Inclusion of Minority-Owned and Women-Owned Businesses

The Procurement function of the Board's Division of Financial Management, working with ODI, is responsible for the fair inclusion and utilization of minority- and women-owned businesses (M/WOBs) in the Board's procurement process. Staff from ODI and the Procurement function meet regularly to assess the results of the supplier diversity objectives and activities and to determine whether additional efforts are needed to help M/WOBs compete successfully in the Board's acquisition process. The Supplier Diversity Program has four primary objectives: 

• Compliance

  • Meet the statutory compliance requirement set forth in section 342(c) of the Dodd-Frank Act.

• Education, training, and communication

  • Increase awareness among Board staff about the Board's Supplier Diversity Program, with the aim of supporting the participation of M/WOBs in the acquisition process.
  • Provide technical assistance to these vendors to enhance their ability to qualify and successfully compete in the Board's acquisition process.

• Reporting tools and processes

  • Improve automation to track, report, and monitor contracts awarded to M/WOBs.

• Access, opportunity, and engagement

  • Collaborate and coordinate efforts with advocacy groups representing M/WOBs to expand M/WOBs' access to and participation in the Board's acquisition process.
  • Utilize the Acquisition Planning Forecast of the Board's contracting opportunities to serve as a roadmap for M/WOBs to participate in the acquisition process. This information is published on the Procurement section of Board's website (www.federalreserve.gov/aboutthefed/procurement/procuring-the-future.htm) and distributed at outreach events.
  • Ensure M/WOBs have access to resources and events to learn how to do business with the Board. For instance, Procurement staff participate in outreach events so they can include qualified vendors in the Board's buying process.

Through implementation of the program objectives and through networking with M/WOBs, the Procurement function has made significant progress in fostering success for those businesses seeking to do business with the Board.

 

Contracts Awarded to M/WOBs

During calendar-year 2015, the Board awarded contracts for goods and services in the amount of $214,867,580.⁷ Of this total, $37,461,063, or 17.43 percent, was awarded to M/WOBs, including $24,128,891, or 11.23 percent, to minority-owned businesses and $13,332,172, or 6.20 percent, to women-owned businesses. The total dollar value of contracts awarded to M/WOBs represents an increase of 22.97 percent over contracts awarded in 2014.

 

Five-Year Trend in Awards to Minority-Women Owned Businesses, Minority-Owned Businesses, and Women-Owned Businesses

Since the inception of the Board's OMWI program in January 2011, the Board has tracked the percentage of contracts awarded to M/WOBs as well as the percentage of awards to minority-owned businesses and women-owned businesses.Table 5 shows the amounts and percentages of contract dollars awarded to M/WOBs over the past five years.

 

Table 5. Contract awards to minority- or women-owned businesses, 2011-15

Demographic	2015		2014		2013		2012		2011
	Dollars	Percent	Dollars	Percent	Dollars	Percent	Dollars	Percent	Dollars	Percent
By business type
Total awards, all businesses	214,867,580	100.00	190,643,728	100.00	158,196,516	100.00	141,168,580	100.00	125,070,569	100.00
Minority-owned 1, 2	24,128,891	11.23	14,122,354	7.41	6,806,841	4.30	3,726,415	2.64	9,028,526	7.22
Non-minority women-owned	13,332,172	6.20	16,340,738	8.57	11,520,842	7.28	8,145,183	5.77	4,237,038	3.39
Minority women-owned	0	0.00	0	0.00	2,670,032	1.69	1,685,031	1.19	2,148,583	1.72
Total minority-owned and women-owned2	37,461,063	17.43	30,463,092	15.98	20,997,715	13.27	13,556,629	9.60	15,414,147	12.32
By demographic group
American Indian or Alaska Native	0	0.00	0	0.00	n.d.	n.d.	n.d.	n.d.	n.d.	n.d.
Asian American	7,428,282	3.46	5,728,722	3.00	n.d.	n.d.	n.d.	n.d.	n.d.	n.d.
Black or African American	1,829,100	0.85	3,222,106	1.69	n.d.	n.d.	n.d.	n.d.	n.d.	n.d.
Hispanic or Latino	13,065,762	6.08	4,506,404	2.36	n.d.	n.d.	n.d.	n.d.	n.d.	n.d.
Native Hawaiian or other Pacific Islander	1,210,920	0.56	0	0.00	n.d.	n.d.	n.d.	n.d.	n.d.	n.d.
Other minority 3	594,826	0.28	665,120	0.35	n.d.	n.d.	n.d.	n.d.	n.d.	n.d.

