TVA wants to expand diversity of suppliers even as it cuts $200 million in purchases

TVA wants to expand diversity of suppliers even as it cuts $200 million in purchases

May 1st, 2014 by Dave Flessner in Business Around the Region

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When Orchard Knob native Darrell Freeman started his computer services business in 1991, the Tennessee Valley Authority was one of his first major contracts.

Over the past two decades, Freeman's Zycon business has continued to serve TVA even as his Nashville-based firm has grown into one of Tennessee's top IT service and support companies.

"TVA early on gave me a yes when I was getting no from a lot of other places," Freeman said Wednesday during a TVA Diversity Summit in Chattanooga. "We've been able to build a successful relationship over the past 21 years and I think that has been valuable for TVA, for us and for the valley."

Zycon has grown to nearly 400 employees and more than $45 million in sales, including $9 million in ongoing IT service work for TVA. Zycon was among more than 75 minority- and female-owned businesses at TVA's seminar Wednesday.

TVA President Bill Johnson told the contractors that TVA plans to cut what it spends on purchases and contractors this year by nearly $200 million as part of the utility's effort to trim its operating and maintenace expenses 20 percent by 2015 to better compete in the industry. But the federal utility is still trying to boost the share of what it buys from women-, minority-and veteran-owned businesses, Johnson said.

"Supplier diversity gives TVA advantages far beyond simply lowering costs and improving operational efficiency," he said. "We are confident that partnering with these firms strengthens our ability to succeed as a national leader in providing safe, clean, reliable and low-cost electricity."

TVA, which spent $3.4 billion on purchases last year, fell short in 2013 of meeting the target for federal agencies of having more than 4 percent of its purchases from minority-owned businesses and more than 4 percent from women-owned companies. But Bruce Schofield, vice president of supply chain and facilities for TVA, pledged "to drive to these targets" in the future.

"My goal is the meet and exceed these targets and ideally to eventually reflect the demographics of the region that we serve," he said.

TVA has exceeded the federal target of buying at least 20 percent of its goods and services from small businesses. Last year, TVA bought about a third of its purchases from small businesses and two thirds from businesses in the Tennessee Valley, Johnson said.

"A key mission of TVA is to support the economic development of the Tennessee Valley and we do that when we reach out and make sure we are trying to support diversity in our region," he said.

TVA doesn't alter its specifications or bidding standards for awarding contracts to favor underrepresented groups. But the utility is trying to do a better job to help small and minority owned businesses know how to do business with TVA or how to subcontract with one of TVA's major contractors. The Diversity Summit Wednesday was designed to aid businesses in making contacts and understand TVA's bidding process.

Contact Dave Flessner at or at 757-6340.