SMALL BUSINESS

New report finds minority contractors exceed federal goals

In fiscal 2012, small disadvantaged businesses exceeded the government's spending goal of 5 percent, hitting 8 percent, or $32.3 billion, in contract spending.

Looking at the time and money that minority business owners invested in contracts, as well as breaking down their contract performance activity over the past few years, American Express OPEN was able to distinguish minority small businesses from other small businesses, and even certain designations among minority small businesses.

The survey of 684 small business owners in February and March 2013 focuses on trends in federal contracting among minority-owned small businesses, and provides a view of how small businesses stack up against one another.

Key findings include:

Minority business owners invest more time and money in finding contracts than all active small business government contractors. In 2012, for example, minority business owners invested $143,356, which is 11 percent higher than the $128,628 that all small firms invested. This figure is also 32 percent higher than the investment that minority contractors made in 2009.

However, the investment gap between minority and non-minority firms has declined over the past three years because non-minority-owned firms have seen a 55 percent increase in their procurement investment. Bidding activity has declined for minority and non-minority owned contractors alike, the report found.

Minority contractors are increasing their contract performance activity, reporting a higher level of contract activity compared to five years ago: Thirty-nine percent of minority contractors have increased their activity compared to the 29 percent of non-minority contractors. This is mainly among Asian American and Hispanic contractors, with a 52 percent majority of each reporting that they are busier now than in 2008.

Minority contractors are also performing on 3.2 contracts at the present time, which beats the 2.2 contracts that non-minority contractors are performing on, according to the American Express report.

Minority small business contractors, especially African American and Latino contractors, are more likely to leverage the designations and certifications available to them, with 86 percent of active minority small business contractors having at least one of ten tested government certifications, compared to the 68 percent that non-minority contractors have.

The top three certifications are the GSA schedule (27 percent), self-certifying as a woman-owned small business (24 percent), and self-certifying as a minority-owned small business (21 percent), according to the report. 

Minority business owners have also claimed that being in a HUBZone, being a veteran-owned small business, and being a woman-owned small business has been useful to them.

About the Author

Mark Hoover is a senior staff writer with Washington Technology. You can contact him at mhoover@washingtontechnology.com, or connect with him on Twitter at @mhooverWT.

Reader Comments

Thu, Dec 12, 2013

Why do race, ethnicity, and sex need to be considered at all in deciding who gets awarded a contract? It's good to make sure contracting programs are open to all, that bidding opportunities are widely publicized beforehand, and that no one gets discriminated against because of skin color, national origin, or sex. But that means no preferences because of skin color, etc. either--whether it's labeled a "set-aside," a "quota," or a "goal," since they all end up amounting to the same thing. Such discrimination is unfair and divisive; it breeds corruption and otherwise costs the taxpayers and businesses money to award a contract to someone other than the lowest bidder; and it's almost always illegal—indeed, unconstitutional—to boot (see 42 U.S.C. section 1981 and this model brief: http://www.pacificlegal.org/page.aspx?pid=1342 ). Those who insist on engaging in such discrimination deserve to be sued, and they will lose.

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