Municipalities spend millions of dollars each year on goods and services, from major construction projects to food, supplies, consulting, and repairs. This public spending is a valuable lever for fostering more equitable economic development. Through equitable contracting and procurement policies, cities can ensure that underrepresented entrepreneurs have access to these business opportunities — those who are underrepresented include minority-owned business enterprises (MBEs; defined as at least 51 percent owned by people of color) and disadvantaged business enterprises (DBEs; owned by people of color, women, and other economically disadvantaged groups).
Equitable public spending is critical to the strength of cities, as businesses owned by people of color are more likely to hire people of color than other firms and generate increased economic activity in communities of color. Local governments often fail to provide fair contracting opportunities for MBEs and DBEs, who compete with larger companies that are politically connected, able to access financing, and more familiar with navigating the bureaucratic processes of working with governments. In Chicago, where Black residents make up nearly one-third of the population, Black-owned businesses were paid just 11 percent of city contracting dollars in 2016. Cities should develop comprehensive strategies to achieve equity in contracting and procurement, which could include setting equity targets for MBEs and DBEs, streamlining certification processes, breaking up large contracts into smaller subcontracts, helping subcontractors grown into prime contractors, and removing onerous financial burdens for small businesses.
For more resources on equitable contracting and procurement, see the Democracy Collaborative, the Emerald Cities Collaborative, Urban Institute, Government Alliance on Race & Equity, and the National Minority Supplier Development Council.