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Minority-Owned Small Businesses Get Stiffed On Federal Contracts

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"Minority-Owned Small Businesses Get Stiffed On Federal Contracts"

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Of the $98.2 billion in federal government contracts awarded to small businesses last year, minority-owned businesses got a proportionally small slice of the pie, according to Bloomberg News. Hispanic-owned companies netted just 8.4 percent of that total, or $8.21 billion, despite making up 17 percent of the population. Businesses owned by black Americans won about 7.2 percent, or $7.1 billion, even though they are 13 percent of the population.

Overall, the number of contracts awarded to black-owned small businesses actually fell about 1 percent from 2011. And while awards for Hispanic-owned businesses rose by 1.5 percent, both are digging out of a big hole in recent years. Awards to black-owned businesses are down 6.5 percent from 2010 and those for Hispanic-owned ones fell 4.4 percent. Those figures are much higher than the overall drop in contracts awarded to small businesses, which fell 3.9 percent.

Experts think budget cuts are making it harder for minority-owned businesses to get a piece of the pie by shrinking the pie itself. Sequestration could exacerbate the problem as it cuts spending by $85 billion just this year.

For its part, the Small Business Association can’t select businesses based on race so are hampered in trying to remedy the problem. “Procurement officers cannot see the race/ethnicity of business owners when they select them for a contract award,” John Shoraka, an associate administrator of government contracting at the Small Business Administration, told Bloomberg News. Some of the minority-owned businesses qualify for a federal plan that sets aside work for “economically and socially disadvantaged” businesses but aren’t reserved specifically for race.

The exclusion from government contracts is just one of many challenges facing minorities in the economy. Unemployment rates for black Americans have remained consistently high, in the wake of the financial crisis as well as before. Blacks and Hispanics make less than whites on average. And they get excluded from jobs, as employers often hire friends and acquaintances who tend to be of the same race.

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