WASHINGTON (Reuters) - The White House on Thursday unveiled plans to ask federal agencies to direct at least 11% of contract dollars spent to disadvantaged small businesses next year, up from an average of 9.8% over the last five years.
The small increase, which would go well beyond the 5% required by law, is part of a bid to harness the federal government's hefty buying power to boost equity, the White House said.
"President Biden's committed to leveraging every tool available to him and helping level the playing field for small and underserved businesses ... as a way to narrow the racial wealth gap," a senior administration official told reporters on a briefing call prior to the announcement.
He said the federal government is the single largest buyer of goods and services in the world with $600 billion a year.
"Federal government can be a powerful driver of equity and wealth building in underserved communities," he added, noting that the overall goal was to reach 15% by 2025.
Small disadvantaged businesses are a category under federal law for which Black-owned, Latino-owned and other minority-owned businesses "are presumed to qualify," the White House said.
The move comes after a recent report found that the number of new small business entrants to federal procurement decreased by 60% over the past decade, the White House said.