Government Supplier Diversity Programs Go Global — Just What the UK Does Not Need

In the US, nearly everyone with enough knowledge, intelligence, and open-mindedness to dig below the surface of Federal reporting around supply diversity recognizes the farce that the whole charade has become. Unlike private-sector supplier-diversity programs that target minority groups as customers as a form of investment, Federal reporting around diversity has led to little more than bureaucratic reporting hassles, higher lower-tier supply chain costs (which roll up to the ultimate buyer), targeted handouts (i.e., diversity for me but not for thee), increased supply risk, and, above all, greater total cost. It's shocking that more taxpayers aren't up in arms over it, but I suppose that ignorance really has pulled a screen over a practice that -- while well intentioned -- is playing its own not-so-small role in driving up deficits. Given this backdrop, you'd think the Brits would learn a thing or two about our wasteful Federal diversity-contracting experiment. Guess again.

In the past month, despite booming deficits and a new experiment in socialist redistribution of wealth that makes France look like a capitalist pig by comparison, the UK has begun to introduce new legislation that "could give procurers -- especially in the public sector -- greater powers and obligations to demand diversity strategies from suppliers." The new "Single Equality Bill" provides for, among other things, a requirement for "a new public sector duty to consider reducing socioeconomic inequalities ... [and] using public procurement to improve equality." More specifically, "There will be a specific requirement for public bodies to promote equalities and diversity through their procurement," requiring, for example, "public purchasers … to insist their suppliers take positive action to address inequalities in their workforce and supply chain."

Now while all of this sound well and cumbaya good on paper, in reality it will lead to increased supply chain costs for OEM or tier-one suppliers, who will then -- you guessed it -- pass the costs directly to the government, who will pass it on to taxpayers (who already, in the upper brackets, pay well over 60% of their income to the government, factoring in income taxes and VAT). It will also create another tier of bureaucracy in the British government that, as we all know, has the distinguished legacy of spreading bureaucracy worldwide. For this reason, while we might all agree in theory that, "for businesses, failure to be positive about minorities is to miss an opportunity to attract talented people or competitive suppliers," when such activity is mandated by a bureaucracy, then the overall costs could most certainly outweigh the benefits (especially when you consider that the business world is becoming more global and diverse, regardless).

At the end of the day, government should be in business to get the best value for taxpayers, period. This matters even more in a climate of zealous deficit spending. And when soft factors such as diversity enter into the equation – whether it's in the US or in the UK -- duck and run for overspending cover.

Jason Busch

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