Overview
The Massachusetts Convention Center Authority (MCCA) did not have processes in place to ensure that it met the annual benchmarks for diverse supplier spending set by the Supplier Diversity Office (SDO). During the audit period, MCCA did not meet discretionary spending benchmarks for minority-owned, women-owned, and veteran-owned businesses. The table below summarizes MCCA’s benchmark attainment during fiscal years 2021 and 2022.
| Fiscal Year 2021 | Fiscal Year 2022 | |
|---|---|---|
| Minimum Amount MCCA Needed to Spend to Meet the Minority-Owned Business Benchmark (8%) | $1,538,182 | $2,023,443 |
| Amount Spent | $329,827 | $1,178,128 |
| Minimum Amount MCCA Needed to Spend to Meet the Women-Owned Business Benchmark (14%) | $2,691,818 | $3,541,025 |
| Amount Spent | $855,572 | $2,632,462 |
| Minimum Amount MCCA Needed to Spend to Meet the Veteran-Owned Business Benchmark (3%) | $576,818 | $758,791 |
| Amount Spent | $0 | $186,000 |
Because MCCA did not have a process for meeting SDO’s benchmarks, MCCA’s ability to evaluate and improve the effectiveness of its efforts to promote diversity in its procurement process was limited.
Authoritative Guidance
SDO’s “The Commonwealth of Massachusetts Diverse and Small Business Program Policies for Goods and Services Procurements” states:
On a regular basis, departments must enter planned procurements in the SDO Supplier Diversity Hub. . . . The purpose of the planning process is to identify purchasing, procurement, and contracting opportunities that will be available for diverse and small businesses and assist agencies in achieving the following goals:
- Meet or exceed all SDO benchmarks for the fiscal year
Increase the total spending with diverse and small companies compared to the previous fiscal year
Increase the number of diverse and small firms the department buys from compared to the previous fiscal year
Reasons for Issue
MCCA had not established policies and procedures to effectively monitor the extent to which it was meeting the SDO’s annual benchmarks for diverse supplier spending. Additionally, MCCA’s then-chief financial officer told us in a meeting on May 2, 2023 that their interpretation of discretionary spending was “purchases that fall under the $10,000 threshold.” Given that discretionary spending is defined by SDO and is a straightforward concept and calculation, we believe former MCCA officials made misleading and contradictory statements to our office regarding the definition, applicability, and their understanding of discretionary spending.
Recommendations
- MCCA should develop, document, and implement policies and procedures to effectively monitor, and communicate to its board of directors, the extent to which it achieves its annual benchmarks for diverse supplier spending.
- MCCA should use established policies to track diversity spending throughout the year.
- MCCA should involve its chief diversity officer in the procurement process to help support an inclusive and equitable business environment.
- MCCA should collaborate with SDO to ensure increased accountability.
Auditee’s Response
The MCCA consistently meets or exceeds its Supplier Diversity Office (SDO) benchmarks for spending on diverse suppliers, and is proud of its record in this regard. The MCCA exceeded its SDO benchmarks in [fiscal year 2018], [fiscal year 2019], [fiscal year 2020], [fiscal year 2023], and [fiscal year 2024]. While the MCCA did not meet the SDO benchmarks in [fiscal year 2021] and [fiscal year 2022], this underperformance was caused by the COVID-19 pandemic. During this time, all MCCA-hosted events, operations, and venues were shut down by public health executive orders from the Commonwealth of Massachusetts, the City of Boston, and the City of Springfield, which prohibited mass gatherings.
In response to the pandemic, the Commonwealth of Massachusetts tasked the MCCA with retrofitting the Boston Convention & Exhibition Center (BCEC) into a COVID-19 hospital capable of handling over 500 beds to accommodate overflow patients from Boston area hospitals. Additionally, the BCEC was adapted to care for over 500 [individuals experiencing homelessness] from the City of Boston who were suffering from COVID-19 and could not be accommodated in local shelters. During this same period the Commonwealth asked the MCCA to retrofit the Hynes Convention Center as a “Mass Vaccination Site,” one of only several identified in the state. In short, the [Office of the State Auditor (OSA)] has not identified any years outside of this extraordinary and non‑representative period in which the MCCA fell short of its SDO benchmarks. The MCCA therefore disagrees with the [OSA] finding that the MCCA “did not ensure that it met the annual benchmarks for diverse supplier spending.”
In addition, the MCCA has established a process to ensure that annual SDO benchmarks are met. This process can be verified in all publicly advertised Chapter 149 Construction Project [requests for proposals (RFPs)] and 30B RFP documents. The standard contract language in our RFPs includes the Authority’s goals for [minority-owned and woman-owned business] participation, along with standard letters of intent with [minority-owned and woman-owned business] and other required documentation.
For Chapter 149 Construction RFPs, both the proposal form and instructions to bidders require the General Contractor to list the expected goal for supplier diversity spend and to identify the supplier diversity company name and diversity type. In publicly advertised 30B Procurement RFPs, bidders/firms are instructed to include their commitment percentage of the contract amount dedicated to subcontracting with supplier diverse businesses. Each proposer’s commitments are part of the Authority’s selection criteria and may be included in a . . . Plan Form, which was formulated in collaboration with the [Operational Services Division] office.
The MCCA’s process aligns with the [Operational Services Division’s] benchmarks for Supplier Diversity Spend, which are currently set at 14% [minority-owned businesses], 8% [woman-owned businesses], and 1% for veterans. Additionally, the Authority follows the Department of Capital Asset Management and Maintenance (DCAMM) goals for construction projects, which are currently 8.8% MBE and 4.2% WBE.
Finally, the MCCA notes that its current leadership is conducting an internal review of supplier diversity procurement efforts. This review includes, but is not limited to, examining policies and procedures, staffing, managerial understanding of SDO requirements, and organizational structure with an eye toward even further exceeding current statewide benchmarks.
Auditor’s Reply
As noted above, MCCA did not meet the SDO’s discretionary spending benchmarks for minority-owned, women-owed, and veteran-owned businesses during the audit period of January 1, 2021 through December 31, 2022. We appreciate MCCA’s acknowledgement that its operations were impacted by the COVID-19 pandemic and that these circumstances likely contributed to MCCA’s failure to meet these annual benchmarks. We accept MCCA’s statement that its convention operations were shuttered during the COVID-19 pandemic and that repurposing it to serve as a field hospital could reasonably disrupt its operations and its ability to meet supplier diversity goals.
Although MCCA indicates that it exceeded its SDO benchmarks in fiscal years 2018, 2019, 2020, 2023, and 2024, in contrast, SDO’s annual reports indicate that MCCA did not meet its women and veteran spending benchmarks in fiscal years 2018, 2019, 2020, and 2023. While the SDO annual report for fiscal year 2024 has not been issued yet, we are hopeful that MCCA did indeed meet all of its SDO benchmarks for this year.
The underlying issue remains that MCCA did not have adequate processes in place to ensure that it met annual benchmarks for diverse supplier spending. In MCCA’s response, it indicates that procurement documents may contain language regarding its goals for diverse supplier spending and may require firms responding to procurements to identify how and in what amount they are including diverse businesses within their proposals. However, these documents do not constitute policies and procedures that would establish how the MCCA monitors and tracks spending in each diverse supplier category on an ongoing basis.
According to its response, MCCA will conduct an internal review of its supplier diversity procurement efforts. This review will include establishing policies and procedures related to supplier diversity, staffing, managerial understanding of SDO requirements, and organizational structure. We believe that these measures are prudent. We commend the MCCA for agreeing to fully implement our recommendations.
| Date published: | August 19, 2024 |
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