Virginia's New Law Boosts Opportunities for Small, Women-Owned, and Minority-Owned Businesses

Virginia is taking a significant step toward bolstering small, women-owned, and minority-owned (SWaM) businesses through the passage of HB 1404. This new legislation, known as the Small SWaM Business Procurement Enhancement Program, aims to increase the participation of SWaM businesses in state procurement processes. Here’s a detailed look at what this law entails and its potential impact on Virginia’s business landscape.

Key Provisions of HB 1404

1. Statewide Utilization Goals:
   

• 42% Goal: The law sets a statewide goal for executive branch agencies and covered institutions to achieve a 42% utilization rate of certified SWaM businesses in all discretionary spending, including procurement orders, prime contracts, and subcontracts.

• Annual Increase: Agencies are required to increase their small SWaM business utilization rate by 3% each year until the 42% target is met. If unable to achieve this increase, agencies must implement achievable goals to boost their utilization rate.
  

1. Subcontracting Targets:

• 50% Target: When a prime contractor is not a SWaM business, there is a target goal for subcontracting 50% of the contract's value to SWaM businesses, particularly for new capital outlay construction solicitations.

1. Set-Asides for SWaM Businesses:

• Purchases up to $100,000: The law requires executive branch agencies and covered institutions to set aside purchases up to $100,000 exclusively for certified SWaM businesses, ensuring smaller contracts are more accessible to these businesses.

1. Division of Procurement Enhancement:

• New Division: The law creates the Division of Procurement Enhancement within the Department of Small Business and Supplier Diversity. This division collaborates with other state departments to meet SWaM procurement goals and enhance the development of small businesses, microbusinesses, women-owned businesses, minority-owned businesses, and service-disabled veteran-owned businesses in the Commonwealth.

1. Disparity Study:

• Every Five Years: The law mandates a disparity study every five years to evaluate the need for enhancement and remedial measures to address disparities between the availability and utilization of women-owned and minority-owned businesses. The next study is due by January 1, 2026.

Analyzing the Impact

The implementation of HB 1404 could significantly transform the business environment in Virginia, particularly for small and disadvantaged businesses. Here’s how:

1. Enhanced Opportunities for SWaM Businesses: By setting concrete goals and requiring set-asides for SWaM businesses, the law ensures that these businesses have more opportunities to compete for and win state contracts. This can lead to increased revenue, business and growth.

2. Promotion of Economic Equity: Supporters of the law argue that targeted goals and mandatory set-asides will help level the playing field, giving historically underrepresented businesses a fair chance to succeed. This in turn will promote economic equity and could lead to more diverse and inclusive business communities in Virginia.

3. Increased Accountability and Transparency: The requirement for regular disparity studies and the establishment of the Division of Procurement Enhancement introduces greater accountability. Agencies will need to demonstrate their efforts to meet SWaM goals, and the regular reporting will provide transparency into the state's progress.

4. Support for Business Development: The collaboration between the Division of Procurement Enhancement and other state agencies could help in identifying and implementing initiatives to support SWaM businesses. This includes training, resources, and guidance to help these businesses navigate the procurement process.

5. Long-Term Economic Benefits: As SWaM businesses grow and thrive, they contribute to the state's economy through job creation, increased tax revenues, and community development. The long-term benefits of a robust small business sector can lead to a more resilient and dynamic economy in Virginia.

Conclusion

HB 1404 represents a forward-thinking approach to promoting small business development in Virginia. By setting aside targeted goals, enhancing support structures, and ensuring accountability, the legislature hopes to make significant strides in creating a more inclusive and prosperous business environment. For SWaM businesses, this legislation offers new opportunities and a brighter future, and brings Virginia one step closer towards being a leader in small business development and economic equity.

Don't miss out on the opportunities presented by this new law. Schedule a free consultation with our firm today to learn how you can take advantage of the benefits provided by HB 1404. Our team is ready to assist you in navigating these changes and positioning your business for success. Contact us now to get started on leveraging this exciting law for your business growth and development.