A disparity study examines whether there are disparities between:
The percentage of dollars that minority- and women-owned businesses received on an agency’s prime contracts and subcontracts during a particular time period (referred to as a “utilization analysis”); and
The percentage of dollars that those firms might be expected to receive based on their availability to perform on the agency’s prime contracts and subcontracts (referred to as an “availability analysis”).
The comparison between the utilization of minority- and women-owned businesses on an agency’s contracts and the availability of those businesses to perform that work is referred to as a disparity analysis.
In addition to utilization, availability and disparity analyses, disparity studies examine quantitative and qualitative information about:
Marketplace conditions for minority- and women-owned businesses;
Contracting practices and business assistance programs that the agency currently has in place; and
Although many cities and other local and state governments adopted minority and women business programs for public contracting in the 1970s and 1980s, the legal landscape for these programs changed in 1989. In that year, the U.S. Supreme Court established substantial limitations on the ability of state and local governments to have MBE programs or any other programs benefitting a group based on race. Legal restrictions also apply to gender-conscious programs.
Croson decision. The 1989 U.S. Supreme Court decision in City of Richmond v. J.A. Croson Company held there are only certain limited permissible reasons for a local government to have a race-conscious program, and set specific conditions for such programs:
A government agency must establish and thoroughly examine evidence to determine whether there is a compelling governmental interest in remedying specific past identified discrimination or its present effects; and
A jurisdiction must also ensure that any program adopted is narrowly tailored to achieve the goal of remedying the identified discrimination.
These two requirements must both be satisfied to meet the U.S. Supreme Court’s strict scrutiny standard of review for race-conscious programs.
Disparity studies examine whether there is a disparity between the utilization and availability of minority- and women-owned firms in an agency’s contracting, which is key information in determining whether there is evidence that race or gender discrimination affects a city’s contracting. When the agency already has a race- and gender-conscious program in place, a disparity study examines outcomes for similar public institutions or within the local private sector marketplace to examine if there would be disparities but for that program. Because the U.S. Supreme Court held that a public agency could take action if it had become a passive participant in a system of racial exclusion practiced by elements of the local industry, comprehensive disparity studies examine such information as well.
There are a number of factors used to determine whether a program is narrowly tailored, including consideration of whether workable “race-neutral measures” are sufficient to remedy the identified discrimination.
Methodology. A disparity study develops the quantitative and qualitative information for a government body to consider the types of programs necessary to address the effects of any discrimination against minority- or women-owned firms.
Our methodology is based on relevant case law, including the recent Ninth Circuit Court of Appeals decision that favorably reviewed the study team’s methodology for measuring availability, analyzing disparity and collecting and analyzing qualitative information.
The Disparity Study is led by the eight participating state and local government entities. That group oversees the work being conducted by a team of consultants, led by Keen Independent Research, which has conducted numerous disparity studies nationwide.
Information collected as a part of the disparity study will help state and local entities design and operate programs to ensure a level playing field in their contracting activities. Among other information, the disparity study will provide:
An independent, objective review of minority- and women-owned business participation in participating entities’ prime contracts and subcontracts. That information will be valuable to state and local entities leadership and to external groups that may be monitoring state and local agency contracting practices.
Insights about how state and local entities might reduce barriers to entry and improve opportunities for minority- and women-owned companies and other small businesses to secure participating entities’ contracts.