Direct spend refers to a type of Tier II Reporting spend where a Tier I Prime Supplier’s Diverse Spend can be directly attributed to a specific Customer or contract. An example of this is if a Corporate pays a Tier I Prime Supplier $1 million for a tire contract, and the Tier I Prime Supplier purchases rubber from a small or diverse vendor for the purpose of fulfilling the $1 million contract.
The product or service can include anything from manufacturing to logistics to IT to janitorial services just as long as it can be directly tied to a Customer or contract.
Please note that 100% of the spend that is directly used for a contract or Customer may be reported as Direct Spend for said Customer or contract.
If Diverse Spend cannot be directly attributed to a Customer or contract, it is known as Indirect Spend.