How enhanced government procurement processes can help imbed diversity & inclusion

This post was originally written in my role as a contributor for the Thomson Reuters Institute. You can read the original post here.

Diversity, equity & inclusion (DEI) has been a major focus for local government organizations in recent years as they actively explore better ways of bringing new perspectives into governance, addressing past inequities, and striving to make the public sector more representative of the communities in which they serve.

In 2018, the International City/County Management Association (ICMA) released its Equity and Inclusion Toolkit, which provides resources to empower local governments with best practices in the interest of building inclusive organizations, and by extension, more welcoming communities. And while many DEI initiatives at the local government level are housed within human resource divisions and include enhancing DEI for current and prospective employees, they may not always factor in how to ensure that outsourced work (and the associated procurement processes for contracts) can be DEI-focused as well.

Simplifying procurement processes

Local governments are large users of request for proposal (RFP) processes, in which agencies define the services or goods desired, craft an evaluation criterion, and solicit responses. Municipalities and county-level governments have established price points that automatically trigger a formal procurement process, which can ensure against nepotism or corruption and discourage government waste in awarding contracts.

Some accessible means of streamlining and modernizing RFPs may include:

• allowing proposal responses to be submitted electronically;

• ensuring that any required forms can be accessed as form-fillable PDFs;

• utilizing a proposal tracker where vendors can check on the status of their RFP review. (For example, the City of Tacoma, Wash., has an embedded proposal tracker on its website that greatly increases vendor awareness and transparency throughout the procurement process); and

• sharing, clearly and explicitly, the evaluation criterion and weighting for proposal review and using this criterion in the evaluation process.

Reducing barriers for applicants

An inclusive procurement process removes potential barriers that might discourage the widest slate of vendors from bidding. Removing steps that add significant time or cost to project proposals, often with little gain for the reviewer, or which allow for greater RFP exposure can attract a more diverse pool of vendor applicants.

For example, some methods government agencies can use to reduce these barriers and gain more proposal exposure might include: not requiring hard copy submittals for RFP responses, or removing notarized signature page requirements wherever possible. Also, RFPs should be advertised in free access locations, rather than exclusively being posted on pay-to-play vendor sites or bid aggregators. (State municipal league organizations often offer RFP postings at no or nominal cost for their members.) Agencies should also ensure that RFP timelines for response are long enough to garner response, such as three weeks at a minimum, but preferably one month. And they should share answers to all questions received by submitters in a public location — such as on a proposal tracker website — to ensure information is equal for all parties.

Setting benchmarks for data & tracking

If a local government’s goal is to increase the percentage of contracts granted to businesses owned by under-represented individuals, then the scope of the current awarding metrics must be structured in order to effectively measure change.

For example, government agencies should make sure that all contracts entered for local government services include a declaration page noting majority ownership and identifying diverse business characteristics. Where possible, agencies should evaluate majority ownership of past local government contracts to better understand necessary diversity benchmarks.

Further internal analysis may be required. Larger municipalities sometimes opt to have outside firms complete economic disparity studies in order to get a broader analysis of government efforts and contract-award history and to understand market opportunity within communities. While in municipalities with lower levels of contracting, this data may be able to be generated internally.

These efforts can pay dividends. A study into the economic disparity of city contracts undertaken by the City of Asheville, NC in 2018, found that less than 5% of the city’s non-construction projects were awarded to women- or minority-owned businesses. These findings triggered the update of the city’s Business Inclusion Policy and shifted contract awarding methodology from race-neutral to race-conscious.

Making meaningful connections

Collecting data through a study — such as the one done by Asheville or another done by as the City of Boston — can help municipal governments more fully understand the economic disparity of municipal contracts. The likely result are some key and specific actions that local governments can take to connect with diverse business communities, such as develop a landing page, such as the one created by Asheville to spell out the municipality’s business inclusion efforts.

Municipalities should also participate in state-run diverse-owned business registries and consider favorable weighting in the RFP process for registered businesses. In fact, some local governments opt to create their own business registries rather than using state registries.

Further, agencies seek to connect directly to these diverse-owned businesses by hosting small business open houses or standing calls to connect small businesses in the community with contracting or work opportunities. Municipalities should also forge collaborative partnerships with B2B organizations in their greater region or service area. For example, the Hispanic Chambers of Commerce, LGBTQIA+ business networking organizations, and others can help connect diverse businesses to local government opportunities.

Finally, more local governments are providing exclusive opportunities for minority-owned businesses to bid for municipal contracts. In Boston, for example, the city established a Sheltered Market Program in early 2022 for projects in key areas that were identified in their disparity study. Programs such as these help build the capacity of small, local, and diverse businesses to bid for larger government contracts down the road.

These actions, taken in total, can foster an improved state of equity in the government procurement process for diverse-owned business in the future.