Mandated Spend – What’s That Mean?

SDMWVLGBTBEs (Small Disadvantaged or Disabled, Minority, Women, Veteran, Lesbian, Gay, Bisexual or Transgendered Business Enterprise) hear a lot about mandated diversity goals. But that word, mandate, can be used in multiple ways.

A large corporation may have its own internal mandates that are not relevant to any specific job or project.  These mandates, or goals, exist because the business is sensitive to its corporate social responsibility.  On the other hand, if the corporation has contracts with state or federal government agencies, they may be required to meet certain diversity spend goals in conjunction with a particular effort.

If your client is a state agency, or you are subcontracting on a state project you may know that some jobs have state mandated participation goals (e.g. NY 30% MWBE on all contracts).  And, some jobs may have state DOT mandated participation, meaning the work has to be supported by DOT certified DBEs (this also includes the UCP programs in most states). And, some corporate contracts will have federal spending goals because there are federal funds associated with the project.

All federal contracts have diversity spend goals, see chart below.  And the feds ask their primes to help meet those goals in the prime’s spend (which is how we get to accounting for and reporting on tiered spend goals). The US government has annual diversity spend goals:

• 23 percent small business (gender & race neutral)
• 5 percent small disadvantaged business (minority)
• 5 percent small woman-owned business
• 3 percent HUBZone small businesses (SBA program)
• 3 percent service-disabled veteran-owned businesses

Many SDMWVLGBTBEs are interested in the SBA’s 8(a) certification.  But, don’t be confused, 8(a) is NOT a mandate. 8(a) is a business development program that agencies can use for set-aside work.  This means that a federal agency can say only 8(a) companies are allowed to bid on certain procurements.  Large corporations can’t be an 8(a) company, so you won’t be competing with say Northrup Grumman or IBM on an 8(a) request.  This set-aside privilege also includes HUBZone and Economically Disadvantaged WOSBs. The US Department of Veterans Affairs will also do set-aside work for veteran- and service-disabled veteran-owned businesses.

As a SDMWVLGBTE business, it is important for us to understand the importance of our client’s supplier diversity program, how it works and demonstrate to them why our superior goods and services will support their mission. And, by the way, help them meet their supplier diversity goals.