Federal Procurement Reforms

December 8, 2021

The federal government is the largest buyer of goods and services in the world, making its procurement an important tool to advance equity and build wealth in underserved communities. However, less than 10 percent of the government’s contracting dollars go to small disadvantaged businesses (SDB) – Black-owned, Latino-owned, and other minority-owned businesses. Additionally, while women own around 20 percent of all small businesses, less than 5 percent of federal contracting dollars go to women-owned businesses.

On June 1, President Biden announced a goal to increase the share of contracts going to small, disadvantaged businesses by fifty percent by 2025, which translates to an additional $100 billion to SDBs over 5 years.

On December 2, the Administration announced a set of reforms to the federal procurement process to increase opportunity for all underserved businesses. The reforms include:

  • Asking agencies to increase their goals so that government-wide spending of contracting dollars being awarded to small disadvantaged businesses is raised to 11 percent from the current 5 percent.
  • Releasing disaggregated data of federal contracting spend by race/ethnicity of business owner – a transparency and management tool.
  • Implementing changes to the government’s use of “category management” to boost contracting opportunities for underserved small businesses.
  • Increasing the the number of new entrants to the Federal marketplace and reversing declines in the small business supplier base.
  • Adopting new key management practices to increase accountability and institutionalize achievement of small business contracting goals.

In the next year, the government will also update goals for other “socioeconomic” categories of small businesses –– women-owned small businesses, service-disabled veteran owned small businesses, and HUBZone businesses.

More details about the new reforms can be found here.