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California small businesses are thanking Governor Newsom for signing AB 2019 (Petrie-Norris, D-Irvine) and wrapping up decades of advocacy that spanned 3 administrations. AB 2019 will require departments and agencies to have 25% of its contract dollars go to small businesses and keep them accountable for doing so. This bill also requires these departments and agencies to develop a plan to ensure that women, minority, and LGBTQ+ owned businesses are a part of the procurement process.
“Billions of dollars are at stake in our state contracting process and when we make it fair for diverse entrepreneurs, the success of these small business owners lift up communities all across our state,” said Assemblywoman Petrie-Norris and Chair of the Select Committee on Small Business and Entrepreneurship. “This bill will not only keep the state accountable but it would give businesses that face systemic barriers an opportunity to succeed, keep families fed, create jobs and vitalize their communities.”
In 2001, Governor Davis directed all state agencies and departments to pursue an annual 25% small business participation level in state contracting. Despite this, only 14.6%,23.75%, and 20.58% of contracting dollars went to small businesses for the past 3 years. Small businesses argue that there is no certainty behind this executive order and that it could change on a whim. Additionally, failing departments have little accountability other than having to provide an “improvement plan” to the administration. Advocates have pointed to this as the reason why only 55% of departments who reported their contracting activity have achieved their goal of 25% small business participation. In the fiscal year 2020-2021, $21.23 billion in contracting dollars were given to businesses, and only $3.1 billion were awarded to small businesses. AB 2019 will officially put the goal of 25% in statutory code and create an accountability mechanism for departments who fail to achieve this goal in the past 3 out of 5 years.
Small business advocates argue that while the number of women and minority-owned businesses are increasing, it has not seen a comparable shift in the demographic make-up of the state’s procurement participants. Male business owners have received 74.5% of state contract dollars, while white business owners also received the most out of any ethnicity. The bill would not only require each department to ensure that women, minority and LGBTQ-owned businesses are involved and benefitting from the procurement process, but it would also study disparities in state contracting.
Assemblymember Holden (D-Pasadena) is a joint author and Senator Min (D-Irvine) is a principal co-author.
WHAT OTHERS ARE SAYING:
The California Hispanic Chambers of Commerce represent over 815,000 Latino-owned business in California businesses that contribute over 7% to the nation’s GDP. “As proud co-sponsors of AB 2019, we are thankful that the bill is now signed by the Governor. This bill sets a 25% goal for small business participation in the state procurement process in California which is a giant step in acknowledging the importance of small businesses in California” said Julian Canete, President of the California Hispanic Chambers of Commerce. “There are numerous and diverse small businesses who can provide services and products to the State and this bill ensures they at least have a fighting chance to be awarded a contract. Thank you to Assemblywoman Petrie-Norris for her work on this bill.”
“Small and minority-owned businesses are the backbone of California’s economy, and for far too long our small business community has not been prioritized nor were they given equal opportunities to access contracts and procurement. AB 2019 means that 25% of State procurement will be directed toward small businesses,” said Pat Fong Kushida, President and CEO, CalAsian Chamber. “The California Asian Pacific, Hispanic, and African American Chambers of Commerce, along with our broad coalition of more than 35 organizations — ranging from small business advocates to other Chambers — thank Assemblywoman Petrie-Norris for all her support in making sure this bill made it to the Governor’s desk. We look forward to now opening new doors of opportunity for small businesses across California.”
“AB 2019 is not just a supplier diversity bill; it’s an economic development bill” said Carl Davis Jr., President of the California African American Chamber of Commerce. “Minority owned businesses already face a significant structural barriers that prevent them from accessing state resources, especially with a difficult process like procurement. AB 2019 would help them overcome these barriers by increasing outreach and education efforts to minority-owned businesses and help them become a part of the contracting process.”
AB 2019 is supported by: California Chamber of Commerce, Small Business Majority, National Association of Women Business Owners, CAMEO, California State Treasurer Fiona Ma, California Hispanic Chamber of Commerce, California Asian Pacific Chamber of Commerce, California African American Chamber of Commerce and the California State Controller. The bill passed the State Assembly 74-0 and was signed by the Governor.
