The impact of strategy on public sector set-aside programs: the case of the state of Ohio
| DOI | https://doi.org/10.1108/JOPP-03-2018-003 |
| Date | 05 March 2018 |
| Pages | 31-49 |
| Published date | 05 March 2018 |
| Author | Ian Y. Blount,Jay Seetharaman,Trevor L. Brown |
| Subject Matter | Public policy & environmental management,Politics,Public adminstration & management,Government,Economics,Public finance/economics,Taxation/public revenue |
The impact of strategy on public
sector set-aside programs: the
case of the state of Ohio
Ian Y. Blount
George Washington Carver Food Research Institute, Columbus, Ohio, USA
Jay Seetharaman
Berkeley Research Group, Washington, District of Columbia, USA, and
Trevor L. Brown
John Glenn College of Public Affairs, The Ohio State University,
Columbus, Ohio, USA
Abstract
Purpose –The purpose of thisstudy is to examine the impact of program strategy on the implementationof
the efficacyof a procurementset-aside program at the state level.
Design/methodology/approach –This study examinesthe impact of program implementation strategy
across two administrations consideringthe most compelling alternative arguments for what drives agency
purchasingthrough contracts with MBEs.
Findings –The results of mixed effects linear regression models on the procurement expenditures of 70
state agencies in Ohio from 2008-2015 show significantly higher rates of procurement expenditures with
MBEs under the Kasichadministration.
Originality/value –These results provide support for the argument that changes in program
implementationstrategy led to substantive increases in the use of MBEs by stateagencies in Ohio.
Keywords Public sector, Government, Impact strategy
Paper type Research paper
1. Introduction
Governments around the globe have proliferated set-aside programs to diversify their
supplier base (Brammer and Walker, 2011;Ram and Jones, 2008;Ram and Smallbone,
2003;Wong and Ng, 1998). These programs generally establish a percentage target of
public purchasing for categories of firms that are disadvantaged in the public sector
procurement market (e.g. small-, minority-, female-, veteran- and disabled-owned firms).
By setting aside a portion of procurement spending, targeted categories of firms are
sheltered from competing with firms that have incumbent advantages. A complementary
purpose of set-aside programs is to create conditions for disadvantaged firms to
eventually “graduate”from preferential treatment and successfully compete in open
competitions.
The track-record of set-aside programs is mixed. Some governments have succeeded in
meeting percentage goals and graduating targeted categories of firms, but many have not
(Barrett et al., 1996;LaNoue, 1994;Zehrt, 2008;Nakabayashi, 2013). This paper examines
minority business enterprise (MBE) set-aside programs, as they represent the largest
category of such programs in the public and private sectors (Adobor and McMullen, 2007).
Impact of
strategy on
public sector
31
Journalof Public Procurement
Vol.18 No. 1, 2018
pp. 31-49
© Emerald Publishing Limited
1535-0118
DOI 10.1108/JOPP-03-2018-003
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1535-0118.htm
Specifically, it focuses on the performance of an MBE set-aside programin a large US state
to assess the impact of factorslikely to inhibit or promote success.
In 2008, the Governor of the State of Ohio, Democrat Ted Strickland, promulgated an
executive order to increase the percentage of state purchasing devoted to MBEs across all
state agencies. While state agencies failed to meet percentage targets under Governor
Strickland’s leadership, mostagencies achieved the targets under his successor, Republican
John Kasich (Ohio DAS, 2015). This paper compares changes in the program and the
implementation context between the two administrations to identify factors which explain
the variation in performance.Analysis of agency procurement data from2008 to 2015 with a
clustered mixed effects linear regression model suggests that operational strategy changes
in program implementation drove the success of the program under the Kasich
administration in comparison to the Strickland administration. The analysis assesses the
impact of program strategy relative to other potentially influential factors including
leadership diversity, organizational size, MBE supply, organizational structure and
organizationalculture and history.
The paper is divided into five sections beyond this introduction. The first section
presents a brief history of MBE set-aside programs in the USA and the State of Ohio. The
second section provides a review of the literature on the factors that potentially affect set-
aside program success. The thirdand fourth sections describe the research design, data and
methods and present the results. The fifthsection concludes the manuscript; a discussion of
the results is presented,as well as implications for future research and practice.
1.1. History and context
The impetus for procurement set-aside programs stem from governmental efforts to
respond to historical, institutional and systematic discriminatory practices in the USA.
Initially, the federal government used procurement to achieve social goals by providing
access to employment for minorities,in particular, African Americans (McCrudden, 2004). In
1941, President Franklin D. Roosevelt signed Executive Order 8802, which prevented race
discrimination by government prime contractors. President Roosevelt used the executive
order to enable African Americansa role in Second World War as employee subcontractors
with majority companies selling goods and services to the federal government. Additional
programs followed over the next two presidentialadministrations: in 1951, President Harry
S. Truman issued Executive Order 10308 which established the Antidiscrimination
Committee on Government Contract Compliance, and in 1953, President Dwight D.
Eisenhower promulgated Executive Order 10479 which created the Committee on
Government Contracts.
Congress also followed suit by passing Section 8(a) of the Small Business Act of 1953 to
create the Small Business Administration(SBA). The primary function of the SBA is to “aid,
counsel, assist and protect, insofar as is possible, the interests of small business concerns”
[Small Business Act, 1953, § 631(a), para. 1]. Additionally, Section 8(a) provides the SBA
authority to enter into subcontracts with small businesses for the acquisition of goods and
services, “whenever it determines such action is necessary”(US Small Business
Administration, 2012). The Act strongly encourages federal, state and city government
agencies to use MBEs wheneverpossible.
In 1969, President Richard Nixon createdthe USA Office of MBE within the Department
of Commerce to mobilize federalresources to aid minorities in business ventures. The Office
of MBE program evolved into the MinorityBusiness Development Agency (MBDA) whose
goal is to expand entrepreneurship among underrepresented minority groups by affording
MBEs the opportunity to use various education, business networking and government bid
JOPP
18,1
32
To continue reading
Request your trial