The City of Wilmington today released a report that examined the fairness, accessibility, and inclusiveness of the City government’s system for obtaining or purchasing goods and services as well as obtaining professional, non-professional and construction services. The report regarding the City’s procurement system was requested by Mayor Mike Purzycki and Wilmington City Council. Both branches of City government had expressed concerns in recent years that the procurement process was not providing a wider range of businesses—especially minority and women-owned businesses—the opportunity to bid for City-issued proposals for goods and services.A full presentation of the report will be made to City Council’s Finance and Economic Development Committee tonight at 5 p.m. at the Redding Government Building on French Street. The meeting can also be accessed virtually [wilmingtoncitycouncil.com]. The Disparity Report, compiled by Miller³ Consulting, Inc. [miller3group.com], (M³ Consulting), a nationally recognized public sector consulting firm, issued a central finding regarding disparities that exist within the City procurement process, and also issued a lengthy list of recommendations regarding steps the City can take to make the process more fair, accessible and inclusive. The public can access the complete report here or a summary of the report here. “Over the past few weeks, including during the recent holidays, City managers have been meeting to assess the Disparity Report findings and most importantly, have begun the task of reforming the procurement process,” said Mayor Purzycki. “Tonight, we will present to Council the findings and progress toward reform, which I know will make the late Council Member Rysheema Dixon look down with approval. We acted on her Council Resolution calling for this study because we all agree this review and needed reforms are long overdue. I express my thanks also to former Council President Hanifa Shabazz, who previously raised procurement concerns when she was in office. Some of what M³ Consulting has recommended can be done relatively quickly, while other reforms will take longer. But I pledge to continue working with City Council for as long as it takes to get the job done. The patterns of longer-term disparity presented in this report did not start with my Administration, but it is my goal to see them end before I leave office." Central FindingThe Disparity Report summarizes the disparity ratios for race, ethnicity, and gender procurement categories at the group level for the mostly pre-pandemic period of July 1, 2015 through June 30, 2020, which is the period of the City’s fiscal years 2016 through 2020. Based on 10 analysis categories, the following disparity was found affecting the following procurement categories:
- For the category of professional services, statistically significant disparity was found affecting African American-owned firms, Hispanic American-owned firms, and Women Business Enterprise (WBE’s).
- For the category of non-professional services, statistically significant disparity was found affecting African American-owned firms and Hispanic American-owned firms.
- For the category of goods and supplies, statistically significant disparity was found affecting African American-owned firms, Asian American-owned firms, Hispanic American-owned firms, Women Business Enterprise (WBE’s).
- For the category of construction and construction-related services, statistically significant disparity was found affecting Hispanic American-owned firms.
- For the category of architecture and engineering there was no disparity found
Recommendations for ImprovementIn the Disparity Report, M³ Consulting offers a series of recommendations to the City regarding ways to improve the procurement process. The recommendations are listed below along with a notation of an action step listing a defined action the City will take to make improvements or suggested course of action that is still being explored. Some of the recommendations can be addressed in the short-term while others may require more extensive solutions involving legislative and policy changes. 1. Change inclusion focus from programmatic (compliance with DBE regulations) to organizational (commitment to inclusive procurement environment) such that the organization is focused on inclusive procurement, as opposed to simple goal attainment. Action Plan: The City has created a working group that includes representatives from each department which is currently focused on revamping City procurement policies and procedures and will remain actively engaged in identifying opportunities where focused efforts can be made to create opportunities for MBE’s going forward.2. Address decentralized nature of the City’s procurement process and its effect on DBE participation to ensure that decision making throughout the City is fair, open, transparent, and inclusive and infrastructure structure to ensure monitoring, reporting and tracking of such is instituted.Action Plan: The City is exploring procurement workflow tools and DBE support services that will enhance its ability to monitor, track, report, and communicate opportunities to businesses. Paired with an active supplier diversity committee, these changes will make DBE participation an active program. Additionally, the City is exploring centralizing the compliance and oversight function of the DBE program by hiring resources to manage these functions alone.3. Identify community economic development and inclusive procurement objectives that allow the City to actualize its community economic development objectives through procurement.Action Plan: The working group is working to identify community partners willing to participate in DBE Support Services. These may include DBE Certification support, Bonding Support Services, Bid writing support, etc.4. Provide procurement and DBE training and development to all staff throughout the City that impact the “buy-decision” and the inclusion of DBEs in the City’s opportunities to ensure consistency and effectiveness of inclusive procurement objectives.Action Plan: The department of Finance plans to include DBE and diverse supplier content in their staff training. We will look to create diverse supplier training content to be