Executive branch agencies in Gov. Charlie Baker’s administration boosted their spending with minority-owned businesses by nearly $20 million in fiscal year 2020, pushing minority contracts to account for more than 6% of the state’s discretionary spending for the first time since 2015, according to data obtained by GBH News.
Overall, Baker’s cabinet agencies — such as the Executive Office of Education and the Executive Office of Health and Human Services — reported spending just under $300 million with minority-owned vendors out of a total $4.8 billion in discretionary spending, or about 6.25% of their budgets. Those totals do not include quasi-government agencies like MassPort, MassHousing and the Convention Center Authority.
Baker had set an 8% target for state agency spending with minority-owned businesses. But, as the GBH News Center fo Investigative Reporting revealed in September, that target includes tens of millions that state contractors spent with minority-owned businesses that may have nothing at all to do with state contracts. After the GBH report, Baker announced that in future annual reports, the state will no longer combine direct state spending totals with third-party payments to minority firms.
According to an agency-by-agency report on minority contract spending through September — the end of the 2020 fiscal year — obtained by GBH News, most state agencies maintained or slightly increased their rate of minority spending from the prior year.
But the Executive Office of Labor and Workforce Development posted a huge jump in 2020.
In 2019, the agency spent about $2.2 million of its $12.4 million budget with minority vendors. In 2020, it more than tripled minority spending, to $6.8 million, while its overall budget stayed about the same. More than half of its spending went to minority-owned businesses.
A big part of that jump was $3.5 million the agency spent with Nava PBC, a Washington, D.C.-based minority-owned software firm that was not a vendor in 2019. Nava’s website says it was hired to help set up for the new paid family and medical leave program that will take effect in Massachusetts on Jan. 1. The department also boosted its payments to ThinkArgus, a Boston-based minority-owned communications firm, from about $300,000 in 2019 to $1.5 million in 2020, also for work on rolling out the new family and medical leave program.
The state’s ability to increase agency spending with minority-owned businesses in 2020 is particularly notable given that national business groups including the U.S. Chamber of Commerce have reported that the COVID-induced economic slowdown has hit minority-owned firms harder than non-minority businesses.
“The Executive Office of Labor and Workforce Development’s increased spending with minority-business enterprises highlights the Baker-Polito administration ongoing efforts to strengthen and improve supplier diversity spending and ensure the commonwealth supports and benefits from its diverse business community,” said Patrick Marvin, communications director for the state’s Executive Office for Administration and Finance. “Since taking office in 2015, the administration has focused on expanding opportunities for diverse businesses across Massachusetts and recently announced a series of comprehensive measures to ensure equal opportunity and increase access for diverse companies in state contracting,” Marvin said.
The governor’s announced measures have been partly in response to a series of GBH News reports indicating that the value of government contracts flowing to minority-owned business — and Black-owned businesses in particular — has declined over the past two decades. In fiscal year 1998, the state reported spending over $350 million with minority vendors for goods and services, design and construction. That total included other agencies beyond the executive branch, so it is not directly comparable to the 2020 total the state has thus far reported.
Between 2007 and 2016, Massachusetts also counted Portuguese-owned businesses as “minority-owned,” which inflated the totals for several years until a court reversed that policy. The court order has reduced by tens of millions of dollars the amount of money Massachusetts agencies can claim they spent with minority-owned businesses.