When supplier diversity programs began, the nation was ripe for economic change and inclusion. The federal government is the largest, longest-running, and most comprehensive program for diverse businesses. However, many other industries that are part of the public sector have formalized their processes and efforts to become viable and lucrative business partners for small and diverse businesses to consider. According to Brian Tippens, noted supplier diversity expert and Director, Global Procurement Sustainability and Innovation for the Hewlett-Packard Company,
In the United States, many companiesâ supplier diversity programs are built around a compliance core. These programs are designed to help ensure that the company meets compliance requirements mandated by its public sector customers. The US federal government requires that any company that provides goods and services to it, above a certain mandated minimum level, meets aggressive goals of subcontracting spend with a list of enumerated categories of underrepresented small businesses. These categories include ethnic-minority-owned, women-owned, and veteran-owned businesses.These compliance requirements have become pervasive over the past 50 years as many states, municipalities, school districts, and other public sector entities have developed supplier diversity mandates that mirror or closely reflect the U.S. federal requirements. Even companies that donât source directly to the public sector may be required to adhere to these types of requirements, if they source to other private sector companies which themselves are public sector suppliers and are required to âflow downâ requirements.
Depending on the industry, creating an effective supplier diversity plan in the public sector and implementing it are very different in practice. This is due to a number of factors, including internal priorities, program support and leadership, industry regulations and legislation, political climate, and historical disparities. The level at which any or all of these factors exist can directly impact the efficacy, the complexity, and the robustness of a public agencyâs supplier diversity program and efforts.
The above factors can also impact the requirements for doing business with a public agency, such as:
- Types of allowable certifications, which are official documents confirming the special designation of the majority ownership of a business, usually ethnicity, gender, prior or current military service, or LGBT status
- Whether set-asides or designated programs requiring a percentage of government procurement contracts be reserved for disadvantaged businesses are allowed
- Types of contracting vehicles utilized
- Level of business engagement or business outreach activity
- Level of influence on legacy policy
I have been a supplier diversity practitioner and consultant across a number of industries, including local and federal government, higher education, and corporations. While some basic tactics were transferrable across industries, I often had to refine my strategy to account for the specific industries and the culture climate in which I was working in order to achieve my desired results.
As supplier diversity overall has become a bit commoditized and, arguably, generic, many industries have sought to form their own industry-specific advocacy groups, which allows for precise insights into best practices. This has resulted in the creation of better-trained professionals, stronger advocates, and, ultimately, increased opportunities for small and diverse businesses to get engaged. Although the requirements to do business may vary, these industry sectors spend tremendous amounts of money each year and have active efforts to do business with minority- and women-owned firms, thus proving that doing business in the public sector is a very worthwhile endeavor.
Federal Government
According to the US Small Business Administration (SBA), âPurchases by military and civilian installations amount to nearly $600 billion a year, and include everything from complex space vehicles to janitorial services.â When it comes to supporting diversity, the government has a certain percentage of federal contracting dollars to spend with minority-owned businesses. Targeted goals for government-wide contracting dollars spent with minority businesses across multiple categories break down according to the following percentages: small businesses (23%), women-owned small businesses (5%), small disadvantaged businesses (5%), service-disabled veteran-owned small businesses (3%), and Historically Underutilized Business ZonesâHUBZones (3%).
Because it may be inefficient for the federal government to buy from small suppliers in certain cases, the system encourages their major suppliers to utilize minority businesses. Large, non-minority manufacturers can attract government contracts by building subcontracting or Tier II supplier relationships with minority-owned businesses. This demonstrates their commitment to supporting supplier diversity through their purchasing, and it helps the government meet and exceed minority spend goals. When I launched my professional services consultancy, Porter Brown Associates, I knew that I wanted to focus on the federal government. After years as a supplier diversity practitioner, I am well aware of the routine for new vendorsâresponding to solicitations, going to vendor events, meeting contracting officers, and so on. However, as a new firm with little to no past performance, it was still a challenge. I was trying to determine which certification we should pursue first and my strategy consultant recommended leveraging my past experience in the National Guard and get certified as a veteran-owned business. Once we received our certification, we immediately started receiving solicitations set aside for veteran-owned firms. Within six months, we were awarded our first contract, a multi-year contract valued at over $1 million.
