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Last week, in Tulsa, Oklahoma, the Biden Administration announced a raft of steps they will take to close our country’s widening racial wealth gap. Central to the administration’s wealth-building agenda are twin executive branch actions to reduce discrimination in home appraisals and to increase the targets for direct federal procurement from small and disadvantaged businesses (DBEs) by 50 percent, or $100 billion, over 5 years. These are laudable, bold and necessary moves.

To have the needed impact, especially given the imminent federal investments through the American Jobs Plan, we see reforming the way that that government—at all levels —contracts for building infrastructure as a necessary and urgent task. If done right it will be truly transformative. However, it will not happen by itself and now is the moment to act.

The current system needs an overhaul. This can only be accomplished through institutional reform, legislative focus and directed funding.

We have been working with the Irvine Foundation and the Philadelphia Equity Alliance, with support from McKinsey, for the past six months to understand the current state of procurement practices in Los Angeles and Philadelphia. Our conclusion is that the current system needs an overhaul. This can only be accomplished through institutional reform, legislative focus and directed funding.

Simply put: Procurement reform is not just a matter of increasing spending targets. It requires wholesale institutional change.

We applaud the Biden Administration’s announcement of new targets as a step to overhaul key and highly leveragable tools of the federal government that are long overdue for reform. In this spirit, we provide some key reforms Congress can take to make even more substantial, complimentary, progress.

Why Infrastructure?

Federal infrastructure spending offers a unique platform for growing Black- and brown-owned businesses and building wealth in disadvantaged communities. It has a unique combination of symbolic importance and market-making potential that make it one of the highest impact interventions. Infrastructure policy has a legacy of destroying Black and brown wealth in America—infamously through the construction of highways in the name of “urban renewal” in the 1950s—and must be part of the solution for rebuilding that wealth.

Federally funded infrastructure is market-making on all levels. On the macro-level it represents a public bet on what places, industries, and activities will shape the future. On the micro-level, it represents a huge demand-boost for private sector firms, since the government will not build the infrastructure itself. Infrastructure agencies will buy a plethora of goods and services to deliver federal investments. Architecture and engineering firms will design projects. Construction firms will build them. Other firms will maintain them, once built.

MORE ON INFRASTRUCTURE AND INCLUSIVE GROWTH

This will create not only jobs but will also build wealth for the firms that are contracted to build infrastructure. Failing to reform federal procurement at this moment represents a missed opportunity of generational proportions to close the nation’s wealth gap.

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Federal infrastructure spending is already underway, and more is likely to come soon. The American Rescue Plan Act (ARPA) has already appropriated $126 billion for investments in elementary and secondary schools, which can be used for substantial renovations of school facilities (such as HVAC system replacement) to enable safe reopening in the face of the Covid-19 pandemic.

The proposed American Jobs Plan goes further, recommending unprecedented investments in a broad array of infrastructure, including: transportation (e.g., roads and bridges, public transit, passenger and freight railways, airports, waterways and ports); buildings and utilities (e.g., affordable housing, high speed broadband, electric grid, water/sewer, public schools); and disaster resilience. Significantly, some of the proposed funding is explicitly intended to repair the damage of prior infrastructure investments that divided cities and segregated minority communities through the destructive building of highways. As the American Jobs Plan moves through congress, it provides an important and logical vehicle to advance reforms that help the Administration close the racial wealth gap.

The moment is now: a powerful tool overdue for reform

The federal focus on equitable procurement has been in place for decades, but its impact has fallen dramatically short of aspirations. In 1983, Congress enacted its first disadvantaged business enterprise (DBE) provision, ensuring that infrastructure projects receiving US Department of Transportation (USDOT) funding allocate 10 percent of their spending to certified DBEs. This most-often occurs through a sub-contracting relationship—where DBEs do one, frequently low-profit, element of a project, while the prime contractor keeps the bulk of the contract.

The program, designed decades ago for family-sized businesses, simply has not kept pace with the changing small business landscape. Other than a change to include women in the definition of DBE, the program has not significantly changed in the nearly 40 years since it was established. It leaves DBE subcontracting as a box to check and ensures that Black and brown-owned businesses stay small and attached to the program.

Wealth Can't Wait Pdf

The use of federal procurement as a tool to close the racial wealth gap seems to have flown under the radar for legislators. However, the barriers that have hindered substantial procurement reform in the past have changed in the past year. In anticipation of the largest infrastructure bill in a generation and in the wake of the largest mass movement for racial justice in the nation’s history, it is time to revisit the power and potential of equitable procurement in infrastructure.

Five Fundamental Challenges to Address

Small business procurement is overdue for an overhaul. Largely out of benign neglect, the current programs have set up financial and institutional structures that keep disadvantaged firms at a disadvantage from start-to-end of the federal contracting process. These issues are especially pronounced in infrastructure because of the large contracts and institutional complexity of contracting.

In the recent past, reforms have nibbled around the edges with unified certification in MAP-21, limited personal net worth and gross receipts changes, and SBA-conformance in the FAA reauthorization; however, reformers have done little to address the systemic challenges facing minority-owned businesses. This has created five foundational challenges that any reform to supplier diversity must address.

Challenge 1: DBE firms are at a disadvantage when accessing the flexible capital they need

DBEs do not have access to the same financial system majority-owned firms do. Federal programs have been limited in the scope of the problem they’ve addre

Wealth Can&#39;t Wait PDF Free Download

Wealth Can't Wait PDF Free Download