Gov. Shapiro opens door wider for small businesses to compete for state contracts

Small businesses may now have a better chance at landing a state government contract as a result of an executive order Gov. Josh Shapiro signed on Tuesday.

The order expands increases the amount of money the commonwealth spends on contracts with small diverse businesses, building on former Gov. Tom Wolf’s efforts along these lines that more than doubled that spend over his time in office. It jumped to 11.3% last year from 4.9% in 2015.

Under this executive order signed at Philadelphia’s Enterprise Center, a 35-year-old nonprofit that cultivates and invests in minority entrepreneurs, the state will raise the revenue limit for small businesses to qualify for state contracts to $47 million, up from $38.5 million that it has been held at since 2018.

Shapiro also is calling on the General Assembly to change the definition of a small business as one that has up to 500 employees, instead of the current 100 employee cap. This change as well as raising the revenue limit are consistent with the federal Small Business Administration’s requirements, according to administration officials.

Shapiro pointed out that Maryland, a state with less than half of Pennsylvania’s population, sets aside $448 million in prime contracts for small businesses. In Pennsylvania, small businesses only get $42 million of those contracts.

“We are missing opportunities to incorporate our small businesses into our shared prosperity, which holds them — and really all of us — back. We must do better,” the governor said.

He announced that the state will biannually post data on how many prime contracts are going to small businesses as part of this initiative.

Additionally, administration officials led by Lt. Gov. Austin Davis will form a panel to advise commonwealth agencies on ways to make contracting opportunities more inclusive. General Services and PennDOT also will establish working groups to conduct outreach to the small businesses and provide technical support to help them compete for commonwealth business.

“We must support small-business owners by cutting red tape and putting resources into economic development and innovation,” Davis said in a statement. “That’s why today’s executive order is so important. We’re going to go out and actively encourage small businesses and small diverse business owners to compete for government contracts and become commonwealth vendors.”

Shapiro, who campaigned last year on expanding opportunities for small businesses, already has taken other steps to help fulfill that promise by cutting the time it takes the state Bureau of Diversity, Inclusion and Small Business Opportunity to certify a small business as verified and eligible to compete for commonwealth business from 3 weeks to within 10 days, and implementing a faster payment policy to pay vendors.

General Services Secretary Reggie McNeil, whose department oversees state purchasing, said, “This new executive order is going to fill many gaps for our small businesses. … Actions like this will continue changing the narrative around doing business with the commonwealth and build up Pennsylvania’s small business community.”