The Future of Equity in Government Contracting: Predictions and Trends Shaping Minority Participation

As the U.S. government continues to be the world’s largest customer, federal contracting remains a powerful engine for economic opportunity. Yet, minority- and women-owned businesses still receive a disproportionately small share of federal contracts, despite their growing presence and capabilities. Looking ahead, several key trends and policy shifts are set to shape the future of equity in government contracting and the prospects for minority participation.

1. Ambitious Equity Goals and Policy Commitments

Recent years have seen a renewed federal focus on equity. The Biden administration, for example, has set a target for 15% of all federal contracting dollars to go to small disadvantaged businesses (SDBs) by 2025, a significant increase from previous years. If this goal had been met in FY 2020, SDBs would have received $25 billion more in contract awards. Similarly, if minority-owned businesses received contracts proportional to their share of employer businesses, they would have seen $64 billion more in awards in a single year.

Prediction: Expect continued pressure on agencies to meet or exceed these equity targets, with increased transparency and accountability measures to track progress. These targets are likely to become a baseline for future administrations, regardless of political changes, as the economic and social case for supplier diversity grows stronger.

2. Infrastructure Spending as a Catalyst

The $1.2 trillion infrastructure bill and other major federal investments present historic opportunities for minority-owned businesses. However, without deliberate action, there is a risk that these firms will be sidelined in favor of established contractors. Congressional leaders and minority business advocates are calling for affirmative steps, such as mentor-protégé partnerships, targeted outreach, and education, to ensure minority firms can compete and succeed.

Prediction: Infrastructure and climate-related spending will drive new contract opportunities, but success for minority businesses will depend on proactive inclusion strategies, support for capacity-building, and stronger enforcement of set-aside programs.

3. Addressing Systemic Barriers

Persistent challenges—like lack of access to capital, limited performance histories, and exclusion from informal networks—continue to hinder minority participation. Black-owned businesses, for example, are twice as likely to be rejected for loans and start with significantly less capital than their white counterparts. Many entrepreneurs of color are discouraged from even applying for federal contracts due to these hurdles.

Prediction: Future reforms will focus on reducing administrative burdens, expanding access to financing, and providing technical assistance. Legislative proposals are already under consideration to increase educational resources, analyze lending disparities, and offer equity investments for “low-wealth” business owners.

4. The Power of Partnerships and Mentorship

There is growing recognition that large prime contractors should mentor and partner with smaller, minority-owned firms, especially on large, complex projects. Mentor-protégé programs and joint ventures are increasingly seen as essential tools to help minority businesses gain experience and build performance records.

Prediction: Expect expansion and refinement of mentor-protégé initiatives, as well as incentives for primes to include diverse subcontractors. Agencies may require more robust reporting on subcontractor diversity and outcomes.

5. Data Transparency and Accountability

Historically, progress toward equity goals has been slow, with some years seeing stagnation or even setbacks. The future will likely bring greater data transparency, with agencies required to publicly report contracting outcomes by race, gender, and business size. This will help identify gaps and hold agencies accountable for meeting diversity targets.

Prediction: Data-driven oversight will become standard, empowering advocacy groups and policymakers to push for faster, more meaningful progress.

6. Persistent Gaps—and the Path Forward

Despite policy advances, the equity gap remains substantial. In FY 2020, Black-owned businesses received just 1.7% of federal contracting dollars, even though they make up 2% of all business owners and 13.4% of the population. Hispanic-owned firms, similarly, are underrepresented. Achieving proportional representation will require sustained commitment and innovative solutions.

Prediction: While progress may be incremental, the combination of ambitious targets, infrastructure investment, systemic reforms, and greater accountability is likely to accelerate minority participation in the coming years. The economic and social benefits of a more inclusive federal marketplace will drive continued efforts to close the gap.

Conclusion

The future of equity in government contracting hinges on a multi-pronged approach: bold policy commitments, targeted support for minority-owned businesses, systemic reforms, and unwavering accountability. If these trends continue, the next decade could see a significant shift toward a more inclusive, dynamic, and equitable federal contracting environment, unlocking billions in economic opportunity for underrepresented entrepreneurs.