Supplier Diversity in the Construction Industry

WISSAM AKRA: OK. Good morning, everyone. Hope everyone's doing great. Thank you for tuning in. This presentation is regarding supplier diversity in the construction industry. And I'm going to be your presenter. My name is Wissam Akra. I'm a professional engineer and an MBA. I'm also a licensed project management professional and a design build professional as well.

In my day job, I'm the CEO of Tough Leaf. And we're going to talk a little bit about Tough Leaf later on in the presentation. But to give you some background on my experience, I've been in the construction industry for about 15 years now.

Worked for different verticals in the construction industry. So I've worked for engineering, consulting companies like WSP, Parsons Brinckerhoff. I've worked for commercial contractors like Jerram Construction. And I've worked for infrastructure contractors such as Dragados, part of the ACS Group, the largest construction group in the world outside of China.

Also worked on some interesting construction jobs, Second Avenue Subway on the Upper East Side of Manhattan, where I've managed around $800 million worth of contracts. And I've worked on the $3.6 billion Hampton Roads bridge and tunnel project down in Virginia. And I mention all of that to make the point that on all of these jobs regardless of where I was in the industry, the different players in the construction industry, different projects, whether they were large billion dollar infrastructure projects or small affordable housing jobs, we've always had supplier diversity requirements or goals that we had to meet. And that's really what we're going to be talking about throughout this presentation.

I'm going to go quickly to our safe harbor statement. You can read that. But I'm going to jump over to the outline and tell you what we're going to be talking about today. So I just started with my introduction, introducing myself and telling you a little bit how I got involved in this space. Then we're going to go and talk about supplier diversity and just giving you an understanding of what we mean by supplier diversity, the different certifications and such. Then we're going to talk about the impact of supplier diversity, whether it's requirements or beyond requirements.

We're going to talk about different strategies for implementation, how do I implement successful supplier diversity program in my company. Then we're going to talk about technology solutions that help you with implementing those strategies or takes a big part of that burden or that lift away and into people's hands, or computers' hands that are very capable of doing the manual part of the work.

You can't just offload all of the work. It's just that manual part. And we're going to discuss building capacity and how you and others can help build capacity for diverse suppliers, small, medium-sized businesses. And then we're going to talk about real world case studies and insights, real projects, and how they dealt with the supplier diversity. And since this is a recording, unfortunately, you won't have time for Q&A but feel free to send me an email to wissam@toughleaf.com. Able to see that here at the beginning of the presentation. Happy to answer any questions.

All right. So with that, let's get started. I'm going to start-- this is still part of the introduction-- talking about the target audience. So who this presentation is targeting is targeting decision makers, companies in the construction space. So if you're, you know, a VP of pre-construction, director of pre-construction, estimating supplier of diversity, diversity manager, people who really have a say in how the company is run from a pre-construction standpoint, estimating standpoint, meaning you're the one responsible for finding diverse suppliers and onboarding them onto jobs or supplier diversity managers kind of down the same road, and which companies in the construction space.

I know we're targeting companies that have mandates to meet compliance requirements, whether they're set by public authorities, internal corporate policy, or tax abatement programs. And we're going to talk more about all of these instances during the presentation. And this is for companies that have an existing supplier diversity program right now, looking to improve it, or don't have a supplier diversity program but because of these compliance requirements or because they want to do the right thing, they're looking to implement a supplier diversity program. So that's the target audience.

And we're going to talk about why is this presentation important to you. Supplier diversity is important to you because it affects all facets of your business. It affects top line revenue or the ability for you to bring in new projects, new jobs into the company. It affects business development.

Obviously, there's a very large business case for supplier diversity. It affects what projects you're allowed to go after, what projects you can win, your business development capabilities, areas that you can expand to or not expand to. It is that important. And we'll discuss why throughout the presentation. It will also affect the efficiency of the company, so your bottom line, your profit.