Note: Awards are contracts awarded between January 1 and December 31. "Percent" columns reflect the percentage of total contracts awarded for the calendar year. Components may not sum to totals and may not yield percentages shown because of rounding.

1. "Minority-owned" for 2014 and 2015 includes minority women-owned businesses. Return to table

2. The term "minority" means an individual who falls within one or more of the following race and ethnic categories: Hispanic or Latino, Black or African American, Native Hawaiian or Other Pacific Islander, Asian, and American Indian or Alaska Native. The term "minority-owned business" means a business that meets the following criteria: (i) more than 50 percent of the ownership or control is held by one (1) or more minority individuals; and (ii) more than 50 percent of the net profit or loss accrues to one (1) or more minority individuals. The term "women-owned business" means a business that meets the following criteria: (i) more than 50 percent of the ownership or control is held by one (1) or more women; (ii) more than 50 percent of the net profit or loss accrues to one (1) or more women; and (iii) a significant percentage of senior management positions are held by women. Return to table

3. "Other minority" means those businesses designating "minority-owned"but not designating Asian American, Black American, Hispanic American, or Native American. Return to table

n.d. No data available.

Source: Oracle/MicroStrategy, 2011-15.

 

Trend in Awards by Demographic Group

In addition to reporting the percentage of awards to M/WOBs as required under section 342, the Board in 2014 also began tracking awards to minority-owned businesses by demographic groups. Specifically, the Board tracks and reports contracts awarded to Asian, black or African American, Hispanic or Latino, American Indian or Alaska Native, Native Hawaiian or other Pacific Islanders, and other (nonspecific) minority-owned businesses.⁸

Compared with the previous year, the percentage of contract dollars awarded to Hispanic- or Latino-owned businesses and Asian American-owned businesses significantly increased in 2015, growing by 189.94 percent and 29.67 percent, respectively. Awards to Native Hawaiian or other Pacific Islanders also increased in 2015 compared to 2014, while awards to remaining groups either stayed the same (American Indian or Alaska Native) or dipped slightly (black or African American and other minority).Figure 1 shows the percent of total contracts awarded to different demographic groups in 2014 and 2015.

 

Trend in Awards by Board Summary Account

To better understand the types of purchases that constitute the majority of its contracting awards, the Board tracks its acquisitions by summary accounting codes. In 2015, contractual and professional services; capital assets (construction and software); printing and binding; and news, data, and research purchases accounted for more than two-thirds of the Board's total dollars awarded. As shown in figure 2, seven accounting codes comprised more than 80 percent of the Board's awards.

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Contract Payments to M/WOBs

Besides tracking total contracts awarded to M/WOBs, the Board also tracks contract payments made to M/WOBs during the calendar year. "Contract payments" are the actual funds the Board pays out to contractors for goods and services provided. Performance of a contract might not occur within the same year the contract is awarded. Payments made during the year in many instances are for goods or services provided under contracts awarded in a previous year. As a result, a direct correlation between the dollar amounts for contract payments and contract awards in a given year does not exist.

In 2015, the Board paid a total of $154,264,257 to contractors. Of this total, $22,589,352 or 14.64 percent, was paid to M/WOBs, including $12,833,443, or 8.32 percent, to minority-owned businesses and $9,755,909, or 6.32 percent, to women-owned businesses. The total dollar value of contracts paid to M/WOBs in 2015 represents an increase of 5.84 percent over amounts paid in 2014. Specifically for minority-owned businesses, the total dollar value of amounts paid in 2015 was 29.38 percent higher than in 2014, while for women-owned businesses, it was 14.61 percent lower than in 2014.Table 6 shows contract payments the Board made to M/WOBs from 2011 through 2015.

 

