(Washington, D.C.) – U.S. Senate Committee on Small Business & Entrepreneurship Chair Ben Cardin (D-Md.) today lauded critical reforms announced by the Biden administration to make federal contracting more equitable. The reforms include increasing the government-wide federal contracting goal for small disadvantaged businesses (SDBs) from 5 to 11 percent and releasing, for the first time, disaggregated data of federal contracting spend by race/ethnicity of business owner to increase transparency.
The federal contracting goal increase mirrors provisions of legislation Cardin introduced in August to increase support for small businesses participating in the Small Business Administration’s (SBA’s) contracting programs for underserved communities. Cardin’s measure would, among other initiatives, increase the contracting goal for SDBs immediately to 11 percent, increasing the goal one percent per year until it reaches 15 percent in 2025. The measure would also increase the federal contracting goal for women-owned businesses from 5 percent to 6 percent for the next two years, phasing up to 7 percent for the year 2024 and beyond.
“The Infrastructure Investment & Jobs Act is a once-in-a-generation investment by the federal government, and I applaud the Biden Administration for taking decisive action to ensure that underserved small businesses are able to take advantage of this opportunity,” Cardin said. “Federal contracting is one of the most reliable paths to the middle class for minorities, women, veterans, and other underserved entrepreneurs. The reforms implemented by the Biden Administration will produce economic benefits in some of our most underserved communities for generations to come.”
Despite being the largest purchaser of goods and services in the world, less than 10 percent of the federal government’s total eligible contracting dollars typically go to SDBs, a category under federal law for which Black-owned, Latino-owned, and other minority-owned businesses are presumed to qualify. Moreover, while women own roughly 20 percent of all small businesses economy-wide, less than 5 percent of federal contracting dollars go to women-owned small businesses.
The Biden administration’s announcement will begin reversing a years-long decline in the number of small businesses that secure prime contracts from federal agencies, with 120,000 small businesses securing federal contracts in Fiscal Year 2016 and only 102,422 in Fiscal Year 2019.
The reforms will be especially felt in Maryland, where federal contracting accounts for 8 percent of the state’s GDP and serves as a pathway to the middle class for thousands of working families. The state also boasts the highest concentration of minority- and minority women-owned small businesses in the country.
Increasing access to federal contracts for underserved small businesses has long been a priority for Cardin. Last month, Cardin legislation to make permanent and expand the Minority Business Development Agency (MBDA) passed as part of the Infrastructure Investment & Jobs Act. The measure will expand the MBDA’s programs to support minority entrepreneurs, including its federal procurement centers, into more communities, and it will establish the Parren J. Mitchell Entrepreneurship Education Grants Program to cultivate the next generation of minority entrepreneurs at Historically Black Colleges and Universities and minority serving institutions, such as community colleges and native colleges.
In December 2018, the Senate passed Cardin’s Small Business Runway Extension Act of 2018, which increased the small business size standards calculation from the average annual receipts from the previous three years to the previous five years. The change reduced the impact of years in wherein businesses experience unexpectedly rapid growth, often causing them to prematurely lose their small business status. In December of last year, Cardin secured a 1-year extension for small businesses participating in the 8(a) Business Development Program in response to economic impacts of the COVID-19 pandemic.
