Key strategies employed
- Set public goals and regularly report on progress
- Establish thresholds to ensure local and diverse vendors are considered
- Facilitate a mentor-protégé program
- Provide technical assistance and capacity-building training
- MD Anderson Cancer Center (housed within Texas Medical Center)
- Employees: 21,000
- Annual Spending on Goods and Services in 2016: $1.25 Billion
- Construction Spending in 2016: $127 Million1Employment: “Quick Facts,” MD Anderson Cancer Center, accessed August 6, 2016, www.mdanderson.org/documents/about-md-anderson/about-us/facts-and-history/quick-facts.pdf.; Spending data: “Historically Underutilized Business (HUB) Strategic Plan Fiscal Years 2015-2016,” MD Anderson Cancer Center, November 2015, accessed August 6, 2016, www.mdanderson.org/content/dam/mdanderson/documents/about-md-anderson/about-us/ut-system-reports/Historically%20Underutilized%20Business/MDA%20HUB%20Strategic%20Plan%202015-2016.pdf
Mission of Program
“Our mission is to increase the number of contracts awarded to American minority- and woman-owned businesses, and to provide training, resources, and mentoring to help them meet institutional and legislative program goals for all purchases.”2“HUB & Federal Small Business Program,” MD Anderson Center, accessed August 6, 2016, www.mdanderson.org/about-md-anderson/business-legal/doing-business/vendors-and-suppliers/hub-small-business-program.html.
The supplier diversity program at MD Anderson Cancer Center (MD Anderson) focuses on working with Historically Underutilized Businesses (HUBs) and small businesses. Administered by the state of Texas, HUB certification is available to businesses owned by minorities, women, and veterans, as well as to businesses whose owners reside in Texas. MD Anderson’s program focuses on: 1) providing assistance and information to local businesses about certification; 2) supporting capacity-building activities, including a mentor-protégé program for Texas-based HUB-certified vendors; 3) requiring their tier-one vendors to make a good faith effort to subcontract with HUB businesses for contracts above a certain amount; 4) promoting accessibility by hosting and participating in supplier forums; and 5) upholding program accountability, including regular public reporting.
MD Anderson is part of the University of Texas and is housed within the Texas Medical Center in Houston. The HUB & Federal Small Business programs operate on state and federal levels. MD Anderson is part of the University of Texas System, and as such, follows HUB legislation and is subject to state regulations regarding supplier diversity. In addition, as a federally designated comprehensive cancer center established by the National Cancer Act of 1971, MD Anderson receives federal funding and is subject to federal procurement regulations and guidelines. MD Anderson’s supplier diversity program has largely been developed to meet these state and federal requirements.
The program expanded in scale with the creation of the HUB & Federal Small Business Program in 1990. As associate director of the HUB & Federal Small Business Program, Marian Nimon has implemented policies to institutionalize MD Anderson’s supplier diversity efforts, going beyond the state and federal minimum requirements. Examples of these additional steps include their mentor-protégé program, adding HUB participation forms to the contracting process, and policies for working with federally designated small businesses.
Policies are reviewed and revised every two years to reflect any changes to state and federal guidelines. For instance, disabled veterans were recently added to federal guidelines, so MD Anderson’s policies were updated accordingly. By requiring each policy to be reviewed by a committee, MD Anderson also ensures that the institution’s leadership is involved in and knowledgeable about the program.
All contracts valued at $100,000 or more require evaluation for subcontracting opportunities with HUB-certified vendors. If subcontracting is feasible, vendors must include a valid HUB Subcontracting Plan in their bid, detailing how they will make a good faith effort to subcontract with HUBs. A bid that fails to include this plan is considered “non-responsive” and will not be considered.
MD Anderson provides resources to help vendors comply, including plan templates, a draft review of their plan, and assistance identifying and connecting them to local and diverse vendors. Contracts under $100,000 are required to have a certain number of HUB participants per bid, increasing the likelihood of selecting a HUB certified business and ensuring that purchasers conduct adequate vendor outreach.
In defining historically underutilized and small businesses, MD Anderson’s HUB & Federal Small Business Program uses the guidelines established by the federal Small Business Concerns (SBC) programs and state of Texas HUB Program. HUBs are defined as being “at least 51% owned by an Asian Pacific American, Black American, Hispanic American, Native American and/or American woman, and/or Service-Disabled Veterans.” Also included are businesses “owned by a Texas resident who actively participates in the control, operations and management of the entity’s affairs,” or a for-profit entity not exceeding certain size standards that has Texas as its principal place of business. The HUB definition thus encompasses local purchasing—albeit statewide—as well as diverse purchasing.3“HUB & Federal Small Business Program,” MD Anderson Center, accessed August 6, 2016,
In addition, MD Anderson maintains resources for vendors to become either HUB certified through the state of Texas, or federally certified through the US Small Business Administration (SBA). Technical assistance for certification is offered through the University of Houston Procurement Technical Assistance Center. Certified vendors may apply for mentorship and training opportunities. A mentor-protégé program, described in greater depth below, connects large vendors to small businesses, allowing small vendors to gain business acumen in such areas as quality business practices, back office support infrastructure, and healthcare sector specific industry knowledge.
