UK fails to meet its goal for contracts with minority-owned businesses
About 5 percent of the University of Kentucky’s spending on outside businesses went to minority-owned companies — significantly less than the university’s goal of 10 percent.
Over the past 12 months, about $16 million of $320 million spent on supplies and other areas through competitive and non-competitive purchasing went to businesses owned by veterans, women, the disabled and racial minorities, said UK spokesperson Jay Blanton. The figures don’t include compulsory payments like taxes and utilities.
The university’s Supplier Diversity Business Enterprise Program — established in 2012 — sets a goal that the university spend at least 10 percent of its supplier contract money on minority businesses. According to Barry Swanson, the university’s chief procurement officer since 2017, the program has been a priority for as long as he’s been at UK.
UK’s data system doesn’t immediately show the racial breakdown of the company owners it does business with, so the amount going to Black-owned businesses, for example, isn’t available, Swanson said. When companies register to do business with the university, they have to input that data, but those demographics don’t all appear in the university’s purchasing software, Swanson said.
“That’s much more of a manual process,” Swanson said, who added that updating the data system to show that level of granularity is on the priorities list.
UK officials pledged in June to expand the supplier diversity program. At the time, the university didn’t state how much it was spending on minority-owned businesses.. Last week, several of Lexington’s Black faith leaders called on the university to expand its spending on businesses owned by racial minorities and bring more racial diversity into top administrative positions.
“This is both shameful and unconscionable,” Rev. Nathl Moore, a pastor at First African Baptist Church, said at the faith leaders’ press conference last week. “Yet, this is where the city, the University of Kentucky, Fayette County Public Schools, and the business sector can make a real difference in the trajectory of our community if they are serious about bringing racial equity.”
The city of Lexington also has a minimum quota of 10 percent, which the city doubled this year. But the majority of those contracts went to white-owned businesses. Less than 1 percent went to Black-owned businesses. Businesses owned by women, veterans and those with disabilities often qualify as minority-owned in government or agency spending.
UK is actively trying to increase its spending with minority-owned businesses, Swanson said. The university goes to diverse vendor fairs and tries to coordinate spending efforts with local government and the public school district. He said that meetings on the university’s most recent pledge to grow its supplier diversity spending program will start soon.
In those meetings, Swanson said he will address a number of impediments that might face minority-owned businesses trying to enter the university’s system. Generally, if a UK department needs something that costs less than $40,000, then the university can look to the open market to obtain supplies. Above the $40,000 limit, the university has to enter into competitive bidding — where the company that can do a job the cheapest while also meeting specifications will usually get a contract.
Small or minority-owned businesses can run into issues because UK could do a better job of educating the supplier community about what the university needs, Swanson said.
“I think we spend a lot of time understanding what the vendors have to offer,” Swanson said. “I feel like that’s only half of the equation. I think that we need to better educate the supplier community what we need.”
Swanson said entering the university’s procurement system can be intimidating for some businesses.
“We are a very difficult customer to do business with. It’s not one entity; it’s really 450-500 departments that are doing business,” Swanson said. “If you’re a supplier, that’s really intimidating. It’s complicated enough for us that work here, for us to keep up with who’s doing what.”
In addition to that, Swanson said some of the university’s needs related to science, technology and research are specialized, and there may only be one supplier for certain products.
The university will also look to grow its supplier diversity by working with companies that it has long-standing partnerships with — like Dell, Grainger, Fastenal and CDW-G — and asking them to partner with local, diverse suppliers.
“As those partnerships develop, not only will they be supplying the University of Kentucky, they’ll be supplying the entire customer base of those vendors,” he said.
This story was originally published July 24, 2020 at 3:34 PM.