Contracting Barriers 

and Factors Affecting 

Minority Business Enterprises

A REVIEW OF EXISTING DISPARITY STUDIES

PREPARED FOR

Minority Business Development Agency

Under Contract SB1352-15-SE-0425

PREPARED BY

Premier Quantitative Consulting, Inc.

Orlando, FL

DECEMBER 2016

Foreword i

December 2016 | Minority Business Development Agency

Foreword

Winning contracts that buy your products, services, proprietary work processes, or intellectual 

property is what every entrepreneur strives to accomplish when they go into business. 

Contracts are the business barometer that measure the health of your business and determine 

whether you grow, stagnate, or fail. For America to build a healthy and inclusive economy, 

minority business enterprises (MBEs), must have full and fair access to the range of local, state 

and federal contracting opportunities. Disparity studies conducted over the past 10 years at the 

state and local levels tell a much different story. 

This study, Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing 

Disparity Studies, was commissioned by the U.S. Department of Commerce, Minority Business 

Development Agency to expose the patterns and trends uncovered in these disparity studies 

and to quantify the impact of discrimination in America’s procurement systems. In doing so, it 

reveals that MBEs typically obtain a lower number and dollar value of contracts in proportion to 

the number of MBEs available. The report also reveals that the industry groups experiencing the 

highest ratios of disparity include construction, professional services, architecture, engineering 

services, and goods and supplies.

Beyond the civil injustices that have been protested across the country and the 

disenfranchisement of minority communities, there are distinct underlying issues that primarily 

center on economic disparity. Unemployment, low workforce readiness, lack of transportation 

infrastructure, a shortage of affordable housing, and social issues have negatively impacted 

minority communities nationwide. While MBEs are contributing to the economic vitality of 

these communities by addressing social issues in new ways, they must have the opportunity 

to develop capacity and entry points into the industries of tomorrow. Local governments 

must change their economic development models that enable MBEs to grow and create jobs, 

serve as positive role models to disadvantaged youth, and expose residents to innovation 

and emerging industries to generate wealth creation. These business owners seek new 

opportunities that will allow them to engage with the entire community in order to make a 

broader impact. 
ii Contracting Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing Disparity Studies

Minority Business Development Agency | December 2016 

Civic participation is critical to MBEs as their dedication goes beyond economic success. If we 

are to improve the government’s ability to advance community conditions capable of deterring 

civil injustices and targeting of our law enforcement officers, then our federal response must be 

guided by interagency collaboration, law enforcement understanding, public investment, and a 

sense of urgency.

The findings of this report raise questions about the current and future state of economic 

development in the U.S., in particular as the population moves inexorably to ‘majority-minority’ 

status. It also points out implications for the Nation’s economic health should MBEs not have 

the opportunity to fully participate in government contracting.

During the past 45 years, MBDA has provided MBEs with resources to support and advance 

their success in growing the U.S. economy. Today, many MBEs have proven to be major catalysts 

for economic growth, job creation, innovation, and entrepreneurship. Due to our unique 

position, MBDA has distinct insight regarding current civil unrest issues that plague these 

communities, which historically have benefited from the Agency’s funding and resources. This 

long-term engagement has helped MBDA to identify promising business opportunities that 

create jobs and generate wealth.

Since 2009, MBDA has helped minority-owned firms access more than $34.8 billion in contracts 

and capital, which resulted in more than 153,000 jobs created and retained.*

We know that there is more to do. This report is presented for full consideration by corporate 

CEOs and boards of directors, governors, state/local legislators, mayors, tribal leaders, law 

enforcement/criminal justice and economic development leaders, procurement officers, 

transportation and infrastructure officials, business owners, and pension fund managers and 

investors, in the spirit of generating positive momentum toward the goal of shrinking, and 

ultimately eliminating, disparities in contracting nationwide. 

We encourage you to read the full report which covers the legal framework of disparity studies 

and offers a primer for those embarking upon disparity studies at the state and local levels. 

It also offers an in depth quantitative analysis of disparity ratios and a qualitative review of 

anecdotal evidence. Our hope is that this report will give policy makers and MBE advocates the 

information and data they need to make systemic changes.

Alejandra Y. Castillo Albert Shen

National Director National Deputy Director 

Minority Business Development Agency Minority Business Development Agency

U.S. Department of Commerce U.S. Department of Commerce

*U.S. Department of Commerce, Minority Business Development Agency performance and CRM systems, 

Retrieved December 12, 2016.
Executive Summary iii

 December 2016 | Minority Business Development Agency

Executive Summary 

Analysis of public contracting data indicates that substantial disparities exist between minority 

and non-minority business enterprises. Specifically, the data show that minority business 

enterprises (MBEs) typically secure a lower number and dollar amount of contracts in proportion 

to the number of available MBEs in a relevant market. As a result, MBEs, agency officials, 

policy makers, and advocates have a strong incentive to understand the factors that give rise 

to observed contracting disparities. In order to advance the dialogue concerning contracting 

disparities and inform the development of new and innovative solutions, the Minority Business 

Development Agency (MBDA) requested a comprehensive review of existing data and studies 

to address several key research questions:

•	 What factors create barriers and cause disparities in public contracting for MBEs?

