Supplier diversity
The Transparency and Accountability in Procurement Act (HD 4759) described by Ed Gaskin (“Supplier diversity can reduce racial wealth gap,” 1/10/24, Boston Herald) is no doubt wellintentioned, but I hope the state Legislature will consult representatives from private industry, and seriously listen to their answers, before proceeding with the requirements for all private organizations over $100 million in annual revenue to report on their supplier diversity spend.
As a career (private sector) procurement professional, I can attest to the serious efforts that have been made to increase spending with certified minority, women, veteran, disabled, and LGBTQ+ owned businesses. However there are significant challenges associated with converting intent to contracts.
To be certified, diverse suppliers must be privately held by individuals who meet the socially defined requirements. Because they cannot accept funding that dilutes their ownership, these businesses are often small and poorly suited to supply businesses over $100M in revenue. In addition, it is expensive to secure and maintain a diversity certification, meaning that these businesses are constantly re-thinking their choice to hold one. The effort required to keep supplier diversity records up to date is not only costly and time intensive, it can open buy-side companies up to repetitional risk if a certification has lapsed but their spend is still included in reports.
The effort to increase supplier diversity is ongoing and worthwhile, as evidenced by the fact that companies have run formal programs since the 1960s and continue to invest in them without regulation. Before making the state of Massachusetts less business friendly on yet another front, the Legislature should hear what the companies who would be covered by this Act have to say.
Kelly Barner Shrewsbury