Big blue wants you: IBM looks to make an eightfold boost in the number of gay businesses it buys supplies from.

Alongtime leader when it comes to diversity, IBM is now making another bold move. The Armonk, N.Y.-based computer giant has announced that it is actively seeking gay-, lesbian-, bisexual-, and transgender-owned businesses as part of its effort to diversify the companies it purchases from. It currently uses 30 GLBT-owned businesses as vendors and says it hopes to increase that number to 250 by the end of the year.

Generally speaking, supplier diversity programs are good-faith efforts on the part of large corporations to ensure that they actively support minority groups not only by selling to their consumers but by buying goods and services from minority-owned businesses.

"We believe the financial opportunity to these businesses is tremendous," says Irwin Drucker, director for IBM's GLBT supplier diversity program. "Part of our program is to help these businesses grow, offer advice on how to expand, and find other [GLBT] customers for the goods and services they are selling."

The significance of this move by one of the world's largest and most powerful companies--IBM had revenues of $81 billion in 2002 and ranks eighth in the Fortune 500--cannot be underestimated, as contracts with large companies allow gay- and lesbian-owned businesses to grow and ultimately empower the community, observers say.

"This is really the next, big frontier for GLBT rights and equality," says Howard Buford, chief executive officer and founder of the New York-based advertising firm Prime Access and a longtime pioneer in creating gay-targeted advertising campaigns for Fortune 500 companies. "You need your own strong institutions in your own communities. If you only focus on getting jobs in large corporations, then you are totally dependent on them for your livelihood."

Chip Green, whose Voluntown, Conn.-based multimedia company, Green Ink Communications, is one of IBM's GLBT suppliers, agrees. "Having IBM instantly accept me and my lifestyle means I am far more comfortable working with them," he says. "And I am proud to serve a company that would and does support minorities of all kinds."

Numbers show that minority-owned companies have found great success through the contracts they've struck with both the private and public sectors. According to the U.S. Small Business Administration, the federal government awarded contracts worth $6.3 billion to nearly 7,000 certified minority or socially disadvantaged small-business owners in 2001, the last year for which the agency has numbers.

Additionally, the National Minority Supplier Development Council, an independent certifying organization based in New York City, says that in 2001, $63 billion worth of contracts from private companies went to the 15,000 minority-owned companies that it certified.

Lucrative as these contracts have been, gay- and lesbian-owned businesses are not eligible for them because gay people are not considered a minority by either agency. Both provide "minority" certification to companies that are owned by African-Americans, Asian-Americans, Hispanics, Native Americans, women, or, in the case of the SBA, are owned by people who can prove they belong to some other socially or economically disadvantaged group.

"The NMSDC was started 30 years ago, and this criteria was set in place 30 years ago," says one source at the agency who asked not to be identified. "And we want to be true to those groups and not venture out into other groups."

Part of the problem for gay- or lesbian-owned businesses is that until recently they lacked an independent third party to certify them as such. In November 2002, however, the National Gay and Lesbian Chamber of Commerce, based in Washington, D.C., formed to do exactly that. Founded largely with seed money from IBM, the group has as its mission to act as an independent certifying body, working much the same way NMSDC and the SBA do. The group says its exact certifying methodology has yet to be determined, but it will work through local gay and lesbian chambers of commerce and other affiliated groups.

"There are federal [certifying] mandates for women and minorities," says Justin Nelson, the group's cofounder. "But there are none for gay and lesbian businesses."

While IBM has gone out on a limb to actively pursue gay- and lesbian-identified suppliers, other Fortune 500 companies are more tentative, largely because of the lack of certification.

IBM competitor Hewlett-Packard, for example, says it tracks its vendor diversity according to federal standards. "While we make every effort to have the supplier base reflect the significance we place on diversity and inclusion, Hewlett-Packard does not track GLBT suppliers," the company said.

Similarly, Nike says that while it works with GLBT businesses and is open to working with more in the future, it does not track them the way it does other minority businesses. "Our diversity suppliers today are based strategically around recognizing minority groups that have third-party business associations that certify that they are who they say the are," says Jill Zanger, a Nike spokeswoman.

Meanwhile, IBM's minority business contracts are worth staggering sums. In 2002 the total value of its supplier diversity contracts to the seven groups it recognizes--African-Americans, Asian-Americans, GLBT people, Hispanics, Native Americans, people with disabilities, and women--was $1.7 billion. (As of May 2003, the company said the value of its contracts to gay- and lesbian-owned businesses was less than $10 million.)

Recipients of this money among GLBT-owned businesses say the value of their contracts with IBM has been critically important. Green of Green Ink Communications says annual contracts from IBM represent between 30% and 40% of Iris company's annual revenues.

Similarly, Paula Jones, president of Pinta S. Jones and Associates, a leadership and education consultancy based in San Rafael, Calif., says her IBM contracts are worth between 15% and 20% of her company's annual revenues.

"For us, and for small businesses like us, it is a really powerful thing to be able to work with such a high-end company," Jones says. "It definitely pushes me to be better, and it brings a unique perspective to IBM that they might not otherwise get."

Quittner also writes for Business Week and the New York Post.

The beneficiaries of IBM's vision Paula Jones (top) and Chip Green (bottom) have businesses that benefit from IBM's supplier diversity program. It's "the next big frontier," says Howard Buford (center).