And last but not least, it's important because it's part of the social responsibility for corporations. And over the past few years, we're seeing how that is more and more a very important topic that's being discussed by shareholders, stakeholders, the C-suite, everyone at high levels at the company.

All right. So that's the introduction. Now let's get into it and let's start talking about supplier diversity, what it means, and trying to get onto the same understanding of supplier diversity.

So different types of certifications. As you can see we've listed 10 here. Now this is not an exhaustive list. But just so we can talk about what these certifications mean, MBE is minority-owned business. In most of these cases, it needs to be 51% owned by the disadvantaged group, whether they're minority, or women, or veterans. The company's 51% owned and operated by these groups.

So you have minority-owned businesses, women-owned businesses, disadvantaged business enterprises, veteran-owned businesses, service disabled veteran-owned businesses, local businesses, small businesses, woman-owned small businesses, small disadvantaged businesses, hub zones or historically underutilized business zones, and LGBTQ-owned businesses.

Now again, this is not an extensive list. There's more than 100 different certifications in the United States. And you'll see some of them are similar like women-owned business, women-owned small business. And we're going to talk about why there's so many certifications, why there's similar certifications. That's because there's different certifying agencies.

So the federal government has certifications. And if we go back here, the ones more towards the bottom, small business enterprise, women-owned small business, small disadvantaged business, and hubzone, these are more federal certifications, whereas the ones to the top, MBE, WBE, DOB, SDVOB, these are more state or city certifications. And there are some that are both, like disadvantaged business enterprises, that exist for the Department of Transportation on the federal level and State Department of Transportation as well.

And then there's federal veteran-owned certifications. So as you can see, I say all of that to explain that the space is complicated. And it's complicated for many different reasons, a lot of different certifications, a lot of different requirements, and a lot of certifying agencies.

And if you're new to the space, it's important to understand that if I'm a minority-owned business certified by the state of New York, doesn't mean that I'm a minority-owned business certified by the state of California. If I'm certified in New York and I go to work in California, then that doesn't mean that my certification will count in terms of requirements. Same thing if you're a woman-owned business and you're in New York, again it doesn't count in New Jersey.

So who the certifying agency and where your certifying agency is is important. You can get multiple different certifications from different certifying agencies but they're not equal. Same thing when you're at different branches of government. If you're certified by a city agency and it's a state job, your certification doesn't count. If you're certified by the federal government and it's a state job, again your certification doesn't count. And within the level of government, there's multiple certifying agencies as well.

For the federal government, you have the SBA, the Department of Veteran Affairs. For state agencies, you have public authorities, small business departments. And for local government, you have city agencies. There's also private certifying agencies. And that's I just give a couple of examples here, NMSDC and WEBNC. NMSDC is the National Minority Supplier Diversity Council so it's minority business certifications. And the WEBNC gives women-owned business certifications.

Now, those are on a national level, but they're private. So if the job is government funded, then these certifications don't count. They count when it's privately funded. So let's say you're doing a project for Wells Fargo or you're doing a project for Amazon. That's when NMSDC counts. But if you're doing a project for Caltrans, you need to have Caltrans-certified businesses. So just explaining that this is very complicated and you need to have a lot of information about what certification does the company you're interested in have and who they're certified by.

So it's two different things that you need to know. Is this a minority-owned business, woman-owned business? That's one thing. And then who certified them? What's their certifying agency is the other thing. So it's two parts.

And I think I alluded to this but depending on your company, this is if you have internal goals or the client that you're working for, different certifications might be required to prove that the company is indeed a diverse business. I didn't get really to local businesses, but also that has a more local aspect so, of course, if you're local certified in a certain state doesn't mean that you're local to another state.

Two other things for understanding the space is we need to understand that there is first self-certifications. So certain programs accept self-certification in lieu of certifying agency. That typically goes there's a document that I need to sign in order to say I self-certify that I'm a minority business or a small business and so on.