To be eligible for the program, vendors must be: in business for at least a year, HUB certified by the state of Texas, and in a line of business complementary to MD Anderson. Businesses need not be current vendors, and receiving mentoring is no guarantee of a future contract. However, the mentorship program aids vendors in understanding MD Anderson’s supply chain needs and developing competitive bids.
Housed in the Supplier Diversity department, the program is embedded within the health system’s supply chain processes. Supplier Diversity has three full-time staff members, although all supply chain staff are held accountable for meeting the minimum participation bid requirements described above. All contracts over $100,000 are evaluated by the Supplier Diversity department to ensure compliance with HUB’s good faith effort guidelines. Nimon heads the Supplier Diversity department and serves on MD Anderson’s internal institutional diversity committee. Her dual role helps connect supplier diversity efforts to broader institutional goals.
The department also supports vendor outreach and training, hosts meet-and-greets and trainings, creates diverse spend reports, and facilitates a mentor-protégé program. It also serves as the contact point for vendors interested in contracting with MD Anderson. Nimon developed an email template to thank vendors for their interest. The message recalls how they initially connected to MD Anderson, helping to create a personal connection. The email also provides: instructions on registering electronically, a link to bidding opportunities online, and contact information for relevant department heads. These communications ensure that vendors have the information needed to take the initial steps for contracting with MD Anderson or getting HUB certified.
Key strategies employed
Set public goals and regularly report on progress:
MD Anderson specifies HUB goals by spend category. These goals are publicly available on their website and renewed each fiscal year. For 2016, the goals were: 10 percent for building construction, 12 percent for special trade construction, 33 percent for professional services, 10 percent for other services, and 2.5 percent for commodities. Focusing on specific spend categories allows MD Anderson to establish more targeted goals based on the existing supply of local and diverse businesses in each sector.
MD Anderson’s performance is regularly compared to these goals. The HUB & Federal Small Business Program sends monthly progress reports to the associate vice president of supply chain management. Performance is also reported to hospital leadership and public agencies, adding further layers of accountability. The reports identify the percentage of spend with HUB businesses across spend categories, allowing for easy evaluation of whether MD Anderson is meeting goals.
“The reports are used to help us understand where the opportunities are,” explained Nimon. The frequency of reporting allows for greater troubleshooting and flexibility, and the department has a deeper understanding of where spend is allocated. In addition to these internal reports, MD Anderson reports regularly to state and federal agencies. As a public institution, Nimon emphasized, MD Anderson is subject to a higher level of accountability.
Establish thresholds to ensure local and diverse vendors are considered:
MD Anderson follows a tiered approach for contracting. For transactions under $15,000, 50 percent of all non-committed orders are encouraged to be placed with HUB businesses. Contracts between $15,000 and $49,999 are deemed informal bids; in this tier, a minimum of three bids must be solicited. Two of these bids must be from HUB vendors, with one being a minority vendor and the second a HUB with any ownership. Bid participation is tracked and reported. Solicitations above $50,000 follow this same process and additionally are posted publically on MD Anderson’s website. Anything above $100,000 is evaluated for subcontracting opportunities.
This tiered approach enables flexibility in the procurement process. Smaller purchases need not follow the same channels as large contracts, but there are always procedures to ensure that HUB businesses are considered. It is up to the purchasers to meet these goals; however, the HUB & Federal Small Business Program offer resources such as vendor referrals. By setting a minimum threshold for evaluation, this policy ensures that all contracts are considered for opportunities for localizing or diversifying spend.
Facilitate a mentor-protégé program:
MD Anderson operates a mentor-protégé program to link large, established suppliers with HUB businesses. A recognized model for mentorship programs in Texas, the initiative has assisted nearly forty businesses over twenty-one years. Nimon explained that mentors are ideally companies that have already contracted with MD Anderson for at least a year. “They do not have to be a large business, but they need to be a willing partner to share and mentor,” Nimon explained. Protégé companies must be HUB certified. Nimon’s office aims to foster two new relationships a year, but there is frequently greater demand for the program and they often agree to work with more companies.
