Survey of State Inclusive
Business Programs
Tim Lohrentz, Insight Center for Community
Economic Development
July 21, 2008
Insight Center for Community Economic Development
The Insight Center for Community Economic Development is a national research,
consulting and legal organization that develops and promotes innovative
solutions that help people and communities become, and remain, economically
secure. The Insight Center is based in Oakland, California, and was founded in
1969 as National Economic Development and Law Center (NEDLC).
The Insight Center's multidisciplinary approach utilizes a wide array of community
economic development strategies including industry-focused workforce
development, individual and community asset building, establishing the link
between early care and education and economic development, and advocating
for the adoption of the Self-Sufficiency Standard as a measurement of wage
adequacy and an alternative to the Federal Poverty Line.
Survey of State Inclusive Business Programs
July 21, 2008
Page No. 2
Content
• Why Look at State Inclusive Business Programs?
• The Last Five Years: What’s Happening in the States?
• Supplier Diversity in the States
• State Implementation of the USDOT DBE Program
Survey of State Inclusive Business Programs
July 21, 2008
Page No. 3
Purpose of the Study
This study examines the procurement and
business development programs for small
businesses owned by people of color (MBEs)
and women (WBEs), looking at all 50 states
and the District of Columbia.
The purpose of the Insight Center’s state policy
scan of inclusive business programs is to
promote policies and programs that enhance
minority and women business development.
M/WBE development builds intergenerational
family assets, aids community reinvestment,
creates jobs, adds to the tax base, and links
communities of color to the regional economy.
Survey of State Inclusive Business Programs
July 21, 2008
Page No. 4
What is this trend?
2.0
1.9
1.8
1.7
1.6
1.5
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
State Inclusive Business Programs – M/WBE Targeted Procurement and
Business Development Services
Survey of State Inclusive Business Programs
July 21, 2008
Page No. 5
Enhancements in 2003
Indiana
Created an M/WBE Advisory Commission and Administrative
Division to lead its supplier diversity. Required each state
agency to have a supplier diversity plan.
Ohio
Created the Encouraging Diversity, Growth and Equity (EDGE)
program. State agencies have a 5% goal for contracting with
EDGE-certified firms.
Maryland
The Governor’s Commission on MBE Reform was convened to
identify and solve problems with the state’s M/WBE program.
Delaware
Expanded its race- and gender-neutral supplier diversity
program with the adoption of a systematic electronic vendor
notification system targeting M/WBE firms and M/WBE business
development associations.
Survey of State Inclusive Business Programs
July 21, 2008
Page No. 6
Enhancements in 2004
Massachusetts New legislation required that any local government body that
receives state-funding for construction-related projects must
have goals for MBE and WBE participation.
Tennessee
Passed legislation that required all state agencies to implement
supplier diversity practices.
Arizona
Created an electronic vendor directory which includes M/WBE
status, and required M/WBE bidders on state contracts under
$50,000.
North Carolina The state helped fund and establish the Minority Business
Enterprise Center which provides technical and financial
assistance to MBEs.
Survey of State Inclusive Business Programs
July 21, 2008
Page No. 7
Enhancements in 2004 and 2005
Pennsylvania
Minnesota
Florida
Missouri
2004
Overhauled its M/WBE certification process and required each
state agency to have a supplier diversity plan and coordinator.
Doubled state M/WBE procurement from 2003, the biggest
upswing since the late 1990s.
2005
Doubled procurement from certified M/WBEs from 2004.
Established the Office of Supplier and Workforce Diversity
(OSWD) to ensure that each state agency continues to pursue
supplier diversity in a race- and gender-neutral fashion.
Survey of State Inclusive Business Programs
July 21, 2008
Page No. 8
Enhancements in 2006
Maryland
A comprehensive disparity study leads to a 24.3% DBE goal on
federally-funded highway projects, the highest of any state, and
a 25% goal on all state spending, also the highest in the country
Illinois
IDOT disparity study demonstrated continued need for a raceand gender-conscious DBE program and established a 22.77%
DBE goal for FHWA funds, the 2nd highest in the country.
