Guidance relating to Procurement and Business Practices – Supplier Diversity

Executive Summary

The FDIC's Financial Institution Diversity is a program for assessing the diversity policies and practices of FDIC regulated financial institutions. The FDIC, together with other federal financial regulators, developed and issued the Interagency Policy Statement Establishing Joint Standards for Assessing the Diversity Policies and Practices of Entities Regulated by the Agencies (Policy Statement).

The Standards identified in the Policy Statement offer guidance and a framework that enable a financial institution to voluntarily assess its diversity and inclusion practices in several key areas:

• Organizational Commitment to Diversity and Inclusion

• Workforce Profile and Employment Practices

• Procurement and Business Practices – Supplier Diversity

• Practices to Promote Transparency of Organizational Diversity and Inclusion

• Entities' Self-Assessment

Office of Minority and Women Inclusion (OMWI) agencies have, independently, collected the assessment data they receive to report on diversity progress and trends to raise awareness of diversity policies and practices in an effort to benefit the financial services industry as a whole. The diversity self-assessments have provided valuable insight into the financial industry's diversity and inclusion practices, and has enabled the FDIC to identify areas where financial institutions experience challenges in their implementation of diversity and inclusion practices. The financial institutions self-assessment responses using the Standards help FDIC identify "exemplary" practices. These practices are actions adopted by financial institutions that expand and improve upon their workforce diversity and inclusion.

OMWI agencies have observed that diversity policies and practices continue to develop and expand throughout the industry since the Policy Statement was developed in 2015. As a result, the FDIC has captured exemplary practices that have been shared by its regulated financial institutions in their diversity self-assessments, as well as leading practices shared by industry-related organizations (e.g., National Bankers Association). Informational guides have been developed for the financial institutions' further development or improvement of their diversity policies and practices relating to the Standards.

Guidance for developing or improving diversity policies and practices relating to Standard 3, Procurement and Business Practices – Supplier Diversity of the Diversity Self-Assessment of FDIC Regulated Financial Institutions

The Importance of Supplier Diversity

Diversity and inclusion is embedded in the FDIC's core values, which are integrated throughout the organization and work environment to help the FDIC continue to effectively achieve its mission of preserving and promoting public confidence in the U.S. financial system.

The FDIC has a long standing commitment and firmly believes in promoting the fair and equitable treatment of all businesses interested in contracting with the FDIC. The FDIC's Minority and Women Outreach Program promotes contracting opportunities, to the maximum extent possible, for minority- and women-owned businesses. This commitment reflects the benefits FDIC realizes from increased competition for goods and services, more competitive pricing, and innovative solutions to meet the contracting needs of the agency.

In developing the Policy Statement, a series of roundtables discussions were conducted with representatives from financial institutions, including depository institutions, holding companies, and industry trade groups. The purpose was to solicit their views on appropriate standards and to learn about the successes and challenges of existing diversity policies and programs. Supplier Diversity was identified as a leading practice that produces measurable results for businesses in terms of efficiency and innovation, improving customer relations, promoting growth and development, and supporting job creation and economic development in communities. Standard 3 examines whether the entity has a supplier diversity policy in place; methods to assess and evaluate its supplier diversity policy; and practices and policies to promote supplier diversity, such as proactive outreach to diverse contractors.

Examples of Procurement and Business Practices– Supplier Diversity

The financial institutions are employing a variety of methods and approaches to incorporate supplier diversity in their policies and practices. Conducting a diversity selfassessment enables financial institutions to assess their current diversity maturity to set benchmarks so they can develop strategies that increases their supplier diversity. The results from multiple years of analyses of FDIC's diversity self-assessment consistently demonstrate that supplier diversity as a whole is challenging. We anticipate future responses will provide additional guidance on supplier diversity practices employed successfully by regulated financial institutions. Additionally, we have observed that while smaller banks have noted their limited resources, methods were nonetheless improvised to implement supplier diversity practices.

Organizations with well-defined diversity practices may also consider formalizing their Supplier Diversity Program. The program describes the organization's policies, practices, and procedures that define the organization's supplier diversity business strategy. Goals supported by metrics are used to monitor performance and report to management. Management commitment and support for supplier diversity is important to the long-term viability of the program.

