WCH In the News
Appropriations in the current state budget combined with federal dollars from the American Rescue Plan afford North Carolina leaders a propitious opportunity to simultaneously create a more inclusive business ecosystem and address some of the state’s most pressing social, economic, environmental and health equity issues.
Along with $20 million to facilitate minority-owned business development, growth and expansion, the budget includes more than $3.5 billion to expand broadband access, affordability and digital literacy in underserved areas; clean up legacy pollutants (lead pipes and asbestos) in public schools, childcare centers and residential housing with children and pregnant women; and improve water and waste-water infrastructure projects in small towns and rural communities.
The state’s most recent disparity study underscores why seamlessly linking these budget appropriations is a strategic imperative. Despite far greater minority- and women-owned business capacity as our state has become more diverse over the last three decades, state agencies and the higher education system each spent less than 10% of their contracting and procurement dollars with historically underutilized businesses between 2014 and 2018.
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Typically, such under-utilization has been attributed either to an absence of historically underutilized businesses (HUB) or deficiencies in existing minority- and women-owned enterprises’ capacity to deliver goods and services. In fact, that capacity is solidly in place.
Barriers in the state system of contracting and procurement make it extremely difficult for HUBs to obtain government contracts. Moreover, despite a host of recommendations from the most recent and prior disparity studies, the state has failed to leverage the strategies and tools that many other jurisdictions are adopting to promote greater equity and inclusion in government contracting and procurement.
Herein lies the opportunity. Through intentional and purposeful leveraging of procurement and contracting opportunities in the current budget appropriations, the state not only can ensure our business ecosystem is as diverse as the population it serves but also achieve greater shared prosperity by doing business with a more diverse pool of suppliers of goods and services.
To achieve this type of mission-driven entrepreneurialism, several changes in the state’s approach to contracting and procurement are required.
First, American Rescue funds must be spent within a specified time frame, so the state needs to move quickly to make supplier diversity in procurement and contracting a strategic imperative, not a compliance issue. Nondiscrimination in public and private contracting — albeit not without legal challenges — has been government-mandated for nearly 40 years.
Given dramatic changes in both the size and composition of North Carolina’s population, strategically targeting people of color, women, LBGTQ, disabled people, veterans and other diverse suppliers makes good business sense. Typically, small diverse firms are more flexible, agile and driven to succeed than larger firms, which can reduce cost and ensure goods and services are designed and delivered in a manner consistent with the consumer preferences of the state’s diverse citizenry.
Second, this broader commitment to supplier diversity must come from the state’s top leadership — the Governor’s Office — and must be instituted throughout state government. The Governor must mandate supplier diversity goals to every unit of government.
Third, the state’s existing system of contracting and procurement must be replaced with a fully automated supply chain management system. Turnkey e-procurement solutions exist in the marketplace that automate the processes of recruiting, screening, certifying, pre-qualifying, educating and mentoring diverse supplier aspiring to do business with the state. These technology-enabled platforms also host a range of compliance and reporting tools that benchmark and set goals for supplier diversity, assess risk, and monitor key performance indicators, including diversity spend, economic/community impact and return on investment via a vendor or diversity scorecard.
Adopting a system and engaging the solutions provider to manage contracting and procurement will reduce both the number of state government staff and time required for program implementation and management; streamline the process and reduce the participation cost for diverse suppliers; and align the state’s efforts with standard supplier diversity practices and procedures in the private sector as well as some state and city governments.
By immediately instituting a truly equitable contracting and procurement system for North Carolina’s American Rescue Plan funds and state budget appropriations, we can build and strengthen our diverse small businesses and the communities they represent.
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