How Changes in Federal Procurement Policy Are Creating Contract Equity

As society becomes increasingly aware of the inequities embedded into everyday life and business, more efforts are being made to level the playing field. Set-asides and minority programs were once the gold standard in agency procurement. Now, we’re on the cusp of an even greater overhaul.

President Biden has set forth an ambitious initiative to improve inclusiveness, diversity, and equity across federal branches. (1) His new Executive Order 13985 has far-reaching implications on enhancing contracting opportunities for Small Disadvantaged Businesses (SDBs).

Here’s what the latest federal procurement policies mean for your business and your own contract pricing strategy.

Leveling the contract field

EO 13985, titled “Advancing Racial Equity and Support for Underserved Communities,” is a key initiative for promoting equity, inclusion, and a fairer distribution of resources.

It outlines a number of provisions for eliminating barriers that put certain groups at a disadvantage. It also prescribes proactive steps government agencies can take to ensure impartial treatment of all individuals.

 The order will accomplish its goals by requiring federal agencies to:

1. Review agency policies to determine whether they create or exacerbate barriers to full participation by historically disadvantaged groups.
2. Review agency programs to assess whether contracts are equally available to all.
3. Reevaluate strategies for allocating federal resources to address “the historic failure to invest sufficiently, justly, and equally in underserved communities.”
4. Design a plan to address barriers that inhibit full participation in government programs.
5. Collaborate with members of historically underrepresented communities as well as civil rights and community-based organizations to devise strategies for equitable opportunity access. (1)

$100 billion to SDBs

One of the Biden administration’s main objectives is to direct $100 billion in federal contracting opportunities to SDBs over the next five years.

At the moment, 10% of all federal contracts are awarded to SDBs. However, the Office of Management and Budget is aiming to expand this figure to 15% by 2025. (3)

Small businesses, especially SDBs, are positioned to benefit from these developments—as long as you take the initiative to capitalize on them.

Establishing an inter-agency workgroup

Inadequate data collection can often impede efforts to measure discrimination. At worst, this can result in policies that fail to address the needs of historically disadvantaged demographics.

Another facet of Biden’s plan aims to tackle this issue head on—with the development of an “Interagency Working Group on Equitable Data.”

This group will screen federal data collection programs to identify errors among key demographic variables, such as race, ethnicity, gender, disability, income, and more.

They will also provide recommendations to make federal data collection programs more coordinated and democratized. The end goal is to improve data collection so it can enhance efforts to improve equity.

What this means for you

The latest inclusion measures will hold varying implications for different types of businesses—possibly even causing shifts in each firm’s respective contract pricing strategy.

Minority-owned businesses will witness an increasing number of opportunities in the federal contracting space. The market is expanding for SDBs, which means that it’s a great time to ramp up proposals and seize new deals.

On the other hand, businesses and their owners who don’t belong to historically disadvantaged groups will need to start paying more attention to internal policies. Companies that work with federal agencies will notice an uptick in inquiries about Diversity, Equity, and Inclusion (DEI) policies and data. Soon, agencies may be less inclined to collaborate if you’re falling short on key DEI measures.

It helps to reevaluate, even redefine, your DEI policies and goals. Consider introducing diversity and anti-bias training, implementing mentorship programs, switching up recruitment measures, hiring diversity managers, and more.

If you’re unsure where to start, a great resource is Alexandra Kalev and Frank Dobbin’s book - Companies Need To Think Bigger than Diversity Training (1).

Remove structural barriers yourself

The changes that will come into play over the next few years will empower small businesses, and especially SDBs, to succeed. That said, you’ll still need to take matters into your own hands to capitalize on growing opportunities.

Here’s a snapshot of some practical contract pricing strategies to help your business secure new deals and reach new heights.

(2)

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No matter the government’s dedication to SDB success and how many smart strategies you implement, your business simply won’t be able to compete if you don’t get the details right. This entails submitting professional government proposals in the correct format, every time.

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Sources

1. Weil Article: A Shift in Federal Government Priorities for Diversity, Equity and Inclusion
2. Insight White Paper: Contracting for Equity
3. Washington Technology Article: White House tells agencies to set contract equity goals