Table 6. Contract payments to minority- and women-owned businesses, 2011-15

Demographic	2015		2014		2013		2012		2011
	Dollars	Percent	Dollars	Percent	Dollars	Percent	Dollars	Percent	Dollars	Percent
By business type
Total awards, all businesses	154,264,257	100.00	142,278,128	100.00	136,200,452	100.00	122,044,429	100.00	80,469,431	100.00
Minority-owned 1, 2	12,833,443	8.32	9,918,863	6.97	5,727,983	4.21	4,009,883	3.29	2,628,299	3.27
Non-minority women-owned	9,755,909	6.32	11,424,820	8.03	4,564,941	3.35	3,931,793	3.22	3,138,549	3.90
Total minority-owned and women-owned2	22,589,352	14.64	21,343,683	15.00	10,292,924	7.56	7,941,676	6.51	5,766,848	7.17
By demographic group
American Indian or Alaska Native	0	0.00	0	0.00	19,877	0.01	0	0.00	0	0.00
Asian American	5,406,022	3.50	3,019,103	2.12	1,740,317	1.28	1,325,225	1.09	1,033,795	1.28
Black or African American	1,122,953	0.73	2,626,233	1.85	325,101	0.24	643,263	0.53	249,923	0.31
Hispanic or Latino	5,118,261	3.32	3,681,174	2.59	3,490,665	2.56	2,041,395	1.67	1,283,556	1.60
Native Hawaiian or other Pacific Islander	672,896	0.44	0	0.00	0	0.00	0	0.00	0	0.00
Other minority 3	513,311	0.33	592,353	0.42	152,023	0.11	0	0.00	61,025	0.08

Note: Contract payments are the actual funds the Board pays out to contractors for goods and services provided. Data are per calendar year. Components may not sum to totals and may not yield percentages shown because of rounding.

1. "Minority-owned" includes minority women-owned businesses. Return to table

2. The term "minority" means an individual who falls within one or more of the following race and ethnic categories: Hispanic or Latino, Black or African American, Native Hawaiian or Other Pacific Islander, Asian, and American Indian or Alaska Native. The term "minority-owned business" means a business that meets the following criteria: (i) more than 50 percent of the ownership or control is held by one (1) or more minority individuals; and (ii) more than 50 percent of the net profit or loss accrues to one (1) or more minority individuals. The term "women-owned business" means a business that meets the following criteria: (i) more than 50 percent of the ownership or control is held by one (1) or more women; (ii) more than 50 percent of the net profit or loss accrues to one (1) or more women; and (iii) a significant percentage of senior management positions are held by women. Return to table

3. "Other minority" means those businesses designating "minority-owned" but not designating Asian American, Black American, Hispanic American, or Native American. Return to table

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Successes

 

Quick Response Code and Board Website Enhancements

The Federal Reserve Board enhanced its digital outreach and resources for vendors in 2015. For example, Procurement staff developed a Quick Response (QR) code for vendors to use at outreach events. The vendor's smartphone serves as a QR code scanner, displaying the code and converting it to the Board's URL (website), thereby taking vendors directly to procurement-related web pages, with information about the Board's Supplier Diversity Program, tips for winning Board contracts, frequently asked questions, and forecast of contract opportunities. In addition, the Board's Procurement web pages were enhanced by adding new links to give vendors seeking to do business with the Board quick access to related policies and resources (such as the Board's Acquisition, Supplier Diversity, and Small Disadvantaged Business Acquisition policies and the Diversity and Inclusion web page).

 

External Programs to Build Capacity and Provide Technical Assistance to M/WOBs

During 2015, the Board increased its presence in the supplier diversity community locally and nationally by continuing to implement a comprehensive outreach strategy. As part of this strategy, the Board developed programs to build capacity and provide technical assistance to diverse vendors. The Board continued to support M/WOB advocacy groups by engaging in numerous outreach activities (see box 3) to provide technical assistance by presenting, exhibiting, or matchmaking at various conferences and to enhance awareness of the Board's acquisition process. These events were hosted by industry, federal agencies, and advocacy groups reaching a broad and diverse audience of over 20,000 conference delegates. The Board also provided technical assistance by responding to potential M/WOB contractors' inquiries regarding upcoming procurement opportunities.

The Board also held regular meetings with financial regulators and other supplier diversity professionals to share information, metrics, innovations, and opportunities related to diversity and inclusion in contracting.

In addition, the Board--along with the Supplier Diversity Working Group, which includes other federal financial regulatory agencies ⁹ --developed and planned a technical assistance program on behalf of the agencies' OMWI offices. The event, held in August 2015, brought together M/WOBs to learn about the resources available to move their businesses forward. This event also provided opportunities for businesses to receive technical assistance and to connect with representatives from various organizations that provide support to M/WOBs, as well as decisionmakers from the eight principal financial regulatory agencies. Over 300 vendors participated.