•	 What information do existing studies provide stakeholders in assisting agencies address 

observed disparities?

•	 What areas warrant further investigation and policy research with respect to contracting 

disparities experienced by MBEs?

This research explored existing disparity studies conducted by a variety of economic consultants 

that were commissioned by local and state governments nationwide. A disparity study is a 

comprehensive effort that analyzes a wealth of data pertaining to the legal, legislative, and 

contracting environment facing MBEs in a particular jurisdiction or when procuring contracts 

from a specific federal, state or municipal agency. The findings presented in this report are 

drawn from a comprehensive review of 100 disparity studies, summaries, and reports that are 

publicly-available and accessible via the internet. The selected set of disparity studies does 

not represent the full universe of studies and includes a greater focus on recent studies with 

information on contracting disparities affecting MBEs within the last ten years.

LEGAL PRECEDENT AND DISPARITY STUDY BASICS

The evolution and development of disparity studies arose from legal challenges to existing 

affirmative action or race-conscious programs1

 enacted by government rules, legislation or 

policies intended to alleviate perceived or actual discrimination against different racial, ethnic or 

1 This report uses the terms “affirmative action programs,” “race-based programs,” and “race-conscious programs” 

interchangeably, where the terms imply a government initiated program that specifically includes racial or ethnic preferences in 

alleviating discriminatory behavior.
iv Contracting Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing Disparity Studies

Minority Business Development Agency | December 2016 

gender groups in public contracting. In response to the legal precedent,2 government agencies 

have commissioned disparity studies to examine the extent to which minority contractors are 

underutilized in public procurement in a particular industry and geography, such that the agency 

can determine whether a legally-defensible race-conscious program is justified or needed to 

provide remedial relief given discriminatory or exclusionary behavior.

Disparity studies typically include an overview of the legal precedent that influences the 

key methodologies, computations, and evidence necessary to justify or support existing or 

proposed contracting programs, including those that are race-conscious. City of Richmond v. 

J.A. Croson Co.3

 (Croson) and Adarand Constructors Inc. v. Peña4 (Adarand) are two seminal 

legal decisions that established the evidentiary tests necessary to evaluate local, state, and 

federal race-conscious contracting programs. These cases introduced several key concepts and 

standards, including:

•	 Ensuring that disparities in contracting are specific to the relevant geographic and 

product markets;

•	 Disparities are evaluated considering only firms that are ready, willing and able to bid on 

and perform contracts;

•	 The importance of evidence related to marketplace discrimination to support raceconscious contracting programs; and

•	 The importance of anecdotal evidence in supporting programs offering remedial relief 

of discrimination in public contracting.

There have been a number of additional challenges to existing race-conscious contracting 

programs. While the constitutionality of programs has been upheld, the legal decisions have 

often brought forth key issues related to disparity study methodologies and the evidence 

needed to support an inference of discrimination related to an observed disparity ratio.

In addition to the legal review, disparity studies typically include an overview of the rules, 

regulations, and ordinances that govern public contracting for a particular agency. This 

includes the existence of race-conscious programs to alleviate contracting disparities. In order 

to determine the extent to which disparities exist among MBEs and different racial and ethnic 

groups, disparity studies compute numerical disparity ratios using agency procurement data, 

information on winning bidders, and a comprehensive analysis of actual and potential bidders 

to determine which firms are ready, willing, and able to bid on contracts. Consultants use 

this information to determine utilization and availability, the two inputs of the disparity ratio 

calculation. Figure ES-1 shows a simplified illustration of the disparity ratio calculation, where 

2 City of Richmond v. J.A. Croson Co. (488 US 469 (1989)) and Adarand Constructors Inc. v. Peña (515 US 200 (1995)) are two 

seminal legal decisions that established the evidentiary tests necessary to evaluate local, state, and federal race-conscious 

contracting programs.

3 488 US 469 (1989).

4 515 US 200 (1995).
Executive Summary v

 December 2016 | Minority Business Development Agency

the numerator represents the utilization of MBEs and the denominator shows the availability 

of MBEs.5

FIGURE ES-1

DISPARITY RATIO COMPUTATION EXAMPLE

As a general rule of thumb, a disparity ratio of less than 0.80 (or 80 if expressed on a scale that 

multiplies the disparity index by 100) indicates a substantial disparity.6

 Utilization and availability 

are also specific to well defined geographic and product markets (i.e., the “relevant markets”). 

