By: Katie Kuehner-Hebert
Site visits and certification verification are just a few things companies can do to ensure their diverse suppliers are indeed diverse. Organizations with diverse supplier programs do all they can to ensure that participating firms are in fact women- or minority-owned, but sometimes firms with others running the show behind the scenes can fool them…
Lane Kelman, a partner in the construction group for law firm Cohen Seglias Pallas Greenhall & Furman PC in Philadelphia, said some of his clients have had their women-owned business enterprise (WBE) or minority-owned business enterprise (MBE) status challenged. He said most of those firms unintentionally failed to comply with certification rules, but sometimes firms are trying to pull a fast one.
“The way I approach it initially is, does it pass the smell test?” Kelman said. “When a firm is intentionally avoiding the legal requirements, it becomes pretty evident after just a nominal amount of investigation.”
On its face there could be paper compliance under certification, but in practice, behind layers of paper, a WBE or MBE may not be controlled by a woman or minority, he said. Proper due diligence for executives overseeing diverse supplier programs includes determining whether a male or non-minority is signing off on the contracts, going to important meetings, making decisions on behalf of the company and controlling the money on both a daily and long-term basis.
Kelman also advises diversity officers to visit the warehouses of suppliers in their programs. “A firm holding itself out as a WBE or MBE may just be a de facto supplier and is in reality nothing more than a broker — a pass-through for non-diverse companies who are actually supplying the needed products and services,” he said.