The American business world has historically neglected minority business groups in contracting and procurement activities within the government. The idea of affirmative action in procurement can be traced back to the times of President John F. Kennedy when racial discrimination was first brought into the forefront. The roots of these programs were established in the 1940s when the Roosevelt administration issued orders of non-discrimination in cases of government contracts. In order to rectify the situation, the SBA was launched during the Nixon administration. It was the first step taken towards the removal of discrimination from the business. The popularity of the civil rights movement during the 1960s generated the momentum for this process and has remained an important component in government procurement.
The basis for implementation was to eliminate racial discrimination, provide technical assistance, the coordination of activities between Federal departments, and encourage the development of minority businesses. The government spends billions of dollars in construction projects like building highways. There was an inequitable distribution of government contracts among the minorities and the white-owned businesses. This differential treatment caused minorities to protest against this discrimination. In order to solve this problem and promote the inclusion of minorities, congress introduced Public Law 95–507 in 1978, which directed federal agencies to secure an established percentage of contracts from minority-owned firms.
The government procures a significant amount of goods and services on an annual basis, roughly 10% to 15% of the GDP which greatly impacts the economy as a whole. Public procurement comprises a large proportion of public expenditure.