Market definition is an economic concept that looks to substitutability and is intended to 

determine who is competing for public contracts along geographic and product lines. Robust 

and defensible disparity studies have an explicit definition of both geographic and product 

markets, as these are required in order to determine who is competing for contracts and the 

extent to which disparities exist among these market definitions. 

DISPARITIES EXIST

The review of selected disparity studies provided 2,385 distinct high-level disparity ratios 

presented in executive summaries, major findings, and conclusions sections. These ratios 

include observations for MBEs in the aggregate, as well as for the African American, Hispanic 

5 This simplified example assumes uniform contract and firm sizes, such that the disparity ratio would be equivalent whether one 

considers utilization based on the number of contracts or dollars awarded per contract.

6 Given the lack of standardization in evaluating the levels of underutilization, many studies employ the Equal Employment 

Opportunity Commission’s (EEOC) “80 percent rule” in Uniform Guidelines on Employee Selection Procedures. In the context of 

employment discrimination, an employment disparity ratio below 80 indicates a “substantial disparity” in employment. 

Award = $100

Award = $300

MBE Utilization = 

25%

UTILIZATION CALCULATION

MBE Availability

AVAILABILITY CALCULATION

MBEs

Non-MBEs

MBEs

Non-MBEs
vi Contracting Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing Disparity Studies

Minority Business Development Agency | December 2016 

American and Asian American categories.7 In addition, studies computed disparity ratios 

based on industry, with the majority reporting disparity ratios for major industry groups such 

as construction, professional services, architecture and engineering services, and goods and 

supplies. However, there is no standard disparity ratio reporting method and a review of the 

disparity studies found wide variation in how disparity authors computed and reported disparity 

ratios. Some studies included a single disparity ratio covering multiple years, while others 

reported ratios for every calendar year or fiscal year for the time period under investigation. 

Furthermore, some studies only reported disparity ratios on prime contracts, while other studies 

distinguished between prime contracts and subcontracts. 

As a result, the disparity ratios are not an “apples to apples” comparison when examining 

results from one report compared to another. The studies were conducted by different authors, 

for different agencies, using different product and geographic market definitions and for 

different time periods. In addition, there are methodological differences in computing disparity 

ratios among consultants. Nevertheless, the comprehensive nature of the review established a 

distinct pattern of substantial contracting disparities for MBEs in the aggregate and for different 

racial and ethnic groups across different industries. 78.2 percent of all disparity ratios drawn 

from the set of disparity studies were less than 0.8, with a median value of 0.19. Considering 

that less than 0.8 is a substantial disparity, these results indicate that contracting disparities for 

MBEs are pervasive. 

Furthermore, many studies tested whether these disparity ratios were statistically significant, 

where disparity study authors used statistical approaches to test whether the disparity could 

have arisen due to chance, or some other factor such as discrimination. For those disparity 

studies that explicitly indicated whether a disparity ratio was statistically significant or not, 

approximately 65 percent of all disparity ratio observations were classified as statistically 

significant by the study authors. However, this may be a conservative estimate since some 

disparity study consultants only reported significance at a highly aggregated level. Lastly, 

99 percent of statistically significant disparities identified by study authors were less than 0.8, 

lending strong support for discriminatory behavior in contracting. 

Despite the detail regarding underrepresentation presented in disparity calculations, the 

existence of a disparity does not on its own support a conclusion of discrimination. Rather, the 

numerical disparity ratios necessitate additional inquiries to explain why MBEs face significant 

7 This does not represent the totality of disparity ratios reported in the 100 studies. In certain cases, disparity study consultants 

also included Native Americans and Subcontinent Asian Americans, but these instances were relatively few or often contained 

inadequate data to compute a disparity ratio. In addition, most studies reported disparity ratios for women-owned businesses, 

although differences existed with respect to approaches separating out Caucasian-owned WBEs versus non-Caucasian owned 

WBEs. Furthermore, some studies reported an aggregate M/WBE disparity ratio, as opposed to just an MBE disparity ratio. 

The results presented in this report include the combined M/WBE ratios, but do not include WBE-only disparity ratios. Lastly, 

many studies provided hundreds of different additional disparity ratios based on smaller geographic regions, combining across 

industries, looking at different funding sources, or looking at different time periods. In order to minimize double counting, the 

research findings in this study do not include the subset of disparity ratios based on the multiple iterations that some disparity 

study consultants performed. The primary purpose of the disparity ratio review was to demonstrate that these studies identified 

contracting disparities, sufficient to assess causal factors.
Executive Summary vii

 December 2016 | Minority Business Development Agency

contracting disparities compared to non-MBEs. In order to determine whether disparities are 

the result of discrimination, disparity study consultants use both quantitative and qualitative 

analyses to examine the root causes of disparities in public contracting. Most studies in the 

research set included an analysis of marketplace discrimination, using regression analysis to 

investigate disparities in business formation, business earnings, and loan denials between MBEs 

and non-MBEs in the private sector. These analyses demonstrate the presence of discriminatory 

behavior in private markets by showing race as a statistically significant predictor of disparities in 

business owner earnings, business formation and access to capital. As a result, these analyses 

allow disparity studies to address whether or not public agencies were susceptible to or 

engaging in passive discrimination in public contracting.

