The COVID-19 pandemic has had a devastating impact on the small business community. With businesses struggling, government contracts are even more important to many small businesses, including minority owned businesses with limited cash reserves and access to capital. The failure of governmental entities at all levels to ensure that minority businesses receive a fair share of government contracts has resulted in minority owned businesses being less capitalized. This has put them at higher risk of failure during these unprecedented times.
The Current Situation
The purpose of minority contracting programs such as the Business Enterprise Program (BEP) and Disadvantage Business Enterprise Program (DBE) is to help minority contractors obtain government contracts. The BEP program focuses on minority and women owned businesses participating in the State’s procurement process as both prime and subcontractors. The stated goal of the BEP is to award 11% of contacting opportunities to minorities. The central aim of the DBE program is to increase minority participation on federally funded contracts awarded to minority-owned and disadvantaged businesses.
Illinois has failed Black and Brown businesses through its implementation of the BEP and DBE programs. Indeed, the government has badly missed its BEP goals. With respect to the DBE, the 2018 US Department of Transportation DBE report finds Illinois ranking 47th among all states and the District of Columbia in terms of meeting minority contracting goals.
The BEP and DBE programs are riddled with loopholes and non-compulsory targets. Minority contracting goals are waived if an agency or contractor makes a “good faith effort” at finding a qualified minority owed business. Reforms must be made to this good faith waiver. The certification process is complicated and confusing, especially for business owners without the resources to wade through complex legislation and confusing requirements. There is lack of transparency and inadequate oversight. Goals are not met and as a result, Black and Brown businesses are not being awarded their fair share of government contracts.
Our Recommendations
- This proposed legislation establishes a goal that 20% of all state contracts be awarded to Black and/or African American owned businesses. This legislation establishes a goal that 20% of all revenue generated through state contracts be awarded to Black and/or African American owned businesses.
- Claw-Back: A prime contractor that does not meet the goals must return funds which were allocated for, but not awarded to, Black and/or African American owned businesses. Said contractor will have sixty days after the completion of any project to return said funds.
- The “good faith waiver” must be eliminated so that state agencies and prime contractors allocate 20% of the revenue generated through government contracts to Black and/or African American owned businesses.
- Increasing transparency as it pertains to minority contacting in Illinois by requiring transparent annual public reports on the successes and failures of the program including but not limited to the total procurement budget of the state and the percentage of the state budget spent on procurement, the amount of revenue procured by Black and/or African American owned businesses via government contracts and several other targets.
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