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Whether the motivation is new legislation or funding requirements, increasing competition in your RFP responses, or supporting your community — there’s no wrong reason for public sector procurement teams to foster more diversity in their vendor pool.
So how do you create vendor diversity initiatives in your organization? Many Bonfire clients have asked this question, so on May 12th we asked Sheena Fain from the City of Akron and Robert Tatum from the Cayman Islands Government to join us in a discussion of the topic. In this webinar, they tell us how they created successful vendor engagement and support strategies and built these processes into their organizations.
Here are the highlights of this discussion or you can watch the webinar here.
Vendor diversity in public procurement encapsulates the practice of supporting small, minority-owned, or historically under-utilized businesses in gaining access to government contracts. These businesses would include entrepreneurs or businesses with fewer than 50 employees (definition varies per jurisdiction) as well as businesses owned by women or people of color.
Some phrases or acronyms you may have seen around this topic include: disadvantaged business enterprise (DBE); diversity, equity, and inclusion (DEI); or supplier diversity.
For many public agencies, creating a dedicated effort to engage diverse suppliers is something new and driven by legislation or funding requirements such as some components of the American Rescue Plan Act (ARPA).
While legislation was one of the reasons stated by our experts, it’s clear that those requirements were more of a tool to secure more buy-in from internal stakeholders after working on similar initiatives for a while. They also stated that the catalyst came from research and listening to their communities and seeing the need to support those vendors. Legislation was the centralizing factor to those efforts.
We discussed evaluating the current state of processes, how they affect DBEs, what’s working, and what’s not working. It’s key to identify what’s getting in the way of success and how to capitalize on opportunities.
To do this, talk to the target businesses, analyze the information received, understand their needs, and identify barriers.
Some advice the panelists had for organizations still in the planning stages of their supplier diversity and small business support programs include:
Leading off the previous responses, the discussion centered around gathering feedback, networking, building partnerships, and meeting these businesses where they are as a few of the ways to structure a supplier engagement strategy. As Sheena put it, “know your ecosystem”.
We talked about finding out how the target business owners spend their time and meeting them there so they don’t have to go out of their way to engage with you. A great example that Robert mentioned is that his team works with the office that handles business licenses to piggyback on their communications and other ways to engage.
Part of the feedback the panelists recommended gathering was how these target businesses want to be engaged with such as:
Sheena also discussed how she creates and leverages public-private partnerships. This means engaging with local professional service providers to create educational materials and offer free or subsidized services. Most of the target businesses don’t have the funds to hire a lawyer or an accountant but through these partnerships they would have access to services that can remove barriers for them to compete for government contracts. Part of this is to draw business owners in and offer educational opportunities while incentivizing their engagement.
One takeaway from the responses to this question is to build relationships with internal stakeholders to create change in RFP and RFQ processes. Since government agencies tend to have long tenure, it’s easy for staff to have a “this is how we’ve always done it” mentality and resist change. Demonstrating why changes to these processes will benefit them personally as well as the organization as a whole will go a long way in securing buy-in.
Another key point is to set these businesses up for success in the RFP and RFQ processes. Your organization has access to resources that these businesses don’t, such as a legal team. You can use these resources to take some of the strain off and encourage vendors to submit responses. For example, if one of your RFP requirements for the vendor is to submit a contract, have your legal team draft a standard contract for them to use.
Some advice was to try new things with these processes. Ask for feedback from both internal and external stakeholders and take that feedback with grace while implementing where possible.
Measuring your program success is key to future improvement, so as part of planning you should define success criteria and what metrics to track. Reevaluating the way success is measured is also a great way to grow and scale your program as you go.
Here are some of the metrics our experts track:
Also mentioned was the opportunity to use a customer relationship management (CRM) system to track contacts and communications with them as well as follow a timeline from the first touchpoint to winning a contract.
Creating such a large shift in processes and priorities with no real framework to work from can mean a lot of trial and error but our panelists agreed: progress is progress.
A lot of the discussion circled back to educating and empowering colleagues. Resistance to change isn’t necessarily intentional; it could be that they’re unaware of new ways of doing things or have misconceptions about what’s allowed and what’s encouraged.
The panelists also encourage those trying to create similar change to be actively involved in the improvement and not to just do things on autopilot. Waiting for perfection is counterproductive.
Sheena sums it up: just start. There is no right or wrong way to start supporting DBEs so start having conversations with your internal teams and the businesses you aim to support. Small businesses are the backbone of America and supporting them is a smart business strategy.
Robert says to meet the businesses where they’re at and focus on what you can control. Small businesses have many restrictions so you can choose to change your procurement processes to meet their needs rather than trying to shape businesses to meet yours.
Public procurement teams are in a unique position to support the economic growth and social wellbeing of your local communities. Getting started on these initiatives can be daunting, but arming yourself with as much information as possible is a great first step.
Read about how you can support vendor diversity in your organization with Bonfire.