Biden travelled to Oklahoma to commemorate the Tulsa race massace ©  Mandel Ngan/AFP via Getty Images
Biden travelled to Oklahoma to commemorate the Tulsa race massace © Mandel Ngan/AFP via Getty Images

How the US will use procurement to cut racial wealth gap

US president Joe Biden has announced a new goal to increase the share of government contracts going to small disadvantaged businesses (SDBs) in the US by 50% by 2026.

The new “all-of-government effort” will use combined purchasing power to expand contracting opportunities for SDBs, a category under federal law which includes black, Latino, and other minority-owned businesses.

“Government agencies will assess every available tool to lower barriers to entry and increase opportunities for small businesses and traditionally-underserved entrepreneurs to compete for federal contracts,” the Biden-Harris administration said. 

“The federal government is the largest consumer of goods in the world, buying everything from software to elevator services to financial and asset management. Federal procurement is one of our most powerful tools to advance equity and build wealth in underserved communities.

“And yet, just roughly 10% of federal agencies’ total eligible contracting dollars typically go to small disadvantaged businesses… Increasing federal spending with these businesses will help more Americans realise their entrepreneurial dreams and help narrow racial wealth gaps,” it added. 

Attainment of the new goal would represent the biggest increase in SDB contracting since data was first collected more than 30 years ago and lead to an additional $100bn spent with SDBs over the five-year period.

The target forms part of a wider actions to increase wealth in communities of colour as the US commemorates the 100th anniversary of the massacre on “Black Wall Street” in Tulsa, Oklahoma.

Up to 300 black Americans were estimated to have been killed and thousands left homeless and impoverished as a result of the massacre in the Greenwood area of Tulsa.  

The White House added “the massacre, along with certain laws and policies enacted, made recovery almost impossible for those affected”. 

Ahead of the US presidential election last year, Biden outlined commitments to “establish a transparent process” for government procurement, and added that efforts would be made to identify firms – particularly small businesses and those owned by women and people of colour – that have the capability to fill procurement needs.

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