A Look at Federal Contracting for Black American Owned Businesses

It is Black History Month and we thought it would be a great time to celebrate the success of our black owned businesses in federal contracting.  

I was curious to learn more about Black Owned business and was fascinated to learn that the first Black Insurance company was founded in 1810 and that in 1821 Thomas Jennings was the first African American to be granted a patent for what is a predecessor to today's dry-cleaning methods. These fascinating insights truly highlight the resilience and determination of Black-owned businesses to me. Throughout my career, I have had the honor of working with incredibly dedicated African-American individuals so let's understand how these businesses in have done in Federal contracting.

The US Census Bureau reported in FY 2020 that there are 140,918 Black- or African American-owned businesses across all sectors of the economy with annual sales exceeding $141 billion.   So how much did our Black American owned businesses do in terms of federal contract awards?

In FY 23, 5,371 Black American owned businesses won $9.99B in federal contracts, which is less than 1.3% of the $774B in total contracts that the were awarded in FY 23.  Interestingly, looking at historical data for the period FY 20-FY 23, the dollars awarded remain relatively constant at $9.5B, however the total contracts awarded have seen a 12.4% growth from $689B in FY 20 to $774.6B in FY 23.

In terms of numbers of company, we see a marginal growth of 315 companies over the same period.

It is important to keep in mind that there are no specific set-asides for Black American owned businesses, so it is important to understand the set-aside, if any, that is used.  This will vary from agency to agency.  Overall, less than 15% was awarded as small business set-aside.  8(a) sole-source and competed set-asides are at less than $1.3B, followed by set-asides to SDVOSB of less than $600M

As we delve deeper into the data on contract awards, it is crucial to recognize the government agencies working with Black American Owned Businesses. Notably, defense agencies such as the Army, Air Force, DoD, Navy, and DLA stand out as top agencies for these companies. Additionally, we observe Health & Human Services, Homeland Security, and the VA making significant contributions to the list of top agencies working with Black American Owned Businesses.

Understanding the products and services sourced from Black American-owned businesses is crucial, keeping in mind that it will vary across different government agencies. In Fiscal Year 2023, the top NAICS categories included Administrative Management & General Management Consulting Services, Computer System Design Services, Facilities Support Services, Engineering Services, and Construction. It is essential to pay attention to the evolving trends within these NAICS codes, especially since the overall contracts awarded has remained stagnant.

I do want to recognize the top Black American Owned Businesses in FY 23.  Ranger Land Systems Inc, Medical Place, Lazarus Energy Holdings, Apogee Engineering Aand VAE Inc are our top 5 businesses within this socio-economic category.

Small businesses encounter numerous obstacles, and navigating the federal contracting arena is not easy - it demands resilience and unwavering determination. While I applaud the achievements of our Black American-owned businesses, particularly in the realm of federal contracting, I strongly believe that we must strive to increase not only the dollar amounts awarded but also the number of participating companies. Although the US SBA offers valuable resources to support these businesses, it is crucial to utilize the wealth of federal contract data available to extract valuable insights that can fuel the growth of a company. Whether it involves understanding your target market, crafting a strategic agency plan, or mapping out your business pipeline, leveraging this data is key to unlocking new opportunities and driving success.

I remain hopeful that over the next couple of years we will see an increase in the contracts awarded to our Black American owned businesses.