Minority-Run Contractors Need Help Cutting Red Tape To Access Historic Levels Of Funding

Minority-owned businesses are about to have their best opportunity to obtain private-public works projects, local leaders said during an Urban Land Institute event Tuesday.

On May 9, revisions to the federal Disadvantaged Business Enterprise program will be enacted nationwide, including plans to better track projects and pay subcontractors faster for their work building roads and other infrastructure on government-run projects.

There is also a major boost in funding locally, as last month the Biden administration appointed Philadelphia as a workforce hub among three other priority cities as the federal government parses out $1.2T in funding from the Infrastructure Investment and Jobs Act and other bills.

However, most of the people who could access these funds don't know they even exist, Autumn Anderson, the governor's deputy director of strategic investments, told the crowd at the second annual Women and Minority Owned Business Fair in Center City.

"There's $22B that Pennsylvania is going to be receiving across broadband transportation and energy programs," Anderson said. "Those are incredible opportunities for small businesses and for contractors, too. And if they don't know about them, then how are they going to be able to be part of that?"

In addition, while private firms constantly contact the governor's office about accessing funds, she said, most of those calls are not from or focused on small businesses run by those who are disabled, female or a racial minority. 

Anderson said the "onus is on the government" to spread the word on funding this year for DBEs.

The city of Philadelphia announced last month that it wants 35% of its public works to be built by DBEs by 2025. It does not publish what percent of minority companies do so right now.

In response to information barriers, the Economy League of Greater Philadelphia plans to roll out a regional procurement guide for minority-run businesses looking for funding that is "very decentralized," said Tia Abdulhadi, resource manager at the nonprofit group.

The guide is intended to help firms get in the door to pre-bid with other contractors who already have relationships with developers or the government.

In the meantime, the group plans to help small contractors find better ways to address the value and size of contracts they want to bid on.

The Economy League will help people get registered as DBEs, too — a necessary step to be competitive, but one all panelists agreed is a barricade. Philadelphia requires dozens of documents to indicate that a business is 51% owned by an ethnic minority, a woman or disabled person as determined by a licensed physician, and applicants must show proof of a personal net worth less than $1M.

Moderator Anne Fadullon spent years in local government and real estate but said she had a headache when she tried to get her own firm, Make Advisory, registered as a DBE. 

"I mean, we got there and I would say it was worth it, the reward has been good. But oh my goodness, really," Fadullon said. "It was beyond a humbling experience to try to get through that process."

Small contractors are usually less rigid candidates for some aspects of mega-projects than their government counterparts, and funders should take note, said Elizabeth Woods, vice president of planning and capital programs at Delaware River Waterfront Corp.

The group helped hire subcontractors to work on the project to cap over a section of Interstate 95 and add 12 acres of parkland and space for around 1,500 housing units by connecting Old City to the Delaware River waterfront in the next few years.

PennDOT and the nonprofit DRWC are the two lead contractors on the $329M project, she said, and DRWC helps get smaller contractors on board by taking care of administrative expenses.

Plans for an ice skating rink and playground, for example, are small contracts but they come with a heavy administrative lift and added costs. 

"In order to be a business partner, you have to go through a lengthy and expensive audit," Woods said. "And for many of these companies, their entire contract to provide the service was less than the audit would have cost."

Buckley & Co is a small local firm named contractor for the project, along with Philadelphia branches of larger northeastern firms.

On many projects, DRWC allows self-certification. Through that, contractors are approved much more easily for projects, she said, adding that other business owners and nonprofits need to realize that opening up the door can help projects be completed more nimbly by diverse firms.

"We have to walk the walk, because now ... walking is creating hurdle after hurdle after hurdle," Fadullon said.