After long treating M/W/DSBE supply firms the same as M/W/DSBE subcontractors, and giving City contractors 100% credit for the use of M/W/DSBE supply firms, the City of Philadelphia Office of Economic Opportunity has now changed its tune. Apparently, the OEO will no longer give full credit for use of an M/W/DSBE supply firm, unless the firm is a “stocking” supplier, meaning that it actually has in stock the supplies which it plans to furnish to the prime contractor on the City contract.
The new policy was reported in The Philadelphia Tribune in February. Angela Dowd-Burton, Executive Director of the OEO, was quoted in the Tribune article as follows:
“They [the M/W/DSBE] don’t have the inventory, and the probability is they’re just picking up the phone and collecting a fee…So, we’ve decided that whatever commission you get from making that call, that’s the only participation we’re going to report on.”
“Contractors will ultimately have to find participation from minority- and women-owned businesses that actually hire people and use contractors that do work, as opposed to someone that is providing more of a clerical function.”
The new OEO policy will undoubtedly affect many M/W/DSBE supply firms, as it is rare that any supplier will have in stock all of the needed supplies for a construction project. Where custom or special order equipment is involved, as is the case on many public works projects, it is unlikely that any supplier will have the equipment in stock.
The OEO is reportedly encouraging the use of subcontractors for the ordering of construction supplies. It is hard to see how this makes any difference, however, as it is unlikely that a subcontractor will have in stock the supplies that the supply firm does not.
As for City contractors, they must now pay greater attention to the firms that they propose to meet the City’s M/W/DSBE contracting goals. If those firms are suppliers, and not working subcontractors, the City contractor may need to think twice before using the supply firm to avoid risking disqualification for failure to meet the City’s contracting goals, or seek clarification from the OEO before submitting a bid.
Christopher I. McCabe, Esq.