required City-wide for employees with purchase power.5. Fully implement existing DBE programmatic initiatives and address prior internal audit concerns regarding the impact of the lack of full implementation of existing policies and procedures.Action Plan: The City has analyzed the Agreed Upon Procedures (AUP) report findings and those considerations are included in the recommendations and subsequent actions that are being pursued.6. Conduct a culture audit to assist the City in understanding any underlying values, perceptions, traditions, and biases that may impact the “buy decision” by staff throughout the City involved in the procurement process.Action Plan: The City will identify vendors to conduct a culture audit in the future.7. Address data capture issues to allow the City to effectively monitor and track all procurement decisions and in particular those related to DBE participation in the City’s decentralized environment.Action Plan: The City is exploring procurement workflow tools and DBE support services that will enhance its ability to monitor, track, report, and communicate opportunities to businesses. Paired with an active supplier diversity committee, these changes will make DBE participation a more active and efficient program.8. Implement procurement-focused budgeting, forecasting, and scheduling to allow for maximum identification of opportunities – both informal and formal—as well as to allow for maximum time for outreach and matchmaking.Action Plan: The Supplier Diversity Committee will actively search for opportunities by monitoring the Capital Projects list and will also produce a “contracts to watch” list of opportunities that do not meet the threshold for bidding.9. Monitor contracts for the issue of concentration (bids awarded to just a small group of companies) to ensure that any race/gender-conscious goals or initiatives are not being achieved by limiting DBEs to certain categories that do not provide for growth and development and capacity-building opportunities. Conversely, concentration should also not exclude non-DBEs from the opportunity to participate in certain procurement activities.Action Plan: In implementing a procurement tool, the City will have data regarding prime and subcontracting participation.10. Determine how the City can engage in youth entrepreneurship programs utilizing access to its vendors.Action Plan: The City will work with community partners and existing community-based youth programs to identify and support entrepreneurship opportunities.11. Refocus certification and pre-qualification efforts to identify qualified firms.Action Plan: The City will identify all MBE firms in its MSA. Outreach will be made to encourage registration within the City’s vendor database as well as certification with the DBE program. The City will collect capability information from existing sources where possible and collect capability information for new certifications. An online certification tool would greatly enhance this process.12. Increasing pipeline of DBEs using outreach techniques drawing upon the list of M/W/DBEs provided as part of this study and access to Management, Financial and Technical Assistance providers who are identifying and supporting DBEs throughout the MSA.Action Plan: The City has been actively meeting with service providers who possess data on MBE businesses in the region that are available firms to potentially do business with the City. M³ Consulting has provided the data behind this study to aid with our outreach efforts. Additionally, the City intends to leverage community partners to promote the City’s DBE program and communicate opportunities to M/W/DBEs.13. Expanding competition by conducting a deeper dive into the City’s procurement and bidding practices to increase competition on specific bids.Action Plan: By reviewing the Capital Projects list, the inventory of current and active vendor contracts can be listed and shared more widely.14. Promote DBE participation at the prime contractor level.Action Plan: The City is working with local partners to increase MBE capacity through training, networking events, and making vendor opportunities more transparent. Additionally, the City is working to reduce historical barriers to MBEs bidding competitively such as implementing bond support services, creating a DBE fund at WEDCO to provide gap financing for MBEs, and supporting partners who provide bid support services such as bid writing and proposal assistance.15. Develop a DBE program that addresses requirements of large construction and development projects by looking at opportunities at the seven stages of development: Planning, Financing, Designing, Construction, Equipping, Maintaining and Operating.Action Plan: The City will review the Capital Projects list to create opportunities by unbundling according to the seven stages of development.16. Implement small business set-asides and sheltered market projects.Action Plan: The City will forecast annually and publish a list of anticipated small business purchases on the City website, based on current and historical purchases to minimize the need of small businesses to continually inquire about upcoming bids; the City will ensure that small businesses are registering on the City’s vendor portal. This should also facilitate a buyer’s ability to quickly connect with small vendors on informal purchase opportunities; the City will work collaboratively with and provide incentive (where allowable) to prime vendors to refer small businesses capable of performing small prime contracting opportunities.17. Address concerns about slow payments.Action Plan: The Finance Department will streamline the invoicing process by implementing the Vendor Self Service module through the Tyler Munis system.18. Develop bonding and insurance programs related to a project-based procurement process.Action Plan: The City is actively searching for a partner to provide bonding support services for MBEs.19. Maximize use of joint ventures, mentor-protégé programs, and distributorships.Action Plan: The City will leverage its community partnerships and the state and local ecosystem to identify opportunities for partnerships, mentorships, and distributorships.20. Develop effective matchmaking and outreach programs.Action