Projecting some important factors in supplier diversity’s next step
When compared to other areas within your organization, supplier diversity is relatively young as a department or even a strategic initiative. Despite its auspicious start during the 1960s, it languished for many years and wasn’t always embraced or welcomed. Not until the 1970s did organizations and communities across the country begin to get intentional about their commitment and create programs that can have a lasting impact on their communities.
In this chapter, I look at the foundation of supplier diversity — where it began, its evolution, and some trends shaping its future. I haven’t designed this chapter to be a big history lesson. It’s here to provide more context to why supplier diversity programs were started, how they’ve evolved, and how certain elements became part of the structure you know today. This background can inform your thinking as a practitioner so you can move beyond a cookie-cutter approach to create or build your program to be responsive to the businesses within your community.
Looking at Where It All Began
The 1950s ushered in a new era of prosperity in the United States. It marked the end of WWII, which positioned the United States as the world’s strongest military power. One of the benefits awaiting soldiers returning home was the opportunity for entrepreneurship. The Small Business Act of 1953 established the Small Business Administration, commonly called the SBA. The SBA, now recognized as the leading federal agency focused on small-business growth and development, was required to guarantee a fair percentage of public or government-structured contracts to various small-business owners throughout the country.
The Small Business Investment Act of 1958 expanded services provided to small businesses. Its purpose was to counsel, assist, and protect the interests of small-business concerns in order to preserve and encourage free competitive enterprise. It also ensured that a fair proportion of the government’s total purchases and contracts/subcontracts for property and services were placed with small-business enterprises.
During this time, the economy was booming, and the bounties of this success were available to more people than ever before. The American economy experienced a shift that created more income for more Americans than in previous decades. This prosperity helped establish a solid middle class and provided the foundation for generational wealth. However, only a portion of society was benefitting from this newfound wealth and financial security. As the economic disparity gap widened, the 1960s were marked with uprisings, protests, and civil rights/Black Power movements within the Black community. This unrest brought new calls for equality and access to economic opportunities for the Black community.
Over the next few years, several presidents issued key executive orders to address economic issues impacting the Black community — employment, contracting, and entrepreneurship issues. For a while, these orders did quiet the calls for justice and access to economic opportunity. However, subsequent orders continued to be issued, highlighting the fact that this complex issue couldn’t be solved with a one-and-done order.
The following sections highlight the executive orders that had a direct impact on supplier diversity. They’re the foundation for how it has evolved today.
Executive Order 10925 (1961): Established Committee on Equal Opportunity Employment
Issued by President John F. Kennedy, this order established the President’s Committee on Equal Employment Opportunity (EEO) and included a condition that government contractors “take affirmative action to ensure that applicants are employed, and employees are treated during employment, without regard to their race, creed, color, or national origin.” It also gave federal contracting agencies authority to institute procedures against federal contractors who violated their EEO obligations, including contract cancellation, debarment from future contracts, and other sanctions. This order is significant in that it was the first use of the term affirmative action, and it set the stage for future orders that address socioeconomic disparities.
Executive Order 11246 (1965): Established Requirements for Non-discriminatory Practices
Issued by President Lyndon B. Johnson, this order prohibited organizations that received federal contracts and subcontracts from discriminating based on race, color, religion, and national origin in employment. In 1967, after outcry from women’s groups, the order was amended (Order 11375) to include sex on the list of attributes. Executive Order 11246 also requires federal contractors to take affirmative action to promote the full achievement of equal opportunity for women and minorities. The Office of Federal Contract Compliance Programs (OFCCP), part of the Department of Labor, is in charge of overseeing this requirement for all federal contractors and has developed regulations for these contractors.
Executive Orders 11458 (1969) and 11625 (1971): Economic Entrepreneurial b Equality
There is a scene in the Lee Daniels movie, The Butler, that shows Washington, D.C., burning after the assassination of Martin Luther King in 1968. In that scene Nixon asks his aides what do “they” want? One of the few African American advisers to Nixon told him that Blacks wanted to do business like every other American but were discriminated against in government contracts. That was the supposed seed of supplier diversity.
Issued by President Richard Nixon, this order specifically addressed economic entrepreneurial equality. It provided a framework for developing a national program for minority business enterprises and establishing the Office of Minority Business Enterprise (OMBE) and the Advisory Council for Minority Business Enterprise. Note: In 1977, Executive Order 12007 terminated the Advisory Council for Minority Business Enterprise. OMBE became the Minority Business Development Agency (MBDA). In 2021, the U.S. Department of Commerce announced that the MBDA would be a permanent agency and expanded, and it was elevated with the passage of the Minority Business Development Act of 2021.
Initially, Executive Order 11458 was viewed as a step in the right direction. Unfortunately, the goodwill was short lived because the order didn’t provide language clarifying who can be considered a minority-owned business. This gap left the interpretation of who’d be eligible up to agencies and organizations, so the order had little to no impact on fostering economic inclusion.
Nixon replaced Executive Order 11458 with Executive Order 11625, which attempted to solve the problem of defining who was eligible for these business programs. The order introduced vague language such as “socially and economically disadvantaged persons” and defined minorities as not just Black people but also Puerto Ricans, Spanish-speaking Americans, American Indians, Eskimos, and Aleuts. Many felt this language diluted the initial intention of the executive orders, which was to address the need for social justice for Black Americans. Because of an outcry from women’s rights groups, women were also included in this category and would go on to be classified as minority or disadvantaged, a designation that continues to this day.
Public Law 95-507 (1978)
On October 24, 1978, President Jimmy Carter signed Public Law 95-507 to amend the Small Business Act and the Small Business Investment Act of 1958. This change made federal procurement contracting more readily accessible to all small businesses. The law PL 95-507 specifies that the government’s