The matching process is not as simple as linking businesses in the same field, and MD Anderson looks to pair companies with similar business processes. “They might complement one another with good business practices, but they don’t have to be in the same line of business,” Nimon explained. Processes such as bid preparation, tracking finances, back office support, and succession planning remain consistent across sectors. Cross-field mentorship also encourages participation, as mentors are not directly supporting their competition. When mentors and protégés are in the same field, the protégé company may go on to serve as a subcontractor, helping the mentor to meet HUB subcontracting goals.
Mentor-protégé pairs meet an average of ten times a year in person. They are expected to be in communication between meetings as well, ideally in person if they are in the same city, or via conference call if not. A staff member from the HUB & Federal Small Business Program moderates the meetings and tracks the progress of the teams against their goals.
Mentors can also provide vendors with healthcare-specific knowledge and expertise. Nimon gave the example of a large pharmaceutical supplier helping a small supplier to better understand the FDA approval process. MD Anderson went on to contract with the protégé company as they expanded, and the company hired additional staff to meet the growing demand.
|2015 HUB Expenditures||2016 HUB Expenditure Goals|
|Building Construction||$5.5M (9.9%)||$6.2 M (10%)|
|Special Trade Construction||$8.8M (14%)||$7.8M (12%)|
|Professional Services||$2.5M (47.2%)||$1.5M (33%)|
|Other Services||$23.6M (9.9%)||$26M (10%)|
|Commodities||$18.7M (2%)||$24.8M (2.5%)|
Provide technical assistance and capacity-building training
Additionally, MD Anderson offers other technical assistance and training opportunities to potential vendors. For instance, they host a yearly internal training designed to build the capacity of diverse vendors. Participants receive step-by-step instructions on registering as a vendor and submitting a HUB subcontracting plan. They also have the chance to meet and hear from key purchasing decision makers in each area of business. Participants learn information specific to MD Anderson as well as general best practices for human resource procedures, legal contracting, and pricing bids.
Furthermore, MD Anderson provides technical assistance on becoming HUB certified in order to be eligible to be considered a diverse supplier. The landing page for the HUB & Federal Small Business Program’s website provides links to information about the certification process. In addition, MD Anderson provides information for connecting with The University of Houston Procurement Technical Assistance Center (PTAC), where vendors can get help becoming certified and developing proposals. The website also guides vendors in scheduling an appointment with MD Anderson staff so as to receive further information and guidance.
The second phase of MD Anderson’s annual training for small diverse suppliers is a complimentary half-day workshop. Presented by PTAC in tandem with the HUB & Federal Small Business Program, the workshop instructs small diverse vendors in assembling solicitation responses and completing HUB subcontracting plans. MD Anderson provides PTAC with past proposals as sample case studies. Since an external partner offers the training and the sample proposal is for a contract that has already been awarded, this practice does not pose a conflict of interest for MD Anderson.
These real world examples give vendors insight into the bidding process and the intricacies of working with a major institution. Nimon explained the crucial value added by this program: “Rather than teaching suppliers to respond to a particular open proposal…the intent of the entire program is to help build capacity, increasing skill sets for success, not just with MD Anderson, but at any corporation.”
Associate Director and SBLO
HUB & Federal Small Business Program
MD Anderson Cancer Center
Marian Nimon, interview by David Zuckerman and Katie Parker, February 11, 2016, transcript.
“HUB & Federal Small Business Program,” MD Anderson Cancer Center, accessed July 2016, www.mdanderson.org/about-md-anderson/business-legal/doing-business/vendors-and-suppliers/hub-small-business-program.html.
More Purchasing Case Studies
References [ + ]
|1.||↑||Employment: “Quick Facts,” MD Anderson Cancer Center, accessed August 6, 2016, www.mdanderson.org/documents/about-md-anderson/about-us/facts-and-history/quick-facts.pdf.; Spending data: “Historically Underutilized Business (HUB) Strategic Plan Fiscal Years 2015-2016,” MD Anderson Cancer Center, November 2015, accessed August 6, 2016, www.mdanderson.org/content/dam/mdanderson/documents/about-md-anderson/about-us/ut-system-reports/Historically%20Underutilized%20Business/MDA%20HUB%20Strategic%20Plan%202015-2016.pdf|
|2.||↑||“HUB & Federal Small Business Program,” MD Anderson Center, accessed August 6, 2016, www.mdanderson.org/about-md-anderson/business-legal/doing-business/vendors-and-suppliers/hub-small-business-program.html.|
|3.||↑||“HUB & Federal Small Business Program,” MD Anderson Center, accessed August 6, 2016,|