How Memphis Revamped Its Procurement By Embracing Minority Businesses

The Tennessee city has worked to become more responsive to the needs of local minority businesses—and to help those firms grow.

The Memphis Area Transit Authority has contracted with Chicago-based to develop a cashless fare payment system.
The following blog post by the City of Memphis, a current City Accelerator participant, is part of the City Accelerator initiative, a collaboration between 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.

Municipal procurement is not usually a headline-grabbing part of city government (that is, unless something goes wrong). But the work of the city of Memphis over the past year and a half to improve our contracting practices—and to use the city’s purchasing power to help grow and support small businesses and minority- and women-owned firms—has been incredibly important to the future of our city, and the lives of our citizens.

One of the first steps in helping support those businesses was to make it easier for them to do business with government agencies. So in the spring of 2018 we revived the Inter-Governmental Procurement Consortium and set to work on how we developed policy, implemented programming and communicated opportunities to the business owners. This Consortium is made of up multiple government agencies in Memphis and represents all citizens. The agencies include Shelby County government, Memphis/Shelby County Airport Authority, Memphis Light Gas & Water, Shelby County Schools, MATA, Memphis Medical District Collaborative and Greater Memphis Chamber. Each month these organizations meet to discuss programs, challenges, sharing of best practices and ways to collaborate to meet the needs of the citizens we serve. This consortium touches all areas of government procurement and represents all citizens.  

We enhanced our “We Mean Business Symposium,” a biannual convening of vendors and city agencies, by expanding the “Seat at the Table” portion of the program. That’s an aspect of the program that allows minority- and women-owned business enterprises (MWBEs) to have face-to-face conversations with decisionmakers in government procurement. We also created a 12-month countywide forecasting book that listed various vendor opportunities with agencies including the city of Memphis, Shelby County, the Memphis-Shelby County Airport Authority, Memphis Light Gas & Water and the Economic Development Growth Engine. 

But it’s not just about making sure the city is responsive to MWBE needs—it’s about helping those businesses build their own capacity. So we took a hard look at the barriers that were keeping some business owners from doing business with the city, which included things like a lack of bonding capacity and a lack of financial readiness related to eligibility for loans. We contracted with a consultant, which provided specialized services to business owners to help ensure they were ready financially to take on projects.  Our workshops have continued to be at capacity. 

We also wanted to help MWBEs better understand how business-to-business opportunities are created from informal networks. So we brought in a local author and business expert, Lucy Shaw, to conduct a series called “The Hidden Rules of Business.” Shaw is a best-selling author, facilitator, national speaker and the board chair of Tri-State Bank of Memphis. Her areas of expertise include leadership and the dynamics of poverty as well as business and personal development. Over the course of a few months, she led free lunch seminars to sold-out crowds of local business leaders. 

We also know that improvements to our contracting processes—even incremental ones—can have a monumental effect. So we’ve developed new methods to pay vendors promptly, which is a great concern for smaller businesses that have more cash flow concerns than large businesses. We’re just getting that effort started, so it’s too soon to chart the results, but it will be a major help to the business community we work with. We’re also completing a total review of our business process engineering and providing broad recommendations that will be ongoing. This process, which has been branded as Project PRESS ("Procurement Review for Efficiency, Speed, and Success"), is being led by our newly appointed CFO, Shirley Ford. 

We’ve also launched two new exciting, innovative programs in the past couple years that will help us engage our MWBE community even further. 

First, we implemented a new policy of having informational meetings with those businesses that didn’t win bids, just to coach them about how they may be more successful next time. 

Second, we kicked off the 800 Initiative, which offers technical assistance, coaching, loans and access to other resources to support the roughly 800 African American-owned businesses that are between the startup phase and being fully at scale. Our goal is to help those grow their collective annual revenue by $50 million in five years.

Memphis is fiercely committed to strengthening our small, minority- and women-owned businesses. In the first two fiscal years of Mayor Jim Strickland’s tenure in office, we doubled our spending with MWBEs, from 12 percent in 2015-16 to 24 percent in 2017-18. Thanks to the technical assistance provided by the Citi Foundation and the Living Cities grant, as well as the fellowship with other cities in the City Accelerator that are working on the same challenges, we in Memphis will continue to make even greater strides.

Zach Patton -- Executive Editor. Zach joined GOVERNING as a staff writer in 2004. He received the 2011 Jesse H. Neal Award for Outstanding Journalism