Press Release  Audit Identifies Opportunities to Increase Diversity, Access and Equity in State Contracting

Boston — Today, State Auditor Diana DiZoglio’s Office released an audit of the Supplier Diversity Office (SDO), reviewing the period of January 1, 2021 through December 31, 2022.

The SDO is an independent state agency operating under the oversight of the Executive Office of Administration of Finance. Its mission is to (a) promote diversity, equity and inclusion in state contracting by certifying diverse businesses (minority, women, veteran, service-disabled veteran, disability and LGBT-owned) and small Massachusetts-based businesses; (b) connect these companies with business opportunities and resources that enhance their marketability when bidding on public contracts; and (c) collaborate with Executive Agencies and public organizations to identify and remove barriers for diverse and small businesses, as well as increase diverse and small business spending.

The audit recommended improvements to ensure the Supplier Diversity Program (SDP)-participating state agencies meet SDP spending benchmarks.

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 and includes diverse and small Massachusetts businesses.

Moreover, the audit recommended that SDO resolve overstated SDP indirect spending discrepancies reported by statewide contractors. By not settling overstated SDP indirect spending, SDO’s Compliance Unit cannot confirm indirect SDP spending by SDP partners against the amounts reported by statewide contractors. If SDO does not confirm SDP indirect spending, then opportunities for diverse and small businesses in the Commonwealth may not be provided and SDP-participating agencies may not be meeting spending benchmarks to which they agreed.

During the audit process, SDO did not confirm SDP indirect spending information on nearly one-third of the SDP partners sampled in the audit. Because SDO did not confirm information on how much statewide contractors expended on SDP indirect spending, SDO is limited in its ability to provide oversight of and confirmation that statewide contractors meet their contractual SDP indirect spending. Increased accountability is needed in this area.

The audit also notes that SDO’s ability to monitor SDP spending is limited to that of only executive branch state agencies. This is because SDO only has access to executive branch state agencies’ spending in the Massachusetts Management Accounting and Reporting System (the state’s accounting system). However, SDO does not have access to non-executive branch state agencies, constitutional offices, and quasi-public entities.

SDO has been encouraging non-executive branch state agencies, constitutional offices, and quasi-public entities to voluntarily participate in the SDP. In fiscal year 2021, 12 non-executive branch state agencies, constitutional offices, and quasi-public entities submitted Narrative Reports to SDO. In fiscal year 2022, this number increased to 14 non-executive branch state agencies, constitutional offices, and quasi-public entities.

To help increase diversity, access and equity in state contracting, the SDO should be able to provide an accurate picture of SDP spending across Massachusetts and increase its efforts to encourage all non-executive branch state agencies, constitutional offices, and quasi-public entities to participate in its SDP.

Finally, the audit notes SDO requires greater access to COMMBUYS to increase the involvement of diverse and small businesses in the state’s contract bid solicitation process. COMMBUYS is the state’s web-based procurement platform for Commonwealth agencies and political subdivisions.

Currently, SDO has limited access to COMMBUYS. Without necessary access, SDO cannot determine whether contracts contain language to fulfill diverse and small business requirements or identify potential barriers to entry, such as contract length, before a contract is negotiated and executed.

“The Supplier Diversity Office has engaged thoughtfully with our audit team to shine a light on areas for improvement regarding their efforts to increase diversity, access and equity in state contracting,” said Auditor DiZoglio. “As is customary, we will be following up in roughly six months to review progress on the issues highlighted in our audit report.”

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