Diversity RFI Opens the Door to Rethinking How Government Reaches Its Goals

One of President Biden’s first actions upon taking office was to issue an executive order rescinding Trump administration policies that undercut diversity, equity and inclusion training programs at agencies and federal contractors. More recently, the Office of Management and Budget took the unusual step of issuing a request for information seeking potential DE&I solutions to improve a range of government activities, including service to public assistance beneficiaries and federal procurement. 

While RFIs are generally used as a market research tool to inform procurements, the administration is using this one as a kind of crowd-sourcing application for policy solutions. That suggests the centrality of DE&I to the administration’s larger management agenda as well as an openness to new ideas and thinking. As such, it is an opportunity that should not be underestimated. At the same time, the issues raised by the RFI are highly complex. It is imperative that any initiatives be assessed holistically and that the “easy button” be studiously avoided. Further, since any initiative must have a measurable goal against which progress can be measured, we need to make sure that each initiative is tied to data that is as accurate and current as possible. To do otherwise risks putting initiatives in place that are sub-optimal or founded on the wrong premise.

One good example of this is federal procurement. The administration wants to find better ways to leverage the government’s spending power—now over half a trillion dollars a year—both to ensure all communities receive their fair share and as one tool to help close income, wage, and opportunity gaps. To that end, the administration has laid down an initial marker, setting a 15% goal for federal contract dollars flowing to “small disadvantaged businesses.” Is that the right goal? Truth is, we don’t really know. We actually do not know how much federal contract spending is going to small disadvantaged businesses today. We know how much in prime contracting dollars is going to a set of firms that meet the statutory definition, but it is not clear that the definition itself is adequate. And we definitely don’t know how much subcontracting money is flowing to SDBs. The data is simply not collected in a way that would provide anything close to an accurate picture. Logically, that problem needs to be solved before establishing a goal. Only then will we have a sound baseline from which to determine the right goal and to measure progress. 

Further, this is the perfect time to ask questions about whether we are even measuring the right thing. No one is asking whether the government’s traditional ways of measuring DE&I in federal procurement through traditional spending goals is the only or best way to achieve the desired outcome. Clearly, setting aside a portion of contracting dollars, and requiring prime contractors to set aside an additional amount for SDBs is one important tool. Likewise, there have to be better ways of ensuring that higher-tier subcontractors can obtain their own past performance reports so they are positioned to bid for additional work as a prime contractor. But all of that aside, our procurement preference programs today focus on only one metric: company ownership. There are some programs that also account for where the work is done, but their foundation remains centered on who owns the company.

Is that the only way to generate greater opportunity? Is the opportunity (and income) gap more meaningfully closed if one individual accumulates the bulk of the wealth or might we actually make more progress by focusing on the location of where the work is performed? Should we dramatically expand current programs and build new ones that incentivize companies of all sizes to locate work in underserved areas? Some forward-leaning companies are already doing so, but the incentives, at the federal level, remain inconsistent and limited. 

And what about the “value” of the work performed? Especially in a struggling economy, creating jobs is always the top priority. But are our broader DE&I goals genuinely served when the bulk of set-aside or subcontracted work is on the lower end of the value scale (lower wages and less upward mobility)? Doesn’t that exacerbate the problem rather than solve it? If a mid-tier or large company locates high-value work in an underserved urban, rural or tribal location, wouldn’t that be at least as likely to help close the gaps as a contract performed in an economically advantaged area, like metropolitan Washington, D.C.?

I do not pretend to have the answers nor am I at all in favor of a burdensome new regulatory regime that instructs businesses on how they should manage their work. That would be a disaster. But the RFI is a great launching point for the kind of broad and comprehensive conversation that is needed to make certain that what we are doing will, in fact, achieve the intended goals without placing undue burdens on individual companies or federal agencies. That conversation starts with the data and requires a wide open aperture.

If the administration’s important initiatives are to succeed, we first need to answer the question of where we are today. In other words, we need a baseline—driven by data and the right analytics—from which to build. Only then will we be in a position to properly define success and address the very complicated questions of how we will get where we want to go. It’s the conversation we should be having now. It’s the conversation that can help ensure we don’t fall into the trap of hitting the easy button.