Also, determining the scope of the diverse suppliers may vary based on: geographic area; diversity make-up of the businesses and the surrounding community; and the purchasing needs of the organization. Diverse businesses consist of the following classifications:

• Women-owned

• Minority-owned

  • Black or African American
  • Hispanic American
  • Asian American
  • Native American

• Veterans-owned and Service Disabled Veteran-owned

• Lesbian, Gay, Bisexual or Transgender-owned

Supplier Diversity includes an organization's efforts to:

• Establish benchmarks from which to develop or improve supplier diversity;

• Expand list of suppliers to provide equal procurement opportunities to diverse businesses.

• Identify opportunities, challenges that may arise, and establish achievable goals.

• Promote supplier participation reflective of a company's diverse customer base and the business community

• Key supplier diversity considerations include:

  • Locate sources for diverse suppliers, such as certification organizations, industry groups, existing suppliers or other resources (e.g., chamber of commerce), the federal System for Award Management (SAM);
  • Disseminate and/or market procurement opportunities to diverse businesses in the surrounding community;

• Determine purchasing opportunities that would attract a diverse group of suppliers;

• Track and monitor procurement performance;

• Obtain management's buy-in and support.

The FDIC has identified practices that financial institutions might consider implementing as part of their supplier diversity practices. Some examples that can be considered by financial institutions, include:

• Conduct a local and regional supplier survey to determine how many diverse suppliers were available to the financial institution to procure goods and services.

• Implement formal supplier diversity programs to provide opportunities for minority and women-owned businesses to compete for procurement of business goods and services, and required the inclusion of minority- or women-owned businesses in bid opportunities.

• Partner with business, civic and trade organizations as appropriate at the local, region or national to identify opportunities for qualified suppliers.

• Initiate, build, and maintain relationships with suppliers who share a commitment to diversity, providing future opportunities to establish long-term partnerships with MWOBs.

• Develop systems to facilitate the augmentation of demographic and procurement information. When vendor demographics are reflected in the market that matches an institution's business and contractual needs, minority- or women-owned businesses are included in bid opportunities.

• Develop a planned approach to determine methods for sourcing qualified minority- and women-owned businesses and establish goals to provide contracting opportunities to diverse vendors.

Informational Resources for Supplier Diversity

Informational resources are provided for further research and exploration, and include:

• Information about the FDIC's Financial Institution Diversity Program

• The Doing Business With the FDIC brochure provides guidance on FDIC's procurement practices.

3. Procurement and Business Practices – Supplier Diversity

Companies increasingly understand the competitive advantage of having a broad selection of available suppliers to choose from with respect to factors such as price, quality, attention to detail, and future relationship building. A number of financial institutions have achieved success at expanding available business options by increasing outreach to minority-owned and womenowned businesses. As in the employment context, financial institutions often use metrics to identify the baseline of how much they spend procuring and contracting for goods and services, how much they spend with minority-owned and women-owned businesses, and the availability of relevant minority-owned and women-owned businesses, as well as changes over time. Similarly, financial institutions may use outreach to inform minority-owned and women-owned businesses (and affinity groups representing these constituencies) of these opportunities and of the procurement process. In addition, financial institutions' prime contractors often use subcontractors to fulfill the obligations of various contracts. The use of minority-owned and women-owned businesses as subcontractors provides valuable opportunities for both the minority-owned and women-owned businesses and the prime contractor. Financial institutions may encourage the use of minority-owned and women-owned subcontractors by incorporating this objective in their business contracts.

1. 3.1 The financial institution has a supplier diversity policy that provides for a fair opportunity for minority-owned and women-owned businesses to compete for procurement of business goods and services. This includes contracts of all types, including contracts for the issuance or guarantee of any debt, equity, or security, the sale of assets, the management of the financial institution's assets, and the development of the financial institution's equity investments.

2. 3.2 The financial institution has methods to evaluate its supplier diversity, which may include metrics and analytics related to:

   • 3.2(a) Annual procurement spending.

   • 3.2(b) Percentage of contract dollars awarded to minority-owned and womenowned businesses by race, ethnicity, and gender.

   • 3.3(c) Percentage of contracts with minority-owned and women-owned business subcontractors.

3. 3.3 The financial institution has practices to promote a diverse supplier pool, which may include:

   • 3.3(a) Outreach to minority-owned and women-owned contractors and representative organizations.

   • 3.3(b) Participation in conferences, workshops, and other events to attract minority-owned and women-owned firms and inform them of contracting opportunities.

   • 3.3(c) An ongoing process to publicize its procurement opportunities.