When Tim Keller entered office in December 2017, he needed to order new business cards. Minted with the title “Mayor of Albuquerque,” Keller’s team ordered cards from the same vendor that the Mayor’s Office had always used. When those cards hadn’t shown up weeks later, his staff contacted the vendor to see what the problem was. What Albuquerque printer wouldn’t understand the urgency of getting new business cards to a new administration? The answer was surprising: the City’s business card vendor was in Arizona.
“I was shocked to find out that we were ordering all of our business cards from an out-of-state company,” said Mayor Keller. “As a new administration, we were in the process of ordering a high-volume of business cards for our executive team and newly appointed directors. You mean to tell me there are no local vendors that can competitively bid for this job? I’m just not convinced.”
The City of Albuquerque spends between $200-300 million on goods and services annually. The lion’s share of these purchases, estimated at 70-80%, are made from businesses not considered local. Mayor Keller considered this a huge missed economic development opportunity for both the government and the residents of Albuquerque.
Mining the Data
The City had extensive data on the number, dollar value and types of services that the City was contracting for, but had not yet moved from analysis to action. Mayor Keller asked the administration to review existing contracts with vendors based outside Albuquerque that could potentially be swapped out with a local vendor. “Prior to entering office as Mayor, I had seen a lot of community partners come together to either study this issue or form coalitions—like City Alive, Living Cities lead for The Integration Initiative in Albuquerque—to address this issue from a systems-level perspective,” said Keller. “While I’m a fan of these efforts, I also think it is important to roll-up our sleeves and get our house in order first. Essentially, we could be the proof point for other efforts in our community.”
Establishing a New Policy
Next, the City issued a new Administrative Instruction to all City departments to increase the use of local businesses for city goods and services. Under the new Administrative Instruction, the threshold for local purchases was raised from $2,500 to $10,000, which reduced the red tape for local businesses who wanted to compete for small contracts. In addition, the instruction requires buyers to check whether they can make small purchases from local vendors when feasible and not cost-prohibitive. The City also created a Local Business Search Tool to help City purchasers find vendors that meet their needs.
Applying an Equity Lens
Research shows that for every $1 spent out of state, cities lose at least 25 cents that would have stayed in the local economy. Knowing the economic benefits of buying local, the question then becomes “who” actually benefits from local procurement? Recent data shows that the City annually purchases only 2% of goods and services from Minority Business Enterprises (MBE) and only 3% from women-owned businesses. “We know we can do much better when it comes to contracting with women- and minority-owned businesses through increasing our local buying efforts,” explained Keller.
Building on existing efforts, the City’s goal is to double purchases to women-owned businesses and those owned by people of color by 2020. Through the Community Navigator program out of City Alive, which was made possible through generous funding from the W.K. Kellogg Foundation, the City mobilizes business support specialists to meet businesses “where they are” by visiting local Main Street and mom-and-pop type businesses, specifically in underserved communities. Navigators conduct an initial assessment with businesses and connect them to targeted resources from a growing number of entrepreneurial support services to help them grow their enterprise. Additionally, a new Small Business Advocacy Office is in the works to better connect underserved populations to business opportunities with the City.
“Our work is just beginning, but if we continue to build awareness and make data-informed decisions, we can build our local economy and create jobs. This is a much more sustainable economic growth strategy than simply relying on hitting ‘home runs’ with big-box companies looking to relocate,” added Keller.
For local governments looking for proven strategies to increase purchases from businesses owned by people of color, read stories from five cities in our Inclusive Procurement City Accelerator cohort. Also, look out for our City Accelerator guide in January 2019, which is designed to help you use the data at your disposal, apply a racial equity lens to your procurement policies and practices, and boldly initiate needed procurement reforms.