SAIF MIDS statement

SAIF was contacted on May 27, 2016, with a request by the Multistate Insurance Diversity Survey (MIDS), as supported by the Oregon Insurance Division, to provide certain 2015 supplier spend data. SAIF is a strong promoter of diversity and inclusion and immediately set out to understand the MIDS request, as well as understand what data would be available. SAIF is able to submit its 2015 total national procurement spend by industry category. While SAIF is hopeful that this information will be useful, SAIF understands that its submission contains considerably less data than that which is requested, for the following reasons.

Cost and effort required for complete MIDS compliance

MIDS is requesting a multitude of data points across several categories for SAIF's thousands of suppliers. Full compliance with MIDS would require SAIF to employ additional staff, a robust technological infrastructure, new processes, and new procedures to track the thousands of line items requested.

One of the best ways to gauge what MIDS compliance entails is to investigate the manner in which other insurers comply with MIDS. CSAA's (California State Automobile Association) senior supplier diversity and risk consultant participated in a MIDS technical call to serve as an example of MIDS best practices. CSAA was also gracious enough to communicate with SAIF's procurement manager outside of the MIDS call to provide specifics.

CSAA uses three IS systems, as well as third-party vendors, to achieve MIDS compliance. Specifically, CSAA uses:

• A contract management system that allows detailed reports to be generated, such as number of contracts by supplier, dollars spent, and expiration dates
• A supplier life-cycle management system that allows suppliers to register with CSAA electronically
• A robust Enterprise Resource Planning system (ERP), specifically Oracle, which serves as a financial hub linking finance and procurement operations. CSAA's current ERP system is in the process of being replaced with another system that will be a financial hub for several business lines and act as a spend analytics tool.
• Third-party vendors to process the output from these systems. CSAA made special note that there are only a few vendors that can perform the required processing, and that "costs can be considerable."
• Also of note, CSAA strongly advised that those groups owning the supplier relationship need to "own" the task of gathering the MIDS data. This equates to business partners/divisions here at SAIF.

SAIF does not currently utilize any of the above systems, and therefore is not able to rely on the automation these systems provide. Without such systems, SAIF would be facing manual tracking of thousands of suppliers across scores of categories. SAIF does not currently track any of the categories as they are defined by MIDS.

Economic costs

Costs to achieve CSAA's best practices approach, which CSAA is in the process of upgrading at this time, are easily in excess of $1,000,000 initially, and $100,000 annually thereafter. Such systems must be customized to meet the needs, processes, and procedures of the end user.

Before arriving at the point at which SAIF could reasonably solicit prospective technology providers, SAIF would also need to create multiple, parallel workflows across each division to address "ownership" of the supplier relationship, and also address the fact that Oregon's COBID standards do not align with the standards of MIDS.

COBID in contrast with MIDS

If SAIF were to embark on a project to formally track diverse spend, it would be important to align that work with objectives specific to the state of Oregon and, in turn, SAIF's policyholder customers.

Oregon state agencies are required to undertake various initiatives to promote inclusion and participation of minority-owned, women-owned, and other recognized emerging small businesses. The Certification Office for Business Inclusion and Diversity (COBID) is charged with both registering eligible businesses and monitoring compliance as required by Oregon statutes and regulations.

The standards addressed and tracked by COBID are not the same as those of MIDS. At a high level, the COBID standards closely resemble, and even cite to definitions contained in, the federal government's Small Business Administration (SBA) program.

COBID's approach has a strong focus on addressing economically disadvantaged businesses and stringent requirements to ensure the focus is on disadvantaged/emerging businesses, so that COBID's benefits are not awarded to large, multinational corporations that do not do business in Oregon (such as the requirement that capital contributions match ownership level, caps on gross receipts, and a comprehensive application process to fully vet eligibility).

The MIDS approach, in contrast, does not require that a qualifying diverse supplier be a small business or an emerging business enterprise, and it does not closely tie to the generally accepted SBA standards. The diversity categories of MIDS do not align with COBID, which could create confusion among suppliers, as well as those charged with compliance, as the disparate definitions would require parallel processes for compliance. Under MIDS, a large, multinational, publicly traded company could qualify as a diverse supplier, something that would be next to impossible with COBID.

The goal of increasing procurement spend with diverse suppliers is a serious aim that is best served through a concerted and cohesive effort, where the relevant resources are focused on data sets that further diversity without adding the potential for confusion by using disparate definitions and approaches. SAIF is concerned that the conflicting requirements of MIDS and COBID would result in data that would not be useful to advance the goals of either group.

SAIF is committed to ensuring diversity and inclusion in all respects, including in its supplier selection processes, and desires to explore every practicable effort to communicate these efforts with MIDS. While SAIF bases its supplier selection decisions in accordance with its policies, with an understanding of the requirements the State of Oregon provides to state agencies, SAIF will continue to explore approaches that may expand the categories of data SAIF gathers, so that it can respond to requests such as MIDS.

Without any form of advance notice of the MIDS requirement, and given the scope, cost, and complexity of the request, full compliance is not practicable at this time. However, as noted above, SAIF is responding in good faith to this year's survey to the best of its ability, and in so doing has performed manual calculations to categorize total national spend into MIDS-requested formats.