Description and History

Historically, smaller, locally owned, and inclusive and democratic enterprises—such as cooperatives and social enterprises—have faced barriers to competing for procurement contracts. These barriers often include limited resources, expertise, and access to the information and technology needed to meet the rigorous requirements set by larger buyers, such as anchor institutions or government entities. 

The concept of capacity building for these suppliers emerged as a response to these challenges. Progressive procurement strategies began incorporating training, technical assistance, and financial resources to equip local suppliers to meet bid requirements and deliver contracts. These supports enable suppliers to meet standards, submit competitive bids, and effectively engage in procurement opportunities.

Local Supplier Capacity Building and the Community Wealth Building Wedge

By investing in capacity building, anchor institutions ensure inclusive participation in procurement, strengthening local supply chains and building more resilient local economies. Supporting the capacity building of a diversity of local suppliers  who are explicitly rooted in the community, motivated by democratic governance, and focused on long-term, sustainable social impact rather than profit maximization alone ensures that these enterprises can grow to meet demand, allowing them to provide more stable and fair jobs, and enhancing local multipliers and the recirculation of wealth locally.

Capacity-building support includes a variety of initiatives designed to equip local businesses to compete effectively for procurement contracts. These may include business management training, compliance assistance, technical support for digital platforms, or financial resources to help secure necessary certifications. By leveling the playing field, capacity-building initiatives enable these different suppliers to meet institutional standards, thus diversifying supply chains and ensuring that local businesses are not excluded from procurement opportunities.

This approach transforms procurement into a tool for building community wealth , enabling anchor institutions to work with and support the growth of democratic enterprises in their communities . Additionally, a robust local supplier base contributes to a more resilient, self-sustaining economy, particularly beneficial during economic downturns or climate disruptions.

Challenges and Limitations

While capacity-building supports for local suppliers are essential, several challenges limit their effectiveness. 

• Resource Constraints: Smaller, local suppliers often need ongoing and sustained financial support to engage in capacity-building programs. However, public funding or institutional backing for these programs is sometimes short-term, which can hinder the growth of supplier capacity initiatives.

• Need for Long-Term Engagement: Capacity-building efforts require a sustained, long-term commitment to create lasting change. Short-term programs may offer limited support without addressing the deep-rooted challenges that local suppliers face. Programs must be structured to allow continuous engagement and follow-up to achieve meaningful impact.

Taking it Forward

1. Adopt Flexible Procurement Practices: Institutions can consider adopting flexible procurement practices, such as simplified bidding processes, small business set-asides, or social value criteria, that reduce barriers for smaller, local suppliers. By streamlining requirements, these practices can improve access and participation for local businesses.

2. Invest in Technology and Infrastructure: Digital platforms and technological tools can be vital in helping local suppliers meet procurement standards. Institutions can invest in infrastructure or provide grants for technology upgrades that improve suppliers' operational efficiency and compliance with bid requirements.

3. Foster Strategic Partnerships: For capacity-building programs to fully deliver and be transformative, institutions must work in collaboration with local community groups, enterprise developers, funders/financers (e.g., Community Development Financial Institutions—CDFIs), and other stakeholders. These partnerships can pool resources, share expertise, and provide a holistic approach to supplier development, ensuring that local businesses have the support they need to thrive in competitive procurement environments.

4. Commit to Long-Term Engagement: Capacity-building efforts require a sustained, long-term commitment to address the systemic challenges faced by local suppliers. Institutions should develop programs that include continuous engagement, follow-up support, and adaptive strategies to ensure lasting impact.