How the City is lowering barriers for business owners of color and local businesses to compete for city contracts, and growing the economic pie for all residents.
When it comes to changing procurement practices, those of us working in city government are often confronted with a scarcity mindset – that there’s a scarcity of money, or that buying locally will always mean taking a contract from someone else. Of course, government has a bias toward the lowest cost provider. And rightly so. We’re trying to protect the taxpayer. However, that mindset can be a trap.
If we consider the benefits of local vendors who will reinvest in the local workforce and the local economy, we see that keeping more money in the local economy helps every taxpayer, entrepreneur, and every citizen across the ecosystem. In Albuquerque, because people of color make up the majority, buying locally will mean that many more companies owned by people of color will grow. The goal is to grow the entire economic pie. We can all do better when we focus on equity.
From day one, Mayor Keller has embraced buying locally as a cornerstone of his administration’s economic development strategy. He understands that by channeling government spending toward local businesses, we will be able to keep more money circulating in our local economy and grow jobs. In July, Mayor Keller challenged us to convert 10 contracts from non-local to local vendors by Labor Day and lower the barriers for business owners of color to compete for City contracts.
A year later, I’m pleased to report that we’ve converted 20 contracts and taken steps toward improving racial and income inequalities. These executive changes are a big step toward bringing many more local, minority-owned businesses into the fold. Through this process we are able to identify commodities in which businesses owned by people of color are underrepresented among City vendors and to test strategies to get more people of color doing business with the City.
While the process is far from over, we have some early insights to share on how a city can live its racial equity values. Over the past year, we have taken the following steps:
• Started tracking better. We recognized and fixed gaps in our data systems that were making it impossible to accurately track minority- and women-owned businesses—for example, by revising our W9 form. This work isn’t very sexy. It’s clunky to explain, and people rarely find it interesting—but you have to establish a baseline before you can begin monitoring progress.
We also expanded use of vendor databases, including one developed in cooperation with the Albuquerque Hispano Chamber of Commerce. These databases give us information and access to local companies and allow us to target outreach to business owners of color.
• Made it easier for businesses to register as vendors with the City and enhanced outreach. Business owners can now get help at local libraries to sign up as vendors. They can see what the city buys at www.cabq.gov/webuy or sign up to receive notices of upcoming bid opportunities at www.cabq.gov/getbids. We now issue regular press releases to give the business community updates on opportunities, and to celebrate new local contracts and purchases. This has made the process more equitable for women and business owners of color who have traditionally been shut out of informational networks.
We are also proactively targeting entrepreneurs of color through our City Navigator program. Through this program, City-funded navigators support people of color who are starting or scaling a business by connecting them to resources and helping prepare them to do business with the City. So far the program leads have met with 161 businesses.
• Broke down barriers for local companies to do business with the City. As Frank Mirabal wrote in his piece, in July Mayor Keller raised the small purchases threshold from $2,500 to $10,000, which reduces the red tape for local businesses to get small, non-competitive contracts. He also tightened up usage of p-cards for online purchases, required all City departments to find a local vendor for anything under $10,000 whenever feasible, and required buyers making purchases between $10,000 and $60,000 to get at least one quote from one local vendor when possible. He’s also required buyers to justify, in writing, why they can’t buy locally. Instituting such changes in the procurement approval process and paperwork helps ensure that requirements remain in effect for the long-term.
• Implemented data-informed strategies. An internal working group made up of representatives of the Mayor’s Office, Equity and Inclusion, Economic Development, Procurement, and Department of Finance and Administrative Services began meeting weekly to review city purchases by commodity, and look ahead six months for contracts that are expiring. Members of this cross-departmental team began working with department buyers to identify and share opportunities to do more business locally, and identify gaps in our local economy.
Diving deeply into one area made the initial change work less overwhelming and helped us test strategies we can use going forward to shift more contracts…to local businesses owned by people of color.
For example, the group discovered that in 2017, the City had spent over $2 million on IT hardware (computers, keyboards, etc.) with one non-local company. The contract with this company was close to expiring, so the group worked with the IT department to identify local companies that could fulfill the contract and to communicate this upcoming opportunity to those potential vendors. Diving deeply into one area made the initial change work less overwhelming and helped us test strategies we can use going forward to shift more contracts for other goods and services to local businesses owned by people of color.
While we know we still have a long way to go, we are encouraged by the fact that we’ve doubled the amount spent with minority-owned businesses from 4% to 8%; and the percentage of total money spent on 2018 contracts with local companies is 40%, up from 20%. We will continue to monitor our progress over time, and as we move forward, we’d offer the following principles for other cities looking to change practices to advance race equity and local growth:
Change the mindset
We are beginning to make the case that for every one dollar spent out of state, our city loses at least 25 cents that would have stayed in the local economy.
Asking our City departments to go local seemed easy enough, but we faced some push back against changing the way things have been done in the past. They told us, “We already have a vendor that’s doing a great job” or “We looked for a local vendor a few years ago, and there wasn’t anybody then.“ It was easier and less time consuming for most departments to maintain the status quo. So instead of just asking, “Have you looked in the past?” we are urging departments to “look again, because our economy is always changing.”
It is not enough to ask our City departments to shift toward local purchasing—we need to show them why it matters. If we leave City employees in the dark, our policy change efforts will be ineffective. We cannot be regulating every purchase forever. We are beginning to make the case that for every one dollar spent out of state, our city loses at least 25 cents that would have stayed in the local economy. Imagine what that means in lost tax revenue, charitable contributions, and even payroll.
Institutionalize the change
We are putting the creative power for more equitable and local purchasing into the hands of senior buyers, backed by enabling policy. Our Police Department is a great example. We sat down with them and showed them their purchasing profile: what they currently buy and from whom. Then, we asked them for three to five purchases that they think they can change over the next year to better align with our goals. Through these real conversations, each department is beginning to take ownership of our collective challenge and success.
Keep talking, sharing
Now that we have begun to put systems in place, we’ve got to keep the work going. We’re normalizing conversations about race and race equity, and using tools to institutionalize changes in our internal systems. We’re holding ourselves accountable and celebrating the successes along the way.
Leverage the Living Cities network
It is helpful to remember that we don’t have to start from scratch, and we aren’t doing this alone. Living Cities, The Integration Initiative, and our networks and local partners in City Alive and in Healthy Neighborhoods Albuquerque are giving us many ideas of what to try and how to effectively accelerate our work. Living Cities’ resources and networks can help navigate the myriad of procurement equity strategies, and how to stay accountable, transparent, and set up the data and dashboards to measure our results.
While it is too soon to determine the impact of these efforts, we are hopeful about our city’s future. Our unemployment rate fell to 4.4%. Albuquerque metro saw growth of 11,000 jobs, or 2.8% from October 2017 to October 2018. This compares with growth of 1.7% for the U.S. There is still a lot of work to do, but these small, initial successes have created momentum to take even bigger strides toward using the City’s purchasing power to make Albuquerque’s economy more equitable.
If you have any questions or want to share your story on your racial equity journey, please email email@example.com