Government Contracting in Philadelphia

Like many major U.S. cities, Philadelphia relies heavily on nonprofit and for-profit partners to provide a wide variety of services to its residents. In fiscal year 2024, the city spent $1.3 billion on approximately 2,400 professional services contracts. Those outside vendors provide critical services, including after-school programs, homeless shelters, and health care, to name just a few.

And, like many other jurisdictions, Philadelphia struggles with a time-consuming and complicated procurement system that contributes to difficulty in getting service providers paid on time. Of the more than 12,000 outside service contracts that the city signed from fiscal 2020 through January 2025, 90% were “conformed”—meaning approved, signed, and executed—after their start date. When adding up the costs of the agreements during the period examined, the value of those late contracts totaled $3.4 billion.

Late contracts present challenges for the city’s vendors, who cannot submit invoices for work they have completed until after a contract has been approved, signed, and executed. In many cases, however, vendors must continue to provide essential services for city residents even without a contract in place. A shelter for unhoused residents, for example, could not suspend operations until it has a conformed contract in place without having a devastating impact on those who receive services.

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Meanwhile, the vendors incur significant costs—for salaries, rent, and other overhead, among many other expenses. This inability to receive payments while incurring expenses leads to financial strain for many vendors. Smaller organizations, especially nonprofits that receive most of their revenue from government contracts, feel the greatest impact. Some may struggle to make payroll or remain fully staffed and be forced to limit or cancel services or even permanently close. Many have taken out expensive lines of credit to cover costs, the interest on which is not reimbursable, which can lead to organizations losing money from doing business with the city. Many nonprofit organizations expressed these and other concerns as participants in the city’s Nonprofit Provider Task Force, which released its findings in December 2024.

These concerns were further explored through a 2025 survey conducted by the Nonprofit Finance Fund, which found that only “one-third of Greater Philadelphia nonprofits said they are paid on time by government, compared to nearly half (46%) of nonprofits nationally.” The issue of on-time payment by government is largely felt by nonprofits throughout the region.

Philadelphia has taken steps to address this problem. Most notably, in the fall of 2024, Mayor Cherelle Parker announced a systemic effort to rapidly conform all delayed professional services contracts and pay past-due invoices by late November of that year. As a result, the city conformed more than 550 backlogged contracts and paid more than $221 million for outstanding invoices in just five weeks.

Additionally, the mayor committed to helping identify reforms to the city’s professional services contracting system to prevent future backlogs and ensure that city contractors get paid on time. In 2025, The Pew Charitable Trusts, in partnership with civic sector consulting firm Bennett Midland, supported this effort to understand the current state of the professional services procurement system and identify feasible opportunities for reform with engagement by the City Contracting Working Group, a task force made up of city employees that informed, reviewed, and refined the report’s findings.

The resulting report includes a complementary portfolio of potential interventions—near and long term, discrete and systemic—that will support city staff with the resources they need to conform contracts on time, improve vendors’ experiences in working with the city, increase transparency, and provide stability for the many organizations that provide critical services for Philadelphians.

Key findings:

1. Measuring the state of the conformance system: From fiscal 2020 to January 2025, 90% of Philadelphia’s contracts with outside providers were conformed after their start date, representing an average of 2,042 contracts with a value of $3.4 billion per year.
2. Contract volume and planning: The primary driver of late conformance is the overwhelming volume of contracts going through the conformance process, a problem caused largely by a reliance on one-year agreements.
3. Process timelines and expedited pathways: While the conformance process itself was not identified as a primary driver of late conformance, it contains redundancies that lead to inefficient processing. Meanwhile, pathways meant to move certain types of contracts through the system more quickly, such as expedited amendments, are underutilized.
4. Organizational capabilities and gaps: Administrative staff face a lack of training, resources, and effective digital tools, while core functions of the procurement system are decentralized, with no single person or department having clear responsibility for certain key tasks.
5. Vendor support: Insufficient support, a lack of uniformity across city departments, and minimal transparency about the conformance process have left both vendors and administrative staff frustrated.

Key recommendations:

1. Decrease the volume of contracts going through the full conformance process.
2. Strengthen the conformance process.
3. Increase transparency and accountability.
4. Support the city’s staff.
5. Make it easier for vendors to do business with the city.

Philadelphia has already committed to reforming the procurement system and has taken steps toward implementing several of these action items. In addition to the 2024 effort to clear the backlog of contracts, the city’s recent and ongoing initiatives include overhauling the electronic systems used in the contracting process, expanding the use of expedited contracting mechanisms to shorten processing times, and engaging directly with vendors and city staff to inform additional priorities and implementation.

Over the next year, Bennett Midland, Pew, other local philanthropic partners, and the city will continue working together to implement the highest-priority and highest-impact solutions identified through this collective effort to transform the procurement system and position the city as a strong partner for its essential service providers.

Jennifer Clendening works on The Pew Charitable Trusts’ Philadelphia research and policy initiative.