Aug 28 2023

State and Local Government Supplier Diversity Benefits Contractors and Citizens

Agencies should strive to invest in diverse small businesses within their communities.

The city of Boston last year published a disparity study, its first in 18 years, with the goal of “strengthening business opportunities for people of color and women.”

Boston sought to address “deep economic inequities” with its study, which it devised to inform the city of any changes required to expand diversity in its supplier base. In an executive order, Boston set a goal to award city contracts to at least 25 percent minority- and woman-owned businesses every year (15 percent for women-owned businesses and 10 percent for minority-owned businesses).

Municipal leaders saw the study as an opportunity to continue to address inequality in contracting practices with respect to expanding opportunities for minority-owned businesses. “The steps outlined by the Disparity Study and Executive Order puts in place the steps we must take to eliminate the root causes of inequity, wherever they exist, as well as unlock more opportunities for positive change as our City moves forward,” the city notes on its website.

The International City/County Management Association produces its ICMA Equity & Inclusion Toolkit to help other local governments do the same. ICMA calls on local governments to ensure their supplier bases reflect “the diversity of the communities” that they serve. This is critical for fostering economic growth, for building up communities, and for the satisfaction of citizens and government employees. 

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Small Business Spending Boosts the Economy

The United States finds itself in persistent uncertainty where the economy is concerned. Each state government must plan for economic recovery, and those governments must make procurement decisions focused on investing in their own communities.

State and local governments are quite aware of the benefits of local procurement and spending money within their jurisdictions, as this boosts their citizenry and strengthens the local economy.

Should a local government agency choose an IT contractor far afield, it would be sending money outside of its community. Suppliers must be ready to take advantage of these contracting opportunities. They must have the capacity to handle the work and have access to capital.

CDW positions its business to support local suppliers to handle these opportunities, and does so with a focus on diversity, equity and inclusion (DEI). CDW seeks collaboration and not competition with small local businesses.

State and local governments are far ahead of everyone else in seeing the benefits of local procurements because they know firsthand how investing regionally in diverse suppliers builds communities and benefits citizens.

LEARN MORE: How local governments can elevate DEI principles in procurement.

Diverse Supplier Bases Build Community

Every U.S. mayor elected to office arrives with some sort of promise to elevate small businesses. All want their communities to thrive. And they can help neighborhoods thrive with diverse supplier bases that reflect the community. With a supplier ecosystem built from their own community, officials see improved decision-making thanks to informed input on local conditions.

Local governments also gain more insights into problems on the ground and thus become smarter about potential blind spots. They can solicit input from community leaders that represent their neighbors to learn about what’s happening around them.

Biases decline if an agency establishes a DEI program and creates strategies around it to include better representation in the community. For example, Washington state offers guidance to its local governments for establishing diversity goals.

The state notes that local governments win through diversity with “improved decision-making," better community representation and “increased community trust” as the community gains a better understanding of government initiatives.

Kristin Malek
Ensuring a diverse supply chain in government procurement policies and practices fulfills an obligation to citizens to spend tax revenues wisely."

Kristin Malek Director of business diversity, CDW.

Citizens and Employees Gain from Procurement Diversity

Small businesses account for 44 percent of total U.S. economic activity. So, striving to diversify a government supplier base will pay dividends in supporting the overall economy.

Ensuring a diverse supply chain in government procurement policies and practices fulfills an obligation to citizens to spend tax revenues wisely. Goals to allocate funds to small and disadvantaged businesses create more equity in the allocation of resources and build up local communities. State and local governments should ask their prime contractors to help with these goals, setting allocation targets for diverse and disadvantaged businesses.

These goals can also help governments in hiring and retaining good employees. Ethical organizations and socially responsible organizations attract strong candidates. Supplier diversity can lead to increased employee satisfaction, reducing staff turnover.

Employees have a sense of belonging if they see diversity not only in their own ranks but in their supplier bases.

Washington state notes that equitable allocation of public resources to all parts of a community increases trust between community members and “offers citizens more opportunities to interact with one another.”

The overall result is improved employee satisfaction, reduced staff turnover and increased employee engagement.

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