And then another term that's always used is commercially usable function, meaning that-- and we'll talk about the increased scrutiny in this space going forward. But this means that you need to, as a diverse supplier, you need to be performing a commercially usable function, meaning you need to be doing a part or all of the work. You can't just simply take a contract from a general contractor and then subcontract the entire thing to a subcontractor and make 2% or 5% of that.

That was never OK but it used to be overlooked in the past. If you look 10 years ago, that used to be very common. Today you can get in a lot of trouble. People went to jail because of that, because they basically just don't perform any of the work. They take the contract. They give it to someone else just because they're a minority-owned business so that percentage counts.

The companies that do that get in trouble. And the general contractors or the main consultants or the engineer of record get in trouble for that as well because you're the one responsible for verifying that they do a commercially usable function. So it's an again very important point to understand.

So here we spoke about right now understanding supplier diversity. It is a very complicated topic and a lot of different certifications as we discussed. But the main takeaway is a lot of certifications, a lot of certifying agencies, depending on who you're working for or your internal goals, certain certifications, certifying agencies are accepted.

To give you an example, which is always helpful, in New York State, you need to have 15% minority-owned business on any state-funded job, 15% women-owned business. They need to be certified by New York State. 6% of service disabled veteran-owned business.

On federal jobs, we see sometimes 25% requirement. And they kind of leave it up to you where some of it has to go to small disadvantaged business, women-owned small business, veteran-owned business, small business enterprises, and so on. And they need to be certified by the federal government, so the SBA and Department of Veteran Affairs. So these are just two examples so you're aware of the different requirements.

New York City is a little bit more special. They don't only divide based on minority-owned business. The ethnicity over there is as well important. So certain percentage has to go to Black-owned businesses. Certain percentage has to go to Asian or Hispanic-owned businesses. So those are the different types of requirements. On the private side, we see on average around 25% And a lot of times on the private side, they accept any certifications, including private. These are just some requirements just to explain what requirements typically are.

So now let's talk about why supplier diversity is important. Let's look deeper into that. The first one I have there is the increased scrutiny. These requirements have existed for over 10 years now in certain places in the US. But it's become harder and harder to comply with them because now we mentioned the commercial usable function.

We've mentioned the different certifications. Obviously, that makes it harder. And it used to be just public jobs. It used to be on large projects. Now we're seeing it across the board, including private projects from private developers from Fortune 500 companies that are looking to, obviously, fulfill their ESG requirements, their DEI requirements, and look good in front of their stakeholders and shareholders. And that's why supplier diversity we're seeing, especially in the past two or three years, becoming more and more prevalent on a lot of projects regardless of size.

And it's important right now to talk about the main impact of having what happens if I don't meet my requirements. I need to get 30% but I'm only at 25%. And that's where waivers or good faith efforts come in. And going back to the increased scrutiny that those waivers and good faith efforts used to be much, much easier to get in the past.

And now they're getting really scrutinized. But what these mean is you'll say basically that I tried to find diverse suppliers. I just simply couldn't find them or I couldn't get enough companies interested in what I'm trying to do. There were bad actors in the past which led to the increased scrutiny here.

Some people used to use certain services that know that, hey, there's these 100 companies in California that are no longer in business. I can call all of them, record that no one answered, and request a waiver. And people used to do that. A lot of people got into trouble. And now it's become harder and harder to get away with not real good faith efforts or incorrect waivers.

Obviously, understand that in certain places, a waiver makes sense, especially if you're working with say a multi-billion dollar project and say $1 billion or half a billion dollars is to build a tunnel boring machine. Now there are no diverse suppliers in the world that can build a tunnel boring machine. There's less than 10 companies in the world actually that can do it and none of them are diverse suppliers.

So it makes sense, for example, in that case to say, you know what, that part, we need a waiver on. We need to take it out because simply they don't exist. Things like that make sense. And those are things that are acceptable and most government agencies accept them. What they don't accept is you going and saying, you know, I tried when you didn't really try.

