Setting up for success: Shaping procurement for social value in the United States

Evolving priorities

We are seeing this movement gain traction in both private and public sectors where there is a fundamental shift away from cost as the primary concern in procurement, to instead placing a great emphasis on wider value for society. This trend will need to continue across all sectors, and particularly at a federal level, to deliver the support required for MBEs and for American businesses more generally.

Historically, requirements for securing federal funding has shaped a low-bid environment that limits the incentives for local vendors – minority or otherwise – to pursue significant Government contracts.

To redress the balance, criteria for procurement decisions need to be creatively reimagined, with clear goals set around aspects such as social value and environmental impact.

That is true not only for public programmes, but also private, as investors look to back projects with wider value and robust ESG credentials. In the public sphere, the MBDA then has a vital role to play in channelling federal funding.

Galvanised by the Act’s expansion of its scope, the agency has now set up 50 regional, state and specialised business centres across the country. These will need to work closely with the economic development offices in the states they support to make sure that local MBEs have access to the right funding and contract opportunities to help drive the Act’s regional objectives.

Building on past progress

Alongside President Biden’s infrastructure law and the opportunities it presents to encourage the development of MBEs, procurement teams must remember that the Act builds on and should be utilised in conjunction with wider policy for greatest effectiveness.

At a recent roundtable, we discussed with Microsoft its successful use of Opportunity Zones – an economic development tool introduced by the Tax Cuts and Jobs Act 2017 – to support an under-served, under-represented area in Atlanta.

25 acres of the 90-acre site which Microsoft is in the process of building outside of Atlanta’s business district will be dedicated to public facilities including parks, health care and affordable housing.

This investment will bring mutual benefits for the local community and the technology organisation. To start, the Opportunity Zones policy provides tax incentives for capital investors. On top of this, Microsoft has begun to invest in an upskilling centre on the site.

This investment in people and skills will create an engaged and trained pool of talent able to support the company when its facilities are completed and, beyond that, expand the capabilities and capacity of the wider industry with well-paying jobs.

Focusing on the grassroots

Investing in training opportunities for the communities who will benefit from infrastructure delivery will be fundamental to developing minority businesses. Union membership in infrastructure remains predominantly white and programmes such as apprenticeships are still traditionally accessed by white populations.

Infrastructure organisations need to engage with local community centres and colleges, public high schools and other cultural facilities to create non-traditional avenues into the sector and promote minority businesses from the ground up. As well as expanding our sector’s talent pool, this will have the vital benefit of gaining public support for the infrastructure programmes which will affect those communities.

Understanding regional realities

Investing in minority businesses and talent pools will be key to the successful delivery of the Infrastructure Investment and Jobs Act. The Act emphasises the need to bring the quality of infrastructure in under-served regions up to standard.

By procuring through local and minority businesses, projects will gain much needed perspectives from the populations they wish to serve. This enhanced understanding of realities for communities on the ground will help to ensure the right projects are being pursued in the right way to guarantee productive delivery with public support.

The infrastructure law has placed a tall order on the construction sector – promising the replacement of all lead water pipes across the country, a $110 bn investment to repair roads and bridges and support major projects, and improvements to airports, rail, ports, and roads to strengthen supply chains.

Procurement as usual will not be enough to meet these demands. Recalibrating how procurement teams make decisions with social value in mind will be critical. From the very outset of the conceptual phase, procurement teams whether private or public, must consider how projects can invest in MBEs.

By promoting the development of minority businesses, we have the opportunity to level the economic playing field in the United States, helping to ensure prosperity for all.

Crucially, this increased support will expand the number and quality of qualified vendors, creating greater market competition and ultimately driving productivity up and costs down.

Set against current inflationary pressures and the mammoth task facing American infrastructure, this is not about driving an ESG agenda – it is imperative to successful delivery of the Infrastructure Investment and Jobs Act.