Massive Annual Spend is Devoid of Responsible Transparency


by Dean L. Jones, C.P.M.

Supplier diversity management has longed for openness in annual product and service outsourcing requirements from the American public and private sectors. When corporate America exercised rightsizing and downsizing strategies of their firms in the 1980-90’s this phenomenon benefited a number of major corporations to merge and acquire at multi-billion dollar levels, a feat certainly never to repeat. Sadly, we are now in the mist of encountering entire major cities downsizing such as Detroit, Cleveland, Pittsburg to name a few, and to some extent Los Angeles. What is critical to this state of affairs is unlike stockholder-controlled corporations, whereas the public sector does not have the operational luxury of benefiting from lucrative merger and acquisition processes.

The Federal government created legislation that would safeguard society from enduring this type of economic implosion, but leadership has dismissed the shared knowledge in lieu of deficiency in responsible socioeconomic development. A considerable amount of time and material has gone into the general business model of launching and operating socioeconomic development programs. Conversely, there is a serious lack of responsible care of implementing a transparent course of action for supplier diversity and contracting inclusion. Slim to no positive outcomes are developing as it pertains to black-owned and operated concerns. There appears to be a disconnect from the sprit and intent of legislation for socioeconomic development includes employment, supplier utilization, and philanthropic support among protected classes designated by race, color, religion, sex, national origin, disability, or age, which still presents enormous parity gaps.

These aforementioned protected classes add up to a large range of American citizenry, but yet the distribution of annual spend among these groups from the public and private sectors is more disproportionate today than it was when these programs first began in the mid-1960’s. Banking, finance, insurance, petroleum, energy, food/beverage, entertainment, technology, and telecommunications are making some unreal multi-billion dollar profit margins. All the same, it is not so much the excessive profits to blame as the problem for the shrinking economy; as much as it is how these successful major industries have selectively chosen to divest their respective annual spend for operational products and services. Annual spend dollars are not going to enough companies to help defray the tax burden required to run large scale economies like the city of Los Angeles, thereby creating vast disparity gaps in the American landscape.

For example, let us take a snapshot of the National Minority Supplier Development Council that has a membership base of the top Fortune 2,000 corporations, plus many of the major municipalities and state agencies. This is roughly a 40-year old organization that records an aggregated annual corporate spend with minority businesses in excess of $100 billion. Corporate America sourcing qualified minority firms and awarding such contracts on a competitive basis may sound like a good investment, but this annual spend with minority firms hardly breaks the surface of underserved communities, once again pointing out how the spirit of intent of socioeconomic is being lost.

Therefore, if regular competition is the business model, the public and private sector socioeconomic development programs at this time may be redundant work product. The outcome is showing no benefit or innovative application with supporting the protected classes to build historically underutilized business enterprises. Contracting fairness is apparently resolved where any company demonstrating responsive competitive pricing and responsible management will reach parity through an auditable win-capture rating of contract opportunities.

All the same, one has to question the significance and relevance of what does a $100 billion mean regarding the groups labeled protected class and to what extent does recording such a large annual spend accomplish if the very communities and cities where minorities reside are going bankrupt? Pronouncing an annual collective spend of $100 billion dollars without transparency of positive outcomes does not make for trustworthy socioeconomic progress. Especially when the business model expressed by the Fortune 2,000 corporations maintains doing business only with other like companies, then there is no change in the game, the hierarchy of wealth remains analogous to the start of addressing socioeconomic barriers.

More than ever before, the dreams of black-owned business proprietors for operating a successful enterprise are facing evasive purchasing opportunities and it has shaped a slim likelihood for such companies of obtaining sustainable long-term contracts from the public or private sector. The rules of engagement for blacks overtly deal with ownership certification processes and other frivolous upfront acceptance requirements to market their prospective supplies, which are taking black business enterprise on a deceptive socioeconomic ride.

This is especially applicable when it comes down to meeting with diversity specialists in who in turn do present a good game, but in the end can produce no tangible or transparent results of how the outsourcing budget is being invested. Relatable business management job descriptions to the self-made term ‘supplier diversity’ has little use during our current economic crisis, where whole cities are eroding while a sizable qualified workforce sits idle on the side lines watching as Rome burns to the ground. In the present day, capturing contracts by small business owners appears achievable at a much different management level than diversity officers who operate unaccountable, or are unconscientiously prepared, to deliver.

We are in an economic crisis and the sacrificial lamb is small businesses, slaughtered right in plain sight due to the lack of business offerings that go to black-owned and other small business enterprises. The lack of transparency in obtaining those aforementioned competitive bids is an obvious problem as the lack of participation from small business is withering away. It is withering away with the populace seeking areas of refuge within corporate America as consultants, contractors, leased employees and temporary workers. This is good for Corporate America who can aptly continue to prosper and bad for small business enterprises who can barely forecast next month, less alone produce a five to ten year plan with meaningful accuracy.

The City of Los Angeles has a small minority business program; however, when you review the business corridors of the city you do not get a visual picture of thriving concerns. Los Angeles’ annual spend investment does not align itself well with the community in which its serves. Likewise, the protected class business owners located in the prescribed service territories of the investor-owned utilities have dissolved considerably over the past twenty years as these profitable major corporations thrive and their respective service territories waste away from the lack of corporate investment.