Minority companies need access to contracts


By Carlton Joseph

Justin Trudeau

Congratulations to Prime Minister’s Justin Trudeau’s Liberal government on its initiative to launch Canada’s first-ever Black Entrepreneurship Program.  Trudeau announced investments of up to nearly $221 million in partnership with Canadian financial institutions, including up to nearly $93 million from the Government of Canada over the next four years.  The program is expected to help thousands of Black business owners and entrepreneurs across the country recover from the Covid-19 crisis and grow their businesses.

Up to $53 million to develop and implement a new National Ecosystem Fund to help Black business owners and entrepreneurs access funding and capital, mentorship, financial planning services, and business training.  Up to $33.3 million that will provide loans of between $25,000 and $250,000 for Black business owners and entrepreneurs, plus $128 million available in additional lending support from banking institutions. And up to $6.5 million to create and sustain a system that will collect data on the state of Black entrepreneurship in Canada and help identify Black entrepreneurs’ barriers to success as well as opportunities for growth.

Laudable goals and much needed relief for the minority business community.  However, my experience in business informs me that the government has yet to address the main reason for the crisis in minority businesses.  The knee jerk reaction to business failures is to assume that money is the solution.  I want to emphasize that money is a result and that what businesses need is business.  For any business to grow and become successful , it needs contracts, or in the case of some service businesses, it needs customers.

The Government of Canada is one of the largest public buyers of goods and services in Canada, purchasing approximately $22 billion worth every year on behalf of federal departments and agencies.  Public Works and Government Services Canada (PWGSC) plays a key role by helping federal departments and agencies define their requirements or scope of work, and obtain what they need at the best value.  The government should instruct PWGSC to implement a “Minority Set-Aside” program to direct a portion of this procurement to minority and indigenous businesses. 

Minority companies need access to contracts that is how the government can help them.  Grants and loans are good but if there is no contract base to support the payment of the loans, the companies will default, and the prevailing idea that Black and indigenous peoples are not good businesspersons will persist. 

Systemic racism and colonial structures have been so ingrained in society that unconsciously white people in government and private industry do not consider minority-owned companies to perform on technology products or services contracts.  In fact, procurement officials, even in the Caribbean and Africa, with Black Prime Ministers, Presidents and Black government officials, do not award contracts to their own  Black majority population.  They award contracts to white- owned companies, because the prevailing sentiment is that these companies have the experience and expertise to manage and deliver on the contract. 

Procurement officials and contract managers are scared to “risk their reputation” on a Black company, so they “play it safe” and award the contracts to white owned companies.  Black companies are not even given the opportunity to perform or prove that they can do the work. 

My business experience informs me that even in the most racist environment, the racist when forced to give a contract to a Black business, will stop being racist when the business delivers on the scope of work.   Setting aside contracts for minority business competition is the tested approach to Black and indigenous business success.

In the United States , to help provide a level playing field for small businesses owned by socially and economically disadvantaged people or entities, the government limits competition for certain contracts to businesses that participate in the 8(a) Business Development program.  Trudeau’s Liberal government can adopt a similar program based on the following guidelines.  

For requirements below $25,000 for goods, and below $40,000 for services and construction contracts, including all applicable taxes, PWGSC contracting officers could set aside some of these for minority sole source participation. 

A portion of acquisition for supplies or services that has an anticipated dollar value exceeding $3,000 and not exceeding $150,000 can be reserved exclusively for minority business concerns.  Oral presentations for two or three businesses can be arranged and the winner selected.  This would expedite the procurement, save money, give minority firms opportunity and enable the businesses to grow. 

For acquisitions exceeding $150,000 and with multiple years to perform the contract, government should set aside some of these for minority companies.  Written solicitations and proposals from the minority firms would be the contracting method.  This would enable firms to develop their proposal writing expertise so that they can successfully compete with the major companies when they graduate from the program.

Anyone who loans or gives you funds wants to feel confident that their investment will pay off.  Government contacts, especially those with  four and  five  option years provide the stability, cash flow, and managerial experience to engender confidence.   More important, it allows the firm to develop in the areas of accounting, marketing, opportunity development and capture, contract management, compliance, and financial analysis. 

The goal is to develop successful businesses for the benefit of the companies owners and employees, the community and Canada.  The goal is to have successful Canadian companies and not have to do anything special because some communities have been marginalized. 

There must be a paradigm shift in thinking, procurement officials and government contract managers must stop thinking that Black companies can only perform in areas such as janitorial services, cleaning services, data entry, grounds maintenance and other services related to real property.

Black people have educated themselves and are working for multinational companies, and government agencies.   They have developed software and operate at managerial levels in every industry.  They want to start businesses but lack access to contracts because of the perception that Black people are not good at business.  The Set Aside program will enable these entrepreneurs to fully contribute to the Canadian economy.

A study conducted by the government revealed that racism and discrimination exist in all parts of Canadians lives, from systemic racism and the unconscious biases that may influence how people relate to one another, to the under or over representation of racialized communities and Indigenous Peoples in various sectors.  And, although Canada has promoted multiculturalism and diversity over the years, systemic racism is still at the core of many institutions.

The government should be applauded for the steps it has taken to address Black entrepreneurship.  Access to loans will assist cyclical businesses like construction and education or companies that need capital to invest in new machinery or launch a product line, but it will not give  Black businesses the foundation they need for success.

Trudeau leads a minority government with the prospect of an election ever present.  The public service must be more focused and must deliver tangible results, be aware of where the political overlap lies, and deliver results to the Liberal platform.  The minority community must be vocal in its support for . Trudeau’s Black Entrepreneur’s initiative, including the “Minority Set Aside” program, and get the other political parties to support it.