5 ways to increase construction contract opportunities for small businesses

As city and county government agency leaders know, there is tremendous power in the procurement process. With that power comes responsibility to equitably invest funds through contracting opportunities for small businesses, which are the foundation of the American economy. This is especially true in the construction industry, which includes many small businesses vying for contracts against much larger companies.

Here are five practical steps public sector leaders at the city and local level can take to ensure they are allocating contracts in an equitable manner:

1. Listen to the community you serve.
It’s important for leaders in the public sector to align the values of their agencies and departments with the communities they serve. This includes going directly to the minority contractors and business owners in your area and learning their needs. Doing so will help establish trust and bring more contractors into the fold, which, in turn, will help agencies better engage with their local contractors, strengthen the economy of surrounding communities and meet their diversity, equity and inclusion (DE&I) goals.

2. Look at your vendor database and make sure it reflects the community.
Taking a hard look at your current list of vendors is an excellent way to start the process of improving your agency’s DE&I contracting efforts. Compare your database with the local population. If you find your vendor list does not proportionally reflect the population data, it’s time to add new construction contractors to the list.

Also, simplifying the process by which contractors can become part of your list will engage a more diverse contractor pool. Creating an easily accessible online application will enable more contractors to apply for consideration.

A disparity study analyzes data related to the contracting environment for minority businesses. A disparity study may pertain to a geographic region or specific entity at any level of government and evaluates the usage of minority firms that are “ready, willing, and able to bid on and perform the contract,” according to the Minority Business Development Agency (MBDA). Recent MBDA analysis of 100 disparity summaries found minority businesses specify access to capital and timely bid notifications as two of several barriers to participating in public contracting.

By referencing existing disparity studies or conducting one on their own, public procurement officials can utilize objective data to better understand the realities of minority contracting for your entity and course correct as needed.

3. Know the challenges small businesses have when contracting with state, city and county agencies.
Listening to the contracting community is often a learning experience. Small businesses, including women’s business enterprises (WBEs) or minority business enterprises (MBEs), often face barriers to entry, including resource constraints, language barriers, union obligations and the intimidation of bureaucracy. One overarching message from the contracting community is they have many issues economically that they need help with. For some agencies, it takes a while to pay contractors and small contractors can’t wait that long—they need help getting paid expeditiously. They need assistance with bonding and securing lines of credit. Contractors want to know how agencies and their partners can help them succeed and grow.

Further, bid documents are often lengthy and complex, with important details buried deep within their pages. A cover sheet or checklist that communicates what a contractor must include to have their bid considered makes the process less intimidating for the contractor and increases the likelihood of a quality bid and aid in getting project owners closer to their DE&I goals.

4. Create opportunities for small businesses with set-aside programs.
Set-aside contracts, as the name implies, are contracts that the government has set-aside or limited to certain businesses that have made the effort to comply with contracting requirements. Businesses that operate in disadvantaged locations, small businesses, MBEs or WBEs must be granted an official certification or award and registered with the System for Award Management (SAM) to qualify for a set-aside contract. Set-aside programs have a dual purpose to help small businesses gain footholds in markets where it can be difficult to compete against larger competitors and to assist government entities in meeting small business contracting goals.

5. Use tools such as job order contracting to provide opportunities for diversity, equity and inclusion.
Traditional construction procurement processes can hinder DE&I efforts. The size of bond requirements and the length of payment schedule are often a barrier for small, MWBE-owned businesses. But there are alternative construction procurement methods that can help increase government contract opportunities for small businesses by breaking down the traditional barriers.

Trusted third party partners can help agencies adjust their requirements to encourage construction bids from minority contractors for job order contracting (JOC) programs. JOC is an indefinite delivery indefinite quantity (IDIQ) construction delivery method that allows many projects to be completed through a single, competitively awarded contract. This single-bid process enables projects to start faster and creates partnerships between project owners and awarded contractors, resulting in higher quality work. Through their JOC program, agencies can adjust bonding requirements when it comes to individual projects or job orders and set-aside contracts.

Creating a win-win for agencies and small business
Agencies would be remiss to overlook small businesses as potential business partners simply because they may require some extra guidance to navigate government processes. Likewise, diverse contractors need more avenues to pursue public sector jobs. By working together, state and local government agencies and the contractors all stand to benefit—as does society as a whole. Today, more than ever, state and local government agencies’ responsibility to support their communities includes making sure that all members have a chance to literally build up their neighborhoods.

Dwayne Pierre-Antoine serves as Gordian’s vice president of operations for the central/south United States markets. He leads a team responsible for implementing and educating clients on all aspects of job order contracting (JOC) solutions. Gordian is the leader in facility and construction cost data, software and services for all phases of the building lifecycle.