Pa. Lt. Gov. Austin Davis pitches state contracting to Black-owned businesses, touts 30% jump as progress

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Pennsylvania state agencies were encouraged to spend more taxpayer money with minority-owned and veteran-owned small businesses over the past two years and did just that, government contracting data shows.

Under Gov. Josh Shapiro and Lt. Gov. Austin Davis, the state spent $691 million with small, diverse and veteran-owned businesses during the fiscal year ending June 2023.

That’s up from $562 million spent for the fiscal year ending June 2022.

Inside those figures, the state government spent $136 million in the fiscal year ending June 2023 with Black-owned and Hispanic-owned businesses, up from $104 million by the end of June 2022. That’s a 30% increase in just one year, and it’s the kind of momentum the administration wants to keep up, officials said.

Contracting data for the most recent fiscal year which ended June 30 was not yet available.

Lt. Gov. Davis shared the results during the Black Business Expo that brought hundreds of entrepreneurs in the region to Philadelphia.

Davis said the COVID-19 pandemic was a difficult time for Black-owned businesses and an ample opportunity as federal relief money rolled in.

“The pandemic made existing problems worse,” Davis said about the lack of access to business capital for Black-owned companies. “However, the pandemic also created an opportunity. An opportunity to invest in small diverse businesses and help them grow and thrive here.”

In September 2023, Gov. Shapiro issued an executive order encouraging state agencies to bolster greater participation in contracting with small diverse businesses.

“Pennsylvania spends a lot of money with vendors and [on] contracts but the process for bidding and winning those contracts can be often complex. It’s harder for small businesses and especially small diverse businesses to navigate that process,” said Lt. Davis.

He now chairs the Pennsylvania Advisory Council for Inclusive Procurement, created by Gov. Shapiro’s executive order signed about a year ago.

The state also has a Bureau of Diversity, Inclusion and Small Business Opportunity and tried to streamline the business processes.

For example, the state reduced the time it takes for its centralized buying agency to certify a small business. Contractors are required to pay subcontractors within 10 days. It also created a mentorship program where small diverse businesses are paired with experienced contractors to help with the procurement process.

The state also releases data from its Small Business Reserve program, which focuses on creating prime contracting opportunities for small diverse businesses and veteran-owned companies.

It appears that the program led to less spending with diverse businesses over two years, especially as some of the COVID-19 relief money rolled off the books.

There were 212 small businesses awarded $57 million across state agencies for 510 different purchase orders between July 2022 and March 2023. One year later, the 212 small businesses were awarded $34 million across 584 purchase orders.

About 75% of all state contracting dollars were spent with businesses owned by non-veteran white men, totaling $4.1 billion out of $5.5 billion overall during the fiscal year ending June 2023.

Officials said they want to keep making gains to shrink that gap.

“That’s why the Governor and I have put a lot of time and energy into leveling the playing field for these businesses,” Davis said.