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    The Case for Federal Programs That Help Small and Diverse Suppliers

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    In signing an executive order to terminate diversity, equity, and inclusion in federal workforce and contracting practices and programs, President Donald J. Trump argued that DEI initiatives are a public waste and hurt government performance. However, a study of set-aside contracts for small and diverse suppliers contradicts this claim, showing that these programs improve federal procurement performance. The study found that small and diverse suppliers perform better when awarded contracts through set-aside programs, with lower cost overruns and shorter delays, compared to smaller and diverse suppliers and larger suppliers who won their contracts in open competitions. These findings also suggest that large corporations that currently allocate only a small percentage of their spending to small and diverse suppliers should develop their own programs to increase these purchases.

    On January 20, U.S. President Donald J. Trump signed an executive order aimed at terminating diversity, equity, and inclusion (DEI) programs “in the federal workforce, and in federal contracting and spending.” As part of this new order, government agency and department heads will have to attend monthly meetings, so that the assistant to the president for domestic policy can “hear reports on the prevalence and the economic and social costs of DEI.” The Trump administration argues that DEI initiatives, such as contracts set aside for small and diverse suppliers, are a “public waste” and hurt the federal government’s performance.

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