Disparity Studies: What and Why?

Raleigh and Wake County both have disparity studies underway with results expected later this year. This post will walk through what a disparity study is and why these studies matter for our community.

What is a Disparity Study?

A disparity study assesses the contracting activity of a government entity to determine whether they have provided equal opportunity to minority-owned, woman-owned, and other disadvantaged business enterprises (MWDBEs). 

The 1989 U.S. Supreme Court decision in City of Richmond v. J.A. Croson necessitates disparity studies for jurisdictions to establish a “compelling interest” to justify the creation or continuation of programs designed to help MWDBEs. Both Raleigh and Wake County have such programs; their respective disparity studies will indicate whether any remedial programs would withstand scrutiny if challenged in court. Disparity studies can also be used to explore whether such programs have helped reduce inequities in government contracting if prior disparity data exists.

What Does a Disparity Study Involve?       

There are several components of a disparity study to evaluate the prevalence, extent, and scope of discriminatory behavior in public procurement: utilization, availability, disparity, and anecdotal analyses.

Utilization analysis. This is an overview of what firms were awarded government contracts and subcontracts during a particular period of time. For example, Raleigh’s disparity study will examine all awarded contracts for goods, services, and construction between July 1, 2016 and June 30, 2021. 

Availability analysis. Even if woman- and minority-owned businesses get fewer contracts, that’s not sufficient proof of discrimination. It could be that there are simply fewer firms owned by women and minorities. That’s why the availability analysis is critical; it is a calculation of the percentage of firms available to fulfill government contracts and subcontracts.

Disparity analysis. This analysis compares the percentage of public procurement dollars one would expect MWDBE firms to receive based on their availability in the market to what they have actually received during the same period of time (utilization). This comparison results in a disparity index, with a score of 100 indicating that MWDBE firms received the percentage of contract dollars equal to their availability in the market. Index scores less than 80 are generally used to conclude that significant disparities exist in the contracting of disadvantaged businesses. It’s important to note that these disparity scores generally underestimate the extent of discrimination for woman- and minority-owned firms because subcontracting data is inconsistent and sparse; MWDBEs are more likely to be subcontractors on a government contract.

Anecdotal analysis. The quantitative analyses to assess disparity are supplemented by data collected from local business owners through public hearings, surveys, interviews, and focus groups. This is how researchers learn more about the specific experiences of business owners and allows them to contextualize the statistical findings. 

What Impact Will The Results Have?

Not only will the findings of these disparity studies potentially provide the legal justification for continuing MWDBE-based initiatives, but they may also shape the future of such initiatives. If there is evidence of disparity for the City and/or the County, the research consultants will provide recommendations on how the jurisdiction can address the primary issues contributing to inequity. Often, these remedies require government agencies to change their procurement processes, bolster their MWDBE networking and matchmaking programs, collect more accurate and comprehensive contracting data, and develop accountability structures to protect woman- and minority-owned businesses from predatory practices. 

The results could translate into major changes to MWDBE programs and procurement structures, the creation of new initiatives and staff positions, increased funding to support the success of MWDBEs in government contracting. However, the reality is that these results could also lead to nothing if Raleigh or Wake County do not implement the necessary changes. Such inaction could perpetuate disparities and impair the health of local MWDBEs for the foreseeable future.

Where Can I Learn More about These Disparity Studies? 

Wake County: Griffin & Strong, P.C., a law and public policy consulting firm based in Atlanta, is conducting the Wake County Disparity Study. They held their first public information session in June and plan to release the results late 2022/early 2023.

City of Raleigh. Raleigh has hired Miller3 Consulting, also based in Atlanta, to lead its disparity study. Miller3 Consulting will be working with other firms, including two local MWDBEs. They started their research in December 2021 and anticipate the conclusion to take place in November 2022. You can see more information on Raleigh’s website.