USING ANECDOTAL EVIDENCE TO EXPLORE CONTRACTING BARRIERS 

AND CAUSES

Anecdotal evidence does not establish the predicate for race-conscious programs, but instead, 

aids policymakers in evaluating whether a contracting program is needed and narrowly tailored 

to address demonstrated discriminatory behavior. Anecdotal evidence provides first-hand 

accounts of barriers in public contracting and instances where discrimination is a factor in MBE 

underrepresentation. Critics of the validity of anecdotal evidence argue that the accounts may 

not be sufficiently verified and that instead of detailing actual accounts of discrimination, the 

evidence may only present perceptions of discrimination. Yet, legal proceedings have varied on 

the level of verification needed to support the importance and relevance of anecdotal evidence. 

In order to address these concerns, the most robust disparity studies will draw on multiple 

techniques to obtain anecdotal accounts from individuals that have had actual, verifiable 

experiences in working with a procurement agency. It is through a wide number of reliable 

sources that disparity studies can include instances of discrimination which are representative of 

the experiences of multiple minority business owners.

The disparity studies reviewed for this study provided specific, verifiable instances of 

discrimination which were recorded, cataloged, and analyzed using content analysis. The most 

robust studies identified barriers, discussed the harm that the improper conduct inflicted on 

the businesses in question, and examined the extent to which discriminatory exclusion and 

impaired contracting opportunities are systemic rather than isolated or sporadic. Figure ES-2 

summarizes the most frequently cited barriers in the disparity studies.
viii Contracting Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing Disparity Studies

Minority Business Development Agency | December 2016 

FIGURE ES-2

MOST FREQUENTLY CITED CONTRACTING BARRIERS FACING MBES

Discrimination influenced multiple contracting barriers, both from the marketplace, as well as 

driven by either a contracting agency or non-MBE prime in the context of subcontracting. The 

barriers identified varied from outright prejudicial treatment and instances of exclusion based 

on racism, to marketplace barriers erected by systemic discrimination in both the private and 

public market (e.g., access to capital). Disparity studies with substantial anecdotal evidence 

supporting the presence of discriminatory barriers provide justification for the use of raceconscious programs in those jurisdictions. In addition, there are multiple non-discriminatory 

barriers, such as large project sizes, timely payment, and bid requirements that present 

challenges to potential bidders regardless of the race or ethnicity of the owners. However, the 

anecdotal evidence indicates that certain systemic discriminatory barriers can influence the 

perception of exclusionary practices with respect to some non-discriminatory barriers.

Arguably the most difficult barrier to address with respect to discrimination is the exclusionary 

networks that MBEs encountered in public contracting. On one hand, network exclusion can 

arise due to normal business operating procedures, often dictated by the desire to work with 

companies that have prior experience, demonstrated work product, and a solid reputation. Yet, 

in other instances, discriminatory attitudes of agency personnel and non-MBE primes facilitated 

excluding MBEs from informal networks that influence learning about and obtaining public 

contracting opportunities.

Agency

Non-MBE 

Prime

MBE

MBE as 

Prime

MBE as 

Subcontractor

Prime Level

Discriminatory

Barriers

• Timely bid 

notification

• Explicit 

discrimination 

(stereotypes, 

higher and double 

standards)

• MBE/DBE stigma

Subcontractor Level

Discriminatory 

Barriers

• Timely bid notification

• Bid shopping

• Held bid

• Lack of good faith

effort

• Only using an MBE if

required

• Explicit discrimination 

(stereotypes, higher 

and double 

standards)

• MBE/DBE stigma

Prime Level

Non-Discriminatory

Barriers

• Large project sizes

• Bonding/insurance

• Bid requirements

• Timely payment

Pervasive Barriers**

• Access to capital

• Network access

• Marketplace 

discrimination

**Access to Capital and Network Access barriers can arise due to both discriminatory and non-discriminatory reasons and also 

influence non-discriminatory barriers such as bonding and insurance
Executive Summary ix

 December 2016 | Minority Business Development Agency

The review of existing disparity studies yielded several common themes and insights beyond 

the characterization of contracting barriers and evidence of discrimination. These included:

•	 The “needle has not moved” with respect to overcoming disparities. Every study 

identified significant contracting disparities and many supported these findings with 

additional quantitative and anecdotal evidence that supported the need for both raceneutral and race-conscious remedial efforts. Yet, over time disparities were prevalent 

even within the same jurisdiction.

