Creating an Ecosystem to Strengthen and Expand BIPOC-Owned Business
Boston, MAAfter a disparity study found significant race and gender inequities in access to city contracts, Boston, Massachusetts set an ambitious goal in 2021 to more than double the amount it spends on contracts with businesses owned by women and people of color. The City dedicated $9 million in ARPA recovery funds toward inclusive procurement, including the development of an innovative new business accelerator program—the Supplying Capital and Leveraging Education (SCALE) program. SCALE aims to level the playing field for small, local, disadvantaged businesses, helping them grow and scale in industries that represent areas of high municipal spending, and supporting them in gaining access to city contracts. The goal, as André Lima, Director of Supplier Diversity puts it, is “to create a city where both the perception and the reality is that the vendors who are doing public work reflect the demographic composition of the marketplace itself.”
Why this investment?
In 2018, Boston launched a comprehensive disparity study to compile the data and community input needed to understand and pinpoint the structural gaps that make it harder for minority and women-owned businesses to compete—and win—City contracts. The study found significant disparities, including that less than one half percent of City contracts went to Black-owned businesses, even though they represent about 4 percent of available firms. The study also shed light on the industries where the City spends a large share of its discretionary budget, yet the presence of women and minority-owned businesses is limited. These businesses are at a greater disadvantage in accessing City contracts, given the saturation of the vendor pool with large, established businesses that have a long history of government contracting.
With this information, the Department of Supplier Diversity was able to identify the areas where they wished to increase the competitiveness and availability of women and minority-owned businesses. While most of the City’s technical assistance relates to general business capacity, the Supplying Capital and Leveraging Education (SCALE) program offers an alternative approach through the development and inclusive procurement of disadvantaged Boston businesses.
The department also conducted qualitative research including community conversations, focus groups, and interviews with small businesses and those owned by women and people of color. These entrepreneurs often mentioned the need for technical assistance and resources to help better understand how to adequately prepare their businesses to bid on public work.
SCALE came out of an acknowledgement that there is a documented need for entrepreneurs who are interested in public contracting to better understand how to do business with the city of Boston and how to think of their business as seeking—and ultimately winning—public contracts.
What is this investment?
Currently in the development phase, the SCALE program is a three-to-six-month targeted business accelerator that will offer focused assistance to small, local, disadvantaged businesses in specific industry categories receiving a large share of City spending. The priority industries include construction (both general contracting services and trade work), snow removal and landscaping, design and architectural services, and food and dining services. The Department of Supplier Diversity plans to work with organizations offering business development, consulting, technical assistance, and capital advisory services to businesses in the aforementioned industries.
SCALE will be structured as a grant program, with the technical assistance representing an in-kind grant and the monetary grant award offsetting any operational capacity issues that may arise when a business owner participates in the program. By providing more support than the standard general business development consulting programs offer, SCALE aims to prepare these disadvantaged businesses to more effectively conduct business with the City as established, competitive contractors. The goal is to serve 18-20 businesses across the five industry categories in the first year of the program.
SCALE’s business development supports would complement the City’s current procurement reforms, including supplier diversity specific procurement programs and policies such as the Sheltered Market Program, bidding process technical assistance, and vendor education initiatives. As Lima explains, “The SCALE program is the business side. And this mirrors the larger procurement reform effort. Our intention is to continue supporting businesses in a meaningful way, while at the same time finding ways to make the City's procurement process more accessible, and friendly to smaller businesses.”
Centering equity in the program
Although SCALE has yet to launch, supporting participating businesses is a key component of equitable program design. The program is set to be quite rigorous, requiring a significant time commitment on behalf of the businesses and as such, the department is planning to supplement any operational capacity issues that may come to pass with further grant making. Another crucial aspect is tracking real, accurate outcomes for participating businesses. SCALE will address this by following the trajectory of the businesses closely after they exit the program to understand which businesses went on to win City contracts as well as how they performed.
Outcomes to date
In October 2023, the Department of Supplier Diversity issued an RFP seeking business-serving organizations, nonprofits, and for-profit firms that will be responsible for delivering technical assistance within the program. They are currently in the process of reviewing proposals and will finalize awards in March 2024, seeking to launch the program by the end of 2024.
Toward transformative change
With the program set to launch in 2024, the Department of Supplier Diversity is actively working to bring SCALE to life. This includes staffing the project, selecting external partners, and developing the competitive grant process. Along with other ARPA funded projects in Boston, SCALE aims to reduce the racial wealth gap and democratize wealth-building opportunities. As Lima states, “Our hope is that the increase in the piece of the pie that is going to women and minority-owned businesses, which is the closing the disparity goal, can be distributed across a large number of women and minority owned businesses, as opposed to just a few.”