So that's what happens when you can't meet the requirements. Certain waivers get approved. Others get denied and then you're in trouble. And what does that trouble mean? We've seen this becoming more and more prevalent in the past couple of years. You'll have to pay financial penalties. Basically, depending on how much you've missed and your goal, then there's a part of that that you'd have to pay as a financial penalty.

It is more serious but you can also get disqualified from bidding on future projects. So they say, OK, you promised that you're going to get 30%. You only got five. We gave you this project, project number one, where that happened as a free pass or maybe you had to pay a financial penalty but this has been going on so right now, as an agency, we're not going to allow you to bid on new projects or you can go ahead and bid but we're going to disqualify you based on your history of not meeting these requirements in the past.

So we're seeing that become more and more prevalent as well. What we're seeing too is like if you're not compliant and you're not submitting the required documents that clients are withholding payments. So they're like you need to get your stuff in order or we're going to stop paying you. And we're seeing that happen as well. Also those are what might happen if you don't meet your goals.

Sometimes these are internal goals. So you don't have to prove to any external entities that you've tried or you met or didn't meet the goal but you just didn't meet your internal goal and that has a stakeholder impact. Obviously, you promise your stakeholders you're going to be something, you don't do it, that will have an impact as well. So these are kind of the scary impacts of supplier diversity, what could happen if you don't meet your goal from financial penalties to disqualification.

Obviously, that will have a huge effect on you and your company and being able to do business development in the right way. We've seen that where companies used to rely on certain clients. They used to get 60% of their work from client x, government agency y, and then all of a sudden they're not winning any projects because they just get disqualified because they haven't been meeting their supplier diversity requirements.

So what happens? You lose 60% of your revenue because you can't work for this client anymore because they don't trust that you're going to meet your requirements anymore. And obviously, that's detrimental for the company. We've seen companies having to downsize, having to pursue new clients, take losses while pursuing these new clients because they haven't been used to working with them, all of these things just because they couldn't-- and it's not just because it's not important, but because they didn't meet their supplier diversity programs.

They're obviously very important as I'm explaining but can have a catastrophic effect if you don't deal with it the right way, especially in today's environment, whether you're targeting small businesses, women-owned businesses, or minority-owned businesses. Not meeting your goals, not having a good reason and a verifiable reason of why you didn't meet your goals could basically have catastrophic effects on your company.

And if you go 10 years ago, it wasn't like that. You maybe used to get a slap on the wrist like, oh, don't do that again, but today we're seeing this more and more prevalent. And there's a lot of cases about that. I don't want to mention any exact examples so these companies don't think I'm targeting them. But you can google. You can find it. And you can see a lot of companies either had to pay financial penalties, which were significant, or got disqualified from projects, [INAUDIBLE] of jobs and/or stopped being able to work with certain clients.

So these are the negative impacts but we're going to talk about beyond requirements why having supplier diversity program is not only a good thing from a compliance standpoint and from you being able to continue to run your business standpoint but in a positive light why having supplier diversity program and having diverse suppliers and subcontractors on your project is a great thing other than compliance and requirements.

One, innovation and creativity. And there's so many case studies have been written on those, none of them by me, but Deloitte, KPMG, McKinsey, all the big consultants have case studies explaining why having diverse suppliers, different points of view, different contractors, subcontractors from different ways of life, different heritage would lead into innovation and creativity on a project.

Again, you can go in, look into those case studies. They have numbers. They have examples. And they have the statistics of why having diversity on a project, or in a company, or really anywhere will lead to more innovation and creativity. Also, it will lead to efficiency because, from the same concept, when you're having people from different ways of life, different backgrounds, different histories, they come with their own way of doing things.

And when they talk it out, they can come to the most efficient result and the most efficient way of doing this. I've tried this. You've tried that. The other person tried something else. And then when we discuss all of that, we can come to the best way of doing things because if I keep doing things the way I've always done them, I can't increase my efficiency. I'm just going to stay where I am. But when I hear from different people how they've done things in the past, we can be more efficient and, obviously, we've discussed this before, but that will help [INAUDIBLE].

