Supplier Diversity

Federal, state and local governments purchase billions of dollars worth of products and services each year. Recent federal mandates require that a certain minimal percentage of government and corporate procurement opportunities be set aside for small businesses and, more particularly, small minority-owned businesses.

Read more about how to Register for Government Contracting.

Supplier Diversity is the proactive business process of sourcing products and services from previously under-utilized suppliers such as diverse-owned, women-owned, veteran-owned, LGBT-owned, service disabled veteran-owned, historically underutilized business and SBA defined small businesses. Supplier Diversity is defined by the creating of partnerships which contribute to the growth and prosperity of minority-, women- and disadvantaged-owned businesses. It has become an integral part of modern corporate culture and a vital element to success. Corporate Supplier Diversity Objectives also include the maintaining of a diverse workforce and working with suppliers that represent and reflect the communities they serve.

Diverse and women-owned business enterprises are among the fastest-growing segments in the U.S. economy, the former generating over $495 billion in annual revenue and employing nearly 4 million workers since 1997, and the latter accounting for some $2.5 trillion in annual sales and employing over 19 million people. Veteran-owned (VOB) and Service Disabled Veteran-owned businesses (SDVOB) are among the most prominent groups of entrepreneurs currently being sought after by corporate supplier diversity directors.

If you are planning on expanding your company’s supplier diversity efforts, following are facts, terms and information to help you better understand the supplier diversity concept.

Minority-Owned Business

A minority-owned business is one that is at least 51 percent owned and controlled/managed by a minority individual or minority group. This includes, but is not limited to, the following minority groups:

  • African Americans
  • Hispanic/Latino Americans
  • Native Americans (any person/s having the origins of the original peoples of North America or the Hawaiian Islands, in particular, American Indians, Eskimos, Aleuts and Native Hawaiians)
  • Asian Pacific Americans (any person/s having origins in Asia or the Indian subcontinent, including but not limited to, person/s from Japan, China, the Philippines, Vietnam, Korea, Samoa, Guam, the U.S. Territories of the Pacific, Northern Marianas, Laos, Cambodia, Taiwan, India, Pakistan and Bangladesh)

Women-Owned Business

A woman-owned business is one that is at least 51 percent owned and controlled/managed by a woman or women.

Physically Challenged-Owned Business

A physically challenged-owned business is one that is at least 51 percent owned and controlled/managed by an individual or a group of individuals, pursuant to the Federal Americans with Disabilities Act.

Veteran/Service-Disabled Veteran-Owned Business

A veteran/service-disabled veteran-owned business is one that is at least 51 percent owned and controlled/managed by one or more disabled veterans who served in the armed forces of the United States or a service-disabled veteran of the armed forces of the United States who has a service-connected disability, as determined by the United States Department of Veteran Affairs.

Small Business Enterprise

A small business enterprise is one that performs a commercially useful function; is not owned and controlled by individuals designated as minorities, women, veterans or physically-challenged; and has annual gross sales that do not exceed $2 million.

Second-Tier Purchasing

“Second-tier purchasing” is a relative term, in that it is a function of who the customer is. From a customer’s perspective, a “first-tier” supplier invoices a customer for goods and services directly rendered by the supplier. A second-tier supplier is a supplier that invoices the first-tier supplier for goods and services rendered.

  • Direct-Spend Purchasing Second-Tier Purchasing refers to those products and services that can be identified in support of the customer’s requirements.
  • Indirect-Spend Second-Tier Purchasing refers to those products and services that cannot be identified in support of the customer’s requirements.

Note: For additional information, the Small Business Administration is an excellent source for companies seeking to investigate incorporating supplier diversity. Contact the SBA.



Before your business can begin to do business with the government or large corporations, however, it is first necessary to obtain the proper certifications. Small business certifications are similar to professional certifications in that they document a special qualification, capability or status of that business. While certifications are not required in order to operate a business legally, whereas permits and licenses are, it may be necessary to obtain certain certifications in order to take advantage of business opportunities, such as government contracts. Certifying your business can definitely help you successfully compete for contracts bidded out by large corporations and government entities.

Business Certification Benefits vary, depending upon the type of certification. Some general benefits might include access to:

  • Private and public contract opportunities
  • Supplier/Supplier Diversity Contacts
  • Prime / Subcontractors / Tier 1 / Tier 2/ Tier 3 Contacts/Contracts
  • Databases of other businesses
  • Exclusive vendor events
  • Educational/Training programs
  • Percentage Bid preference
  • Advantages on payments
  • Preferred vendor opportunities
  • Restricted Contracting opportunities
  • And more…

Is Your Business Certification Ready?

Certifications aside, there is the issue of business capability and compliance. Is your business truly at the level of capability where it could benefit from being certified to begin with? It could be that it is in need of a “tuning”. In addition to certification, the following criteria and capabilities are what Procurement Representatives look for in your business before they will want to do business with you. Being deficient in one or more of these areas may preclude your business from even being considered for contract bids:

When your business is certified, and fully capable and compliant in each of the above areas, your prospects of being considered for major diverse contracts are vastly increased!

LBA Partner Certifications

The LBA is proud to partner with other companies and organizations in providing various Business Certifications. LBA Partner Certifications include:

LBA City Partner, the City of Los Angeles, recognizes certifications from various Agencies. View the roster of Certifying Agencies- City of Los Angeles.

LBA Corporate Partner, Los Angeles World Airports (LAWA), recognizes certifications from various Agencies. View the roster of Certifying Agencies- Los Angeles World Airports (LAWA).

LBA/LBA-Institute Supplier Diversity Boot Camp Training Program

The Latin Business Association, in collaboration with its sister-organization the Latin Business Association Institute proudly present the LBA/LBA-Institute Supplier Diversity Boot Camp Training Program, a comprehensive, seven-week course designed to provide business owners the knowledge and tools they need to build their business infrastructure and become diverse contract ready!

Read full details about the recently concluded 2014 LBA/LBA-Institute Supplier Diversity Boot Camp Training Program- Los Angeles Series– May 31st thru July 19th.