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How Is Diversity Growing — and Not Growing — in Gov Tech?

A new Bonfire report paints a complex picture of growing awareness of diversity even as minority-owned suppliers struggle to gain footing in the gov tech industry. What does this mean for better tools and services?

More government agencies appear to be intentionally looking for diverse vendors when buying tech, at least going by a new report from Bonfire, a subsidiary of GTY Technology Holdings. Even so, that doesn’t mean actual diversity in gov tech is growing in all cases.

That’s meaningful because experts say more diversity could lead to more innovation in the gov tech space, along with better constituent service.

Bonfire’s new State of Public Sourcing report measured how many clients tracked diversity-related data. The report found that 16 percent of the company’s clients use one or more “diversity-related fields” as of the end of May 2022, up from 10 percent in 2021. Bonfire clients also have created 26 percent more diversity-related fields in projects this year than last year.

But another finding cast doubt on the strength of diversity when it comes to public-sector sourcing.

Disadvantaged business enterprises, or DBEs, submitted 28 percent fewer proposals in 2022 than in 2021. Bonfire blamed part of that on a general downturn in the “number of proposals submitted per project” — a finding connected with Bonfire's sales pitch for its RFP invitation service.

Bonfire, however, said DBEs face stiffer challenges in winning gov tech contacts.

“When working with DBEs, there are more barriers to entry than for other vendors and different engagement strategies and support are required,” the report states. “Getting feedback from these target businesses is invaluable to shaping how you engage and support them in the future.”

That matters because having a broader pool of suppliers can lead to more competition and better quality goods and services at lower costs, Bonfire CEO Omar Salaymeh told Government Technology in an email interview. Not only that, but increasing diversity can provide a positive look to public agencies as social equity and related ideals become more important to society at large.

He emphasized the importance of tracking data as the first step to increasing supplier diversity.

“Once DBE tracking is in place, agencies must work to break down barriers that may be preventing historically small and minority-owned businesses from participating,” Salaymeh said. “For instance, since these types of businesses typically have fewer resources, a lengthy and arduous RFP submission process may disadvantage some small and diverse businesses. Optimizing your vendor submission process for ease of use and efficiency can prevent DBEs from opting out of the process.”

Organizations exist to boost gov tech diversity and even provide mentorship and other support for minority entrepreneurs seeking to build digital services for local, state and federal governments. Among them is a relatively new incubator program in Baltimore called Hutch.

As the new year approaches, Stephanie Chin, program manager for Hutch, is encouraged by a building focus — including at the federal and state levels — for more diversity in contracting and supplier programs, she told Government Technology in another email interview.

That said, much work remains, she said.

“There obviously continues to be a long road ahead towards true progress,” Chin said. “Limited capacity and resources translates into limited support from (certain government agencies) for minority-owned businesses and underrepresented entrepreneurs. It continues to be overwhelmingly difficult for small-business contractors who don't already have access to networks, capital, opportunities, information, etc. to navigate their way through bureaucracy.”

She said the stakes involved are high for the business of gov tech.

“Better representation in the creation and delivery of products and services means better outcomes,” Chin said. “We can't expect homogenous groups to develop solutions that are representative and inclusive of the diversity and varying needs of our country, citizens and government stakeholders.”
Thad Rueter writes about the business of government technology. He covered local and state governments for newspapers in the Chicago area and Florida, as well as e-commerce, digital payments and related topics for various publications. He lives in Wisconsin.