Massachusetts Expands Supplier Diversity Program

Written by Amanda Maher

Talk to enough business owners and you’ll find that there’s no singular recipe for success. But for more than two decades we’ve been working with inner city businesses and from our research, we’ve learned that there are a handful of factors that make doing business that much easier for these firms.

Access to institutional procurement opportunities is an important one of these factors.

At a recent event hosted by The Boston Club, a network of women executives and professionals, Massachusetts Governor Charlie Baker discussed the importance of diversity in the business world. He looked back on his tenure at Harvard Pilgrim, a company that was struggling when he became chief executive in 2000. Under his leadership, the number of women on the Harvard Pilgrim Board of Directors increased to seven of the 12 positions. He joked to the large audience of women that it was no surprise that with this board, Harvard Pilgrim turned around to become one of the nation’s premier health plans.

Diversity on boards, in business and in government is critical to success. “You have to be willing to get outside your circle,” said Governor Baker. “You must be willing to make new friends.”

Recently, Baker signed an executive order that expands the Commonwealth’s decades-old supplier diversity program’s benchmarks for minority-owned businesses from six percent to seven percent and women-owned businesses from 12 percent to 13 percent. The benchmark for registered small businesses also increased from 2.5 percent to 3.3 percent.

While the increases may seem minor, the impact will certainly be felt by the 2,700 certified minority- and women-owned and small businesses in Massachusetts, which, combined, have $13.3 billion in gross revenues and employ 60,000 residents.

Other changes include a redefinition of who is eligible under the certified service-disabled, veteran-owned business enterprise category of the Supplier Diversity Program. Now, all certified veteran-owned businesses qualify, regardless of disability status.

Baker made the biggest splash, though, by announcing that Massachusetts would become the first state to add two new categories to the Supplier Diversity Program: disability-owned business and LGBT-owned businesses.

“LGBT-inclusive supplier diversity means that there will be greater LGBT business visibility across Massachusetts. Economic visibility, just like social visibility, is essential in building a diverse and inclusive society,” said Justin Nelson, Co-Founder and President of the National Gay and Lesbian Chamber of Commerce, in a press release. “Governor Baker’s administration recognizes what over 1/3 of the Fortune 500 has already – including opportunities for all businesses, including those owned by LGBT people, is good for business.”

Expanding procurement opportunities for diverse business owners is more than a moral imperative—it makes good business sense, too. Research shows that companies that focus heavily on supplier diversity programs generate a greater return on procurement investments than a typical business.

And for suppliers, contracts like these can have a major impact. Our 2015 Inner City 100 list provides evidence: The majority of this year’s fastest-growing inner city companies do not provide goods directly to consumers but instead to other businesses, anchor institutions or government agencies.

For firms of all sizes, more procurement opportunities can lead to an improved bottom line. Massachusetts’ new rules can help to ensure that those bottom line benefits extend even further.