President Joe Biden visits W.S. Jenks & Son hardware, a small business in Washington, D.C., on March 9. File Photo by Yuri Gripas/UPI | License Photo
Dec. 2 (UPI) -- The White House announced Thursday that President Joe Biden's administration will ask federal agencies to give more spending contracts to minority and underserved smaller businesses -- at more than twice the current level.
Officials said the intent is to increase the statutory goal from 5% to 11%. That means smaller and minority businesses would receive 11% of all federal contracts.
The shift would move closer to Biden's goal of having disadvantaged American businesses receive 15% of all contracts by 2025.
"Increasing federal spending with underserved businesses not only helps more Americans realize their entrepreneurial dreams but also narrows persistent wealth disparities," the White House said in a statement.
"Based on data provided by the Small Business Administration, differences in business ownership account for 20% of the wealth gap between average White and Black households."
The analysis, released Wednesday, showed that Black, Hispanic, American Indian and Native Alaskan business owners remain underrepresented relative to their population share, as are female business owners and those in rural counties.
The White House said it will also release disaggregated data of federal contract spending by race/ethnicity of the business owners to improve transparency. That will enhance contracting opportunities by implementing changes to the government's use of "category management," it said.
The change is also expected to raise the number of new entrants to the federal marketplace and reverse declines in the small business supplier base. It will also adopt key management practices to drive accountability and institutionalize the achievement of small business contracting goals.
"Small business contracting goals are a key element of our federal procurement system, driving priorities for nearly 40,000 federal contracting officers," the White House noted.
Goldman Sachs 10,000 Small Businesses Voices, an initiative by the investment bank to help small business owners advocate for policy changes, has been calling for these types of reforms for months.
"Small businesses don't want a handout; we want a fair shot," Jessica Johnson-Cope, the group's national leadership council chair and small business owner, said in a statement emailed to UPI.
"This a big step toward leveling the playing field for small businesses to compete for and win federal contracts."
"Reforms like this have a meaningful impact," added Joe Wall, national director of the Goldman Sachs 10,000 Small Businesses Voices program.
"[We are] proud to have been a part of the advocacy efforts that led to this announcement and will continue to lead the way toward further reforms."