Solve Procurement Challenges by Partnering With Small or Diverse Businesses
As our industry is quickly learning, a global pandemic — and all its impacts on labor availability, material supply, logistics and other still-evolving ramifications — can have a significant impact on construction projects. It can also be a reminder for utilities of the value of a proactive business diversity program.
In the months ahead, utilities will likely need the help of businesses with skill sets and services that may be in short supply. Some of these businesses are owned by minorities, women, veterans and other underrepresented groups that will need you as much as you need them. Engaging underrepresented businesses also helps support the economy and larger community.
Currently, however, multiple barriers prevent some utilities from procuring the goods and services they need from small or diverse businesses. Here are some things you might do to expand this pipeline, both now and as future needs evolve. The benefits will likely far outlive the coronavirus pandemic.
- Reassess contract terms and conditions. Many utilities include bonding capacity, insurance requirements and other contract terms and conditions that can discourage small or diverse business participation, either as a prime contractor or subcontractor to a larger organization. Many of these requirements, however, are not feasible or applicable to smaller contracts and can create unnecessarily high barriers to entry for companies working to penetrate or grow in the utility market. Utilities that build flexibility into their terms and conditions and take other steps to level the playing field will see broader participation as a result.
- Implement supplier development programs. Our firm, as well as several utilities we work with, have developed programs to prepare small and diverse businesses to serve the market. These can range from executive mentoring relationships to workshops that help first-time participants understand the utility bidding and contracting processes. The relationships developed through these training programs also benefit utilities by helping bidders understand and respond to their needs. Supplier development programs can go a step further by providing strategic business education as well. Over the years our firm, for example, has awarded scholarships to several diverse business owners to attend a weeklong course at the Tuck School of Business to enhance their businesses.
- Mold a culture of inclusion. An increasing number of utilities are setting targets and goals for increasing diversity throughout their organizations, including small and diverse business participation in construction programs. Goals and targets are valuable because they require utilities to be intentional and accountable when making hiring and contracting decisions. But goal-setting is just the first step in creating opportunities for diverse businesses.
Our firm recently hosted a utility diversity summit where we joined 10 utilities in discussing a range of business challenges and best practices for engaging small and diverse firms. Economic inclusion became a major point of discussion. A culture of economic inclusion has power to reach beyond an established goal and provide business opportunities for all diverse-owned businesses. Such efforts require advocates at the top, as well as an “all hands in” approach to transforming historical barriers into opportunities for underrepresented groups and businesses.