How can state and local governments remove barriers to procurement and contracting for entrepreneurs of color? That’s an important question because in many places public procurement has perpetuated inequitable systems that create hurdles for Minority Business Enterprise (MBE) participation. 

The question is also a rough paraphrase of a title from a new research report from the Urban Institute that seeks to find answers.. The report makes the case that erasing barriers to participation in procurement opportunities is a critical equity issue for MBEs and other Disadvantaged Business Enterprises (DBEs); women-owned businesses and veterans as well as for small and local businesses generally.

Since many states and recent court decisions bar racial preference, one way the report addresses creating opportunities for MBEs is through racially neutral approaches, which “have become a critical pathway to increase MBE utilization and participation in contracting opportunities,” according to the report.

A clear access problem lies in ineffective government communication and outreach efforts, and cumbersome solicitation processes that are difficult to navigate. As a result, the report advocates simplifying the time-consuming, confusing, intimidating, and inaccessible bidding environment that novice potential contractors often face.  “Procurement processes at all levels of government are plagued by complexity and inefficiency,” the Urban Institute authors write. “Becoming a government contractor is no easy feat for businesses of all sizes and industries.”

The benefit of repairing these problems accrues to local economic development, given an environment in which $1.5 trillion of annual government contract spending more often goes to large national companies and not to small local establishments. 

The report is loaded with information on ways to both increase MBE and more general participation. Key advice includes the critical importance of leadership support, with the focus on equity as a guiding principle; up-to-date and user-friendly technology and data systems; institutionalizing equity practices in laws; establishing solid performance measurement systems, with active tracking of contractor demographics, location, attributes, and industry, and improving data on subcontracting.

More specific, promising steps include:

• Better forecasting of upcoming procurements

• Identifying procurement needs in advance

• Information and networking sessions

• Reducing the steps for bid submission

• Digitizing the bid process

• Offering technical assistance to local firms with less resources and contracting experience

• Streamlining certification

• Providing smaller contracting opportunities

• Reducing or providing help in dealing with bonding and insurance requirements

• Adopting best-value rather than low-bid practices

• Developing timely and usable data and tracking vendors by location, type, and owner attributes

• Providing ongoing support to successful bidders after a contract is signed

• Ensuring prompt payment practices

Advice that is more targeted at entrepreneurs of color focuses on the use of disparity studies; ways that local governments may deal with state preemption of racial preferences; developing strong databases of certified MBEs and DBEs, and setting contract and subcontract-level targets for MBE and DBE participation, along with active monitoring and follow up so the targets are not just aspirational.

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