 

 

Vendor Outreach Fair

In addition to participating in external M/WOB outreach events, the Board hosted its annual Vendor Outreach Fair. The fair allows vendors to learn about the Federal Reserve System's purchasing needs and offers them the opportunity to discuss their business capabilities and interact with the Procurement staff and Board technical representatives. The 2015 fair included educational seminars designed to enable vendors to increase their capacity to participate in the Board's acquisition process, and covered topics such as the following:

• Responding to the Board's Solicitation, Offer, and Award
• Navigating the Federal Reserve System Procurement Process
• Martin Building Renovation Project
• Doing Business with the FIRREA Agencies (OCC, NCUA, SEC, CFPB, FDIC) and the Board

The fair included presentations by the U.S. Small Business Administration, other federal financial regulatory agencies, and several Federal Reserve Banks. Overall, more than 300 companies participated.

 

Enhanced Internal and External Communication to Support the Supplier Diversity Program

The Procurement staff promotes the Board's web-based vendor registration system during outreach events. More than 1,000 businesses have registered with the Board using the web-based application, and the list of registered vendors is available to internal purchasers of goods and services to use as a tool to identify M/WOBs interested in doing business with the Board. In 2015, the vendor registration system was refined by asking vendors to indicate how they heard about the Board. This enhancement will help Procurement staff to determine the return on investment and measure results of outreach events. The Board also developed new materials and provided training to improve efficiencies for Procurement staff attending outreach events representing M/WOBs.

The Board participated in the Federal Reserve System Procurement Summit in September 2015. This summit was designed to bring System procurement and supplier diversity professionals together to strategize on how to provide access, opportunities, and engagement for vendors and to further engage leadership and stakeholders to support the Supplier Diversity Program. Best practices were also shared during the summit.

During 2015, the Procurement function enhanced its service portfolio by providing transparency and visibility to divisions and other stakeholders regarding contract awards. Specifically, it improved automation support in this area and implemented a business-intelligence reporting tool that provides trend analyses and dashboards to help divisions evaluate their procurement activities relevant to the Supplier Diversity Program in contracts awarded to M/WOBs.

 

Tier 2 Program

The Board's Procurement function is developing a subcontracting program for vendors in support of its Supplier Diversity program. In accordance with the Paperwork Reduction Act, documentation requesting approval to collect information from vendors regarding subcontracting was submitted to the Office of Management and Budget and final approval to collect information was granted in November 2015. The program will be finalized and implemented in the second quarter of 2016.

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Challenges

During 2015, the Procurement function addressed the challenges associated with the Supplier Diversity Program identified in the Board's OMWI report for 2014.¹⁰ Although, the Board does not require certification, the Procurement function utilized the Central Contractor Registration to verify the status of minority-owned and women-owned businesses. The Procurement function also implemented a vetting process that assisted in increasing the participation of M/WOBs in the acquisition process.

To increase Board staff's awareness and understanding the requirements of section 342 of the Dodd-Frank Act, the Procurement function hosted a series of training sessions and a forum to educate staff on the importance of supplier diversity. Additionally, Procurement staff is working on a webinar and expects to finalize and implement it in the 3rd quarter of 2016. The Board is aware of the many challenges facing M/WOBs; therefore, Procurement staff collaborates with advocacy groups representing M/WOBs in order to better understand the challenges these businesses face when seeking to work with the Board and to help them navigate the Board's acquisition process.

Procurement staff also continues to raise awareness within the agency by holding regular meetings with Board senior leadership to discuss the Supplier Diversity Program and garner their support, and by engaging division leadership to work as champions by supporting the inclusion of M/WOBs in their existing contracting opportunities.

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Next Steps

The Board will continue to build upon the efforts made in 2015 to identify, facilitate, and advance opportunities for M/WOBs to successfully participate in the contracting opportunities available at the Board.

Key actions for 2016 will include:

• Developing a procurement dashboard that provides divisions with real-time supplier information data, including vendor classification, number and dollar-value of awarded contracts, and type of purchases. This will enable divisions to monitor supplier diversity activity and measure outcomes of objective(s) on the diversity and inclusion scorecard.
• Implementing a plan to support a major construction project by hosting networking meetings where large general construction businesses that might be included as prime contractors for the construction project could meet with M/WOBs who could serve as subcontractors on the project.
• Soliciting information from the Board's primary contractors regarding their second-tier sourcing with M/WOBs in an effort to better track such subcontracts.

Finally, the Board will continue its broad outreach campaign to increase awareness among potential vendors of its contracting opportunities and to encourage M/WOBs to compete for Board contract awards. Further efforts will be made to engage in nurturing and fostering relationships with advocacy groups that represent minority and women-owned businesses.

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References

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