On November 3, 2015, Governor Charlie Baker signed Executive Order 565, expanding the Massachusetts Supplier Diversity Program (SDP) as part of the Administration’s ongoing efforts to increase diversity within the Commonwealth’s procurement network. In addition to streamlining existing certification processes, Executive Order 565 expands the SDP by adding three certification categories of supplier diversity groups: (1) Veteran-Owned Business Enterprises; (2) Disability-Owned Business Enterprises; and (3) Lesbian, Gay, Bisexual, and Transgender (LGBT)-Owned Business Enterprises. Massachusetts is reportedly the first state to include LGBT-owned businesses in its supplier diversity program.

Increased Spending Benchmarks
As part of this diversity initiative, the Commonwealth’s Supplier Diversity Office has also increased the state spending benchmarks established back in October, by 1% for women-owned businesses and minority-owned businesses and .8% for small businesses. The new spending benchmarks are now 13% for women-owned businesses, 7% for minority-owned businesses, and 3.3% for small businesses. In addition, Executive Order 565 expands the existing 3% spending benchmark for service disabled veteran businesses to apply to all veteran-owned businesses. The new disability and LGBT categories will not have spending benchmarks at the outset, to allow for a period of capacity development and collaboration.

Streamlined Certification Process
Effective immediately, certain vendors certified by the U. S. Business Leadership Network, the National Gay and Lesbian Chamber of Commerce, and VetBiz / U. S. Department of Affairs Office of Small and Disadvantaged Business Utilization must submit an Application for Verification with the Supplier Diversity Office. Cross-certification with other widely recognized organizations will be promoted and phased-in effective January 1, 2016. Application forms for vendors certified by the Center for Women and Enterprise, the Greater New England Minority Supplier Development Council, and the City of Boston will be rolled out in December 2015.

Administration and Enforcement
Under Executive Order 565, state agencies must implement the SDP, designate a Supplier Diversity Officer, and meet and “even exceed” the spending benchmarks. The Director of the Supplier Diversity Office will assess contract compliance across all state agencies, address potential violations, and coordinate enforcement measures with the Assistant Secretary of Operational Services and the Office of Access and Opportunity.

Executive Order 565 is no doubt a laudable initiative that will increase opportunities for diverse and underserved members of the contractor community. Nevertheless, both SDP and non-SDP contractors will need to become familiar with the Order’s new set of legal mandates and take steps to ensure compliance. Stay tuned for updates when new regulations implementing Executive Order 565 are inevitably enacted.