One of the most comprehensive reviews ever conducted of the State of Delaware’s procurement practices found that the majority of state contracts for construction, goods and services are going to nonminority firms, while companies owned by women and people of color are being largely excluded from those same economic opportunities.
Released Wednesday, the 2022 Disparity Study conducted by MGT Consulting Group determined that businesses owned by women received less than 3% of total state contracting dollars from 2015 to 2020 that were reviewed by the study, while firms owned by people of color received less than 7% over the same time period. The study also found similar disparities between the number of businesses owned by people with disabilities and veterans capable of fulfilling state contracts and the number of businesses actually receiving contracts.
“In partnership with Governor Carney, in recent years we have put greater emphasis on providing critical early-stage support to small, local businesses, particularly those in communities of color,” said Senate Majority Leader Bryan Townsend, who led the push to require the Disparity Study in the Fiscal Year 2021 Bond Bill.
“While that was a good first step away from historical inequalities and inequities, the disparity study released this week makes it abundantly clear that there is still so much more that can and must be done to achieve equity in economic opportunities in the First State,” Townsend said. “If we truly care about promoting prosperity for all Delawareans, if we truly want to create jobs in historically disadvantaged communities, and if we truly want to help hardworking people of all backgrounds to build equity and wealth, we have to start by putting our money where our mouth is. We have to commit ourselves to taking deliberate actions that will remove the barriers preventing qualified businesses owned by people of color from winning state contracts, and we need to start that work immediately.”
The Disparity Study analyzed contract data only from the Office of Management and Budget (OMB), Department of Health and Social Services and Department of Correction. These agencies were chosen as they represented most of the State’s spend and data was readily available through the State’s opensource checkbook portal.
No “inherent or built-in barriers that intentionally restrain or constrain any businesses from participating in procurement and contracting” were uncovered. In fact, the study gave Gov. John Carney high marks for hiring the state’s first Chief Diversity Officer, establishing an anti-discrimination policy across state government, creating the Office of Statewide Equity in his office, establishing the EDGE Grant program and reconstituting the Governor’s Supplier Diversity Council with Executive Order 40.
However, the study did find there is still room for OMB and other relevant procurement partners to work more collaboratively with all state agencies to increase awareness, interest and participation in procurement and contracting.
For instance, the Office of Supplier Diversity – which is housed in the Division of Small Business and tasked with promoting greater diversity among state contractors – is understaffed compared to similar programs in other states and frequently left out of “the front end of the procurement cycle,” according to the report.
“Advancing business diversity and inclusion will require continuously encouraging diversity and inclusion in all State procurement and contracting,” MGT Consulting Group states in the report. “Our experience has shown that keeping departments informed about opportunities to utilize diverse businesses and educating the vendor community can pay huge dividends if consistently and effectively executed.”
The 155-page report recommends several steps the State of Delaware can take to level the playing field and promote greater gender and racial diversity among its suppliers, including:
- Use of project-specific and overall diversity goals;
- Adopt a narrowly tailored program to promote supplier diversity;
- Use a vendor rotation system for smaller contracts;
- Enhance record retention and data collection; and
- Expand outreach and training for federally certified disadvantaged businesses.
“Over the last several years, we’ve made progress statewide in supporting small, minority- and women-owned businesses,” Governor John Carney said. “But this report makes clear that we have a lot of work ahead of us to make sure all Delaware firms have access to State contracting business. That’s important work and we remain committed to making progress and expanding economic opportunity up and down our state.”
“While the State of Delaware was commended for the open and transparent manner in which it conducts business, offers vendor training and resources, and encourages competition; despite these ongoing efforts, this report illustrates major disparities in awarded contracts across multiple categories,” OMB Director Cerron Cade said. “The Office of Management and Budget looks forward to working with state partners and legislators to improve vendor diversity, equity and inclusion with the goal of obtaining better economic outcomes for all citizens of the state.”
“The disparity study shows that while Delaware is doing a lot of things right, there still is plenty of room for improvement. As with many efforts to increase participation in longstanding situations, it’s not always enough to open opportunities, but we must take active steps to help new players get their foot in the door,” said Rep. Kendra Johnson, chair of the Delaware Legislative Black Caucus. “By actively helping minority- and women-owned businesses get that first state contract, we will then be truly opening doors for businesses. And by increasing the pool of qualified applicants for contracts, it means that the quality of services the state receives will only increase.”
“This report confirms what we already knew. We have to do better,” said Ayanna Khan, founder and president/CEO of the Delaware Black Chamber of Commerce. “Delaware does not presently ask for ethnicity when registering a business for the issuance of a business license. This is a fatal flaw that disallows the promotion of diversity and equity in Delaware’s business sector. Just as a census, collecting ethnicity information promotes business and supplier diversity, and provides a more accurate and complete representation of the makeup of Delaware’s business community. We are the First State, as such, we have to take the lead in creating a level playing field for all, in the business sector, in the social sector, and in every sector. Plain and simple, equity and diversity are not just good for society, they are good for business, and they will strengthen our economy on every level.”
“The Disparity Study highlights the steps needed to adopt more inclusive contracting practices. Implementation will allow the State of Delaware to expand economic opportunity to Black, indigenous and people of color (BIPOC) to do business in the First State,” said Senator Darius Brown, D-Wilmington. “This study does not merely provide a problem statement but also shows us how to develop a vibrant economy by nurturing and growing homegrown businesses. As the demography of our state continues to shift and our BIPOC population increases, the government’s role in policy making and practice must remove the systemic barriers that have hampered business development in historically marginalized communities by building the financial and social capital for their success.”