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.
What evidence supports this strategy?
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.
Is this strategy right for my community?
Adopting inclusive procurement practices has been shown to improve outcomes predictive of upward mobility. These outcomes, identified by the Urban Institute, are opportunities for income, employment opportunities, jobs paying living wages, and financial security.
City and county leaders can assess local conditions for each of these outcomes using the metrics below, identified by the Urban Institute. This assessment can be used to determine whether this strategy is appropriate for their community. (Note: these metrics are a starting point for self-assessment and are not intended to be comprehensive.)
All cities and counties with populations over 75,000 can receive a customized data sheet here.
Measuring opportunities for income in your community: Examine the household income at 20th, 50th, and 80th percentiles. These data are available from the Census Bureau’s American Community Survey.
Measuring employment opportunities in your community: Examine the 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.
Measuring the opportunity for living wage employment: Examine the 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.
Measuring financial security in your community: Examine the share of households with debt in collections. These data are available from the Urban Institute’s Debt in America website.
Best practices in implementation
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.