Diversity Governance by Convenience? Federal Contracting for Minority-Owned Small Businesses

Abstract

Public procurement serves as the means by which public goods and services are acquired through contracts with private firms, as well as a means by which governments promote policies such as socioeconomic diversity. In the U.S., diversity goals are pursued through preferences for contract awards by public agencies to businesses owned by members of disadvantaged groups, such as Native Americans, women, and disabled veterans. In this paper we argue that the extent to which these policies are realized depends substantially on implementation--specifically, on agency contracting capacity. Given current deficiencies in federal agency contracting capacity, diversity governance is largely missing. Rather, agencies use minority-based preferences in order to reduce their workload, thereby awarding contracts for convenience rather than to redress disadvantage and discrimination. We demonstrate that, when agencies use these expedient measures to sidestep the intent of public policy, they risk diverting contracts from deserving to undeserving firms. Unless agencies increase their contacting capacity, diversity governance in this important area of public administration will remain impoverished.