When Congress passed the American Rescue Plan (ARP) in March 2021, state and local governments in North Carolina were to receive more than $8.8 billion in federal funding for pandemic relief and recovery. Since then, our elected leaders have understandably focused on how to spend the funds. From addressing the eviction crisis to the childcare shortage, ARP funds will allow state and local leaders to make a significant down payment on meeting the urgent needs of North Carolinians still reeling from the pandemic.
Less discussed is a different question: How can state and local governments make sure public contracts using ARP funds are distributed in an equitable and inclusive way?
With ARP dollars, state and local governments can expand jobs and build wealth with significant impacts for Historically Underutilized Businesses (HUBs) and the communities they empower.
New analysis of federal contracting data, however, should alarm anyone concerned with equity in public contracting. Recent work from the National Equity Atlas found that entrepreneurs of color received less than 12% of federal contracting dollars in 2020 — despite the fact that people of color represent 39% of the U.S. population and own 29% of all businesses.
The authors also found that the overall number of small businesses winning federal contracts had fallen dramatically over the past decade — declining 40% since 2010 — and that federal contract spending was largely concentrated in just 17 congressional districts. Where public procurement could be used to foster equitable economic development, it is instead concentrating public dollars in a select few communities.
Anyone hoping for more encouraging data from North Carolina will be sorely disappointed. The state’s own 2021 Disparity Study found that state agencies, community colleges and universities have made abysmal progress toward the modest goal of awarding 10 percent of public contracts to Historically Underutilized Businesses. Across all five industry categories in the report, aggregated from FY2014 to FY2018, Minority Businesses Enterprises never received more than 2.02 percent of contracts awarded by state agencies.
The same story holds true at the local level in North Carolina. Read more