•	 Disparity studies often reported the same race-neutral remedies (e.g., unbundling large 

contracts, improving payment processes, improving data collection) and race-conscious 

remedies (e.g., improved goal setting and monitoring) to address contracting disparities, 

yet what is missing is the extent to which agencies have actually implemented and 

measured the success or failure of these recommendations.

•	 Race-conscious programs typically helped MBEs when enacted; however the legal 

history has illustrated that these programs need to comply with the strict scrutiny 

standard and be narrowly tailored.

In addition to common observations, the disparity studies and anecdotal evidence highlighted 

common problems and issues with contracting disparities experienced by MBEs. These include:

•	 Enforcement and accountability of race-conscious programs by contracting agencies. 

There is a perception that prime contractors do not engage in good faith efforts to 

comply with race-conscious programs and agencies do not monitor or enforce these 

efforts.8

•	 Resource constraints are a major issue facing contracting agencies. Many suggestions 

for program improvements, both race-neutral and race-conscious, require a substantial 

monetary investment (both human capital and infrastructure) at the public agency level. 

Based on the political and economic environment, some of these recommendations are 

prohibitive given lack of resources.

•	 There is often insufficient analysis and evidence of subcontracting activity at the agency 

level. Given that subcontracting is an important and critical component of increasing 

MBE participation in public contracting, greater oversight and accountability of 

subcontracting behavior coupled with better and more reliable data collection should 

be a priority

The disparity study review indicated that both discriminatory and non-discriminatory actions 

lead to contracting disparities for MBEs. Additional research is needed to understand what 

steps public agencies have taken to address these disparities. Specifically, whether agencies 

have been effective at implementing the common policy prescriptions most disparity studies 

include and to what extent these policies have either succeeded or failed. Beyond this, there 

are a number of areas to explore and research with respect to lessening barriers faced by 

8 Numerous disparity studies included anecdotal accounts which touted the belief that without a race-conscious program in place, 

prime contractors would never use an MBE.
x Contracting Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing Disparity Studies

Minority Business Development Agency | December 2016 

MBEs in public contracting. MBEs, advocacy groups and policy makers should explore new 

and innovative ways to increase engagement, oversight, enforceability and accountability 

within the public contracting process. This requires leveraging data sharing and transparency, 

exploring race-neutral means and the efficacy of these means, and also evaluating what raceconscious methods have been not only defensible, but successful, in alleviating the effects of 

discrimination.
Table of Contents xi

December 2016 | Minority Business Development Agency

Table of Contents

Foreword................................................................................................................................................ i

Executive Summary ............................................................................................................................ iii

Table of Contents................................................................................................................................ xi

List of Figures ..................................................................................................................................... xii

List of Tables ...................................................................................................................................... xiii

Acknowledgements ........................................................................................................................... xv

1. Introduction...................................................................................................................................1

2. Legal Review.................................................................................................................................5

Seminal Cases – Croson and Adarand..............................................................................6

Concrete Works of Colorado.............................................................................................8

Western States Paving........................................................................................................8

Rothe and DynaLantic ........................................................................................................9

3. Disparity Study Basics ...............................................................................................................11

General Overview of Disparity Studies ...........................................................................12

Critical and Often Contentious Issues ............................................................................21

Importance of Anecdotal Information ............................................................................28

4. Disparities and Marketplace Discrimination Exist................................................................31

Description of the Set of Disparity Studies ....................................................................31

Observed Disparities in Minority Contracting ...............................................................34

Subcontracting Analysis ...................................................................................................38

Quantitative Data on Marketplace Discrimination ........................................................40

5. Anecdotal Analysis and Summary ...........................................................................................47

Importance of Anecdotal Evidence in Supporting Race-Based Programs..................47

Disparity Study Review Findings on Collection Methods .............................................48

Characterizing Barriers Identified in Existing Disparity Studies....................................52

Networking Barriers..........................................................................................................55

Process-Based Barriers.....................................................................................................57

Discriminatory Attitudes and Perceptions......................................................................63

Barriers Affecting Firm Financial Performance and Ability to Compete......................67

6. Reserach Findings ......................................................................................................................69

There is a Need for Innovative Policies...........................................................................71

Appendix A – List of Disparity Studies (Chronological)..............................................................75

Appendix B – Glossary......................................................................................................................83
xii Contracting Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing Disparity Studies

Minority Business Development Agency | December 2016

List of Figures 

Figure ES-1. Disparity Ratio Computation Example.......................................................................... v

Figure ES-2. Most Frequently Cited Contracting Barriers Facing MBEs ...................................... viii

Figure 2-1. Timeline of Key Legal Cases by Decision Date ..............................................................6

Figure 2-2. Key Holdings in Croson and Adarand .............................................................................7

