Designing and evaluating a supplier diversity program in public procurement

Thesis Abstract

Public sector procurement increasingly seeks to leverage supplier diversity to drive inclusive economic growth, social equity, and innovation; however, practical design, implementation, and evaluation challenges often impede meaningful outcomes in many jurisdictions. This study addresses the gap by designing a comprehensive supplier diversity program within a mid-sized metropolitan government’s procurement function, with rigorous evaluation to determine its effectiveness in expanding participation by minority-owned, women-owned, and small disadvantaged businesses while maintaining value-for-money and regulatory compliance. The aim is to develop a scalable framework that integrates policy design, supplier development, contract management, and performance monitoring to achieve measurable procurement and socio-economic objectives. Specific objectives are (1) to map the existing procurement processes, governance structures, and barriers to supplier diversity; (2) to design a structured supplier diversity program (SDP) with clear targets, incentives, and capacity-building components aligned to public procurement regulations; (3) to implement a pilot SDP across three procurement categories (construction, professional services, and goods) over twelve months; (4) to evaluate the impact of the SDP on supplier participation rates, contract outcomes, and total spend with diverse suppliers; (5) to identify operational enablers and barriers through stakeholder engagement; and (6) to formulate a replicable evaluation framework grounded in theory and practice. The methodology adopts a mixed-methods research design, combining explanatory sequential and design-based research elements. The population comprises the local procurement office staff (n=18), procurement managers across three categories, and suppliers registered in the municipality’s supplier database. A stratified random sample of 120 suppliers (40 from each category) and 15 key internal stakeholders will be surveyed, complemented by in-depth interviews with 20 stakeholders (10 internal, 10 external) and five focus groups with diverse supplier representatives. Data collection instruments include a structured survey instrument measuring perceptions of procedural fairness, access, and capability development; semi-structured interview guides exploring governance, risk, and implementation challenges; and a documentary analysis protocol for contract awards, vendor performance, and spend data. Validity and reliability are established through pilot testing, content validity checks with procurement policy experts, and Cronbach’s alpha assessments for multi-item scales. Data analysis employs descriptive statistics, inferential analyses using regression (to assess determinants of supplier participation and contract outcomes) and ANOVA (to compare SDP effects across categories), as well as thematic analysis for qualitative data to identify recurring motifs and causal mechanisms. A conceptual framework anchored in Herzberg’s two-factor theory of motivation and institutional theory is applied to interpret performance outcomes and governance dynamics, with a supplementary input from Stakeholder Theory to map power relations and legitimacy concerns. The study also develops a logic model linking inputs, activities, outputs, and short- to mid-term outcomes. Expected findings include (i) increased participation of diverse suppliers across targeted categories, with measurable growth in contract awards and competitive bidding activity; (ii) improved performance metrics for diverse suppliers, including on-time delivery and quality, driven by capacity-building and mentorship components; (iii) enhanced procurement process transparency and perceived procedural fairness among suppliers and internal staff; (iv) identification of policy, capability, and relational barriers requiring iterative adjustments to the SDP design; and (v) a validated evaluation framework usable by other municipalities seeking to implement or scale supplier diversity initiatives. The study contributes to knowledge by operationalizing a theoretically grounded SDP that bridges policy design and performance evaluation, providing empirical insights into mechanisms that translate diversity commitments into tangible procurement outcomes, and offering a replicable framework with governance, risk, and measurement components. The main conclusion anticipates that a thoughtfully designed SDP—combining targeted category-tailored targets, supplier development, transparent criteria, and continuous performance feedback—plays a decisive role in widening access to public procurement for diverse firms while maintaining value-for-money. Recommendations include formalizing SDP governance within the procurement policy, investing in capacity-building for diverse suppliers, instituting ongoing data analytics to monitor spend and performance, and conducting longitudinal follow-up studies to assess long-term socio-economic impacts.