Executive Order 13985 – Everything you need to know about an Important but Little-known Federal Directive

Executive Order 13985 was issued on day one of the Biden-Harris administration for the purpose of advancing equity and decreasing barriers to opportunity among racial and ethnic minorities. It has been nearly eight months since its passage, and the order has since laid the foundation for several important economic development initiatives.

Despite its importance, it is rarely discussed outside of D.C. policy circles, and it has not received vast, wall-to-wall media coverage like the $3.5 trillion Infrastructure Bill. However, it’s a fairly important directive and one that members of the supplier diversity and minority business communities would do well to follow.

Below is a brief overview of Executive Order 13985 as well as its implications for the recovery and growth of minority-owned firms in a post-COVID-19 economy.

What is Executive Order 13985?

Executive Order (E.O.) 13985, Advancing Racial Equity and Support for Underserved Communities Through the Federal Government, was implemented on January 27, 2021. The E.O. calls for a Whole-of-Government Approach (WGA) in which federal agencies collaborate to reduce disparities and barriers to opportunity for underserved and marginalized communities. In a presentation delivered during Minority Enterprise Development (MED) Week 2021, Director of Domestic Policy Council Susan Rice explained that the goal of the E.O. is to root out systemic racism and reduce equity disparities. According to Rice, racial wealth gaps are “larger than ever” owing to the COVID-19 pandemic, and since wealth accumulates across generations, these gaps are compounding in nature. For example, a study published by Northwestern University in June of 2020 found that the median Black American family has thirteen cents for every one dollar in wealth held by White families.

The Build Back Better Agenda

Rice explains that the W.G.A. of E.O. 13985 lays the foundation for President Biden’s Build Back Better Agenda, described in a White House June 2021 Fact Sheet as “an ambitious plan to create jobs, cut taxes, and lower costs for working families – all paid for by making the tax code fairer and making the wealthiest and large corporations pay their fair share”. The Build Back Better agenda will assist underserved minorities by creating intergenerational wealth via entrepreneurship and homeownership, reducing healthcare costs, and increasing access to education and childcare. The E.O. outlines several programs and policies pursuant to these goals.

Federal Agencies Will Conduct Equity Assessments and Develop Action Plans

Historically, a mere 10% of U.S. federal government procurement is conducted with small and disadvantaged business enterprises. On the centennial anniversary of the Black Wall Street race riots in Tulsa, Oklahoma, President Biden announced a plan to grow federal contracting with small disadvantaged businesses by 50 percent, translating to an additional $100 billion over five years.

To expedite this process, the E.O. mandates that federal agencies conduct internal equity assessments and then develop action plans resultant to these assessments. As part of this initiative, the Office of Management and Budget (OMB) will survey best practices to assess equity and report their findings to the Office of the President. The Director of OMB will then consult with agency heads to review select programs and policies using best practices, and then assess whether underserved communities and their members face any systemic barriers in accessing benefits pursuant to these programs and policies. Once assessments are complete, federal agencies will develop action plans to reduce disparities and advance fairness and opportunity in their programming and procurement processes.

The EO Establishes an Equitable Data Working Group

The EO established a multi-disciplinary Equitable Data Working Group comprised of government leaders in policy, statistics, information technology, and data science.

The working group was designed with three specific outcomes in mind:

  1. To obtain higher-quality data. Per the order, “a first step to promoting equity in Government action is to gather the data necessary to inform that effort.”
  2. To improve policy and program design
  3. To ensure that historically underserved populations receive assistance and resources.

According to an update published by the White House on July 27, 2021, “because Federal data are often not available by race, ethnicity, sexual orientation and gender identity, disability, income, region, veteran status, or other crucial demographic variables, the Equitable Data Working Group is tasked with identifying inadequacies in our existing Federal data collection infrastructure and laying out a strategy for improving equitable data practices in the Federal government.”