Figure 2-3. Key Holdings in the Rothe and DynaLantic Cases .......................................................10

Figure 3-1. Legal Review and Requirements for Disparity Studies ................................................12

Figure 3-2. Key Components of Procurement Data Analysis .........................................................13

Figure 3-3. Utilization Example using Contract Awards ..................................................................15

Figure 3-4. Methodologies for Calculating Availability and Disparity Indices ..............................16

Figure 3-5. Disparity Computation Example....................................................................................17

Figure 3-6. Discrimination Assessment Analysis Summary .............................................................19

Figure 3-7. Evaluation and Recommendation Foci..........................................................................21

Figure 3-8. Capacity Sensitivity Example..........................................................................................24

Figure 4-1. Disparity Ratio Distribution for Minority-Owned Businesses.......................................35

Figure 4-2. Disparity Ratio Observations by Industry and Minority Category...............................36

Figure 4-3. Regression Analysis Process and Results Example.......................................................43

Figure 5-1. Distribution of Anecdotal Data Collection Mechanisms..............................................49

Figure 5-2. Barriers Faced by MBEs in Public Contracting .............................................................53

Figure 5-3. Frequency of Barriers Identified by M/WBEs................................................................55

Figure 5-4. Example of Bid Shopping...............................................................................................62
List of Figures/List of Tables xiii

December 2016 | Minority Business Development Agency

List of Tables

Table 4-1 Disparity Ratio Observations by Minority Category and Industry .................................37

Table 4-2 Median Disparity Ratios by Minority Category and Industry .........................................38

Table 4-3 Subcontracting Subset Analysis........................................................................................40

Table 5-1 Summary of Anecdotal Evidence Collection Methods...................................................50

Acknowledgements xv

December 2016 | Minority Business Development Agency

Acknowledgements

This research report would not have been possible without the support, guidance and direction 

provided by Minority Business Development Agency (MBDA) personnel and stakeholders. As 

the scope and direction of the research project shifted to focus on key issues facing minority 

business enterprises in public contracting, the MBDA team was helpful in identifying the key 

issues it sought to explore and understand as a result of this research effort. The research team 

wishes to acknowledge the insight, guidance and direction provided by Bridget Gonzales, 

Antavia Grimsley, Josephine Arnold, Efrain Gonzalez, Jr., Albert Shen, and Justin Tanner. In 

addition, the research team is grateful to David Beede and Dr. Rob Rubinovitz, from the Office 

of the Chief Economist at the United States Department of Commerce, for their contributions. 

Lastly, the research team would like to thank our peer reviewers, who provided valuable 

commentary that helped focus our research findings as we strived to assist MBDA, stakeholders, 

and elected officials address key issues in public contracting.

Chapter 1: Introduction 1

 December 2016 | Minority Business Development Agency

CHAPTER 1:

Introduction

Analysis of public contracting data indicates that disparities exist in contracting activity between 

minority and non-minority business enterprises. Specifically, the data show that minority 

business enterprises (MBEs) typically secure a lower number and dollar amount of contracts in 

proportion to the number of MBEs that are available in the marketplace to bid on and perform 

contract work. In response, the Federal Government, state agencies, and local municipalities 

have enacted a number of affirmative action, or race-conscious,9

 programs designed to 

overcome both the perception and reality of discrimination against MBEs. The proliferation of 

these programs led to an increase in the number of legal challenges to them. As a result, the 

various legal challenges and court decisions provide a foundation for “disparity studies” that 

assess and provide the basis for race-conscious programs. 

Government agencies at the federal, state, and local level typically commission disparity 

studies to examine the extent to which minority and women contractors are underutilized in 

public procurement. Well-conducted disparity studies not only present information on actual 

contracting disparities experienced by MBEs in a particular industry and geographic region, 

but also facilitate an investigation into the extent to which discrimination is a prevalent issue 

in the marketplace. In fact, the need for disparity studies often arises out of legal challenges 

to existing programs, and the results of such studies can have broad application to a number 

of other agency programs. Thus even if an agency is not experiencing litigation, it will be well 

informed to ensure its existing or potential program complies with legal precedent. 

Given evidence of disparities in existing studies, MBEs, agency officials, policy makers, 

and advocates have a strong incentive to understand the factors that give rise to observed 

contracting disparities. In order to advance the dialogue concerning contracting disparities and 

inform the development of new and innovative solutions, the Minority Business Development 

Agency (MBDA) requested a comprehensive review of existing data and studies to address 

several key research questions:

•	 What factors create barriers and cause disparities in public contracting for MBEs?

•	 What information do existing studies provide stakeholders in assisting agencies address 

observed disparities?

