Setting a 30% small and diverse business goal in procurement can have substantial economic impacts on various levels. While the specific economic impact can vary depending on factors such as the size of the state's procurement budget, the industries involved, and the types of contracts awarded, here are some general economic benefits that can be achieved:
Job Creation:
Increased procurement with small and diverse businesses often leads to the creation of more jobs. As these businesses grow and secure government contracts, they typically hire additional staff to meet the demand for goods and services.
Entrepreneurship and Business Growth:
A 30% goal encourages the growth of small and diverse businesses. Access to government contracts provides these enterprises with opportunities to expand their operations, invest in technology, and enhance their capabilities.
Innovation and Competition:
Diverse businesses often bring innovative solutions and fresh perspectives. By increasing the participation of small and diverse businesses, the state can foster competition and drive innovation in the marketplace.
Community Development:
Procurement with small and diverse businesses contributes to the development of local communities. When businesses in these communities succeed, they reinvest in their neighborhoods, creating a positive economic ripple effect.
Supplier Diversity Ecosystem:
Establishing a 30% goal contributes to the development of a robust supplier diversity ecosystem. It encourages the growth of diverse suppliers, including minority-owned, women-owned, veteran-owned, and other businesses, creating a more dynamic and competitive marketplace.
Reduced Economic Dependence:
Diversifying the supplier base through increased procurement with small and diverse businesses reduces economic dependence on a limited number of large vendors. This, in turn, enhances the resilience of the local economy to external shocks.
Increased Tax Revenue:
Economic growth resulting from increased procurement often leads to higher tax revenues for the state. As businesses thrive, they contribute more to local and state coffers through taxes on income, sales, and property.
Enhanced Corporate Social Responsibility:
Achieving a 30% goal demonstrates a commitment to corporate social responsibility. Both public and private entities benefit from positive perceptions when actively engaging with and supporting small and diverse businesses.
Skills and Knowledge Transfer:
Collaborations between large and small/diverse businesses foster knowledge transfer and skills development. Mentorship programs and partnerships contribute to the professional growth of smaller enterprises.
Social and Cultural Impact:
The economic impact extends beyond numbers and statistics, influencing social and cultural aspects. Supporting diverse businesses promotes inclusivity and reflects the values of a diverse
and vibrant society.
It's important to note that these impacts are interconnected, and the success of achieving a 30% small and diverse business goal goes beyond immediate economic gains. It contributes to building a more inclusive, resilient, and dynamic economy that benefits a wide range of stakeholders within the state.
The state of New Jersey can implement various strategies and initiatives to increase procurement with small and diverse businesses. Here are some effective ways to achieve this goal:
Set Inclusive Procurement Goals:
Establish specific and measurable goals for procurement from small and diverse businesses. This creates a framework for tracking progress and ensures a commitment to inclusivity. Given the recent passage of S855/A2146 that was recently signed into law from the Governor, we now have a public law to support this initiative. This can also be accomplished through Executive Order.
Diverse Supplier Database:
Create and maintain a comprehensive database of certified small and diverse businesses. This database can serve as a resource for government agencies and contractors seeking diverse suppliers. The current state database, NJSAVI, is antiquated and not user friendly. We want to make it as easy as possible for state agencies and prime contractors to find qualified small & diverse businesses.
Outreach and Education Programs:
Conduct outreach programs to educate small and diverse businesses about procurement opportunities. Provide workshops, training sessions, and resources to help them navigate the procurement process effectively. Additionally, educational programs should also be targeted to state procurement officials so they become aware of opportunities where they can set aside contracts or help prime vendors find qualified small & diverse subcontractors.
Streamlined Certification Process:
Simplify and expedite the certification process for small and diverse businesses. A streamlined process makes it easier for these businesses to qualify for procurement opportunities. The state has already accomplished this task with their new business portal.
Unbundling of State Contracts
Analyze current state contracts to see if they can be broken apart so that small & diverse businesses can compete as a prime vendor, or if the contract could be set-aside to small & diverse businesses.
Small & Diverse Business Development Fund
Create a fund run by NJEDA that is designed for small & diverse businesses that have been awarded a state contract. Allow the business to utilize that contract as collateral so that capital is accessible to small & diverse businesses
Memorialize the NJDBAC and make it an official state council
Create a formal council, with powers and voting rights, to guide the state in providing a pathway forward for greater procurement opportunities for small & diverse businesses.
Mentorship Programs:
Implement mentorship programs where established businesses mentor small and diverse enterprises. This facilitates knowledge transfer, skill development, and enhances the capabilities of smaller businesses. This has to occur at the state department level.
Incentives for Prime Contractors:
Provide incentives for prime contractors to engage with small and diverse subcontractors. This can include preferential treatment in bidding processes or recognition for companies that actively support diversity in their supply chains.
Set-Aside Programs:
Implement set-aside programs that reserve a percentage of contracts specifically for small and diverse businesses. This ensures that a portion of government contracts is dedicated to supporting these enterprises.
Collaboration with Community Organizations including diverse chambers:
Collaborate with local and diverse chambers of commerce, business associations, and community organizations to identify and promote small and diverse businesses. These organizations can serve as valuable intermediaries in connecting businesses with procurement opportunities, and often require funding to support their programming.
Regular Reporting and Accountability (Report Cards):
Establish reporting mechanisms to track and report on procurement activities with small and diverse businesses. Regular assessments help identify areas for improvement and maintain accountability.
Establish an Office of Small & Diverse Business Development
Create a new entity that takes a whole of state government approach to helping create policy and enforcement of small & diverse business utilization and development. Include entrepreneurship training, capital readiness, certifications, networking, leadership, resiliency, DPP/DPMC Classifications, and insurance & bonding. Have this entity remove all barriers for small & diverse business utilization
Supplier Diversity Liaisons:
Appoint supplier diversity liaisons within government agencies to actively promote and facilitate the inclusion of small and diverse businesses in procurement processes. These liaisons can serve as advocates for diversity within their respective departments.
Networking Events and Conferences:
Host networking events and conferences that bring together small and diverse businesses, government officials, and prime contractors. These events provide opportunities for businesses to showcase their capabilities and establish valuable connections.
Transparency in Procurement Opportunities:
Ensure transparency in the procurement process by clearly communicating opportunities, requirements, and selection criteria. This transparency builds trust and encourages more businesses to participate.
Feedback Mechanisms:
Establish mechanisms for collecting feedback from small and diverse businesses about their experiences with the procurement process. Use this feedback to make continuous improvements and address any challenges they may face.
Promote Technology Adoption:
Embrace technology solutions that make it easier for small and diverse businesses to access and respond to procurement opportunities. Online platforms and digital tools can streamline the procurement process.
Regular Evaluation and Adjustment:
Regularly evaluate the effectiveness of diversity initiatives and be willing to adjust strategies based on the evolving needs of small and diverse businesses.
Passage of S1313/A3330 (221st Legistature 2024-2025 Session)
An act establishing a certification program for businesses owned by LGBTQ+ persons, and supplementing Title 52 of the Revised Statutes.
By implementing a combination of these strategies, the state of New Jersey can create a more inclusive and diverse procurement environment, fostering economic growth and providing opportunities for a wide range of businesses.
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