Answering the Question of Diversity in Government Spend

 November 2021

More than ever before, agencies are being called upon to explain their outreach efforts and contract spend to diverse target groups such as minority-owned, women-owned, SBE's, DVBE's, local, and more.  Procurement and outreach teams often are asked during Board or Council meetings to compile the data quickly and report at a moment's notice on the state of diversity spend within their organizations.  Being caught flat-footed can lead to panic and may highlight pain points within an agency. 

Having a strong diversity initiative can bring value to the procurement process.  By encouraging spend to under-represented groups, procurement fosters the economy and encourages new business through an opportunity for a steady government contract, which can become the foundation in which a diverse company grows.  According to Concha Lawrence, Supplier Diversity Coordinator at the City of Hartford (CT), a supplier diversity program "provides opportunities for small businesses to grow and foster long-standing relationships with larger public and private sector organizations and promotes innovation through the introduction of new products, services, and solutions."

Once a program has been established, it's essential to work with your vendor community to educate them on the opportunities that are available not only as a direct supplier/contractor but also as a sub-supplier or sub-contractor to a larger prime.  By encouraging large companies to actively seek out certified diversity vendors and contractors, the agency can enhance the program even further.  The Metropolitan Water District of Southern California (MWD) operates an SBE certification program.  They decided to do away with the Good Faith Effort (GFE) for all construction contracts over $100,000 and instead mandated that the awarding Prime MUST include 18% percent with a certified SBE.  Once MWD moved their certification process online, it allowed their contractors to not only search their approved database of SBE's, but also required them to record monthly payments to their SBE subcontractors. In turn, MWD saw substantial growth in their SBE numbers.  According to Carmen Bermudez-Bracy, CCAP Administrator at MWD, has since increased its participation goal from 18% to 25%, and they are considering increasing it again - that's a massive win for all stakeholders!

Developing a strong diversity program may require hosting vendor workshops to not only promote the program, but to offer training on how to complete bid documents and meet bid requirements by participating in an agency’s Bonding and Contract Financing Assistance Program.  The San Diego International Airport (SAN) has a massive Capital Improvement Program (CIP) that provides critical infrastructure efficiency improvements to its property.  The replacement of Terminal 1 is the centerpiece of SAN’s $3 billion Airport Development Plan (ADP).  SAN required the primes to have a diversity outreach program for their subcontracting opportunities.  By doing so, they were able to exceed their projected commitments.  Christine Pham, Small Business Development Program Manager, remarked that one of SAN’s first inclusionary approach projects, the Green Build, had a commitment goal for 15% Small Business (SB) and 70% Local.  The award-winning project ultimately achieved 25% SB and 87% Local with a final contract value of $476.1 million. 

Maria Quiroz, Small Business Development Interim Manager, states a significant benefit in starting a diversity program is not just to count the numbers but to focus on innovation.  Both the SAN and MWD have included innovation workshops and events to allow diverse companies to present their products and provide vital, innovative products that would not usually have reached their attention. 

Not every agency has the workforce, resources, or even the mandate to run a diversity certification program and must rely on certifying agencies for information.

The solution is to find an online system that allows the agency the flexibility to do it all. The cost-effective PlanetBids PB System™ does just that.  Managing your own certification process allows vendors to self-identify third-party certifications, and provides the agency with a mechanism to verify this information, track outreach, bid participation, awards and contract spend, even at the subcontractor level, all in one application. 

With a comprehensive system that automatically tracks your vendor data, bid participation, and contract spend, it is possible to run reports at a moment's notice. 

When looking for a solution, look at your agency's ability to control the diversity list, including certification numbers/expiration data, and to verify the data at the vendor record and bid level.  Does the system track complete bid participation from vendor notification, becoming a plan holder/prospective bidder, submitting an offer, and contract award by diversity type? 

Don't forget the subcontractors!  They count in diversity spend. While vendors can submit paperwork stating they'll spend so much money with a diverse subcontractor, how do you know they have met the goal? What about exceeding it? By moving the process completely online, agencies can accurately track monthly reporting, validate subcontractors’ payments, and get updates when there's a missed payment, inaccurate entry or a new subcontractor assigned. 

Part of PlanetBids offerings is the Business Certification module, which compiles diversity data on all of its vendors. In staying true to our mission to provide Innovative eProcurement Solutions to public agencies, PlanetBids will present two free webinars in December on the benefits of online management of vendor diversity in government spend and diversity certification.

Jan 18 at 10am PST - Answering the call for more Diversity in government spend Register Today!

Jan 24 at 10am PST - Diversity Certification using the PlanetBids PB System™ Register Today!

-Ria Diaz, Manager of Client Services at PlanetBids
Former Buyer III and SBE/DVBE Advocate for San Jose State University