Also helps garner local support. And that's specifically when we talk about local business enterprises and we're using people from the community. We've seen in a lot of projects where, especially the big ones, where local people or local communities are against the project and the project gets halted, gets pushed back, gets fought by the locals, protests, all of that stuff that no one loves dealing with.

I give an example, the I-10 [INAUDIBLE] project down in Alabama, after it was supposed to be a P3, spent years qualifying and meeting with different P3 teams, concessionaires, and so on. And then it got shut down because it didn't have local support. Having diverse suppliers, having people from the community being part of this project can help with local support.

Next point I make is market access and expansion. So having diverse suppliers in different parts of the country, different geographies, can help get you market access and expansion. A lot of times, the smaller businesses have great relationships with local governments, with local firms. And they have insight into these programs what projects are coming up so it gives you an ability to be better at business development and know about projects before other people, giving you market access to more markets, giving you the ability to expand.

So obviously, that's something that all contractors, consultants want is grow the business, get more projects, get more market access. And that's how you can get there with supplier diversity. It can be a source of competitive advantage as well. This is not I don't want to say a new space. It's an old space but a lot of changes have happened.

So there's a lot of ability to do better. And it allows you to be more competitive as a business if you have access to a lot of diverse suppliers, if you have access to different diverse businesses in different geographies, and will give you-- if you have the right supplier diversity program, it will give you a competitive advantage because you can say, listen, to the client, we've met our compliance goals in the past, we've exceeded our compliance goals in the past. You have asked us last job for 30%. We gave you 36%.

We're always exceeding these goals. We know what we're doing when it comes to supplier diversity. And that gives you a competitive advantage over your competitors, which is not a price, which is not a schedule. It's just how you source and what subcontractors you use. And it also gives you a competitive advantage in order to expand into new markets.

If you are trying to work in a new market, you don't know any of the local suppliers, you don't have the right way to meet them, it makes it very challenging because how are you going to get 25% requirement? How are you going to meet that if you don't have a supplier diversity program whereas, if you do and you're able to garner the support, you can go into newer markets where your competitors can't.

And so I make that point it's more altruistic but you're helping community development. You're helping build capacity for more businesses. And you're helping the economy in general by using these local, small, diverse businesses.

So we spoke about what the different certifications are, understanding supplier diversity. We spoke about the impacts both negative if we don't meet them and positive if we do for supplier diversity. And now we're going to talk about strategies of implementation.

So how do we put supplier diversity programs in place? First thing, we got to set our goals. If we don't have a goal, we don't know what to measure against. And we don't know if we're doing well or bad.

So how do we set our goals? It really depends on a couple of things. First, you need to say we got to look at requirements. Do I have any compliance requirements on my projects? If I do, that should be my minimum goal. That's my minimum goal. Do I want to meet it and not get in trouble or do I want to exceed it and use it as a part of a competitive advantage for future projects? That's something that only you can decide for your company.

Then you got to think about internal goals. For these jobs that don't have a requirement, do I want to set internal goals or do my stakeholders, shareholders, or my C-suite request that I set internal goals, or did they set the internal goals for me or not? We're seeing the internal goals being much, much more prevalent in the past couple of years. Only a handful of companies had them before. Now pretty much every large company has internal goals for supplier diversity even if they don't have requirements.

And then the third part would be what certifications do I accept from which certifying agencies. Again, that's if you have internal goals, that's something you decide. If this is a requirement set by a client, you're going to meet what they have.

So I've set my goals for the project. I've set my diversity requirements. Let's say I decided I want to get 30% off 10% minority-owned businesses, 20% women-owned businesses, or 15% small businesses, 15% veteran-owned businesses, whatever you want for your internal goals, and I got to meet the requirements for external goals. Now that I did, I need to identify the base.

