Gov. Shapiro’s ability to increase the threshold for small business certification from 100 employees to 500 employees, which aligns with the federal definition of a small business, is limited. This change would require the state legislature to pass a new law. Despite this limitation, Shapiro is focused on increasing competition in the market and allocating more resources to qualify more individuals for small business certification.
When questioned about a specific percentage of state contracts that would be targeted, Shapiro stated that he did not believe in providing an arbitrary number to appease people. Instead, he emphasized the importance of tangible results that can be achieved through this policy.
Former Gov. Tom Wolf pursued a different strategy, aiming for 26.3% of all state contracts to be awarded to small diverse businesses based on a disparity study. However, in 2020, only 20.2% of state contract spending in Pennsylvania went to small businesses, diverse small businesses, and veteran-owned businesses. Within that figure, only about half was allocated to diverse small businesses. In 2021, the percentage decreased to 19%, indicating that the diversity goal was not met.
Maryland also encountered difficulties in meeting its minority and women-owned business contracting goal under Governor Larry Hogan. However, Governor Wes Moore has taken action to address this issue by signing an executive order mandating agencies to report on minority and women-owned business contracting. He has made it a focal point of his administration.
According to The Enterprise Center CEO Della Clark, certain communities in Philadelphia are frequently excluded from the market, and access to capital is crucial for the growth of small businesses. Clark previously believed that training programs or incubators could help overcome the challenges faced by small businesses without capital. However, she now recognizes that there is no substitute for capital and contracts in driving their success.