Reducing Contracting Delays in Philadelphia

Overview

Philadelphia enters into nearly 2,300 contracts each year with nonprofit and for-profit partners that provide a wide range of services to residents, at an average cost of $3.8 billion.

The city government has long struggled to process these contracts in a timely manner, and 90% are not “conformed” by their proposed start date. Contract conformance is a process which ensures that an agreement between two parties meets the legal, statutory, and regulatory requirements for signature. From the beginning of fiscal year 2020 through January 2025, 49% of all contracts were conformed more than 90 days late.

Build Communities How Philadelphia’s Professional Services Contracts Can Be Improved

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These delays have negative consequences. Contractors cannot submit invoices for work they’ve completed until a contract has been signed. Many contractors feel they must deliver services anyway, however—particularly if their clients have relied on those services for years, or if the services are critically important, such as child welfare support. The financial strain of this arrangement often falls most heavily on small organizations with limited financial reserves that rely heavily on government contracts. Because of the delay in the disbursement of funds from the city, some contractors struggle to make payroll and are forced to reduce staffing and limit, or even cancel, services. Others take out lines of credit, the interest on which is not reimbursable, to cover their costs until city funds arrive.

Under Mayor Cherelle Parker, the city has acknowledged the severity of the situation and has taken steps to address it. Nevertheless, much more remains to be done. To support those efforts, The Pew Charitable Trusts—in partnership with civic consulting firm Bennett Midland and with the input and partnership of the City Procurement Working Group, a task force made up of city employees who informed, reviewed, and refined the report’s findings—examined the procurement system and ways to reform it, which they have summarized in a report. A key focus of those recommendations was making the conformance system more efficient while minimizing the disruption of services to residents and improving collaboration between vendors and the city.

Bennett Midland’s research highlighted two sets of factors contributing to the situation. Most significant is the high volume of contracts processed, an issue discussed in a previously published brief. A second set of concerns stems from the inefficiencies built into the process of finalizing professional services contracts in Philadelphia.

This brief summarizes the report’s findings and recommendations about the city’s professional services contracting process. They involve the suboptimal conformance process, gaps in training and resources for city staff, the role of the Procurement Department, the problem of backlogged contracts, and vendors’ experiences. While efforts to reduce the high volume of contracts will have the greatest overall impact on the procurement system, addressing these process issues may be more feasible in the near and medium terms.

Professional services contract conformance process

In the language of city government contracts, being in conformance means that the scope of work, or the outline of what will be accomplished through the contract, has been written, and both the city and the vendor have agreed to the terms of the agreement. The contract is then reviewed by multiple departments—including Procurement, Finance, and Law; the Office of the Chief Administrative Officer; and the Office of Economic Opportunity—to ensure that the agreement is lawful and meets the city’s requirements. After that, it can be signed by city officials and the vendor. (See Figure 1.)

From fiscal 2020 through January 2025, conformance timelines for professional services agreements largely met the city’s target schedule of 85 days, which is also in keeping with the timelines followed by other jurisdictions, including the federal government.

Once an agreement is submitted via the Automated Contract Information System (ACIS), the city’s internal contract management system, the median conformance time for professional services contracts is 52 days. Competitively bid, advertised agreements can take nearly twice as long, on average (a median of 97 days), while micro-purchase agreements for less than $41,000 usually take less time (a median of 29 days). There’s also some variation in how long the conformance process takes, on average, from department to department. (See Table 1.) However, 65% of these contracts begin the conformance process on or after their intended start date.

Conformance process inefficiencies

Several factors limit the efficiency with which city staff can conform professional services contracts, including the number of steps involved in the procurement process, the timing of legal reviews, and a too-limited use of expedited contracting mechanisms.

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One recommendation to address these concerns would be to streamline the conformance process for all original contracts. Removing several steps and conducting some others simultaneously would reduce the average contract timeline by 16 days.

Steps recommended for removal include:

• Review by the Office of Economic Opportunity for nonprofit vendors, which does not actually happen because of differing inclusion goals for these contracts, but the contracts are still sent to the office and vendors are still required to report the related information.
• Review by the finance director/chief administrative officer. This step is unnecessary because it duplicates oversight that takes place as part of the city’s overall contracting plan, rather than through individual agreements.
• Initial certification, which duplicates the final certification step.
• Final conformance, which is not necessary since it takes place after a contract has already been finalized and is an extra step for closing out the process.

Greater efficiencies could also be achieved by helping departments to draft new contracts earlier through ongoing engagement with the city’s Law Department. At present, this contact usually happens after the conformance process has begun. Making contact earlier—during the request for proposal development and vendor selection stages—would lead to contracts that require less adjustment during the actual conformance process.

Another way to reduce the time it takes to conform contracts would be to rely more often on the kinds of expedited processes already in place for routine renewals and low-value contracts. The report found that these methods have been underutilized—just 25% of the time for routine renewals and 22% for low-value contracts. More frequent use would reduce the volume of contracts required to move through the full conformance process.

Lack of information about the process

Conformance staff in departments that submit contracts and departments that oversee the contracted work sometimes cite a lack of training and resources needed to consistently complete routine conformance tasks. Some staff members have expressed a desire for additional training and detailed instructions on specific conformance processes. Some have also said that they sometimes are not notified when practices are updated, becoming aware of the changes only after contracts they submit are unexpectedly rejected. For their part, vendors sometimes become frustrated because they are not always given clear explanations when their contracts are rejected or delayed.

