Minnesota increases state spending with diverse businesses

ST. PAUL, Minn. (Jan. 8, 2018) — Since 2015, state spending on contracts with African American owned businesses has increased 1,075 percent – from $135,000 to more than $1.5 million in 2017. This increase follows Governor Dayton’s push to make sure state government is accessible to and reflective of all Minnesotans.

Thanks to new state efforts, state spending with Asian, Hispanic, Indigenous, veteran, and woman-owned businesses has also increased significantly in the same time period.

“We are working hard to ensure that state government better reflects the rich diversity of Minnesota, and is accessible to all Minnesotans,” said Minnesota Gov. Mark Dayton on improved diversity in state contracting. “The progress highlighted in this report is encouraging, but we have much more to do to help all Minnesota business owners find new business opportunities with the State of Minnesota.”

When Governor Dayton took office in January 2011, over 202,000 Minnesotans were out of work, and unemployment was at 6.9 percent. Since then, Minnesota’s employers have added over 288,100 jobs, and the statewide unemployment rate has been at or below 4 percent for 41 months. But not all Minnesotans are sharing in Minnesota’s economic recovery. Persistent educational achievement gaps, vast differences in income, and disparities in health and employment are still leaving too many Minnesotans of color behind.

During his 2016 State of the State address, Governor Dayton announced a goal to increase diversity in state employment to 20 percent to more fully reflect the diversity of all Minnesotans. When Governor Dayton took office in 2011, 8 percent of state employees were people of color. Today, it is 12 percent. In 2016, 16 percent of new hires were people of color, and so far in 2017 that number has increased to 19 percent. Governor Dayton has also committed to increasing state contracting with businesses that are minority, women, disabled and veteran-owned, and has implemented new goals that better allow more of these businesses to be reflected in state contracting standards.

During the 2016 Legislative Session, Governor Dayton secured $35 million to begin addressing racial economic disparities in Minnesota. During the 2017 Legislative Session, Governor Dayton proposed additional investments to prepare workers for good jobs, alleviate disparities in health and housing, and expand economic opportunities for Minnesotans of color. Unfortunately, the Minnesota Legislature did not agree to fund the majority of Governor Dayton’s proposals.

	2015 State Spending	2017 State Spending	Percent Increase
African American Owned Businesses	$135,000	$1,586,463	1,075 percent
Asian Owned Businesses	$11,060,842	$16,315,204	47.5 percent
Hispanic Owned Businesses	$1,144,744	$2,780,672	143 percent
Indigenous Owned Businesses	$73,147	$141,720	94 percent
Woman Owned Businesses	$25,492,457	$47,241,273	85 percent
Veteran Owned Businesses	$1,824,015	$6,839,966	275 percent

While this increased spending shows significant progress towards ensuring that Minnesota state government is accessible to all Minnesotans, state spending with targeted businesses still represents only 5.4 percent of all state contracts.

State Strategies to Make Minnesota Government More Accessible

Below, see some of the efforts the State of Minnesota has taken to improve state spending with targeted businesses and make state government more accessible for all Minnesotans.

• Improved Tracking of Targeted Businesses – Since 2015, Minnesota state government has started to better track diversity in state spending and contracting. Under Governor Dayton’s leadership, the state began to track state spending more closely to better ensure these opportunities are available to all Minnesotans. The State of Minnesota is also working with local governments and higher education facilities on a comprehensive review of disparities between majority-owned businesses and businesses owned by underrepresented groups. These studies provide the basis for efforts to increase state spending with targeted groups.
• Tracking Subcontractor Diversity – In addition to better monitoring of state contracts, the State of Minnesota has developed a new method to asses subcontracting goals for targeted businesses. These efforts have already shown success on state projects, and demonstrated the ability to apply stronger goals for contracting partners. This new methodology could result in as much as a 60% increase in required subcontracting.
• Streamlined Certification – Targeted businesses need to be certified, to make sure they meet the criteria for targeted spending. Previously, this represented a major roadblock for new and smaller businesses. Thanks to efforts led by Governor Dayton, the number of certified businesses owned by people of color, women, and veterans by 33 percent, from 898 to 1200. To better ensure that even more targeted group businesses have the same opportunity to bid for state contracts, Governor Dayton has also directed the State of Minnesota to streamline the certification process.
• Training for Purchasing Agents – The Department of Administration has designed and built a new Diversity and Inclusion training, which has been delivered to approximately 700 state employees who make purchases for state agencies. The training is a practical look at ways to include diverse businesses in the State’s supply chain. This includes activities that simulate the challenges a small business owner might feel as they try to navigate the State’s purchasing processes and compete against larger or incumbent businesses.
• Direct Purchasing from Targeted Businesses – State law now allows for direct purchases of up to a $25,000 from certified targeted group business. This new procurement option is identified as “Equity Select,” and has helped promote greater equity and offer a more efficient and streamlined option for purchasers.
• More Opportunities for Targeted Businesses – When at least three certified, targeted group businesses are available to bid on a contract, state law allows for that contract to be limited only to certified, targeted group businesses. While this opportunity was not previously utilized, renewed efforts around diversity and inclusion have led to 16 contracts being designated exclusively for targeted group businesses since June 2016.
• Enhanced Outreach Efforts – At the Department of Administration, the Office of Equity in Procurement was established, increasing the number of employees dedicated to working with diverse businesses from less than one full-time employee, to six full-time employees. This has created the bandwidth needed to get out into the community and connect with small business owners, work with agencies to understand purchasing needs, and create matches between the businesses and agencies. Whereas the Department previously attended five events per year, they attended or hosted 86 events in 2017.

Targeted Group Businesses Success Stories

Below are three examples of Minnesota companies who saw success in 2017, working with the state as targeted group businesses.

• Wenrich Companies – As a certified woman-owned, minority-owned, and small disadvantaged business, Wenrich PD Construction secured $105,660 in contracts from the Minnesota Department of Transportation (MnDOT) in 2017. These contracts were for work including fencing and fence post removal and repairs, gate installation, vegetation removal, and traffic control.
• Ideal Commercial Interiors – Ideal Commercial Interiors provide commercial interior design services, from project inception, design, floor plans, budgeting, scheduling and coordination, to installing office furnishings. Working with the Minnesota Housing Finance Agency, Veterans Affairs Department, and Natural Resources Department, Ideal Commercial Interiors secured $8,457 in state contracts to purchase and install office furniture as a targeted group business in 2017.
• Youth Lens 360° – Youth Lens 360° provides visual communication, product marketing, and branding services through the lens of youth ages 14-24. The owner, Dario Otero, provides youth with project-based credit, experiential learning, after-school enrichment, entrepreneurial development, and pay. As a certified targeted group business, the company secured $24,150 in state contracts in 2017 from the Department of Public Safety and Minnesota Management & Budget, including the production of Human Resources videos.

Learn More and Become a Certified Business with the State of Minnesota

Targeted businesses need to be certified, to make sure they meet the criteria for targeted spending. An application form is available for download here. To learn more about to get certified, visit the website for the Office of State Procurement at the Department of Administration.

Once certified, Targeted Group, Economically Disadvantaged and Veteran-Owned vendors are added to the state’s vendor list, and are listed in the Directory of Certified Targeted Group, Economically Disadvantaged and Veteran-Owned Vendors.

Minnesota businesses seeking additional information can contact the HelpLine at [email protected] or 651.296.2600.