Equitable Contracting Delivers Impact

A new guide to equitable procurement allows cities to build on field-tested ideas.
January 25, 2019 AT 11:00 AM
By Ben Hecht  |  Contributor
Ben Hecht is the president and CEO of Living Cities, which works to re-engineer obsolete public systems and connect low-income people and underinvested places to opportunity.
By Brandee McHale  |  President
Brandee McHale is President of the Citi Foundation and Director of Corporate Citizenship at Citi.

The following blog post is part of the City Accelerator initiative, a collaboration between Governing, the Citi Foundation and Living Cities that aims to speed the adoption of innovative local government projects within and across cities that will have a significant impact on the lives of their residents, especially those with low incomes.

How can local government strengthen its economy, broaden the base of businesses supporting its community through jobs, products, and services, and inspire public confidence with government effectiveness and efficiency?  There’s an answer worth $1.5 trillion: equitable and inclusive contracting.

Local governments spend that much annually in the United States on everything from construction to supplies to technology systems.  Who they spend their dollars on has far-reaching consequences.  According to Interise’s 2017 Impact Report, growth by contracting can have enormous benefits for local businesses, especially small businesses and businesses owned by people of color.  Among the nearly 2,600 small business graduates from Interise’s StreetWise MBA program, one-third have achieved growth through new contracts, with the average value to each business with new contracts valued at $2.4 million. 

Despite the potential for enormous benefits both socially and economically, many local governments have avoided the messiness of reforming municipal procurement processes to address diverse business inclusion with intentionality.  Here are five cities that didn’t: Charlotte, Chicago, Los Angeles, Memphis, and Milwaukee.  As part of our City Accelerator, an 18-month cohort supported by Living Cities and the Citi Foundation, these cities found innovative, effective, locally-tailored strategies to leverage public purchasing power.  They focused on making it easier for firms owned by people of color to anticipate and compete for city contracts, access capital, and receive supportive services that assist in their business growth. Today we are sharing the successful approaches they took in our latest guide for public sector practitioners, Culture, Collaboration and Capital: Leveraging Procurement for Economic Equity.

City leaders, procurement professionals and public sector practitioners who want to spur economic vitality and growth can use this guide to identify solutions and tools to implement inclusive procurement strategies effectively and methods to measure success.   Examples of the great strides cities achieved over the last 18-months applying many of the strategies in the guide provide inspiration.  Some achievements were internal: cities built champions and leaders across departments to support citywide procurement inclusion efforts; several cities launched or expanded city-wide buying plans; another city launched a prompt payment program.  Other achievements leveraged external partners as summed up in a key lesson learned from the city of Chicago: “[c]ity governments can be leaders and catalysts but are only one piece of the procurement landscape.  Through partnerships with sister agencies and anchor institutions, cities can dramatically expand the contracting opportunities for diverse vendors and contractors in the region.”   The City of Memphis leveraged partnerships in a big way. Mayor Strickland launched the 800 initiative with leadership from FedEx, StartCo. and Christian Brothers University to grow the revenue of roughly 800 African-American owned businesses that are between start-up and full scale by $50 million by 2023.

We recognize there are numerous challenges cities face in making their procurement systems equitable.  Inadequate data or data that is misaligned across departments and agencies, insular risk-averse procurement cultures, and policy or legal context that preclude race-conscious approaches are among the challenges cities confront when making their procurement systems more inclusive and equitable.  While there are unique circumstances from one jurisdiction to another that impact which set of tools  each city should employ, the guide recommends that the best strategy for accomplishing a city’s goal of leveraging procurement for inclusive economic opportunity usually involves a mixture of race-neutral and race-conscious components.

Culture, Collaboration and Capital, was written by Griffin & Strong, a law and public policy consulting firm specializing in disparity research and supplier diversity for government entities and private corporations.  They worked alongside the City Accelerator cohort to assess each city’s needs and assist in the development of tailored solutions.  After reading about the innovations pursued by the five cities in the City Accelerator cohort, we are confident that practitioners in the field will be motivated to rethink how their local government’s purchasing power can be utilized to nurture the growth of businesses with diverse owners to address the racial income and wealth gaps that hinder our nation’s dynamism.

We hope you are one of them.

Inclusive Procurement is the focus of the fourth cohort of the City Accelerator. The City Accelerator, an initiative of Living Cities and the Citi Foundation, works within and across cities to advance and promote the spread of promising innovations that will have a significant impact in the lives of residents. Past cohorts have focused on issues like infrastructure financing or resident engagement.

Be part of the campaign for civic innovation at the City Accelerator, presented by Citi Foundation.