Council presses managing director on local‑business contracting as officials defend delivery tax design

Council members pressed the managing director’s office and procurement officials on why citywide contracting for Philadelphia‑based businesses and MWBEs appears to have declined even as department‑level figures look stronger.

Council member Thomas told the managing director’s office that the committee’s prior request for a full accounting of citywide LBE and MWBE contract awards had not been satisfied and said staff documents suggested roughly $150 million less spent in support of local businesses across recent fiscal years. Managing Director Adam Teal told the committee that his office’s figures covered only MDO contracts, and that department‑level reporting explained why internal numbers can be higher than citywide aggregates.

“Bottom line up front, in FY26 so far, we’re at about 93% of our contract value went to local business enterprises,” the managing director said when describing MDO’s internal share. Procurement Commissioner Ron Hovey supplied citywide award percentages for recent years—53, 62, 54 and 64 for 2022–25—and said the administration expects to exceed the 2025 figure for the current year. Hovey described two distinct programs that drive those results: a bid‑preference credit that has seen steady uptake and a set‑aside program that has had very little usage.

Adir Jones, director of the Office of Business Impact and Economic Advancement, told council members the administration will undertake a cross‑department gap analysis to identify impediments and possible underreporting that could explain the apparent reductions in MWBE spend.

“[We’ll] perform a gap analysis across all city departments to get that information to you, ASAP,” Jones said.

Council members said the review should cover reporting systems and definitions so the city can reliably measure how much contracting benefits Philadelphia firms and Black‑ and brown‑led businesses.

Delivery tax and who pays

Separately, council members renewed questions about a proposed delivery tax intended to capture new commercial activity tied to package deliveries. Council member Young pressed whether the levy could be structured to apply directly to large carriers and delivery platforms rather than to customers receiving deliveries.

Revenue staff explained the draft is written as a fee per delivery to purchases delivered inside Philadelphia; in the hearing a revenue official clarified the proposed unit, saying, “25, not percent,” when describing the per‑delivery charge. Officials emphasized they will consult the law department about legal structure and whether the ordinance could be drafted to place the legal obligation on companies rather than consumers.

“We will have to talk with law and get back to you on that structure,” a finance official said when asked whether the city can write the tax to target carriers. The administration also said it has exempted categories such as baby products, medicine and food from the proposed levy to reduce burdens on essential purchases.

What comes next

Council members asked for the gap analysis and additional data on citywide MWBE and LBE awards, plus clearer documentation on how the delivery tax would be administered and what legal options exist for changing who the levy targets. MDO and procurement staff agreed to follow up with the committee and provide supporting figures and a department‑wide review.