Creating a true commonwealth: Pennsylvania includes small and diverse businesses in its government procurement

Of the 50 U.S. states, four are commonwealths—Kentucky, Massachusetts, Pennsylvania and Virginia. And while the descriptor itself confers no special status or administrative distinction from the other 46, it serves as a helpful guidepost.

A commonwealth, historically, is a political community founded to yield a common wellbeing, or a common good. I’m not sure that there is a more applicable North Star for procurement professionals to aim towards as they navigate the intricacies of their day-to-day work.

This “common good” does not just emerge by awarding to the lowest bidder. Being stewards of taxpayer dollars doesn’t necessarily mean spending the least possible amount. Proper stewardship looks like strategic sourcing to best value suppliers to ensure the best outcomes for citizens. It also looks like increased opportunity for small and diverse local businesses. These businesses make up a critical piece of our economies, providing local jobs and putting that tax revenue directly back into the community. Strengthening small and diverse businesses directly contributes to that common good or commonwealth.

Diversity & inclusion in Pennsylvania procurement
In Pennsylvania, there is a broad approach to including small and diverse businesses and getting them to engage with government opportunities more actively. Pennsylvania’s Department of General Services has several policies and programs in place to accomplish this.

The Small Business Reserve (SBR) program in Pennsylvania sets aside 15 percent of contract spending exclusively for small business. As part of the SBR program, there are clear criteria (spend total, availability of small business contractors) for when a procurement should be designated as an “SBR Procurement.”

This 15 percent is included in broader statewide spend goals set for small, diverse and veteran-owned business spending (SDB/VBE). These goals were set in the wake of the commonwealth’s first state-wide disparity study in 2018. That study found not only a gap in SDB and VBE spending and the availability of such suppliers to perform state work, but also determined that the magnitude of the gap between small, diverse, and veteran-owned business spend and supplier availability allowed the state to infer that these businesses were being discriminated against in commonwealth contracting procedures.

The commonwealth of Pennsylvania is addressing the outcome of its disparity study with an aspirational target goal of 26.3 percent of state spending with SDBs and 4.6 percent of spending with VBEs. This goal vastly outpaces the new goal for Federal spending with SDBs, of 15 percent of federal spend going to SDBs by 2025.

Kerry L. Kirkland, deputy secretary for the Department of General Services’ Bureau of Diversity, Inclusion and Small Business Opportunities (BDISBO) states, “We have seen significant improvement in the ability of SDB’s being able to do business with the commonwealth of Pennsylvania. In 2015, SDBs only received 4.8 percent of the state’s spend for commonwealth goods and services. In 2021, SDBs received 12 percent or more than $856 million. Our goal for 2022 is to spend $1 billion with SDBs.”

Opportunities for SDBs are published directly on the state’s eMarketplace for active procurements. At the time of this writing, there are more than 50 open opportunities designated as SBR Procurements or as having a small, diverse, or veteran owned business contracting goal. These opportunities range from construction and electrical work to snow management and removal, to transit and security opportunities, and more.

Making certification simple
Pennsylvania boasts a year-round small business self-certification process with straightforward guidelines:
• The business must be a for-profit, U.S. business.
• The business must be independently owned.
• The business may not be dominant in its field of operation.
• The business must be a for-profit, U.S. business.
•The business must be independently owned.
•The business may not be dominant in its field of operation.
• The business may not employ more than 100 full-time equivalent employees.
• The business may not exceed three-year average gross revenues of $38.5 million, regardless of business type (effective Nov. 1, 2018).

Then, the commonwealth’s BDISBO verifies small businesses that wish to participate as minority-, woman-, service-disabled-, LGBT-, and disability-owned business enterprises. BDISBO accepts approved third-party certifications from several entities.
• Unified Certification Program (UCP)
• Woman’s Business Enterprise National Council (WBENC)
• National Minority Supplier Development Council (NMSDC)
• United States Small Business Administration (SBA) 8(a) Program
• Vets First Verification
• Disability:IN
• National LGBT Chamber of Commerce (NGLCC)

All of this serves to create a database of small and diverse businesses for commonwealth purchasers. But even still there may be small and diverse businesses that have not taken these steps.

Another way this gap can be filled is with outside resources. For example, the commonwealth of Pennsylvania partners with Procurated, a free platform that allows public and education sector purchasers to search for and discover small and diverse businesses alongside trusted assessments of their performance from verified procurement colleagues. This discovery phase is critical because the presence of qualified SDBs determines whether a procurement falls under the Small Business Reserve program.

Further enablement for SDBs
The commonwealth of Pennsylvania has set itself up as a great example of what states can do to address disparity in their spend. Aspirational goals, such as those set by Pennsylvania, alongside well-structured and straightforward certification guidelines, go a long way towards boosting inclusion. 

But the commonwealth, through programming from BDISBO and other state agencies goes even further. On July 14, 2022, the 2nd annual Pennsylvania Diversity Summit took place. The half-day event was created to foster business partnerships between state and local government, prime contractors, and MWBEs.

According to Kirkland, “In order for our efforts to be successful, we need to see SDB programs and policies implemented beyond our metropolitan areas. Our focus is now on helping and encouraging smaller municipalities to develop business inclusion initiatives. This is a challenge that leaders must meet if they are to create a true level playing field of opportunities for SDBs throughout Pennsylvania.”

The commonwealth has set up a mentor-protégé program, designed to connect prime contractors with direct and recent experience with the commonwealth with state-verified small diverse businesses. Qualified mentors and protégés can self-match or be matched up with the assistance of BDISBO. Partnerships that demonstrate exceptional teamwork and developmental support over the course of a two-year mentorship are recognized and awarded by the state.

The commonwealth established, through executive order, a Governor’s Advisory Council on Diversity, Inclusion and Small Business Opportunities. The council—co-chaired by secretaries of the Department of General Services, Transportation, Community and Economic Development, and Labor and Industry—is working to “create a welcoming Pennsylvania where small and small diverse businesses (SBs/SDBs) can compete fairly to provide goods and services.”

“My gratitude and thanks go out to Governor Tom Wolf, the Governor’s Advisory Council on Diversity, Inclusion and Small Business Opportunities, and our SDB stakeholders for their support and commitment,” says Kirkland. “Furthermore, the BDISBO staff is to be commended for their unwavering support and commitment to increasing contracting opportunities for SDBs who want to do business with the commonwealth.”

BDISBO also facilitates an agency liaison program. This program is set up to provide training and technical assistance to agencies across the state as they work to implement new spending guidelines and best practices. The liaison program assist with integrating diversity and inclusion into agency strategy, setting agency level SB/SDB goals, increasing use of best-value procurement and boosting SDV outreach.

Building a commonwealth
The commonwealth of Pennsylvania is embodying to idea of a common wellbeing, or common good. Not only did they undergo a statewide disparity study, but they met the results with eyes wide-open. Instead of denial or excuse-making, Pennsylvania increased spend goals to close the disparity gap, they institutionalized diversity and inclusion, and they have begun the long work of building educational and enablement programs that will help small, diverse and veteran-owned businesses across the commonwealth.

Denitra Gober joined the Procurated team as a community engagement manager in 2021. In this role, she has created strategic relationships to engage, connect and introduce government and public sector agencies to the efficiencies of integrating the Procurated platform into their procurement process. Gober has made it her goal to ensure Procurated is at the helm of diverse, local and small businesses having more visibility within procurement processes. Prior to joining Procurated, gober was a senior it public and community engagement professional with the city of Atlanta, with expertise in building strategic partnerships, developing strategy, and implementing and utilizing cutting-edge technology in and around the greater Atlanta area.