania (Part One), 1992, p. 112.

[62] Brimmer & Company Inc., Disparities and Discrimination in the Marketplace, Philadelphia, Pennsylvania (Part Two), 1992, p. 142.

[63] Ibid., pp. 144–45.

[64] Ibid., pp. 146–47.

[65] The 1996 decision followed two appeals from lower courts.

[66] City of Philadelphia, Request for Proposal to Conduct Minority/Women Business Utilization Study for the City of Philadelphia and its Related Agencies, Sept. 15, 1995, pp. 3–4.

[67] Ibid.

[68] The contract, originally for $987,950, was amended on Aug. 8, 1997, increasing the maximum compensation to $1,064,312. See Standard Amendment, contract 9721775.

[69] In October 1995, the parties agreed that portions of the study relating to city contracting to M/WBEs in its service, supply, and equipment contracts would be completed by Nov. 4, 1996. The revision established three phases for completion of the study in regard to city contracting to M/WBEs in its service, supply, and equipment contracts. This was in response to the Federal District Court for Eastern District of Pennsylvania’s order to the city for information in support of its MBE goal in its service, supply, and equipment contracts. City of Philadelphia contract with D.J. Miller & Associates to conduct a minority- and women-owned business utilization study, addendum 1, Oct. 12, 1995. Other amendments to the agreement were made in June 1996, June 1997, and August 1997.

[70] Michelle D. Flamer, senior attorney, City of Philadelphia Law Department, telephone interview with Marc Pentino, Eastern Regional Office, USCCR, Apr. 21, 1999.

[71] Sieglinde A. Shapiro, chairperson, Pennsylvania Advisory Committee, letter to John W. Macklin, legislative/regulatory affairs monitor, MBEC, Apr. 1, 1999.

[72] James Roundtree, director, MBEC, letter to Sieglinde A. Shapiro, chairperson, Pennsylvania Advisory Committee, June 14, 1999.

[73] Ibid.

[74] Ibid.

[75] The Committee notes that in addition to a general citywide retention schedule, each city department is developing agency-specific record-keeping requirements. Marlyn Samson, Philadelphia Department of Records, telephone interview with Marc Pentino, Eastern Regional Office, USCCR, Aug. 22, 2001.

[76] Sieglinde Shapiro, chairperson, Pennsylvania Advisory Committee, letter to Mayor John Street, July 27, 2000.

[77] Other information obtained at this meeting is incorporated in earlier sections of this report.

[78] James Roundtree, interview, MBEC office, Sept. 25, 2000.

[79] A new program, he explained, would be based on a review of the D.J. Miller study, and other disparity reports in Pennsylvania and other metropolitan areas. Ibid.

[80] Items requested included past annual reports, strategic plans, and amendments to Philadelphia’s prevailing wage laws. See Marc Pentino, Eastern Regional Office, USCCR, letter to James Roundtree, director, MBEC, Oct. 3, 2000.

[81] The Committee made one last attempt on June 14, 2002, to acquire update information regarding the D.J. Miller study, the audit by the University of Pennsylvania consultant, and planned hearings. As of July 15, 2002, no information was received or forwarded to the Committee by MBEC.