9 This report uses the terms “affirmative action programs,” “race-based programs,” and “race-conscious programs” 

interchangeably, where the terms imply a government initiated program that specifically includes racial or ethnic preferences in 

alleviating discriminatory behavior against affected racial or ethnic minority business enterprises in public contracting.
2 Contracting Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing Disparity Studies

Minority Business Development Agency | December 2016

•	 What areas warrant further investigation and policy research with respect to contracting 

disparities experienced by MBEs?

To address these questions, a comprehensive review of publicly-available disparity studies, 

summaries, and reports was conducted. The review of existing disparity studies includes a highlevel inventory of observed disparity ratios coupled with a qualitative review of the anecdotal 

evidence presented in each disparity study that provides insight into causal factors for observed 

numerical disparities. 

Anecdotal evidence offers human experience and context for quantitative evidence such 

as disparity calculations and regression analyses. Anecdotal evidence has also proven to 

be one of the most important elements in evaluating potential discriminatory behavior and 

barriers to minority-owned firms in public contracting. As a result, many disparity studies use 

qualitative data to help address the fundamental questions of “why do disparities exist in public 

contracting?” and perhaps more importantly, “why do disparities continue to exist in public 

contracting despite the presence of many race-based contracting programs?” The collection 

and analysis of this qualitative data provides a basis for challenging the status quo of pervasive 

contracting disparities by helping advance the discussion with a focus on their key drivers.

This report begins with an overview of several legal challenges to race-conscious remedial 

contracting programs. The legal precedent and case law informs the analyses contained in 

disparity studies, such that accumulated evidence is either sufficient to justify remedial racebased action, or alternatively, evaluate other means to address any identified contracting 

disparities. Chapter 3 details the basics of disparity studies, guided in part by the legal 

challenges and findings discussed in Chapter 2. While not every disparity study adheres to 

the same format or level of detail, each study generally covers a number of critical elements, 

including analysis of applicable laws, regulations and ordinances, a description of contracting 

data and sources, utilization and availability analyses, computing disparity ratios, exploring 

third-party data sources on discrimination, collection and reporting of anecdotal evidence, and 

when appropriate, evaluation of existing race-based contracting programs. 

Chapter 4 presents a summary of disparity ratios drawn from the selected set of disparity 

studies, summaries, and reports, which indicate widespread disparities in public contracting for 

the jurisdictions and time periods covered by each study. Identification of potential disparity 

studies entailed a thorough and comprehensive search of publicly-available studies posted 

on agency, consultant, or other websites. A special focus was on disparity studies published 

in the last ten years, to provide more recent insight into the public contracting landscape for 

MBEs. As such, it is important to recognize that the selected set of disparity studies, summaries 

and reports do not represent the universe of all disparity studies and are not intended to serve 

as a nationally representative, statistically significant sample of all disparity studies conducted. 

Rather, the set of disparity studies, summaries and reports represent studies that are publiclyavailable and accessible via the internet and this report did not exclude any identified studies, 
Chapter 1: Introduction 3

 December 2016 | Minority Business Development Agency

summaries or reports. Chapter 4 also summarizes general findings from quantitative analyses 

disparity study authors conducted with respect to analyzing marketplace discrimination.

Chapter 5 details the use of anecdotal evidence in disparity studies to help provide insight into 

the different barriers MBEs face in public contracting. The chapter includes an overview of the 

major barriers identified by disparity studies, with a particular focus on whether these barriers 

are largely the result of discrimination or other factors. Chapter 6 provides conclusions and 

recommendations for future research and discussion. The conclusion also includes potential 

action items for addressing contracting disparities experienced by MBEs in public contracting. 

Lastly, Appendix A includes a list of the publicly-available disparity studies, summaries and 

reports identified and reviewed as part of this research project, while Appendix B contains a 

glossary of terms that are commonly used in disparity studies.

Chapter 2: Legal Review 5

December 2016 | Minority Business Development Agency

CHAPTER 2:

Legal Review

Legal challenges to race-conscious contracting programs provide insight and guidance on 

evaluating the evidence needed to identify and characterize discriminatory behavior in public 

contracting. This chapter reviews the general legal framework of disparity studies, focusing on a 

review of several key legal challenges to federal, state, or local contracting programs regarding 

minority-owned businesses. The purpose of this chapter is not to advocate, condone or 

recommend any legal conclusions drawn from the case law. Rather, the intent of this chapter is 

to provide information on how legal precedent influences the analysis of contracting disparities 

affecting minority business enterprises at the federal, state, or local level.10 This includes 

investigating how legal precedent and court proceedings:

•	 Determine the evidentiary tests for assessing existing race-based contracting programs 

for disadvantaged, minority, women, or small business enterprises;

•	 Define parameters for evaluating potential disparities in contracting;

•	 Stress the importance of anecdotal evidence to investigate causes of disparities.

Figure 2-1 is a timeline of several key legal decisions that provide insight into these issues. 