I need to know what the universe of diverse suppliers means to me. There's hundreds of different directories. I need to figure out which ones that I'm using. Say, you know, I only care about let's say women-owned businesses so my universe of diverse suppliers are women-owned businesses.

And then you got to think about certifying agencies. OK. I accept any certifying agency as long as it's a women-owned business. Then that's good for me. Let's say you did that. You got to go to hundreds of different directories to find your universe.

You got to find out, all right, There's a woman-owned business in California. There's a woman-owned business in Nevada. There's a woman-owned business in Texas. There's a woman-owned business in Washington State. Women-owned business on the federal level, you got to go to hundreds of different directories and get that information so you understand what your universe of businesses that you can work with looks like.

And then you got to set your requirements. It would be great if just being a certified business is enough but they also need to be capable of doing the work. And that's also very important because you're not going to get a free pass just because you're hiring diverse suppliers. They also need to perform. So you need to set requirements.

And that's, again, up to you in terms of revenue, how long they've been in business, what kind of experience you want to see from them, what kind of insurance you want them to have, what kind of past performance you want to see, what's their experience like. And that could differ from project to project. Obviously, if you're looking for a woman-owned business to do a $10,000 interior job is different than having a woman-owned business that needs to do $1 million painting job on a bridge leasing.

Those requirements again are set by you and they are usually different depending on the project and the scope of work. If you're looking for a designer to do MPT on a small job, obviously, the requirements will be easier. But if you're looking for someone to do structural design on your bridge, obviously, you need them to have done something similar in the past.

So you need to set your requirements. Then your universe starts shrinking of diverse businesses because you find all the businesses and then you shrink them to those who meet your requirements for that job.

After you identify the diverse suppliers that fit your business goals, then you need to outreach to them. You need to contact them to collect the information on them. Let's say I need them to have been in business for five plus years. Well, how are you going know that? Most directories don't have that information.

You're going to have to outreach to all the businesses and have to collect the information on these diverse suppliers. And you're going to have to qualify which diverse suppliers can work with you or not. So going back to the women-owned businesses, let's say, even if you're only working with women-owned businesses in your state, that could be 5,000 businesses.

You've got to outreach to all 5,000 to really get an understanding of what they did or what they do. And that could be very challenging. Takes you a lot of time and effort. And a lot of them don't respond because they're busy doing work. They're smaller businesses and they get these solicitations all the time from different people.

And unless there's a real business opportunity, a lot of times what we see is that they might not respond so how do you get that information? It's a challenge. We're going to talk about solutions and using technology for that. But I just want to explain how difficult this thing is.

How to implement it obviously is a challenge. You can throw out a lot of resources on it in order to succeed or you can use technology. And again, we'll talk about that later. But you need to find these diverse suppliers that fit your business goals that meet your requirements as a business depending on your project. You need to understand where each of these companies fall.

After you do, you need to build a relationship with them. When you have a project opportunity, you need to reach out to them again. You need to hope that they're free at the time to estimate your project to give you a proposal and all of that stuff. You need to start building the relationship even before. You need to collect these proposals and then you select the right diverse supplier for your project.

So that's once you get the proposals from multiple different suppliers, you can select diverse suppliers. And we're seeing in the market that a lot of times contractors, consultants looking for diverse suppliers, they're finding it challenging to get more than one bid or proposal from diverse suppliers because they didn't outreach enough businesses, not enough responded, they didn't build relationships with enough businesses.

This is a full time job for multiple, multiple people depending on the size of your business. So a lot of times we're seeing that they can't get multiple proposals leading to something that's unfortunate but reduced competition between diverse suppliers and then the prices being high because I only asked one person for a price and they told me it's going to cost me $100,000.

I have no other options whereas if I get multiple bids, two or three bids, then one person might tell me $100,000 and the other might tell me $80,000. And that markup is very important. That's why it's very important to have multiple bids. But it goes without saying but in this space it becomes more prevalent because it's harder to collect bids from diverse suppliers.

