The federal government makes around $650 billion in purchases each year, including $3 billion spent on IT services. These astoundingly high figures are encouraging to see because it demonstrates the raw purchasing power the federal government can provide as it looks to invest in the many capable businesses that dot our landscape. There is a catch, however.
Many of these dollars go to larger corporations, which grow their wealth and influence at the expense of smaller businesses. Digital services in particular is a fast-growing technology space with incredible potential, but it is a challenging space for small businesses to enter. It can be even more daunting for minority- or women-owned businesses to compete against larger businesses.
These small businesses are just as qualified to be successful as the larger companies—and arguably, more agile and capable of driving change with technology that will advance equity and deliver for underserved communities. Still, there are a few barriers that need to be overcome in order to develop a more equitable landscape for small businesses, especially those in underrepresented communities.
These barriers to entry can include the monolithic “sameness” that often permeates government contracts, but there are other issues to tackle as well. For instance, many small, minority-owned businesses lack technical assistance that would set them up for success. This technical assistance often involves the business training, mentorship and coaching that can be difficult to come by due to the lack of access to resources that are more readily available to other groups.
Many small, minority-owned companies participate in an 8(a) Business Development program which, while designed to support and finance the companies, can hinder advancement because the program is specifically focused on 8(a) work. After graduating, small businesses find that there is no “in between” space where they can exist. They must immediately square off against large, global corporations to win contracts and, without the appropriate tools to develop a strategic post-8(a) plan, small companies are not armed to compete.
In order to develop a more equitable environment for small businesses, especially those in underrepresented communities, we need to connect small business owners with willing, inclusive mentorship along with capital investments.
It should be noted that investing in minority-owned small companies for digital services makes a ton of business sense. Businesses in the digital services space, when compared with other fields, have a low overhead. This means that if they have a strong foundation, including contracts, revenue and business banking relationships, they can more easily scale up to meet the needs of their clients.
Furthermore, many people are now realizing the importance of human-centered design, which keeps the end user in mind. Often, digital services that follow human-centered design and engineer a product with the end user at heart can create more inclusion and accessibility within their products. Federal Chief Information Officer Clare Martorana stated in September that our government’s digital services need to work for all Americans, not just a select few. Investing in small businesses in underrepresented communities that practice human-centered design is a great first step toward achieving this goal.
As we look toward 2022, diversifying the delivery of the government’s digital services is not only recommended, but critical. More diversity among the vendors who deliver the government’s digital services will undoubtedly improve customer service. Not doing so will undermine trust in the government as well as the government’s own guidance on encouraging diversity, equity and inclusion.
Stephanie Chin is the program manager of Hutch, a digital services and civic tech incubator based in Baltimore and founded by Fearless. She serves on the boards of Innov8MD, Baltimore Community Lending and Open Works Baltimore.