State and Local Governments
Many local and state agencies have made doing businesses with diverse businesses a part of their overall economic development plan, often aligning their efforts and mirroring programs found in the federal government and the private sector. Further, many have adopted local preference ordinances, which allow them freedom to support local suppliers, many of whom are more likely to be diverse. This is important, as local suppliers are likely to create more jobs and stimulate purchasing at the local level. For many diverse suppliers, local and state governments are usually the first line of strategy when opting to do business with an institutional customer. This strategy often proves to be prudent, as firms can learn the process and become comfortable with the expectations required to service an institutional customer while also building the capacity needed to successfully pursue loftier opportunities.
Higher Education Institutions
The business opportunities that exist with higher education institutions are sometimes overlooked by diverse businesses. However, depending on the location and the size of the school, they can actually be a primary employer and a major economic engine within a community. Depending on whether they are a public or private institution, these educational settings are usually governed by state legislation and regulations. However, some schools operate in what I call a âquasiâ manner in that they do not have full autonomy because taxpayer dollars are being used and there can be no perception of preferential treatment, but they do have some flexibility in how vigorous their supplier diversity engagement and enforcement will be.
One of the leading organizations for procurement and supplier diversity professionals in higher education is the National Association of Educational Procurement (NAEP). They have a very active and engaged supplier diversity assemblage, consisting of supplier diversity professionals from higher education institutions all over the country. The group also produces the Supplier Diversity Institute (SDI), which allows practitioners to discuss best practices and success strategies for increasing engagement and providing access to contract opportunities for diverse businesses. The SDI has become one of the leading conferences for supplier diversity professionals in higher education.
Airports
In many cities, the airport can be the epicenter of the community and a prime opportunity for small businesses. Unfortunately, opportunities with airports are another area often overlooked by businesses due to their complexity. However, airports can present big chances to do business to include opportunities in infrastructure construction, small renovation projects, concessions (including restaurants and retail stores), and advertising. Ironically, it was the proposed expansion of an airport and the actions by Atlanta Mayor Jackson at the then Hartsfield Airport (now the Atlanta HartsfieldâJackson International Airport) that placed supplier diversity front and center, becoming a model for modern-day diverse business inclusion activities.
When considering doing business with airports, it is best to understand how the procurement process is managed. In major metropolitan markets, the local municipality may manage the day-to-day operations for the airport and have full oversight for administering contracts and procurement functions for the Federal Aviation Administration (FAA). In small markets, procurement operations are managed by the airport and are separate from the local government procurement process. Opportunities for diverse business participation with airports tend to fall under the disadvantaged business enterprise (DBE) requirements, which are discussed later. To learn more about business opportunities at specific airports, businesses may contact the airport directly, as many have supplier diversity representatives in place to ensure equitable inclusion in airport projects and that their DBE goals are being met.
The FAA recently launched the FAA dbE Connect System, a matchmaking system (powered by B2G Now, one of the contributors to this book) that provides organizations and businesses information connecting them to certified DBE firms and then connecting businesses to potential opportunities with airports across the country. They also partner with one of the leading advocacy groups for doing business with airports, the Airport Minority Advisory Council (AMAC).
According to its website, the Airport Minority Advisory Council (AMAC) is the only non-profit trade association dedicated to promoting the full participation of minority-owned, women-owned, and disadvantaged business enterprises (M/W/DBEs) in contracting opportunities and professional development throughout the aviation and aerospace industries. Since its inception, AMAC has been at the forefront of nearly every national policy initiative impacting the participation of disadvantaged businesses in airport contracting. AMAC also works consistently with Congress, the federal government, aviation trade associations, and others as a resource for information, education, and guidance on business and employment matters.
Transportation
As an agency within the federal government, every state has a US Department of Transportation (DOT) program which manages projects in the design, construction, and maintenance of the nationâs highway system and bridges. They also administer and issue the disadvantaged business enterprise (DBE) certification. The disadvantaged business enterprise (DBE) certification program is a federal program whose purpose is to increase the participation of certified DBEs in projects funded by the US Department of Transportation and other federal sectors. In some markets, the DBE certifies airport concession DBE firms, also called ACDBEs.
Many local governments have opted to accept DBE certification in lieu of having their own certification program. The DBE regulations require state and local transportation agencies that receive DOT financial assistance to establish goals for the participation of DBEs. Each DOT-assisted state or local transportation agency is required to establish annual DBE goals, to review the scopes of anticipated l...