The Impact of Executive Orders on Racial Equity in Contracting

Federal contracting has long been a powerful tool for economic growth, yet systemic inequities have historically limited access for minority-owned businesses. Recognizing these disparities, the Biden-Harris Administration has implemented executive orders and policies aimed at advancing racial equity in federal procurement. This blog explores the impact of these initiatives and the progress made toward creating a more inclusive contracting environment.

Key Executive Orders Driving Change

1. Executive Order 13985: Signed on President Biden's first day in office, this order mandated a whole-of-government approach to advancing racial equity and supporting underserved communities. It directed federal agencies to identify barriers to equitable access in their programs, including procurement processes, and develop actionable Equity Action Plans.

2. Executive Order 14091: Issued in February 2023, this directive expanded equity-focused leadership across federal agencies and strengthened civil rights offices to enforce laws and implement equity strategies. It emphasized distributive equity in procurement, ensuring that contracting opportunities are allocated fairly to historically excluded groups.

Policy Goals and Achievements

The Biden-Harris Administration set ambitious goals to address racial disparities in federal contracting:

• Increasing Contracts for Small Disadvantaged Businesses (SDBs): In 2021, President Biden announced a target to allocate 15% of annual federal contracting dollars to SDBs by 2025—a 50% increase from previous levels. This goal is supported by reforms that expand procurement opportunities through landmark legislation like the Bipartisan Infrastructure Law and Inflation Reduction Act.

• Record Spending on SDBs: By Fiscal Year 2023, federal agencies awarded $76.2 billion in contracts to SDBs, representing significant progress toward the administration's equity objectives.

• Entrepreneurship Growth: Since the start of the administration, over 20 million new business applications have been filed, with Black business ownership doubling and reaching historic highs among other minority groups.

Challenges Addressed

The executive orders tackle several systemic issues that have historically hindered equitable access:

1. Bias in Procurement Practices: These directives require agencies to conduct equity assessments and eliminate discriminatory barriers in contracting processes.

2. Lack of Transparency: The administration has emphasized data transparency to track who receives contracts and ensure accountability.

3. Underrepresentation: Despite progress, minority-owned businesses still face challenges such as lower application rates and limited access to networks that facilitate contract awards.

Impact on Black-Owned Businesses

The intentional focus on racial equity has created new opportunities for Black-owned businesses:

• Increased representation in federal procurement systems.

• Expanded access to grants and contracts through targeted programs.

• Advocacy from organizations like the U.S. Black Chambers (USBC), which calls for greater transparency and equitable outcomes for Black firms.

Looking Ahead

While significant strides have been made, achieving full racial equity in federal contracting requires sustained commitment. Continued efforts include:

• Further increasing transparency in contract awards.

• Strengthening mentorship programs to help minority-owned businesses navigate complex procurement processes.

• Expanding outreach efforts to ensure all eligible businesses are aware of opportunities.

Executive orders like 13985 and 14091 represent critical steps toward addressing long-standing disparities in federal contracting. By fostering inclusivity and empowering underserved communities, these policies are helping close the racial wealth gap and creating a more equitable economic landscape for all.