The Case for Federal Programs That Help Small and Diverse Suppliers

Research challenges the Trump administration’s assertion that they are a “public waste.”

In signing an executive order to terminate diversity, equity, and inclusion in federal workforce and contracting practices and programs, President Donald J. Trump argued that DEI initiatives are a public waste and hurt government performance. However, a study of set-aside contracts for small and diverse suppliers contradicts this claim, showing that these programs improve federal procurement performance. The study found that small and diverse suppliers perform better when awarded contracts through set-aside programs, with lower cost overruns and shorter delays, compared to smaller and diverse suppliers and larger suppliers who won their contracts in open competitions. These findings also suggest that large corporations that currently allocate only a small percentage of their spending to small and diverse suppliers should develop their own programs to increase these purchases.

• 
  Leopold Ried is an assistant professor of management at the University of Melbourne.
  

• 
  Mikaella Polyviou is an associate professor of supply chain management at Arizona State University.
  

• 
  Robert Wiedmer is an assistant professor of supply chain management at Arizona State University.
  

New!