And then we go to monitoring and reporting. Then after you bring them on, you need to monitor your diverse spend, whether at a project level or at a company level. Then you compare that to the goal. I wanted to get 25% diverse suppliers. I only got 20 or I got 30. Great.

And then you report that back to the stakeholders, whether they're the government agencies-- certain government agencies expect a quarterly report, others yearly report, others just at the end of the job or beginning of the job, and for your internal goals also depends on your stakeholders, but you definitely need to set the goal, measure against the goal, and then report to that goal and/or your performance on that goal. And obviously, that's a very important part.

All right. So we discussed the strategies for implementation on how they're challenging. Now we're going to talk about a technology solution that can help you with this process and help take a big part of that manual labor or finding diverse suppliers out of your hands into a technology platform and try to make your life much easier.

So first thing we discussed was setting your goals. That's always going to be a huge thing. You need to set your goals. Even if they're requirements that you have and you're only looking at jobs with compliance requirements set by government agencies, you got to understand whether I want to meet these requirements or exceed them. You always need to set your own goal.

Identify your base. So you have two options. You either go to hundreds of different directories that are out there and find out who all of these businesses are, what they do, what have they done in the past. Certain directories are better than others but it's going to always be a challenge, or you can use the Tough Leaf profiles. And we'll talk about what that means later in the slides. But basically, Tough Leaf, we've already done that work for you. We've already identified all the diverse businesses all around the country. We have profiles on them that tell you everything about them.

Then the next step we've talked about is identifying the diverse suppliers that fit your business goals. Again, you can go and outreach to these businesses, try to collect these business goals yourself, try to find the information on them, insurance, how long they've been in business, what's their revenue, what certifications do they have, what kind of projects have they done in the past in certain areas, whether or not they're in the union, all that different stuff, or you can use the Tough Leaf matching platform.

Again, Tough Leaf has all that information. What you can do is just give them the requirements. They find the businesses that meet your business goals. And then we talked about building a relationship. And again, you need to outreach to them, tell them I have a job, collect the bids, do all of that work and either do it internally manually or you can use the Tough Leaf outreach platform that does that using technology on your behalf. And then we didn't really talk about capacity building yet. We'll get to it so I'll skip it for now.

All right. Identifying your base. This is the Tough Leaf profile. So instead of you having to go out, finding all the different directories, talking to all these businesses, getting their information, you can use the Tough Leaf profile. And then as you can see here to my right, this is just one example of a profile. Tough Leaf has all certified businesses in the country. It has all the certifications.

And I'll tell you as you can see, this company is certified woman-owned business certified by New York State. It's also a woman-owned business certified by New York City. Here's their contact information. Here is how many people they have on their workforce, how long they've been in business, their revenues, how many projects have they done.

These are their capabilities. You can see a wall about the company on the right. You can see endorsements from previous projects that they've done. And you can see the projects that they've completed in the past, how big these projects are. Some things they're on their profile but you can't see them on the slide is their capabilities, also their NAICS codes from different certifications because it's another nuance to this is that they need to have the NAICS codes to perform the work.

And again, this is one profile. Tough Leaf has over 100,000 profiles of diverse businesses all over the country that have to do with construction, whether they're contractors, subcontractors, or consultants, safety consultants, quality consultants, engineering firms, architects, or suppliers, material suppliers and so on, trucking companies, all of that businesses that have to do with construction. All that information is there.

And one thing I missed is see here we show two certifications. For you to figure out that this company is certified by New York State and New York City, you have to go download the state directory. You have to go down to the city directory. And you won't have even half the information that you see on this page. You'll have to collect it yourself.

All right. So now we figured out how we can use technology to find the universe of diverse businesses, how do I find out who these people are or who these companies are? The next step is identifying diverse suppliers that fit your business goals. And as we discussed before, if you want to do that yourself, you need to go through the directories, ask the businesses for their information, qualify them. The other option is you use the Tough Leaf Matching platform.

