President Joe Biden announced more actions to improve the representation of diverse small businesses in federal contracting.
First, the president is asking government agencies to increase their diverse contracting goals to meet his target of doubling the share of contracts awarded to disadvantaged businesses by 2025. He wants them to raise their diverse spending goal from 5% to 11%.
Second, the administration would release disaggregated data on federal contract spending by business owner race or ethnicity. The goal is to have more clarity on the spending with every group. Topline data do not provide an accurate picture of federal contracting performance. For example, the government typically awards around 10% of contracting dollars to disadvantaged businesses. But in 2020, only 1.7% went to Black-owned firms, 1.8% to Hispanic-owned and 2.8% to Asian-American and Pacific Islander-owned businesses.
Finally, Biden is directing federal agencies to track new entrants into government contracting. He also wants to make new contracting opportunities for these firms and diversify their small business base.
Jessica Johnson-Cope, the chair of Goldman Sachs 10,000 Small Businesses Voices National Leadership Council, said the initiatives are big steps toward leveling the playing field for small businesses to compete for and win federal contracts. U.S. Black Chambers’ president and CEO Ron Busby also lauded the move but said they would remain the active voice for small Black contractors to ensure they continue to receive more federal contracts.