Executive Order 13985, titled Advancing Racial Equity and Support for Underserved Communities Through the Federal Government, laid the foundation for several Diversity, Equity, Inclusion and Accessibility (DEIA) initiatives. It was issued January 2021 and its fundamental purpose is to create opportunities for underserved communities. Covering a broad range of initiatives, including federal procurement. It required agencies to conduct equity assessments including potential barriers that underserved communities and individuals face in taking advantage of agency procurement and contracting opportunities.
The Executive Order also provides definitions of equity and underserved communities.
Equity means the consistent and systematic, fair, just, and impartial treatment of all individuals, including individuals who belong to underserved communities. Most of these are already recognized by existing socio-economic programs such as the 8(a) program – persons of color, disabled persons, HUBZone. But it adds two new groups – members of religious minorities and LGBTQ persons.
Note that underserved communities do not refer only to geographic communities, but to groups of people who share a particular characteristic.
In addition, there is the United States Office of Management and Budget (OMB) memo on advancing equity in federal procurement. The most significant element is that the administration has set a goal of awarding 15% of federal contracts to small, disadvantaged businesses, or SDs, by fiscal year 2025. The interim goal for fiscal year 2022 is 11% of contract dollars. While the statutory goal has been 5%, in actuality agencies have been awarding about 10% of contract dollars to SDs.
The administration continues to pay attention to how contracting supports equity and opportunities for underserved populations. They specifically refer to contracting in this respect. There have been four White House fact sheets highlighting different communities, an issue brief on the benefits of increased equity, and two other executive orders – one on customer experience and another on Historically Black Colleges and Universities, or HBCUs, that all tie in procurement and contracting.
One report, Study to Identify Methods to Assess Equity: Report to the President, identified three barriers to entering and staying in the federal marketplace –
- Inadequate vendor outreach practices
- Lack of visibility into available opportunities
- Insufficient agency management attention
The report also pointed to existing examples of that have helped overcome these barriers. These include dynamic forecasts of contracting opportunities that some agencies have initiated, innovative vendor engagements – based largely on OMB’s myth-busters campaign, equity-focused management practices – such as already including achievement of goals in key senior leaders’ performance plans.
According to National Equity Atlas, the number of small businesses actually doing business with the government through contracts has decreased by almost half from 2010 to 2020. And the number of small businesses newly entering into federal contracts has drastically decreased from 2012 to 2019. This isn’t a good sign for diversity or of having a substantial pool of companies to provide the needed goods and services required by the government. Other troubling numbers include less than 16% of the total dollars spent in federal contracting is awarded to small businesses owned by people of color and women, and 4% of the population of congressional districts receive 43% of small business contract dollars.
REWARDS OF EQUITY
There are many positive rewards that can come out of equity initiatives. It should result in a more diversified supplier base. That promotes resilience by providing backup sources and better pricing through increased competition. There is also the potential for more innovative solutions. According to the Senate Committee on Small Business and Entrepreneurship, small businesses produce 14X more patents than large businesses and universities. That’s significant. There are also other broader economic benefits such as increased job creation and tax revenue. According to Small Business Administration’s Office of Advocacy, small businesses account for 46.8% of private sector employees and 35.6% of private sector receipts. Again, a significant contribution to the nation’s economy.
Finally, per the OMB Issue Brief, closing the gap in business ownership between more privileged and disadvantaged groups has the potential to reduce wealth inequality.
Unison Marketplace provides a level playing field for underserved communities to bid on federal contracts—in fact Minority-Owned, Small Disadvantaged, and Women-Owned businesses all were awarded well over 20% of contracts.