And what that works is you just send Tough Leaf your requirements. So hey, I'm looking for a business that can do utility relocation in Texas. I need them to be small business certified. I need them to be able to work in Austin. I need them to pay Davis-Bacon wage because this is a federal project. I need them to meet these insurance requirements, whatever requirements that you can think of you put there, you put it into the matching platform with your Tough Leaf customer success manager, and then you're going to get a list of companies that meet your qualifications because what our system is going to do is it's going to take your requirements and match them with the capabilities.

So you've seen the profile. We have all the data. We have your requirements. It's a simple act of using machine learning and artificial intelligence in order to match those requirements with their capabilities or with the capacity of these businesses. So that's what the magic platform does so you get a short list of these are the companies that meet my certification requirements, my business needs, and so on. They've completed the projects that I need them to have completed in the past. They meet the insurance requirements, all of that stuff. And they have the required capacity.

And then the outreach platform will outreach to all these businesses that meet your requirements, have the capacity to do the work, and will tell them about your project, will ask them if they're committed to providing you with a proposal by say October 10 of 2023, I need this proposal. At least at that point, you'll know that I'm going to get three bids for this scope, I'm going to get four bids for that scope, and you're going to ensure that all the companies that meet your requirements understand that this project exists, understand that they have the ability to work on this project, and they'll get back to Tough Leaf if they're willing to provide you with a proposal or not.

And the outreach is very systematic. All of these businesses that meet the requirements will get at least three emails and at least four phone calls to explain to them about the project to tell them what the requirements are and to see if they're interested in writing a proposal or not. The information is then carried over to you.

So that's, just going back a couple of slides, we spoke about identifying your base through the Tough Leaf profile. We spoke about the matching platform and how that can help you find all the businesses that meet your requirements. And then we spoke about how using the outreach platform will allow you to get the bids, to get the proposals from these diverse businesses, and for you to have competition.

On average, we get three bidders for each scope and then I mentioned 15% to 20% increase in cost for diverse suppliers because there's no competition. Using Tough Leaf, that goes down to 0 to 5%. So that's what using technology helps. Obviously it's going to be saving you a lot of time, and effort, and internal resources. It's going to save you a lot of duration to do all of that work because the information is already there.

And it's going to save you on cost for two reasons. One, because you're not spending that money on internal resources. Your estimators can spend time doing what they do best, which is estimating jobs, doing the bid leveling, and ensuring that the scope is well understood between them and the diverse suppliers, that stuff that Tough Leaf doesn't know.

You need the experts on the project and that's where their time is best spent. So you're taking away their time they spend on outreach, and talking to businesses, and doing that initial connection to do things that actually bring more value out to your business because technology can solve for the other part. And the other reason that saves you a lot of money or can increase your profit margins is because now you're getting more bids, meaning more competition and lower costs and then increasing your ability to win the project. And then we're going to talk about capacity building right after this.

Benefits. Obviously, traditional process is going to take a lot of time and effort. You're going to have to request this information, verify it, ensure they have the capacity to do the work, confirm that they're going to provide you with a quote, and more likely than not have less competition. With Tough Leaf, schedule a 30 minute. You share your project details, what you're looking for. And then you're going to get a list of firms that meet your requirements, have the capacity to do the work and are interested in providing you with a proposal. And we're seeing 70 to 200 hours saved per project from your internal resources.

Obviously, more benefits using manual process versus Tough Leaf. You're going to avoid combing through different public websites or private websites getting these directories. You're going to mitigate the risk of getting firms on the project that don't qualify to be on that project because you have to find these firms.

You're mitigating that risk because you have access to their data, their revenues, their endorsements, all of that stuff. And then you're going to meet your goals, obviously avoiding a lot of these negative impacts for not meeting your goals. And you hopefully, you're going to get a competitive bidding because we do on average get three bids per scope that went through the platform.