(The Center Square) – A Virginia bill that would expand how the state awards contracts is drawing attention as it heads to first-term Democratic Gov. Abigail Spanberger for a decision.
House Bill 61 sets a statewide goal for agencies to direct 42% of certain discretionary spending to certified Small, Women-owned and Minority-owned, or SWaM, businesses, according to bill language and a fiscal impact statement from the Department of Planning and Budget.
It also changes how smaller contracts are handled. Purchases between $10,000 and $200,000 would be set aside for certified SWaM businesses, while those under $10,000 would be reserved for microbusinesses.
The bill goes further for construction work. On capital outlay projects, contractors that are not SWaM-certified would be expected to subcontract 50% of the work to certified businesses.
The proposal has picked up attention online, with some posts claiming it would prioritize contracts based on race or gender.
The bill itself does not bar any group from bidding. Instead, it sets participation goals and steers certain types of spending toward businesses that qualify for SWaM certification, which is based on ownership and size requirements under state rules.
If adopted, the measure would require agencies to steadily increase their SWaM utilization rates. It also establishes a procurement enhancement function within the Department of Small Business and Supplier Diversity to help oversee the changes.
The bill would also result in new state costs. A fiscal impact statement projects new state costs starting in fiscal year 2027, including about $325,000 from the general fund and more than $1 million in non-general funds for system updates, staffing and reporting. The bill also calls for a disparity study, estimated at up to $1 million every five years, to evaluate participation gaps among eligible businesses.
There are guardrails in place. Bids from certified businesses cannot exceed competing offers by more than 5%, and the legislation states that public bodies may not discriminate against bidders based on race, sex or other protected characteristics under state law.
The Center Square was unsuccessful prior to publication getting comment from the bill’s patron.
Derrick Max, president of the Thomas Jefferson Institute for Public Policy, said the approach could shift how contracts are awarded and questioned whether it delivers results.
“Set asides substitute political allocation for market allocation, resulting in increased costs and often lower quality,” Max said.
He added that such policies can “often hurt true struggling minority businesses,” arguing that firms that are better positioned or more familiar with the system may be more likely to qualify.
Max also raised concerns about how certification works in practice, saying some businesses may “find ways to qualify, despite the fact that they are not truly qualified.”
He questioned whether the programs address underlying barriers to success, saying they are often tied to claims about disparities in opportunity.
The bill is now with the governor. She can sign it, veto it or recommend changes. If no action is taken by the deadline, it would become law without her signature.