Build Communities Managing the High Volume of Contracts in Philadelphia

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Pew and Bennett Midland recommend developing a comprehensive, citywide training program for department conformance staff, oversight staff, and program staff on the conformance process. This would include developing new resources and updating the existing ones (e.g., step-by-step guides, policy documents, FAQs, vendor-facing resources, and process maps) currently available on the city’s intranet and other locations.

Specific actions that the city should take toward establishing this program include:

• Auditing existing materials to identify what’s outdated, missing, or redundant.
• Engaging users to better understand what types of training and resources they need.
• Establishing a central, easy-to-navigate online location where all contracting materials can be readily accessed.
• Developing a comprehensive, citywide training curriculum.
• Identifying the ongoing resources needed to continuously update materials and deliver trainings.

Backlogged contracts

The city has a considerable volume of backlogged contracts that are not yet conformed and have passed their start date, which is troubling to all parties. The backlog is a particular problem in the first quarter of the fiscal year (from July 1 through Sept. 30), when many city contracts are scheduled to begin. City staff and vendors alike are eager to reduce the backlogs by any reasonable means, and the city has already taken critical steps to do so. More can be done in the near term to continue conforming late contracts and prevent future backlogs from building.

Pew and Bennett Midland recommend expanding upon ad hoc initiatives already undertaken by the city to address backlogs and incorporate them as standard practices, including:

• Providing additional support for the conformance of contracts that begin in the first quarter of the fiscal year. In 2025, for example, the city’s Office of the Chief Administrative Officer (CAO) reported a successful effort to prepare departments to conform contracts with a first-quarter start date in fiscal 2026 as close to schedule as possible. The city should build on lessons learned from this recent effort, which involved the CAO’s office coordinating closely with department contracting teams, to design and implement a process to prepare for the first quarter of fiscal 2027. This process would include requesting early drafts of contract scopes from departments and clarifying deadlines for critical milestones, ensuring that agreements stay on track and preventing interruptions in service delivery.
• Maintaining and expanding ongoing efforts to conform backlogged contracts through targeted support for departments. An effective model that city staff often cite is the Fall 2024 Collaboration Lab, which brought together contracting and oversight staff to problem-solve and successfully conformed more than 550 backlogged contracts in just over one month. The city needs a system to support departments struggling with a backlog and accountability for meeting citywide and departmental targets. Such a system might include making the CAO’s monthly working sessions with conformance leads mandatory for departments with significant backlogs.
• Developing an easy-to-read monthly dashboard for each department leader, the CAO, and City Hall, showing the number and dollar value of backlogged contracts.

The city has already made progress on implementing several of these recommendations. Monthly working sessions with conformance leads have been made mandatory for all departments, and the development and regular use of internal dashboards to track progress and increase visibility into the status of contracts is underway.

Vendors’ experience

For vendors, the primary challenge of the contracting process is that it is often completed weeks or months after the start date. But other aspects of dealing with the city can be frustrating as well, such as the requirement that vendors submit the same documents to multiple departments, or a lack of visibility about why an agreement is stuck in the conformance process. From the vendor’s point of view, the process can seem like an impenetrable black box.

Pew’s and Bennett Midland’s recommendations on this front include:

• Ensuring that the city’s new financial and procurement system, Optimizing Procurement and Accounting Logistics, which is currently under development, improves and automates communication between the city and vendors.
• Developing a detailed, easily accessible vendor-facing webpage providing updated information about pending contracts. This would allow vendors to see where their contract stands in the conformance process and the name of city staff member(s) assigned to their contracts.
• Eliminating disclosure requirements for nonprofit organizations not reviewed or used by the city.
• Providing technical assistance and training on the contracting process for vendors, particularly small organizations and those that are new to the procurement process.

The Procurement Department

Philadelphia’s Procurement Department provides oversight that ensures legal compliance for the contracting process. However, the responsibility for navigating contracting challenges rests with staff in the departments submitting the contracts, who may not have all the information needed to manage complex, difficult, or ambiguous situations. The current delegation of roles and responsibilities misses an opportunity for greater strategic collaboration and optimization.

Build Communities An In-Depth Look at Professional Services Contracting in Philadelphia

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Pew and Bennett Midland recommend empowering Procurement to lead the city’s professional services contracting system, making the department the central authority for all essential leadership functions, both strategic and tactical. While the contracting departments would maintain responsibility for their own contracts, a strong procurement department is critical for setting policy and providing strategic leadership. This change in structure would facilitate its transition from a largely reactive department to a more forward-looking, collaborative one, allowing it to proactively identify the city's needs while working with colleagues throughout the government to find solutions.

Over the next year, the city of Philadelphia, Bennett Midland, and Pew, along with other local philanthropic partners, will continue working together to improve the professional services conformance system and enhance city service providers’ ability to do their work without unnecessary interruptions or financial uncertainty. This will represent a real benefit to the Philadelphians who rely on those services and to the taxpayers who help support them.

Acknowledgments

This analysis was researched and written by Larry Eichel, a senior adviser with The Pew Charitable Trusts’ Philadelphia research and policy initiative, with additional support from Katie Martin, a project director; Jennifer Clendening, a manager; and Jun Ho Phue, a senior associate with the initiative. The research was undertaken in collaboration with Bennett Midland LLC. And the piece was edited by Erika Compart and Tricia Olszewski. Allie Tripp designed the publication.

Folasade Olanipekun-Lewis, vice president of operating and community partnerships at the Vantage Group, and Nick Hand, senior analytics consultant at Voyatek, served as external reviewers for this publication.

This analysis does not necessarily reflect the opinions of these individuals or their institutions.