Colorado
Established the Minority Business Advisory Council to review
the operations and effectiveness of the state Minority Business
Office and to support MBE development. In addition, the state
established that all state spending in Denver would be subject to
M/WBE goals.
Survey of State Inclusive Business Programs
July 21, 2008
Page No. 9
Enhancements in 2006
Virginia
Changed procedures for its small-, women-, and minority-owned
business (SWaM) program, requiring each agency to have a
SWaM plan, including specific WBE and MBE sub-goals.
South Carolina Overhauled its M/WBE program with new procedures and
tracking mechanisms to ensure implementation.
Washington
Following a disparity study, the state DOT reestablished raceand gender-conscious contracting, with an 18.77% DBE goal for
FY06-07 FHWA funds, one of the highest rates in the country.
Survey of State Inclusive Business Programs
July 21, 2008
Page No. 10
Enhancements in 2006 & 2007
New Jersey
2006
Governor Corzine signed Executive Order 34, establishing a
Division of Minority and Women Business Development, to
ensure equal opportunity access to the state’s marketplace.
2007
Massachusetts Required each state agency to have an affirmative marketing
program and coordinator.
New York
Governor Spitzer established an M/WBE Executive Leadership
Council and M/WBE Corporate Roundtable to identify problems
and recommend fixes to the state’s M/WBE program.
Survey of State Inclusive Business Programs
July 21, 2008
Page No. 11
Where are They? State Supplier Diversity
Survey of State Inclusive Business Programs
July 21, 2008
Page No. 12
Bipartisan Support for Inclusive Business
“We all benefit from an educated citizenry
and economic development, such as
business development.”
William Crawford has served in
the Indiana State House since
1972 and serves as Chair of the
Indiana House Ways & Means
Committee and is a long-time
advocate for minority- and
women-business development.
“That is why we have bipartisan support for
affirmative action in Indiana. The state’s
economic growth is dependent on growth in
all parts of the state, including the inner city,
suburbs, and rural areas.”
Indiana’s M/WBE program has
been supported by Democratic
Governors Bayh, O’Bannon,
and Kernan, and current
Republican Governor Mitch
Daniels.
- Indiana State Representative William
Crawford
Survey of State Inclusive Business Programs
July 21, 2008
Page No. 13
State Supplier Diversity Efforts
• Agency Coordination & Accountability
• Focused Vendor Outreach
• Technology for Supplier Diversity
• Linking Procurement to M/WBE Financing &
Business Development Services
Survey of State Inclusive Business Programs
July 21, 2008
Page No. 14
Agency Coordination & Accountability
• Aspirational goals of M/WBE procurement achievement for each state agency
and university
• Each agency must create and submit a supplier diversity plan
• Each agency designates a supplier diversity coordinator
• The performance reviews of agency directors includes supplier diversity efforts
• Workshops and one-on-one assistance with agency procurement officers
Survey of State Inclusive Business Programs
July 21, 2008
Page No. 15
Focused Vendor Outreach
• Business fairs, ‘power’ networking, social events, and ‘match-maker’ activities
• Bringing together diverse businesses, private purchasing agents, and public
agency procurement officers, or
• Bringing together prime contractors and sub-contractors
• Telephone call conferences, video conferences, and webinars
• Partnering with local chambers and supplier development councils
• Best Practice: Florida, Massachusetts and the Illinois DOT all host annual
M/WBE award events
Survey of State Inclusive Business Programs
July 21, 2008
Page No. 16
Technology for Supplier Diversity
• Electronic vendor registration
• E-bid notification to registered M/WBEs on all relevant public lettings
• E-procurement, purchase orders, monitoring, and tracking
• Universal Certification Protocol (UCP) and Streamlined or Reciprocal
Certification Process
• Best Practice: Colorado, Delaware, North Carolina, Vermont
Survey of State Inclusive Business Programs
July 21, 2008
Page No. 17
Linking Procurement to M/WBE Financing & Business Development
Services
• Ten States Have M/WBE Equity Investing and Loan Programs
Best Practice: Mississippi has one of the larger MBE loan pools, with a total
capitalization of over $26 million. There are two loan programs – one for loans
of up to $250,000 and a micro-loan program for up to $35,000.
