The History and Future of Supplier Diversity in Minnesota
Published on: June 27, 2025
When public agencies buy goods, build roads, or hire consultants, they’re spending taxpayer money. The idea behind supplier diversity is simple: that money should circulate fairly and reflect the communities it comes from.
Minnesota has a long record of trying to open its contracting process to small, minority-, and women-owned firms. It hasn’t always been smooth — but every few years, the state takes a new look, measures progress, and adjusts. The 2025 Joint Disparity Study is the latest step in that story.
Early Efforts: 1970s–1990s
Minnesota’s first efforts toward inclusive procurement followed the national civil-rights era. Federal highway funds required states to involve minority contractors, leading to early versions of today’s Disadvantaged Business Enterprise (DBE) program under the U.S. Department of Transportation.
By the 1980s, several Minnesota departments were piloting their own versions. The Minnesota Department of Transportation (MnDOT) and Metropolitan Council began collecting data on minority- and women-owned participation.
In 1988, Minnesota established the Targeted Group Business (TGB) program within the Department of Administration. Its purpose: encourage state agencies to contract with businesses owned by women, minorities, or people with disabilities. (Minnesota Statutes § 16C.16)
At that time, very few such firms were registered vendors, and agencies had little incentive to seek them out. The TGB program introduced certification and allowed agencies to set goals or give preference points.
By the 1990s, large cities like Minneapolis and Saint Paul had created their own supplier-diversity programs and databases. Regional efforts such as the CERT Program (Central Certification) emerged to unify city and county certifications into a shared system.
Growing Pains and Progress: 2000s–2010s
The 2000s brought digital procurement systems and new data visibility. Agencies could now track who was getting contracts — and where disparities remained.
What improved
What held back progress
A 2015 state disparity study found continuing gaps despite decades of effort, particularly in construction and professional services.
Those results pushed agencies to strengthen outreach and modernize procurement websites.
Modern Milestones: 2019–2023
Between 2019 and 2023, supplier diversity gained new urgency.
COVID-19 and equity conversations
The pandemic magnified economic inequalities. Many minority-owned businesses lost clients or closed. State agencies responded by simplifying small-contract procedures and moving training online.
Minnesota also saw an increased focus on racial equity following 2020’s civil-rights protests. Procurement was part of that conversation — ensuring public dollars support communities most affected by inequity.
Key developments
Momentum was building. Then came the 2025 disparity study.
The 2025 Joint Disparity Study: A Reality Check
Released in draft form in June 2025, the study reviewed more than 150,000 contracts totaling about $31 billion from 16 state and local entities.
Headline findings
Why it matters
This gap gives agencies legal justification to keep or expand equity-based programs. Without solid data, such programs risk legal challenge; with it, they can defend targeted action.
The study also highlights a pattern: progress happens when goals are paired with technical assistance and simpler procurement rules.
Legal Headwinds Nationwide
Even as Minnesota refines its programs, national trends are creating uncertainty.
In 2023–2025, several court cases questioned the constitutionality of race- or gender-based contracting preferences. Federal agencies, including the U.S. DOT, have been revisiting DBE program rules to ensure they meet “strict scrutiny.”
At the same time, the National Law Review (Spring 2025) reported that Minnesota adjusted state affirmative-action and workforce-certificate rules, softening explicit references to gender or race.
These changes reflect caution but risk weakening long-standing commitments to inclusion.
Business Voices: The Practical Barriers
Beyond legal debates, small firms face the same obstacles they did decades ago.
a. Bonding and financing
Banks still view small contractors as high risk. Without bonding, bids are dead on arrival.
b. Access to bid information
While most solicitations are posted online, alerts often reach large firms first. Newer vendors struggle to filter relevant opportunities.
c. Payment timing
Slow reimbursements strain small cash flows. A 30-day delay can be fatal for a subcontractor relying on one project.
d. Administrative overload
Each agency has unique portals and forms. Learning curves waste hours that small firms can’t spare.
e. Relationship gaps
Procurement officers say few small vendors introduce themselves outside of bids — yet relationship-building is key for understanding upcoming opportunities.
These challenges appear repeatedly in surveys and disparity-study interviews. (Mn Dept of Admin – Stakeholder Feedback 2025)
What’s Working in Minnesota
Despite barriers, several initiatives show promise.
MnDOT Small Contracts Program
Provides simplified solicitations for small, diverse firms. Early feedback suggests it improves participation by reducing bonding and paperwork.
CERT Unified Certification
Combines City of Minneapolis, Hennepin County, Ramsey County, and St. Paul certifications, saving time for vendors.
(CERT Program Site)
Targeted Outreach and Training
Groups like the Association of Women Contractors (AWC), NAMC, and MEDA (Metropolitan Economic Development Association) run training on estimating, bonding, and proposal writing.
(awcmn.org | meda.net)
Mentor-Protégé Partnerships
Several large primes now voluntarily mentor certified small subs. These relationships build technical and administrative capacity that lasts beyond one project.
The Road Ahead: Opportunities and Risks
Opportunity 1 — Better Data and Transparency
With digital procurement systems and disparity data in hand, agencies can publish dashboards showing contract awards by vendor type. Transparency builds trust.
Opportunity 2 — Regional Cooperation
Joint certification and coordinated goals across cities and counties reduce duplication. Businesses prefer one application instead of five.
Opportunity 3 — Inclusive Financing Tools
Micro-bonding programs or pooled surety funds could help smaller contractors meet bonding thresholds.
Risk 1 — Legal Pushback
Court rulings could restrict the use of race or gender categories. Agencies may need to justify every goal with detailed studies — a costly process.
Risk 2 — Economic Slowdown
Budget cuts often hit small business programs first. Advocacy is needed to protect them during recessions.
Risk 3 — Program Fatigue
Without visible results, public confidence fades. Agencies must pair goals with outcomes and success stories.