Supplier Diversity Makes Headlines with Minority Subcontracting Laws

At Iasta, we started paying more attention to supplier diversity when we released our first Supplier Information Management software in 2007. In 2012 and 2013, we began noticing a significant uptick in general market interest and direct inquiries from clients and prospects regarding supplier diversity tracking.

Aside from hearing about supplier diversity issues from clients and prospects, we’re also reading about it in the headlines.

Just last week, McHugh Construction agreed to pay $12 million to settle a lawsuit alleging they had used “sham pass-through” subcontractors to misrepresent the amount of work performed by minority subcontractors.

According to a Chicago Tribune article written by John Meisner and published on May 1, 2014, “…allegations prompted a joint investigation by federal prosecutors and Illinois Attorney General Lisa Madigan. The probe involved about $150 million in McHugh contracts on some of the biggest recent public works projects in the Chicago area…Under laws designed to give companies with less clout a foot in the door, McHugh was supposed to subcontract out about $40 million of the work on those projects to businesses owned by women or minorities.”

My favorite part of the article was a quote from US Attorney Zachary Fardon, who said that he hoped companies would learn from the settlement and that, in the end, it’s more costly to try to circumvent minority subcontracting laws than to “simply comply with the requirements.” Read the full article here.

Fortunately, not all Supplier Diversity headlines are negative. Here are some positive headlines from 2014:

NY Legislature OKs Contracting Goal for Veterans
New York Legislature has approved a goal of 6 percent state contracting with companies owned by service-disabled veterans.  Read the article from the Associated Press here.

The 2014 DiversityInc Top 50 Companies for Diversity
DiversityInc ranks companies for diversity based on:

  • Talent Pipeline
  • Equitable Talent Development
  • CEO/Leadership Commitment
  • Supplier Diversity

See the complete list here.

AT&T Spends $15.5 Billion with Certified Diverse Suppliers
AT&T* spent $15.5 billion in 2013, or 28 percent of its total spend, with certified diverse suppliers – the highest percentage the company has ever achieved through its supplier diversity program. Read the article here.

Last month, Iasta responded to all of this interest in supplier diversity by launching a new analytics product, the Iasta Diversity Dashboard. The Diversity Dashboard provides analytics tools and reports that give companies visibility to the demographic makeup of their supply channels.

We know many companies are making their own headlines. We’d love for you to share your supplier diversity story on the eSourcing forum. Post a comment here, or click the Blog for Iasta button on the right, and we’ll be in touch!

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