Second-Tier purchasing is a relative term in that it is a function of who is the customer. From a customer's perspective, a first tier supplier is a supplier that invoices the customer for goods and services rendered directly by that supplier (first-tier). A Second-Tier supplier (referencing the customer) is a supplier that invoices the first-tier supplier for goods and services rendered.

Direct Second Tier purchases are defined as Second Tier supplier products and services that can be identified insupport of customer requirements

Indirect Second Tier purchases are defined as products and services that CANNOT be identified in support of specific customer requirements.

Second Tier sourcing programs have value because by supporting the growth of minority and women-owned business on all levels of the economic food chain, they enhance the economic viability of all business concerns. The underdeveloped areas that these businesses may be located will be positively affected.

The overall objective is to encourage the development and implement sustainable opportunities for M/WBEs to participate in the customer's procurement processes where it makes economic sense to do so. Consequently, all parties, including the customer, First-Tier Supplier, Second-Tier Suppliers and advocacy groups must nurture current and emerging Second Tier Initiative.

Program accuracy and verification is necessary for a successful Second-Tier Program. Third Party Certification is not mandated but does provide credibility and verification to the vendor classification in reported total cash payments.