The state must attempt to buy more from small businesses in disadvantaged areas and increase contracts with them under an executive directive signed on Friday by Gov. Gretchen Whitmer.
The directive requires the state Department of Technology, Management and Budget to adopt policies that will increase purchases from opportunity zones or businesses that are “geographically disadvantaged.”
The order expands opportunities for businesses “falling behind” without support needed to succeed in their communities, Whitmer said.
“No one is asking for special treatment,” Whitmer said. “There’s a sense that the wheels are greased for the people who are incumbent contractors.”
The directive honors promises made to minority businesses on the campaign trail nearly a year ago, said Michelle Sourie Robinson, president and CEO of the Michigan Minority Supplier Development Council.
“One of the things our constituents said was that we need access and simply want to be able to compete as everyone else competes to be able to be a part of state procurement,” she said.
The initiative is not expected to increase costs for the state and might actually result in new savings in state contracts, Whitmer said.
“If a Michigan business can compete with the best proposal, then they should get the contract, regardless if they’re a small business in downtown Detroit or in Marquette, Michigan,” Whitmer said.
The Michigan Chamber of Commerce is reviewing the directive and will be following the state’s rule-making process as it relates to the initiative, according to Rich Studley, the chamber’s president and CEO.
The chamber often hears from businesses large and small about the “rules, regulations and paperwork” involved in obtaining and fulfilling a government contract, Studley said.
“I wouldn’t be surprised to see a significant amount of interest from the business community in this topic,” he said.
The directive is one of several Whitmer has signed in her first few days in office but marks a departure from the initial ones that focused on transparency and reporting processes for government employees.
The order directs the agency to develop rules by March 31 so that, “all other things being equal,” preference is given to contracts with businesses in “low-income communities or underutilized business areas” so that contracts with those businesses make up 3 percent or more of annual state expenditures by 2022-23.
State departments may allow for larger contractors to subcontract with geographically disadvantaged businesses or operate in joint ventures with them to reach the 3 percent goal.
The disadvantaged businesses must meet the same requirements demanded of other bidders, including any requisite insurance, according to the directive.