Plan: The City will leverage its community partnerships and the state and local ecosystem to magnify outreach and matchmaking efforts. Additionally, by securing a procurement management tool, the City will have access to data regarding businesses that could be targeted for outreach to participate in the City’s DBE program. Lastly, the City can invite and facilitate matchmaking at pre-bid meetings and City-sponsored networking events.21. Increase outreach by focusing efforts on expanding the total vendor and bidder pools to include potential firms from sources such as other agency certified lists and business lists such as Data Axle or Dun & Bradstreet.Action Plan: The City will leverage available data sources such as other state and local public agency certification data, Data Axle or Dun & Bradstreet, among other sources of data. The City will conduct targeted outreach and promotion of the City’s DBE program. The City will consider accepting certifications held by local bodies to fast track the application process where possible.22.Develop detailed and effective monitoring and tracking reports for overall projects and project-by-project.Action Plan: Reporting, monitoring and tracking will be a key requirement for any procurement management tools the City pursues.23. Develop and assign post-award compliance responsibilities.Action Plan: The City is exploring creating two new positions to conduct monitoring and compliance functions for procurements.24. Partner with technical assistance providers to increase the City’s ability to utilize its opportunities for capacity building.Action Plan: The City is exploring its ecosystem of partners to identify which can assist with capacity-building efforts and activities.25. Develop working capital loans, paymaster programs and prompt pay requirements particularly with minority-owned banks and partners, which should provide the City with assurances that financial management issues will not negatively affect contractor performance, while at the same time providing DBEs with critical financial support and advocacy.Action Plan: The City is exploring a DBE fund at Wilmington Economic Development Corporation (WEDCO) per City Code sec 35-133 (a), (4) [library.municode.com], which enables the City to assist DBE’s by providing financial aid, particularly through short-term loans for disadvantaged entrepreneurs to be administered by WEDCO or other entities as recommended by the Commerce Department (Office of Economic Development). The City is also exploring the use of ARPA funds to support DBE’s who bid on City projects or who have vendor opportunities.26. Identify Race-/Gender-Conscious Goal PossibilitiesAction Plan: The City will continue to evaluate where race and gender-conscious goals are feasible and establish them accordingly. Goal setting will be based on the Annual Target Method (ATM) as recommended by M³ Consulting. Frequently Asked Questions (FAQs)What is a Disparity Study? What is the purpose of a Disparity Study? Why is it necessary?Disparity Studies determine if there are disparities between the availability of firms owned by minorities and women in a market area and the utilization of those firms, measured by awarded contracts, by a public entity. Disparity Studies are used to determine whether there is evidence of an imbalance in the market between the number of firms in specific categories, that are ready, willing, able, and capable in the Wilmington area and how many of those firms receive contracts from the city. The study can help to assess if the City of Wilmington would be justified in making its procurements using race-based and/or gender-based remedies. Such studies can provide a legal basis for public affirmative action procurement programs. Who conducted the City’s Disparity Study?The City of Wilmington hired M³ Consulting to conduct its Disparity Study. Miller³ Consulting is a national professional services firm that is widely recognized as producing accurate, reliable, valid, and legally defensible Disparity Studies. Miller³ Consulting has conducted hundreds of studies since 1988. Who was engaged in the Study?Miller³ Consulting used several methods including interviews with City of Wilmington Procurement staff, Business Development organizations in the City that support contracting, Focus Groups with bidding firms in the City that were DBE, MBE and Non-MBE and significant data from the City’s procurement awards over the last five years. What does the Disparity Study tell us?The Disparity Study tells us the value of contracts awarded by contract type which included Architecture and Engineering, Construction and Construction Related Services, Professional Services, Non-Professional Services, and Goods and Supplies to firms in the categories of African American, Asian American, Hispanic American, Women Business Enterprises, Small Business Enterprises, Veteran-Owned Business Enterprises and Non-DBE firms. These measurements allow us to see if there are more or fewer contracts being awarded to each of these groups based on the number of firms in each group. What was the market area of the study?To effectively determine the impacts of procurement, Miller³ Consulting sought to include firms that were awarded at least 70% of contracts during the period studied. This included the City of Wilmington, DE, the Philadelphia-Camden-Wilmington, PA-NJ-DE-MD MSA (Market Service Area), which consists of the following eleven counties: New Castle, DE; Bucks, Montgomery, Chester, Delaware, and Philadelphia, PA; Burlington, Camden, Gloucester, and Salem, NJ; Cecil County, MD, the State of DE and in certain categories Nationwide. What do you think are the top recommendations from the Disparity Study?There are 26 individual recommendations, which include categories of Identification of Race and Gender-Conscious Goal Possibilities, Enhancements to Procurements and DBE Procedures and Practices, Long-term Availability and Capacity Building Initiatives, and Expanded DBE Initiatives Will the recommendations require changes to the City Code?Some recommendations, if adopted, may require changes to the City Code, while most do not. Any requested changes to the City Code would depend on which recommendations are adopted and when they plan to be implemented.