Focused On Business Law

Attorneys Sara Bradley, Marinda Neumann and Lindsay Nakagawa.

California to award more state contracts to minority-owned companies

On Behalf of | Mar 6, 2023 | Business Law

A newly-enacted state law (Assembly Bill 2019) promises the inclusion of Black and minority-owned small businesses for enhanced access to state contracts. California Gov. Gavin Newsom signed AB 2019 last September, and it became law on New Year’s Day.

Small businesses employ almost half (7.2 million) of all workers in California, and nearly 40% of the state’s small businesses (1.6 million) are minority-owned. AB 2019 requires state agencies and departments to award at least a quarter of all government contracts to small businesses, ensuring that women-owned and minority-owned businesses are considered.

The bill accomplished a rare feat

Advocacy groups representing minority-owned small businesses had fought for decades for increased inclusion in state contracting opportunities. Their dedication paid off with unanimous victories in the Assembly (74-0) and Senate (34-0) before Newsom signed the bill.

The bill also received widespread support from various groups and organizations, including the California Chamber of Commerce, the California African American Chamber of Commerce, the California Hispanic Chamber of Commerce, the National Association of Women Business Owners and the California State Controller. Together, these groups represent hundreds of thousands of small businesses in the state.

The law provides opportunities and demands accountability

Under the new requirements, minority-owned small businesses will be able to compete for billions of dollars under the procurement process for state contracts. Supporters say it not only lifts up small, diverse entrepreneurs but will benefit underserved communities that have faced systemic barriers to economic opportunities.

Gov. Newsom says the law helps the state build a more inclusive economy while supporting growth and innovation for the nation’s largest community of small businesses. He and others believe it will encourage women and minority entrepreneurs to realize their dreams of owning a business. AB 2019 holds the state accountable by mandating that 25% of contracts are awarded to minority businesses.