All small businesses are vital to the framework of our local economy.
These small businesses include those owned by ethnic minorities, women, and veterans. However, it seems that many small businesses are not receiving an equitable portion of state contracts, which could play a role in helping these small businesses grow for years to come.
It is absolutely critical we ensure that Tennessee’s small businesses grow. In 2013, small businesses in Tennessee employed approximately one million people – making up 43.3% of the total private workforce, according to the U.S. Small Business Administration. This is significant, as these small businesses added jobs to our economy and played a role in helping drive down our state’s unemployment rate from 6.2% in 2014 to 5.6% in 2015.
As the primary job creators in our local and national marketplace, small businesses are crucial to solving our unemployment issues and vital to ensuring our state economy is thriving.
The Governor’s Office of Diversity Business Enterprise (GoDBE) (the entity created in 2003 with the charge to expand economic opportunities for small businesses and small businesses owned by minorities and women) reports that small businesses owned by ethnic minorities received approximately four percent (or about $146 million) of total government contract spending statewide, according to the GoDBE 2016 Annual Report. According to Edison, a centralized state procurement system, and also including the University of Tennessee and Tennessee Board of Regents, the state spent about $3.6 billion in total contracts, per the state report.
The state agencies’ and departments’ spending with diverse businesses has dramatically increased over the past 11 years. The total state government spend with diverse businesses, including those owned by ethnic minorities, women, service-disabled veterans, and those considered as a small business, rose from a mere $12 million in 2005 to $466 million in 2016, according to the GoDBE 2016 annual report. In fact, spending increased 20.7%, up from $386 million in 2015.
These strides are not enough. While $466 million is no small number, $3.1 billion (the rest of the state’s total contract spending) isn’t either. And that amount (a staggering $3.1 billion) is what large businesses and those owned by White men received in the form of government contracts.
Take a closer look at the state’s diversity business spend and the numbers illuminate the still-persistent disparities in government contract awards, particularly as it relates to ethnic minorities. Of the $466 million in spending with diverse businesses, nearly 67% was spent with businesses owned by White men and women. These businesses owned by White men and women are either considered a small business, based on state guidelines, or has a majority owner that is a veteran.
We can do better than this.
Naturally, all small businesses that meet state criteria should be afforded the opportunity to compete for government contracts. It would be wonderful if we could work with business leaders, government officials, and state legislators to develop a legislative agenda that eliminates systemic barriers and creates sustainable economic development opportunities for diverse businesses in the state of Tennessee.
This was our goal for the 2017 Minority Enterprise Development Week (MEDWeek), hosted October 1-8 by the Nashville Minority Business Center. Our theme, ‘The Road to Public Contracting: Breaking the Barriers. Mastering the Challenges,’ was designed so that small businesses could get insight from successful businesses who had mastered the art of public contracting and participate in a policy discussion that would inform future legislation affecting small business owners. This theme expanded on our 2016 MED Week mission, which was designed to spark a much needed discussion around the steps that need to be taken to improve the economic outcomes for all small enterprises that are interested in working with local and state governments.
Aside from MEDWeek, we are prepared to take our work two steps further. We are partnering with the Nashville Area Chamber of Commerce, the Nashville Black Chamber of Commerce, and the Nashville Hispanic Chamber of Commerce to offer a new business development curriculum centered on public contracting. Aptly called ‘Public Contracting Made Easy,’ the goal of the new class series is to increase the number of small and minority businesses that receive local, state, and federal government contracts.
The series, which will launch this spring, will focus on strengthening small businesses’ understanding of public contracting, equipping them with the tools and resources to prepare their businesses to bid on public contracts, and mastering the art of public contract bidding.
In addition, we have also been working with state policymakers to develop and implement a statewide program to increase economic opportunities for small and diverse businesses. The pending legislation is modeled after best practices from other states that have excelled in increasing economic opportunities for emerging businesses as well as the federal government’s small business inclusion programs.
We are also planning to host a Small Business Day at the State Capitol and host a reception this spring to engage policymakers and businesses so that we come up with creative solutions to improve the public contracting outcomes for small and minority business owners in the state of Tennessee.
Indeed, we are rolling up our collective sleeves and digging in deep to meet these challenges head on with expanded business development opportunities, smart, thoughtful policy, and consistent, engaged advocacy and action.
We hope you join us in the spring, and we hope you engage with us as we endeavor to help more small and minority businesses break down the barriers and master the challenges associated with public contracting.
The Nashville Minority Business Center is located at 1919 Charlotte Avenue, Suite 320, Nashville, Tenn. 37204. For further information, phone (615) 255-0432.