Overview
The Massachusetts State College Building Authority (MSCBA) did not have processes to ensure that it met the annual benchmarks for diverse supplier spending set by the Supplier Diversity Office (SDO). During the audit period, MSCBA did not meet discretionary spending benchmarks for minority-owned and women-owned businesses.
MSCBA’s spending on minority-owned businesses was only 0.2% in both fiscal years 2023 and 2024, far below the 8% benchmark. Similarly, spending on women-owned businesses was 1.2% in fiscal year 2023 and 2.1% in fiscal year 2024, well below the 14% benchmark. The table below summarizes MSCBA’s benchmark attainment during fiscal years 2023 and 2024.
| Fiscal Year 2023 | Fiscal Year 2024 | |
|---|---|---|
| Total Discretionary Budget | $43,968,982 | $41,582,622 |
| Minimum Amount MSBCA Needed to Spend to Meet the Minority-Owned Business Benchmark (8%) | $3,517,519 | $3,326,610 |
| Amount Spent | $89,489 (0.2%) | $74,366 (0.2%) |
| Minimum Amount MSBCA Needed to Spend to Meet the Women-Owned Business Benchmark (14%) | $6,155,657 | $5,821,567 |
| Amount Spent | $530,638 (1.2%) | $890,001 (2.1%) |
| Minimum Amount MSBCA Needed to Spend to Meet the Veteran-Owned Business Benchmark (3%) | $1,319,069 | $1,247,479 |
| Amount Spent | $2,813,780 (6.4%) | $1,456,939 (3.5%) |
MSCBA has demonstrated a commitment to promoting diversity in its procurement process by voluntarily participating in the Supplier Diversity Program (SDP). However, because MSCBA did not have an established process for meeting these spending benchmarks, MSCBA limited its ability to evaluate and improve the effectiveness of its efforts to promote diversity in its procurement process.
Authoritative Guidance
SDO’s “The Commonwealth of Massachusetts Diverse and Small Business Program Policies for Goods and Services Procurements” states,
Annual benchmarks for departmental supplier diversity and small business spending are set by the SDO and are subject to approval by the Secretary for Administration and Finance and the Governor’s Office for Access and Engagement. The benchmark spending amounts are based on applying current benchmark percentages to each department’s discretionary budget and, at the end of each fiscal year, to its discretionary spending.
| Program | Certification Type | Benchmark Percentage |
|---|---|---|
| Supplier Diversity Program (SDP) | Minority Business Enterprise (MBE) | 8% |
| Woman Business Enterprise (WBE) | 14% | |
| Veteran Business, including Veteran Business Enterprise (VBE) and Service-Disabled Veteran-Owned Business Enterprise (SDVOBE) | 3% |
Reasons for Issue
According to MSCBA officials, MSCBA’s ability to meet SDO’s annual spending benchmarks is constrained by procurement regulations that require contracts to be awarded to the lowest eligible and responsible bidder. Specifically, for construction projects, MSCBA must follow the bidding procedures outlined in Chapter 149 of the Massachusetts General Laws, which mandate contract awards based solely on price. As a result, even when a certified diverse business submits a bid, MSCBA cannot prioritize that vendor if a lower bid is received from a nondiverse business.
Recommendations
- MSCBA should develop, document, and implement policies and procedures to effectively monitor the extent to which it achieves SDO annual benchmarks for diverse supplier spending. These policies should incorporate the updated requirements of the SDP, which, effective July 1, 2024, include spending benchmarks for businesses owned by LGBTQ individuals and individuals with disabilities.
- MSCBA should develop strategies aimed at enhancing the participation of diverse businesses in its procurement process. This could include expanding targeted outreach to certified diverse vendors to increase their participation as both prime contractors and subcontractors.
Auditee’s Response
As correctly noted by the [Office of the State Auditor], the Authority is not a Commonwealth agency within the executive branch and is instead categorized as a quasi-governmental agency and, therefore, not subject to the SDO annual benchmarks. However, as supporting supplier diversity is important to the Authority’s mission in serving the Commonwealth’s campuses, the Authority has established a long-standing practice of setting goals for diversity and specifically supporting diversity of the Commonwealth’s workforce.
Moving forward, the Authority intends to improve its process for monitoring and reporting of direct and indirect spending on a fiscal year basis; consider amending existing contracts when new diversity benchmarks are released by the state; expand outreach to diverse vendors in non-construction cost categories of work; and consider incorporating additional spending benchmarks for businesses owned by LGBTQ individuals and individuals with disabilities. Lastly, the Authority may establish its own process for expanding its sources of information in determining the pool of available minority- and women-owned businesses in accordance with [Section 6(c) of Chapter 7C of the General Laws].
Additionally, the Authority continues to reach out to the subcontractor community by engaging Minority-, Woman, and Veteran-Owned Business Enterprises in a web-based trade contractor prequalification process where they are awarded additional credit toward becoming prequalified to bid on Authority projects. Along with such [minority-owned / women-owned business enterprise] goals, the Authority has also adopted workforce participation goals to ensure opportunities for minorities and women to participate in the Authority’s construction projects.
Auditor’s Reply
Based on its response, MSCBA is taking measures to address our concerns regarding this matter. As part of our post-audit review process, we will follow up on this matter in approximately six months.
| Date published: | June 18, 2025 |
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