Small Business

LA is largest city to formally include LGBTQ businesses in contracting process worth billions

The LA Pride #Resist March on June 11, 2017, in West Hollywood, California

Gabriel Olsen | FilmMagic | Getty Images

Cities are beginning to see the effects of allowing diverse business owners to come in and be a part of their communities.

The city of Los Angeles will be the largest municipality, by both population and economy, to formally include LGBTQ-owned businesses in the city’s billions of dollars in contract procurement. Reports show that similar contracts in LA amount to as much as $8 billion over roughly 40 departments.

The move follows the inclusion for LGBTQ-owned businesses earlier this year in procurement processes for Orlando, Nashville and Baltimore. Nashville became the first city in the south to recognize LGBT-owned business contributions to the city by an executive order of the mayor’s office.

Federal and local governments have long built into contract procurement opportunities for minority-owned and women-owned businesses. Nationally, certified LGBT businesses contribute $1.7 trillion to the U.S. economy and create more than 33,000 jobs, according to the National LGBT Chamber of Commerce (NGLCC). Certified LGBT-owned businesses generate an average revenue of $2,475,642, according to the NGLCC.

“The important point is that we get to open doors and increased opportunity,” said Justin Nelson, co-founder and president of the NGLCC.

California leads on LGBTQ business inclusion

Nearby Long Beach, California, was the first city in California to enact a similar LGBTQ-inclusive contract process, and California was the first state to establish a legal precedent. In 2014 an amended version of Assembly Bill No. 1678 was passed in the California legislature adding LGBTQ-owned businesses to existing legislation covering contracts awarded by the regulated utility industry in the state. The original legislation mandated the utilities to “encourage, recruit, and utilize” businesses owned by minorities, women and disabled veterans. The legislative change to include LGBTQ businesses has led to moves in cities and states around the country in the years since.

The Los Angeles administrative change echoes the California state precedent.

“In the future, Mayor Garcetti or the LA City Council could implement policies to set specific targets or expand resources for citywide supplier diversity initiatives, but for now we are elated to be called out by name as a business community,” said Jonathan Lovitz, senior vice president at the NGLCC.

No city at this point has specific targets, but NGLCC says it is a best practice to set aspiration goals rather than official targets, which can lead to issues of constitutionality.

Nelson said when cities declare themselves as “open for business” with the LGBT community, it will lead to increased opportunities for these businesses not just in the city but across the country.

“The beautiful thing here is these announcements are a catalyst for businesses in the community to stand up, be recognized and get certified,” said Nelson. “And the benefit of that is not only to potential businesses, but it opens them up to a vast array of corporations across the country that are looking to do business with firms, not despite the fact that they’re LGBT, but because they’re LGBT.”

Supply chains need to include LGBTQ-owned businesses in order for large corporations to achieve a top score on the HRC Corporate Equality index, as well as for the Billion Dollar Roundtable.

“Companies now can show that they are also utilizing diverse suppliers to meet requirements that may be a part of their city contract, and they’re also able to show that to other clients that they have a commitment to empowering and utilizing diverse companies just as other major Fortune 500 [companies] do,” Nelson said.

LGBTQ business owners say these changes to the government contract process can change their lives.

We could hope that not only LA but all the major cities will adopt these programs and make it their own, because we need a lot more help.

Joe Maak

founder and CEO of Pride Resource Partners

Joe Maak was still working for an aerospace company when California updated AB 1678, and business opportunities opened up immediately after he had his own consulting firm certified as a disadvantaged business enterprise (DBE).

“Since I received the certification, I actually got my first call from a Fortune 500 company because now I was visible in their database,” said Maak, founder and CEO of Pride Resource Partners, a technical consulting firm that works with clients on project and portfolio management, construction management and facilities management. “They needed to spend on an LGBT-owned DBE. … I received my first contract and … it was the day when I actually quit my job in aerospace and really launched my company.”

Chicago and New York City currently are considering similar moves. Mayors in other cities have used administrative changes or executive orders to recognize LGBTQ-owned businesses, including Seattle; Columbus, Ohio; Philadelphia; and Newark, Jersey City and Hoboken, New Jersey. At the state level, Massachusetts and Pennsylvania followed California by including certified LGBT-owned businesses.

“It’s kind of like the forefront of a new era,” Maak said. “Previously, LGBT companies weren’t seen as DBE companies. … And now people are realizing there is a large pool of very talented people out there who have not had the same opportunities as others. And clearly, LGBT companies and any other DBE companies have been really high performers. … These companies actually are delivering on their promise.”

“We could hope that not only LA but all the major cities will adopt these programs and make it their own, because we need a lot more help,” Maak added.

There is a potential competitive advantage for cities in increasing procurement opportunities.

“Adding more diverse suppliers, including LGBT business owners, makes the supply chain more competitive. And when it’s more competitive, bid prices come down and that means more money left over at the end of the year to get reinvested at the schools, roads and fire departments and back into all the minority communities that are served by that city or state,” the NGLCC’s Lovitz said.

For the LGBT community, it is an important step in leveling the playing field at a time when investment opportunities and financial stability remains a struggle.

“For those that will ask why do we need to know this? The reality is, if you’re spending time worrying about losing your contract or not being able to bid because you’re LGBT, you’re not focusing on delivering a quality product at a competitive price,” said Lovitz.

He added, “We’re not just a social squeaky wheel. We are a vibrant part of the small business engine that makes the U.S. economy run, and that’s good for everybody.”

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