Overview
The Supplier Diversity Office (SDO) was unable to provide us with complete evidence that it monitored Supplier Diversity Program (SDP) spending benchmarks for all SDP-participating state agencies in fiscal year 2021.
Although SDO has made progress reaching out to SDP-participating state agencies to help them meet spending benchmarks since it was first established as an independent state agency in January 2021, if SDO does not monitor SDP-participating state agencies to ensure that they meet SDP spending benchmarks, then it cannot ensure that state procurement and contracting incorporates diversity and equity practices or the inclusion of diverse and small Massachusetts businesses.
Authoritative Guidance
Section 61(m) of Chapter 7 of the Massachusetts General Laws states,
The SDO shall provide assistance to agencies in achieving diversity program goals and benchmarks. The SDO may refer an agency that fails to meet applicable program spending goals or benchmarks or to provide data, information or assistance as requested by the SDO on or before December 15 of each year to the operational services division, the division of capital asset management and maintenance or the appropriate oversight agency for consideration of whether to suspend or limit the procurement authority delegated to such agency or take other appropriate corrective actions.
SDO’s Massachusetts Supplier Diversity Office Executive Agency / Departments SDP Progress Review report states:
An email message was sent to executive agencies and their secretariats which included their progress toward the SDP benchmark. . . . We also reviewed their [fiscal year 2022] discretionary spend final numbers as well as their [fiscal year 2023] discretionary spend progress to-date toward their benchmarks.
In [fiscal year 2022] prior to the [Supplier Diversity] HUB, this method depended on several manual tasks which involved labor-intensive procedures. The SDP spend data was collected by requesting reports and then copied and pasted into a master document.
Reasons for Issue
SDO stated that its first director of compliance and quality assurance was hired in October 2021 and that the Compliance Unit was not fully staffed until February 2022. From the establishment of the Compliance Unit until the end of the audit period, SDO manually sent out monthly emails to SDP-participating state agencies, showing their progress toward meeting spending benchmarks.
Recommendations
- SDO should conduct mid-year reviews on all SDP-participating state agencies and make recommendations and provide feedback to help these state agencies meet SDP spending benchmarks.
- SDO should meet with all SDP-participating state agencies not meeting their spending benchmarks in order to help them improve in the following fiscal year.
Auditee’s Response
Auditee’s Response to Finding #1:
The SDO appreciates the thorough feedback provided throughout the auditing process. The SDO is dedicated to improving processes and the auditing process has allowed us to evaluate and improve upon our current strategic initiatives. This audit period began in January 2021, when the SDO had 13 full-time staff members, none of whom were dedicated to SDO compliance. The SDO did not become an independent agency until halfway through that month and, for the remaining five and a half months of that fiscal year, was not provided any funding to form a Compliance unit. After the passage of the Fiscal Year 2022 budget, the SDO posted the position of Director of Compliance and Quality Assurance, which was filled in October 2021. Upon the Director of Compliance and Quality Assurance starting, the additional compliance officer positions were filled in February of 2022. The Compliance team was thus newly formed and only fully staffed for a portion of this audit period.
The SDO currently conducts mid-year reviews on all Executive Agencies participating in the SDP and [the Small Business Purchasing Program (SBPP)] programs. Although this process was not adopted until after the audit period, the SDO has conducted mid-year reviews since Fiscal Year 2023. The SDO will continue these reviews to ensure compliance with Supplier Diversity spend goals.
Prior to the development and launch of the Supplier Diversity HUB, Executive Agency Benchmark progress reports and report cards were sent monthly via email to all Executive Agencies during Fiscal Year 2021 and Fiscal Year 2022. The Supplier Diversity HUB was created as a proactive way for Executive Agencies to monitor their progress towards SDP/SBPP goals in real time. In Fiscal Year 2023, the process of emailing progress reports and report cards ended, and Executive Agencies were directed to log into the Supplier Diversity HUB for the most up-to-date progress via a comprehensive dashboard.
In addition, SDO holds monthly Supplier Diversity Officers meetings where the overall agencies’ year over year progress (discretionary goods and services spending) is displayed. Supplier Diversity Officers are reminded and encouraged every month to utilize the Supplier Diversity HUB to track their progress.
The SDO agrees with the recommendation of holding ongoing strategic meetings with Executive Agencies who are not meeting Supplier Diversity goals. Many times, these meetings help to uncover issues faced by Agencies in their efforts to achieve the SDP and SBPP benchmarks. Executive Agencies may have difficulty meeting their SDP spending benchmarks due to a variety of factors. For example, an Executive Agency that does not have any large procurements over $250,000 in a fiscal year is required to participate in the Small Business Purchasing Program instead of the Supplier Diversity Program. Some other Agencies may have small discretionary budgets and, therefore, do not have many available expenses from which they can achieve the six benchmarks. Other Agencies may have specialized areas of spending, where the SDO may not have many available certified businesses and/or statewide contracts may not have sufficient diverse businesses on contract. We will continue to use these individual Executive Agency meetings as an opportunity to uncover and discuss what issues agencies are facing in their efforts to achieve SDP and SBPP benchmarks.
Auditor’s Reply
SDO agrees with our recommendations, and we commend it for working on steps to better help agencies meet its benchmarks.
| Date published: | December 23, 2024 |
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