The new administration has made lots of government contracting news and looks like it will continue to do so. By now you’ve probably read that at the 100th anniversary of the Black Wall Street massacre the president announced that his administration’s goal would be to increase government contracts going to minority-owned businesses by 50 percent. The White House told the New York Times it would equal $100 billion.
Sounds great. But is it too good to be true?
The announcement made lots of headlines, but there’s not a lot of detail in the plan. When you go looking for detail, you wind up with more questions than answers. According to the White House fact sheet, “roughly 10 percent” of money spent by federal agencies goes to small disadvantaged businesses (“SDBs”). For the record, small businesses owned by certain minorities—including black and Latino—are presumed to qualify as SDBs.
But the fact sheet does not announce what the new goal will be. Instead it instructs agencies to “assess every available tool to lower barriers to entry and increase opportunities for small businesses and traditionally-undeserved entrepreneurs to compete for federal contracts.” What does that mean? Your guess is as good as mine.
You might think, “I can do math. A 50-percent increase from 10 percent gets me to 15 percent. The new federal SDB contracting goal will be 15 percent.”
Not so fast. The “roughly” 10 percent referenced in the fact sheet was the spend, not the goal. And in fact, that 10 percent spend beat the goal by a lot. The federal SDB contracting goal in fiscal year 2019—the last year with figures available—was 5 percent. A 50-percent increase—by 2026, by the way—would take the goal up to 7.5 percent. That’s significantly less than what agencies are already spending.
To be fair, the announcement did not say it was going to increase the goal, it said it was going to increase the amount of contracts by 50 percent, and then meeting that threshold would be “the biggest increase in SDB contracting since data was first collected more than 30 years ago.” Still, I’m not connecting the dots.
What about the $100 billion number, you might ask? That’s hard to suss out too. The federal government spent $51.60 billion with SDBs in 2019. For argument’s sake, let’s assume the federal budget stays static and SDB spending does as well. That will mean by 2026, the U.S. will have spent $361.20 billion with SDBs (I figured this by taking $51.60 billion times seven, the number of years between 2019 and 2026). So, simply maintaining SDB spending would be significantly better than what the White House is proposing.
OK, so then the plan must seek to increase spending beyond that to something like $461.20 billion. Right? That would be fantastic. But that doesn’t math either. A 50-percent increase would get the spend to $541.80 billion. That’s $180 billion more than the current trends. (Eyes widen emoji.)
Obviously, the federal budget is a complicated thing that I don’t know the first thing about. I’m just going through this exercise to point out that I have no idea what the plan is.
I know what you’re thinking. You’re wondering if I am suggesting that a politician made a promise that sounds significant but upon further review would at best keep the status quo just to get headlines on the 100th anniversary of a massacre.
Uh . . .
I’m really not. I’m just confused. I’m hopeful for SDBs, but until the plan is announced, skeptical.