Scoop: Philly awarded $15M Fourth of July contract without new bids

State of play: City procurement rules generally require a competitive process for major contracts.

• Instead of seeking new bids for the July 4 celebration, the Parker administration relied on a roughly yearlong agreement between the Philadelphia Authority for Industrial Development (PAID) and ESM Productions, according to an Axios review of the city's procurement filings and records obtained through a Right-to-Know request.
• The agreement was also used to produce the city's first-ever free New Year's Eve celebration last year, headlined by rap legend LL Cool J, Kevin Lessard, a spokesperson for Philadelphia Industrial Development Corporation (PIDC), which manages PAID's day-to-day affairs, confirmed to Axios.
• The city declined to say how much it paid ESM for the NYE celebration.

Reality check: This isn't how Philadelphia handled other major event contracts.

• Philadelphia bid out the Made in America festival in 2018 and 2022 — even though those events cost a fraction of this year's Fourth of July festivities.

Meanwhile, the Parker administration is seeking bids for a contract worth up to $75,000 to produce an economic impact report on this year's 250th anniversary events.

What they're saying: Legal and government watchdog experts tell Axios the deal raises questions about whether the city followed competitive procurement requirements designed to promote fairness, transparency and the best value for taxpayers.

• "If this came by my desk, I would ask a lot of questions," UPenn law professor Richard Feder, a former chief deputy city solicitor who advised Philadelphia officials for three decades, tells Axios.
• "Good government principles would suggest that the better route is for a contract of that nature ought to be publicly bid."

A "favored" company

Follow the money: Financial records show the city never wrote ESM a check, instead routing payments through PAID, the redevelopment arm of city nonprofit PIDC.

• The payments appeared as "city contributions" to PAID, finance records show. But accompanying payment records told a different story: "ESM Productions for City's 4th of July Event."
• The city paid for the concert out of its Class 500 budget category, emails show — which is typically used for contributions to schools, nonprofits, tax payments and legal settlements.
• Feder says professional service contracts should come out of Class 200.

The other side: City officials say the work ultimately stemmed from a bidding process that occurred more than 18 months before Parker's July 4 plans and wasn't specific to the concert.

• Lessard tells Axios PAID simply acted as a "financial conduit" for the payments and that doing so "doesn't replace or bypass any procurement requirements," which remain the city's responsibility.

City attorney Andrew Richman told Axios in a statement that the city used an existing contract with PIDC to administer an "economic stimulus program."

• Under that agreement, PIDC "issued an RFP on behalf of the City for various on-call strategic support services," and ESM was selected.
• "This process allowed the City to engage ESM to produce the One Philly Unity Concert for America," Richman wrote.

The city declined to make officials available to answer detailed questions about the process. ESM didn't respond to Axios' requests for comment.

Yes, but: Feder says having "on-call experts" can be useful in emergencies, but not for signature events like the Fourth of July concert that the city had months to plan.

• Using the arrangement this way undermines "the spirit and intent" of the city's procurement requirements, Feder says.

"Why explain to the press and the public why it chose one contractor over another? Why give less well-known contractors an opportunity to bid, when a contract can be handed to a favored, pre-cleared company without any need for transparency or competition?"

Calls for scrutiny

Driving the news: The Committee of Seventy, a government watchdog, is calling for City Controller Christy Brady to examine whether the city followed "established procurement procedures" in awarding the concert work to ESM Productions.

• "The city has procurement rules for a reason," the group's president, Lauren Cristella, tells Axios. "If the established procurement procedures weren't followed, the City Controller should investigate."

• Brady didn't respond to Axios' calls requesting comment. Through a spokesperson, she referred Axios to a previous statement this year, when she said the city must be "accountable for every [taxpayer] dollar coming in and every dollar coming out" of city coffers.

Behind the scenes: Internal emails show city officials directed PIDC to structure the arrangement the same way it had for the city's New Year's Eve celebration.

• In a March 25 email, city senior fiscal manager Dylan Sullivan wrote that PIDC officials should follow a "similar process," with PIDC invoicing the city through "Class 500" funds before paying ESM.
• Five days later, Sullivan asked where the city should be "parking the funds" before it moved through PIDC.
• The city also used funds from a street-sweeping and clean corridors initiative to front money needed to secure performers, emails show.

Between the lines: ESM Productions is on the city's "Strategic Support Partners" roster — a pool of pre-vetted consultants created through the broader solicitation.

• Firms on the roster were eligible for "expedited participation" in future projects, though the program doesn't "guarantee a contract or a paid engagement," per the records.
• Yet PAID never assigned ESM any work of its own under the contract, Lessard said.

Zoom in: Companies selected for the Strategic Support Partners roster must disclose political donations made by the firm or its principals to elected city leaders and candidates running for office.

• ESM Productions disclosed a $2,000 contribution to Parker in 2024. City campaign finance records show the donation came from company co-founder Scott Mirkin.
• He donated another $1,500 to Parker last year.

Context: Mirkin co-founded ESM Productions in 1996, and the company produced many of Philadelphia's largest public events in the last decade-plus, including the 2015 Papal Visit and former July Jam concerts. Jay-Z's Roc Nation later became part-owner.

• The company also has longstanding ties to City Hall. David Cohen, a Parker ally and former chief of staff to ex-Mayor Ed Rendell, told the Inquirer he had hired ESM Productions to produce city events dating back to the 1990s.

The intrigue: The Parker administration remained deeply involved in planning the concert, records show.

• Parker's team directed ESM on performers, stage production, sponsorships and marketing.
• Cost estimates provided in the records included $3.1 million for production, $3.3 million for performers, and a $1.2 million production fee.

The bottom line: The Parker administration had its fingerprints all over the Fourth of July show — from pitch to production. But on paper, PAID held the contract — an arrangement experts say deserves further scrutiny.

• "It's just not what many good government types consider to be best practices," Feder says.