A Supplier Diversity program is a proactive business program which encourages the use of minority-owned, women owned, veteran owned, LGBT-owned , service disabled veteran owned, historically underutilized business, and Small Business Administration -defined small business concerns as suppliers. It is not directly correlated with supply chain diversification, although utilizing more vendors may enhance supply chain diversification. Supplier diversity programs recognize that sourcing products and services from previously under-used suppliers helps to sustain and progressively transform a company's supply chain, thus quantitatively reflecting the demographics of the community in which it operates by recording transactions with diverse suppliers. Diverse- and women-owned business enterprises are among the fastest-growing segments of the U.S. economy. Diverse-owned businesses generated an estimated $495 billion in annual revenue in 1997 and employed nearly 4 million workers, while women-owned firms employed about 19 million people and generated $2.5 trillion in annual sales. Alongside the Women-Owned Small Business Program, the US Small Business Administration also operates an Economically Disadvantaged Women Owned Small Business program for preferential award of federal contracts in certain industries.
Certain states within the United States, as a part of their bidding process, incentivize Minority Business Enterprises and women-owned business enterprises to bid on publicly awarded construction or service contracts. They may also declare that a percentage of the work performed on a contract be awarded to an MBE or WBE.
In New York, the goal for the award of public contracts is to increase from 20% in 2014 to 30% by 2019. In 2018, the state was also considering establishing goals for the workforce of contractors awarded public contracts, but insisted these goals were not quotas. If contractors could not make a "good faith" effort to reach the goals, contractors might not be eligible for future public contracts for a length determined by the state.
Controversy
In 2014, when New York increased its minority and/or women-owned business enterprise goals for public contracts from 20% to 30%, the Association of General Contractors sued the state for failing to release documents via New York'sFreedom of Information Law. The AGC was concerned that the state had not conducted a proper contract analysis before declaring the increase of the MWBE goal to 30%. The AGC stated that the 30% goal does not reflect the availability of MWBEs statewide. The AGC also questioned a later study - performed by Mason Tillman Associates Ltd. of Oakland, California - that was paid for by the state in consideration of its employment goals for state contracts. There have been cases where contractors have been charged with crimes for impersonating MBEs. In New York, Eastern Building & Restoration was charged for fraudulently receiving over $1 million from public construction contracts for impersonating as an MBE from the years 2012 - 2014.
