Minority-owned businesses see small rise in state contracts as Gov. Baker pushes more inclusion

Updated June 27 at 8:57 p.m.

The tiny share of state government contracts awarded to minority-owned businesses in Massachusetts grew slightly last year, from about 2 to 3 percent, as the state continues to implement structural changes intended to expand opportunities for businesses run by people of color.

The state’s Supplier Diversity Office, a state agency tasked with increasing diversity in government contracting, issued its annual report Friday showing that minority-owned businesses received direct contracts worth $165 million in fiscal year 2021, from the $96 million in fiscal year 2020. The increase in funding is due partly to an overall increase in state spending — from $4.8 billion to $5.7 billion over the same period — leaving the total share of state contracts to minority businesses largely unchanged. The state also counts subcontracts given to minoirty firms by white contractors; including this portion brings the total minority business share of state contracts to about 5.1% in 2021, up from 4.4% the year before.

The report comes as Gov. Charlie Baker took steps to increase the diversity office's authority to hold state agencies accountable for meeting the state’s minority inclusion goals. Baker issued an executive order on Friday requiring each state agency to develop procurement plans that will boost minority inclusion and appoint a "supplier diversity officer" to ensure compliance with the plans. The order also mandates the creation of a compliance unit within the diversity office that will have the authority to suspend contractors that do not meet minority subcontracting goals, or remove contracting authority from state agencies that fail to meet targets for including minority-owned vendors.

“Diverse and small businesses will further benefit from the changes outlined in the Executive Order signed today, which will centralize staff dedicated to promoting equity at the [office] and strengthen its efforts to support the diverse business community,” Lt. Governor Karyn Polito said in a statement Friday.

The largest share of the 2021 contract work — about $92 million — went to Asian-owned businesses; Black-owned companies received $49 million worth of contracts and Hispanic and Latino businesses got $20 million worth of work. The GBH News Center for Investigative Reporting revealed last fall that in 2020, Black-owned businesses had been awarded only $11 million and Hispanic-owned firms only $12 million in state contracts.

GBH News has spent several years investigating the dearth of public contracting opportunities for minority-owned businesses. Several times in 2020, Baker denied the state was falling short, but in November 2020 he announced that he was elevating the Supplier Diversity Office to a stand-alone agency and making several other changes to boost minority contract opportunities.

Nicole Obi, president of the Black Economic Council of Massachusetts, said that while the annual growth of minority contacts is relatively modest, "It is important to acknowledge the significance of the progress that has been made. Every additional dollar that has been spent to contract with Black businesses means one more dollar toward growing the wealth of Black entrepreneurs, families, and communities."

Still, she said, "It is equally important for us to continue to insist that more can be done." Obi told GBH News her organization, BECMA, will "continue to strongly advocate for further greater collaboration, oversight, and intentionality by the state and its agencies in providing inclusive and diverse contracting opportunities for all."

Correction: A previous version of this article incorrectly stated that the increase in discretionary spending was largely due to COVID relief funds.