Government Contracts and Minority-Owned Businesses

By: First Union | Date:

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Government Contracts and Minority-Owned Businesses

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At both the state and local levels, governments are hiring on small businesses and contractors for a variety of projects; the problem, however, is that the lion's share of these contracts is going to white-owned companies. In terms of getting public contracts, recent studies reveal that not much has changed in that arena, notwithstanding affirmative action strides.

Essentially what is happening is that people tend to hire who they know. That said, their networks are often not all that diverse and thus contracts end up going to very few minorities owned businesses. In Massachusetts for instance, over the past twenty years, the number of government contracts going to minority businesses dropped by nearly 25%.

There are regulations in place in several states which require that a certain percentage of public contracts annually go to minority and women-owned businesses. The problem is that these rules aren't necessarily being enforced.

In Philadelphia, things look a bit different. They have become more and more aggressive as far as ensuring that government and public contracts go to minorities. For instance, the city currently has a 400 million dollar initiative to fix up low-income neighborhood parks and rec centers. As part of this initiative, one-third of the contracts to do the work and provide the supplies will go to minority-owned businesses.

In fact, since 2017, Philadelphia has banned 3 vendors from working within the City of Brotherly Love specifically because they violated regulations concerning hiring minority contractors. The city has even gone so far as to offer help to smaller minority and women-owned businesses before a bid even going out.

The bottom line is that around the country, states and cities need to stop and closely examine their hiring policies especially when it comes to public contracts and who consequently is getting the bulk of the work.

At First Union Lending, we proudly support minority and women-owned businesses. We want to make it possible for them to thrive. Call today and see if our loan programs can help you!

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