Social equity in federal contracting during emergencies: A portfolio management perspective

• Published date: 01 September 2023
• Author: Ana‐Maria Dimand,Andrea S. Patrucco,Evelyn Rodriguez‐Plesa,Andra M. Hiriscau
• Date: 01 September 2023
• DOI: http://doi.org/10.1111/puar.13614

SYMPOSIUM ARTICLE

Social equity in federal contracting during emergencies:

A portfolio management perspective

Ana-Maria Dimand

1

| Andrea S. Patrucco

2

| Evelyn Rodriguez-Plesa

3

|

Andra M. Hiriscau

4

1

School of Public Service, Boise State University,

Boise, Idaho, USA

2

Department of Marketing and Logistics, College

of Business, Florida International University,

Miami, Florida, USA

3

Department of Public Administration, North

Carolina Central University, Durham, North

Carolina, USA

4

Department of Economics, College of William &

Mary, Williamsburg, Virginia, USA

Correspondence

Ana-Maria Dimand, School of Public Service,

Boise State University, Boise, Idaho, USA.

Email: anamariadimand@boisestate.edu

Abstract

While the U.S. federal government strives to advance social equity in government

contracting through various policies to support small disadvantaged business

enterprises (SDBEs), entry barriers persist. Drawing on federal government spend-

ing data from the initial response to the COVID-19 pandemic, this study estimates

logistic and multinomial logistic regressions using portfolio management theory

to understand what factors can favor SDBE participation in government contracts

during the immediate response to emergencies and whether these factors differ

when governments award strategic versus non-strategic contracts. The results

show that governments do not necessarily have to reduce competition to favor

SDBE participation in government contracts, as some of these suppliers can partici-

pate and win competitive procedures. Although non-SDBE suppliers were still

more likely to be awarded contracts during the initial emergency response, SDBE

suppliers were more likely to win procedures for strategic and important supplies.

Evidence for Practice

•Equity in federal contracting during emergency management is important

because it helps to ensure that a diverse range of businesses, including those

owned by women and minorities, have the opportunity to participate in the

recovery and rebuilding efforts.

•Ensuring equity in federal contracting can also help to ensure that emergency

recovery efforts are more effective and efficient, as a diverse group of contrac-

tors may bring a wider range of skills, expertise, and resources to bear on the

recovery effort.

•We apply portfolio management theory to analyze how equity was ensured by

the U.S. federal government during the COVID-19 emergency. We conclude that,

during emergencies:

•The federal government does not necessarily have to reduce competition to

favor the participation of small disadvantaged businesses in government

contracts.

•Small businesses and woman-owned enterprises are more likely to win federal

contracts with low strategic importance, while minority and veteran-owned

enterprises are preferred for contracts with high strategic importance.

•Women- and veteran-owned enterprises are more likely to win federal contracts

that involve special environmental requirements.

INTRODUCTION

Recent events have exposed large inequities

in our society […] In this time of crisis, it’s

important that governments analyze all the

systems they have at their disposal—including

their procurement processes—to address the

underlying issues that cause these disparities.

( Scot Spencer, Associate Director of Local Pol-

icy for the Casey Foundation)

Received: 13 April 2022 Revised: 6 January 2023 Accepted: 26 January 2023

DOI: 10.1111/puar.13614

Public Admin Rev. 2023;83:1319–1338. wileyonlinelibrary.com/journal/puar © 2023 American Society for Public Administration. 1319

Social equity is a “foundational anchor”and a pillar of

public administration (Blessett et al., 2019, p. 296). While

classic public administration paradigms focused on effi-

ciency and effectiveness, the new public administration

approach focuses on understanding how various public

services can enhance social equity (e.g., Gooden &

Portillo, 2011; Guy & McCandless, 2012; Wooldridge &

Gooden, 2009). Public services can be delivered through

in-house provision, public-private partnerships, and, most

of all, third-party contracts (Smith & Fernandez, 2010).

