Minority- and women-owned businesses—including Black-owned firms—are in jeopardy of not gaining federal contracts tied to the $1.2 trillion infrastructure law if intentional actions are not taken to help them secure equal access to succeed in the bidding process.
That is a stand some Congressional members and minority leaders took on at a hearing of the House Financial Services Subcommittee on Diversity and Inclusion last week. According to Afrii-News, Rep. Joyce Beatty (D-Ohio), the subcommittee’s chairwoman, expressed that “challenges associated with minority and women-owned businesses will not be solved overnight.” For years, minority and women-owned firms have widely been omitted from obtaining federal contracts.
Based on a White House report last December, “President Biden has directed agencies to increase the share of federal contracting from small disadvantaged businesses, including Black-owned businesses, by over 50% by 2025. The report added federal agencies “are now working to ensure that projects proposed for federal funding are reviewed for disparate impacts before they are awarded, and that federal funding does not go to grant applicants with a record of racial discrimination.”
The subcommittee is reportedly considering several bills that would require the federal government to offer educational resources on how to raise capital for historically underrepresented small businesses, analyze lending to minority and women-owned firms, and provide equity investments for “low-wealth” business owners.
Witnesses told the committee larger contracting firms should mentor smaller, minority, and women-owned firms. Those businesses reportedly often are not acquainted with the federal bidding process.
“Historically underutilized businesses risk falling into a cycle of underutilization,” stated Farad Ali, president and CEO at Asociar, a Plano, Texas-based Black-owned communications firm, per Afrii-News.
“If you have a chance as a buyer to choose between a vendor that has more performance or less performance, you’re going to choose the one with more performance. So I think it’s critically important that we work on utilizing mentor-protégé partnerships.”
Committee member Rep. Stephen Lynch (D-Mass.) concurred with Ali. Lynch pointed out that many large contracting deals come about through a “secret handshake” or a “preferred bid list.”
“Because of the size of the dollar numbers on some of these big contracts coming out on infrastructure, you really have to try at the subcontractor level and bring people into the process,” Lynch stated via Afrii-News. “Unless we make affirmative steps to educate people and help them become part of the process, they’re going to stay on the outside.”
Philip Gaskin, vice president of entrepreneurship for the Kauffman Foundation, reflected at the hearing on why such support is needed.
“Today, Black-owned businesses are twice as likely to be rejected for loans, start with three times less in overall capital, and four in 10 entrepreneurs of color are too discouraged to even try for a loan for fear that they won’t get it,” Afrii-News reported. He further added, “We have no better opportunity to bring these entrepreneurs out of hiding than ensuring equal participation in rebuilding our infrastructure.”