• Low-Interest Loans, Brokering Loans, Loan Guarantee and Bonding Programs
Best Practice: Washington has a Linked Deposit Program: interest from state
deposits in CDs are linked to commercial loans made to M/WBEs, lowering the
interest charged on the loans by two percent.
• Fourteen states provided targeted Business Development Services to M/WBEs
Best Practice: Ohio has perhaps the most extensive targeted business
development services to M/WBEs through the Division of Minority Business
Affairs (DMBA) within the Department of Development. The DMBA has set up
the Minority Contractors and Business Assistance Program (MCBAP).
Survey of State Inclusive Business Programs
July 21, 2008
Page No. 18
For more information on State M/WBE Programs
http://www.insightcced.org/index.php?page=programgoals
Survey of State Inclusive Business Programs
July 21, 2008
Page No. 19
USDOT DBE Programs: Key Component
• Even if states do not have a state M/WBE program, they all implement
Disadvantaged Business Enterprise (DBE) programs for USDOT funds.
• USDOT DBE programs comprise some of the largest dollar amounts of
procurement to M/WBEs
• The biggest of the federal DBE programs administered by states is through the
Federal Highway Administration (FHWA).
• 31 of 39 states, for which we have data, utilize race-/gender-conscious goals.
Survey of State Inclusive Business Programs
July 21, 2008
Page No. 20
For the USDOT DBE Program: Maryland, Illinois,
Colorado, and Georgia stand out
Survey of State Inclusive Business Programs
July 21, 2008
Page No. 21
So do Washington, Massachusetts, and Missouri
Survey of State Inclusive Business Programs
July 21, 2008
Page No. 22
Financing Innovations in State DOT DBE Programs
Georgia, Hawaii, and Wisconsin are among the few states that have a DBE
loan program operated by the department of transportation. Georgia DOT funds
Citizens Trust Bank, a minority-owned bank, to make loans to DBE subcontractors below market rate. Montana hopes to soon open a similar program.
Best Practice: Wisconsin DOT is noteworthy, as it helps DBEs to access
financing and bonding specifically for the purpose of helping them move from
being sub-contractors to prime contractors. At the same time it provides the same
DBEs with long-term financial counseling.
State DOTs with a bond guarantee component to their DBE program include:
Florida, Maryland, and Tennessee.
Survey of State Inclusive Business Programs
July 21, 2008
Page No. 23
Additional DBE Program Innovations
• Vendor Outreach – Delaware, New Jersey, South Dakota, Utah, Vermont, and
Wyoming DOTs
• Highway Construction Technical Assistance Programs in Illinois, Kansas, and
Texas DOTs
• Small Business Development Services by New Hampshire, Pennsylvania, and
Minnesota DOTs
• DBE mentor-protégé programs in California, Delaware, Illinois, Minnesota,
North Carolina, and Texas.
Survey of State Inclusive Business Programs
July 21, 2008
Page No. 24
For more information on State DOT DBE Programs
http://www.insightcced.org/index.php?page=dotdbegoals
Survey of State Inclusive Business Programs
July 21, 2008
Page No. 25
Conclusions – Advocate for State Best Practices
• Inclusive Business Programs are politically feasible – more and more
states are doing them
• Inclusive Business Programs make business sense – they help
corporations be more competitive and do the same for states and local
governments
• M/WBE development leads to reinvestment and jobs in our communities,
a stronger tax base, intergenerational transfers of wealth
• Supplier diversity coordinators and plans
• Electronic vendor registration and notification
Survey of State Inclusive Business Programs
July 21, 2008
Page No. 26
The Inclusive Business Initiative
http://www.insightcced.org/index.php/insight-communities/inbiz
inbiz@insightcced.org, 510-251-2600
Survey of State Inclusive Business Programs
July 21, 2008
Page No. 27