What is Diversity Certification?

Many state, federal, commercial and third party agencies have programs that are used to establish a diverse supplier base. This process is referred to as a diversity certification process. The implied goal of these programs is to create a level playing field for first, employment opportunities and subsequently, for diverse businesses in procurement processes. Government agencies and most corporate procurement activities now require diverse spending throughout their supply chain.  In many cases, prime contractors are required to implement second tier sub-contractor programs to assist the end client, be it governmental or commercial in meeting the specified diversity spend goals.  In 2004 corporations purchased in excess of $87.4 billion from diversity-owned businesses.

Federal, state and local governments have published diversity spend goals, as does most of corporate America.  The Government-wide Federal Procurement Contract Award Goals are [1]:
* 23 percent of prime contracts for small business
* 5 percent of prime and subcontracts for small disadvantaged business (minority)
* 5 percent of prime and subcontracts for woman-owned business
* 3 percent of prime contracts for HUBZone small businesses (SBA program)
* 3 percent of prime and subcontracts for service-disabled veteran-owned businesses.

In order to prove that diverse suppliers are participating in and awarded contract dollars, each organization gathers copies of their diverse suppliers’ diversity certificates.

As the economy continues in massive fluctuation, the number of new business founded by minorities and women displaced from prior employment will continue to increase driving even more interest in the diversity certification process.

[1] For more information about Federal prime and sub-contract goals visit: http://www.sba.gov/aboutsba/sbaprograms/goals/intex.html

[2] http://www.input.com/blogs/public/index.cfm/2008/7/22/Small-Businesses-Getting-Lost-in-the-Kerfuffle