In recent years, federal tech procurement has evolved to make it easier for government agencies to acquire new products and technologies from outside contractors. However, despite these changes, Black-owned businesses are still left out.

In the fiscal year 2022, the federal government spent approximately $665 billion on federal contracts, accounting for 10% of the federal budget. A majority of these funds went to large companies engaged in defense contracts, while small and medium-sized businesses received only about $154 billion in federal contracts, Tech Target reported.

A report by the U.S. Small Business Administration (SBA) revealed the disparity in federal contracting among minority-owned businesses. In fiscal year 2021, only 1.6% of federal contracts went to Black-owned businesses, noted Bibi Hidalgo, SBA associate administrator for the Office of Government Contracting and Business Development, during an April 4 Governance Studies at Brookings Institute webinar entitled “Federal procurement and acquisition policies: Removing barriers to reform.” Several barriers, said Hidalgo, contribute to this inequity, including complex application processes that small businesses struggle to navigate and a lack of transparency within federal agencies regarding their contracting partners.

The report, “Shut Out: The Dearth of Opportunity for Minority Contracting,” from Third Way, which describes itself as a “center-left” think tank, points to confusing requirements, contract bundling and preferences for established businesses as some of the barriers to diverse firms competing for and receiving federal contracts.

Some say there has been one positive change under President Joe Biden, and that is the requirement for agency buyers to meet congressionally mandated goals for small business contracting as part of their performance evaluations. This connection between performance evaluations and small business goals is expected to enhance federal buyer engagement with small firms.

The experts on the Brookings panel suggested ways to continue improving federal contract access for small and minority businesses.

“We have to figure out ways to ensure that we continue to create efficiencies but also always [ensure] we’re creating opportunity,” Hidalgo said. “That is a critical tension we need to balance to make sure we’re always creating avenues for firms to compete and for firms to innovate and ultimately get their foot in the door.”

Systemic bias in the federal contracting process means businesses owned by people of color lost out on $64 billion in federal contract dollars in Fiscal Year 2020, while women-owned businesses lost out on $77 billion in federal contract dollars, according to a new report.

Black-owned businesses alone would have received an additional $4 billion in contract awards if they received contracts in proportion to the overall share of businesses they represent in the economy, Next City reported.

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