Supporting small minority-, women-, and veteran-owned businesses in state contracting is vital for Washington's economy and community well-being. Small businesses make up 99% of state businesses and employ about 50% of the workforce. Their success drives economic resilience and innovation.

However, despite Washington's rich diversity, small and diverse businesses continue to face barriers in state contracting. During fiscal years 2017-2024, only 3.2% of the state's average $6.2 billion private sector spending went to minority- and women-owned businesses. By improving our contracting practices, we can foster a more inclusive and thriving economy, enhance business solutions, and strengthen our communities.

Purpose of the Subcabinet

The Governor's Subcabinet on Business Diversity aims to address statewide inequities in public spending by fostering collaboration among state agencies and business community members. We build sustainable, big-picture solutions that enhance supplier diversity and create equitable opportunities for small, minority, women, and veteran-owned businesses.

Mission

Our mission is to increase access to contracting opportunities with Washington state government for diverse businesses, eliminating barriers to certification and state contracting. We strive to enhance the representation and utilization of small and diverse businesses across various industries, aligning their availability in the market with state procurement practices.

Vision

Our vision is to create a business environment where state spending reflects the diversity of our communities.

Through our collaborative governance framework, we envision a future where coordinated efforts and balanced interests lead to meaningful economic opportunities for all underrepresented business groups. This promotes a more inclusive and equitable economy in Washington state.

History

The Governor’s Subcabinet on Business Diversity was established by Governor Inslee in 2015 to address the inequities that Minority and Women’s Business Enterprises (M/WBEs) face in state contracting. The subcabinet guides Washington on the legal path toward contracting equity. Initially led by the Department of Enterprise Services (DES) from 2015 to 2018, leadership transitioned to the Office of Minority and Women's Business Enterprises (OMWBE) in 2015, aligning with its mission to support M/WBEs.

❖ Formation & Action Teams

In order to lay a strong foundation, the subcabinet engaged in 14 weeks of intensive analysis to uncover systematic barriers and develop the Washington State Roadmap to Contracting Equity. This effort involved extensive collaboration – interviewing agency staff, working with the Civil Rights Coalition, attending community events, and developing a comprehensive understanding of systems. The insights gained from this process have shaped ongoing improvements, enhanced measurement frameworks, expanded procurement strategies, and strengthened community engagement efforts. Today, the subcabinet continues to evolve, building on this critical work to create a more equitable and inclusive state contracting system.

❖ Official AG Opinion on I-200

The Washington State Attorney General's opinion on I-200 clarifies that it does not categorically prohibit all race- or sex-conscious measures in state contracting. While the initiative allows consideration of race or gender without elevating a less qualified contractor, agencies may use narrowly tailored preferences in specific circumstances to address documented discrimination or to maintain eligibility for federal funds. These conclusions apply regardless of whether the agency receives federal funds.

❖ 2019 Disparity Study

The Washington State Disparity Study, commissioned by the Department of Enterprise Services on behalf of the Governor’s Subcabinet on Business Diversity, assessed whether minority-, women-, and veteran-owned businesses have full and fair access to state contracts. Published on June 19, 2019 (Juneteenth), the study identified significant barriers to participation. Qualitative evidence strongly suggests that minorities and women suffer ongoing discrimination in Washington’s contracting market. The study also provided 14 recommendations based upon these findings and national best practices for contracting equity programs.

❖ Washington State Roadmap to Contracting Equity

Developed in response to the 2019 Disparity Study, the roadmap guides Washington state on the legal path to achieve contracting equity. We are currently standardizing race- and gender-neutral measures, which will be evaluated for effectiveness before determining next steps for the enterprise.

❖ Toolkit Launch

The Tools for Equity in Public Spending launched in January 2021. This comprehensive guide helps agencies implement equitable and inclusive contracting and procurement strategies. Governor Inslee emphasized the toolkit’s importance as a community benefit and justice issue, stating, “This toolkit is going to move the needle in our state. And it needs to.”

❖ Toolkit Workshops & Supplier Diversity Community of Practice

After the Toolkit launch, OMWBE held monthly Toolkit Workshops for several years focused on different tools and strategies to improve state contracting and procurement practices. This work has carried on in the enterprise Supplier Diversity Community of Practice, coordinated by the Department of Enterprise Services.

❖ Executive Order 22-01

Executive order 22-01, signed by Governor Inslee on January 7th, 2022, advances equity in public contracting by transforming the work the Governor's Subcabinet on Business Diversity into actionable steps for state agencies. It requires Executive and Small Cabinet agencies to adopt the Tools for Equity in Public Spending and Access Equity, ensuring greater access to government contracts for minority, women, and veteran-owned businesses in Washington state.

❖ Executive Order 22-02

Signed by Governor Inslee on January 17th, 2022, executive order 22-02 reaffirms Washington State’s commitment to dismantling systematic barriers and advancing equity in public contracting, employment, and government services. It builds on past efforts including the subcabinet’s work to improve contracting opportunities, new directives to promote equitable hiring practices, and the Office of Equity’s work to drive pro-equity anti-racist policies and accountability. This order ensures all Washingtonians have fair access to opportunities that support their success and well-being.

❖ Access Equity Launch

Access Equity was fully implemented in February 2024. This launch fulfills the #1 recommendation of the 2019 Disparity Study to “Implement an Electronic Data Collection and Monitoring System for All State Agencies.” Access Equity use is now mandatory for all reporting state agencies and institutions of higher education. Once all reporting entities adopt Access Equity, we will gain deeper insight into the full scope of Washington state spending, including indirect payments to subcontractors—a space where many minority- and women-owned businesses operate.

The Path Forward

Washington state is committed to contracting equity and focuses on key components such as the Disparity Study, the Roadmap to Contracting Equity, and fostering culture change across state business enterprises. The subcabinet aims to increase supplier diversity, improve access to contracting opportunities, and align state utilization of small and diverse businesses with market availability.

Recent initiatives include:

• Targeted outreach
• Contract improvements
• Aspirational spending goals
• Mandatory programs for small and veteran business enterprises

In the 2024 Legislative session, funding was obtained for a new disparity study to provide updated data and actionable strategies for advancing contracting equity. This study will cover the impacts of COVID-19 on small and diverse businesses.

These efforts address disparities in public spending and promote economic growth, benefiting businesses and the state as a whole.

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