Inclusive procurement
Strategy overview
Using procurement to advance equity: Public procurement is a powerful tool for local governments to promote more equitable outcomes. Cities and counties can use the procurement process to increase the share of public dollars going to small and minority- and women-owned businesses and to address disparities in and improve the quality of public services.
Making the process efficient, inviting, and transparent: When bidding for a local government contract is time-consuming and confusing, businesses with the least resources, like many small and women- and minority-owned business enterprises (WMBE), will be less likely to participate. By surveying local vendors and mapping the procurement process, local governments can identify opportunities to make government contracts more accessible. One example is requiring pre-bid meetings for each procurement, which allow vendors to ask questions and form joint-ventures.
Integrating equity into contract outcomes: When designing a request for proposals (RFP) or contract, local governments can promote equity by setting clear goals and performance standards. For instance, localities can include standards for community engagement to ensure contractors are responsive to residents’ concerns or create incentives for WMBE participation to encourage prime contractors to work with underserved businesses. To ensure contractors achieve these outcomes, local governments can use real-time performance data to actively manage contracts.
Elevating procurement as a strategic function: Cities and counties can promote equity by reenvisioning procurement as a strategy to improve service delivery. In practice, this means engaging senior leadership to identify upcoming procurements in service areas that need improvement or are aligned with strategic goals; dedicating resources to strengthening the associated RFPs and contracts (e.g., tightening performance standards); and training staff to use procurement as a mechanism to improve service delivery going forward.
While this strategy has not been subject to rigorous, independent evaluations, it is widely-recognized as a best practice among experts in the racial equity space.
Before making investments in this strategy, city and county leaders should ensure this strategy addresses local needs.
The Urban Institute has developed an indicator framework to help local leaders assess conditions related to upward mobility, identify barriers, and guide investments to address these challenges. These indicator frameworks can serve as a starting point for self-assessment, not as a comprehensive evaluation, and should be complemented by other forms of local knowledge.
The Urban Institute's Upward Mobility Framework identifies a set of key local conditions that shape communities’ ability to advance upward mobility and racial equity. Local leaders can use the Upward Mobility Framework to better understand the factors that improve upward mobility and prioritize areas of focus. Data reports for cities and counties can be created here.
Several indicators in the Upward Mobility Framework may be improved with investments in inclusive procurement. To measure these indicators and determine if investments in these interventions could help, examine the following:
Opportunities for income: Household income at 20th, 50th, and 80th percentiles. These data are available from the Census Bureau’s American Community Survey.
Employment opportunities: Ratio of pay on an average job to the cost of living. These data are available from the Bureau of Labor and Statistics’ Quarterly Census of Employment and Wages.
Access to jobs paying a living wage: Employment-to-population ratio for adults ages 25 to 54. These data are available from the Census Bureau’s American Community Survey and the Bureau of Labor and Statistics’ Local Area Unemployment Statistics.
Financial security: Share of households with debt in collections. These data are available from the Urban Institute’s Debt in America website.
Offer technical assistance: Small and minority- and women-owned businesses often have limited resources to compete for government contracts. By providing technical assistance to these businesses, local governments can foster more diverse and competitive vendor pools. Identifying “advocates” who conduct outreach to, train, and guide small and minority- and women-owned businesses through the procurement process is one example.
Set and track measurable goals: Local governments should set and track measurable goals for small and minority- and women-owned business participation. Incorporating these goals into how departments are evaluated and making these goals public will increase accountability. Similarly, when preparing contracts with vendors, local governments should set measurable goals that align with their strategic priorities. Tracking businesses’ performance along these goals will create greater accountability for them to meet provisions in their contract.
Provide prompt payment: Small and minority- and women-owned businesses can be discouraged from doing business with local governments when payment is issued months after they rendered their services. Local governments can minimize this disincentive by issuing payments to vendors more quickly and requiring prime contractors to issue payments to their subcontractors in a timely fashion.
Engage key stakeholders: When evaluating their procurement process, local governments should engage relevant internal and external stakeholders. Engaging local businesses will reveal barriers preventing small and minority- and women-owned businesses from bidding for contracts. Similarly, internal stakeholders can inform the redesign by identifying existing strengths and building buy-in.
- Change narratives around racial equity: As local governments reshape procurement processes to become more equitable, changing narratives among internal stakeholders and the broader public is an important driver of success. Without a shared understanding of the historical role that government has played in creating inequities, internal stakeholders are less likely to engage in new procurement processes. And without a clear external narrative on the factors that have driven racial inequities and the steps needed to confront racist legacies, public support for equity-informed procurement decisions will be less easily secured.
Coordinate procurement across departments: When local governments have decentralized procurement systems, each department may develop a different procurement process. Coordinating procurement processes across departments creates a more consistent and navigable experience for vendors and facilitates the sharing of best practices between departments.
Define and prioritize evidence: Clearly defining and prioritizing “evidence of effectiveness” is a key step in getting better results from contracts and grants. If local governments want to use an evidence framework for making procurement more inclusive, they must build evidence and invest in programs that work for specific populations, including those that are historically underserved. While the explicit incorporation of an equity lens into the development and use of a framework is newer in its application, it is no less critical to ensuring that high quality solutions not only have the necessary data to demonstrate that they are successful, but also that data is disaggregated to address disparities in outcomes. For more on prioritizing equity through procurement, see the Workforce Evidence-Based Spending Guide.
