On the heals of American practices of ‘Jim Crow’ atrocities came disguised economic barriers that work in the near exclusion of black owned business enterprises to readily operate in American capitalism. Apartheid is not always blatantly practiced in plain sight, where a part of racial hate comes in policies and procedures that must be adhered to in the public and private sectors for contract engagement.
Take the Minority Business Enterprise (MBE) resource pool or data base of firms identified as underutilized. Procurement management professionals are trained to research and inquire about how to locate these firms in dead pools of available companies, and once identified are required to ensure that they have been validated as a bona fide MWBE.
Subcontracting gets tossed around frequently in large buying organizations that stringently adhere to economies of scale and aggregated and bundled buying patterns to point of sole source acquisitions. In this event, the option available for inclusion of black enterprise is placed on subcontracting terms and a major portion of the task of inclusion from this point defaults to the selected prime contractor to track and report 2nd and 3rd tier activity.
Subcontracting is cast in stone as a practice to contend with potential reverse discrimination. Major buying entities are able to avoid negative repercussion from non-minority business enterprises complaints and accusations that large agencies are awarding away contracts to MBE because of the company’s policy. Subcontracting elevates scrutiny on how supplier decisions do not cut out the white-owned firms (Familiar) from lucrative business opportunities and profitable contract awards.
American business is by far no sprint race, where planning out 20-30 years is the nature of sustaining a business in the long run. Accordingly, long-term contracts and infrequent bidding is built-in policies for large buying agencies. Consequently, there is rarely an opportune time to show up seeking to capture a large contract when timing and new product compatibility are stacked against emerging MBE vs. FBE [Familiar Business Enterprises]. Essentially, long-term contracting precludes MBE from current contracting opportunities.
Human Resources & Time Management
Building and implement an operation for inclusion has become a thing. Using businesses before MBE activity applied normal staff levels, but finding special people and business labled as MBE is today a production department that buys nothing, except for promotional items to pass out at MBE trade fairs. Essentially, procurement management personnel have gotten out of the way to do business with FBE since they have now gotten the ‘apparent’ needed support to complete evaluation and qualifying procedures of new suppliers (MBE’s).
Buyers are not in the business of changing out vendors for change sake. When presented with the dilemma of changing suppliers the embedded impediments for change are compatibility and continuity. The current (familiar) contractor that we are accustomed to using knows the work product and can complete the process more proficiently, over that of having to ramp-up with a new supplier (MBE). Consequently it is an inefficient use of time and money to break from what the organization is accustomed to using and are quite familiar with performance expectations and outcomes.
This carryovers with preserving an organization’s economies of scale, as reluctant buyers balk at the possibility of loosing their price savings from being forced to breakup a contract and thereby award fragmented business to multiple suppliers.
Setting numerical goals on the annual spend normally does present too many challenges since this is where buyers can best identify available money for their traditional vendors. There is some push back from those who say this is not in their area of responsibility, but somehow manage to provide input during the budget process.
Notwithstanding, goal setting and reporting results based on those goals has become the largest joke for showing progress of MBE activity. Major buying groups set goals solely on annual spend and report success in by comparison to like organizations. Take a utility company’s annual spend to MBE of $1 billion, which should be fantastic! However, a couple of considerations come into play, the main one being is job creation, whereby MBE programs set forth in the Small Business Investment Act of 1958, and amended in 1978 with Public Law 95-507, was written to encourage the increased use of MBE’s in order to bolster job opportunities in distress and under-served areas of America.
Annual spend does not reflect Zip Code parity or neighborhood analysis to see if poverty areas are improving. The wealth gap does not pan out with annual spend mainly because there is no profit measurement built into the spend numbers. For example, annual disbursements to a Staffing and Temporary Labor firm consists of salaries to the temporary labor, or product for the staffing firm. Depending on the number of people paid (normally thousands) the high spend is a misleading outlay of capital to the MBE community.
Another roughly described example is related to how an annual spend that goes to a MBE that is located in Beverly Hills, CA, where wealth is measured by its Zip Code 90210, will never appropriately measure the effectiveness of a MBE program. Kudos to MBE that can afford to operate a the high rent districts of America, however, measuring spend does not reflect progress of the communities requiring targeted focus.
Communication and Training
Although the board room and C-Suite make the decision to have a MBE program (not operation), the ability for managers responsible for this effort have to go overboard to effectively encourage upper management and key employees who influence the purchasing decisions to cooperate and participate. Shockingly, this lack of cooperation is not limited on the back of white males, you find often times a greater resistance among the rank and file to be the very ethnic groups members targeted in the MBE program.
A type of Clarence Thomas syndrome is not an exclusive club where there are more people affected by this challenge of limited fair-mindedness. For example, there exist a small percentage of blacks in management positions that do not want to appear to their peers as too pro-black, fearing that the company might view them as a militant, or some kind of subversive.
A ‘top’ best practice is to tie community development to salary bonuses. Effective change should reflect more money. Because, as target communities prosper the size of the American economic grows and thereby more goods and services can be purchased. And likewise, no cooperation, no added credit or money.
Union Contractors & Bonding
America and Unions are a serious and important part of the economy’s work product. Balancing supplier section processes where Union work is basically mandatory, growing firms rarely have adequate bonding surety. The larger question is has bonding and union participation become too top heavy.
The Miller Act mandates on contract in excess of $100,00 to secure payment and appropriate surety bonds (bid, performance, supply, maintenance, improvement). Waiver of bonds is not the answer in top best practices, where the attention is on the detail of the work product and do not place a boiler plate on every request for bid. Work closely with the corporation’s risk management team and find real life solutions to an overcome cumbersome minimum requirements that were designed to limit completion.