Procurement and contracting of goods and services rep-

resent a significant percentage of overall annual govern-

ment spending (e.g., Netherlands 45.8 percent, Japan 41.6

percent, Germany 35.3 percent, Canada 32.3 percent, UK

31.7 percent; OECD, 2021). While public values like effi-

ciency and effectiveness frequently drive contracting

decisions, it has become increasingly clear that govern-

ment contracting can be an important tool for advancing

social equity (Alkadry et al., 2019). By making social equity

a foundational anchor and a pillar of procurement deci-

sions, governments can implement ad-hoc initiatives that

can ensure equal and fair small disadvantaged business

enterprises (SDBE) participation in government contracts,

which may spur financial prosperity and stability within

minority communities and small disadvantaged busi-

nesses (Cepiku & Mastrodascio, 2021; Veronica

et al., 2020). Throughout this article, “small disadvantaged

business”refers to the comprehensive category of small,

minority-owned, woman-owned, and veteran-owned

business enterprises (SDBEs). Minority-, woman-, and

veteran-owned business enterprises are defined as disad-

vantaged business enterprises (DBEs), while other small

business enterprises are defined as SBEs. Formal defini-

tions of these business categories are included in

Appendix A.

The attention to social equity in governments has

increased even more following the dramatic successions

of emergencies (i.e., climate change events, COVID-19,

Ukraine–Russia war) that have occurred in recent years.

These emergencies have contributed to increasing

inequalities in different ways (Rivera & Knox, 2023). In the

United States, for example, COVID-19 caused dispropor-

tionate decreases of 41 percent, 32 percent, and 26 per-

cent in the number of small businesses operated by

Black, Latinx, and Asian owners, respectively; similarly, in

Europe, more than 50 percent of small businesses do not

know if they will still be in business after the next 2 years

(McKinsey and Company, 2020). Female owners of small

businesses saw a 35 percent higher probability of revenue

loss and bankruptcy than male-owned businesses

because women-owned businesses belong to industries

that were most impacted by COVID-19 (Fairlie, 2020).

Among the initiatives governments have adopted to

soften such inequalities during emergencies is the avail-

ability of additional procurement funds and the design of

supplier diversity programs to give SDBEs increased

opportunities to obtain part of these funds by contracting

with government agencies (U.S. General Service

Administration, 2021a). While social equity in government

contracting should be supported under all circumstances,

SDBE support becomes most important during emergen-

cies. On the one hand, in emergencies, SDBEs become an

important source to support state and federal govern-

ment needs when the supply of strategic goods and ser-

vices becomes critical. On the other hand, national

regulations allow governments to relax some procure-

ment rules and procedures to favor the inclusion of

SDBEs, thus allowing public organizations to diversify

their procurement strategies and involve these businesses

more. However, while recent research suggests that gov-

ernments tend to increase the number of contracts

awarded to SDBEs during emergencies, especially during

the initial response phase (Gereffi, 2020; Melnyk

et al., 2021; Veronica et al., 2020), there is insufficient evi-

dence on the specific factors that favor SDBE participation

in government contracts and, as such, on how govern-

ments should diversify their emergency contracting strat-

egies to involve a broader range of suppliers to obtain

critical supplies and effectively respond to public

emergencies.

In this regard, the COVID-19 pandemic represents an

interesting unit of analysis. First, it was the most recent

case of a global and widespread emergency during which

emergency contract funds were released in different

periods. Second, it was an emergency with severe implica-

tions for government procurement. During the COVID-19

pandemic, governments at all levels faced challenges pro-

curing an unprecedented volume of goods and services

while experiencing shortages of supplies and suppliers.

Third, in these circumstances, governments modified con-

solidated procurement processes and policies to provide

essential goods and to maintain the continuity of services

to their communities. In Europe and the U.S., to increase

contracting responsiveness, federal and state governments

adopted several small business-friendly bidding proce-

dures to favor contract awards to small businesses

(Juergensen et al., 2020; Melnyk et al., 2021).

Based on these considerations, we aim to contribute

to the literature by answering the following research

questions:

1. What factors should governments consider to ensure

social equity in procurement contracts during

emergencies?

2. What strategies should governments follow to ensure

social equity in procurement contracts during

emergencies?

To answer these questions, we used federal data on

emergency contracts awarded during the initial response

to the COVID-19 emergency (the first wave of COVID-19

relief funds, from April 2020 to February 2021) and esti-

mated logistic and multinomial logistic regression models

to analyze what factors impacted the probability of

1320 EQUITY IN FEDERAL CONTRACTING DURING EMERGENCIES