Although a full legal history includes numerous additional cases, these ten decisions capture 

elements of legal challenges and disparity analyses that have broad applicability to assessing 

potential discrimination and use of race-conscious programs in public contracting across 

multiple industries and jurisdictions.

10 Most disparity studies include a comprehensive legal overview as part of the report, often with a longer and more in-depth 

discussion attached as an Appendix to the main report. For a general legal review, see Connecticut Disparity Study: Phase 1, The 

Connecticut Academy of Science and Engineering, August 2013. For a substantially more in-depth and contemporaneous review of 

legal precedent see 2015-16 State of Indiana Disparity Study, BBC Research & Consulting, March 2016.
6 Contracting Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing Disparity Studies

Minority Business Development Agency | December 2016 

FIGURE 2-1

TIMELINE OF KEY LEGAL CASES BY DECISION DATE

SEMINAL CASES – CROSON AND ADARAND

City of Richmond v. J.A. Croson Co.11 (Croson) and Adarand Constructors Inc. v. Peña12

(Adarand) are two seminal legal decisions that established the evidentiary tests necessary to 

evaluate local, state, and federal race-conscious contracting programs. Figure 2-2 presents an 

overview of key legal holdings in each case. Included in this summary is Adarand VII,

13 which 

was the Tenth Circuit Court of Appeals decision following remand of the case.

11 488 US 469 (1989).

12 515 US 200 (1995).

13 Adarand Constructors, Inc. v. Slater, 228 F.3d 1147 (10th Cir. 2000)

1990 1995 2000 2005 2010 2015

City of Richmond v. J.A.

Croson Co., 488 U.S. 469 

(1989)

Adarand Constructors, Inc. v.

Pena, 515 U.S. 200 (1995)

Adarand Constructors, Inc. v.

Slater, 228 F.3d 1147 (10th Cir.

2000)

Dynalantic Corp. v. U.S.

Department of Defense, 885 F.

Supp. 2d 237 (D.D.C. 2012)

Rothe Development Corp. v. U.S.

Department of Defense, 545 F.3d 1023 

(Fed. Cir. 2008)

Rothe Development, Inc. v. U.S.

Department of Defense, Appeal

Ongoing (2016)

Concrete Works of Colorado, 

Inc. v. City & County of Denver,

36 F.3d 1513 (10th Cir. 1994)

Concrete Works of Colorado, Inc. v. City

and County of Denver, 321 F. 3d 950 (10th

Cir. 2003)

Memorandum Opinion, United States

District Court for the District of

Columbia, June 5, 2015, Rothe

Development, Inc. v. Department of

Defense, No. 12-CV-744 (filed D.D.C.

May 9, 2012)

Western States Paving Co. v.

Washington State DOT, 407 F.3d 

983 (9th Cir. 2005)
Chapter 2: Legal Review 7

December 2016 | Minority Business Development Agency

FIGURE 2-2

KEY HOLDINGS IN CROSON AND ADARAND

Croson continues to impact considerations of race-conscious contracting programs. First, 

Croson established that a local government could not rely on society-wide discrimination as 

the basis for a race-based program but, instead, was required to identify discrimination within 

the local jurisdiction. Second, the case highlighted the need to present evidence grounded in 

statistical analysis to justify the presence of discriminatory behavior. This includes evaluation 

of ready, willing and able contractors when determining disparities. This evaluation is the 

backbone of determining “available” businesses to use in computing disparity ratios, such that 

the focus of any contracting program is narrowly tailored to affected businesses.

In contrast, the City of Richmond examined population figures to determine its race-conscious 

contracting goal, without considering whether the goal reflected the demographic make-up 

of contractors that could actually perform the contracted work. An important outcome was 

the Court declaration regarding the utility of anecdotal evidence as supporting and causal 

information related to the quantitative analyses. The U.S. Supreme Court noted that anecdotal 

evidence of discriminatory acts, when used in conjunction with statistical evidence, lends 

support to broader remedial relief.

Adarand extended the strict scrutiny standard to federal programs, including the federal 

DBE program related to use of U.S. Department of Transportation (DOT) funds by states and 

municipalities. Adarand VII provided distinct areas for disparity consultants to investigate 

and compile results that support the institution of race-conscious programs. Most of the 

Key Holdings in Croson:

• Strict scrutiny is the appropriate standard of judicial review, such that a race conscious 

program must be based on a compelling governmental interest in remedying past

discrimination or its present effects and be narrowly tailored to achieve its objectives

• Ruled in Croson’s favor : the evidence did not pass strict scrutiny because the program 

was applied regardless of whether the individual MBE had suffered discrimination.

• Must be evidence of race-based discrimination for each individual group that is

granted racial, ethnic or gender preferences

• Programs must focus on ready, willing and able contractors in determining disparities

• Anecdotal evidence of discrimination, in conjunction with statistical evidence, 

supports the local government’s use of broader remedial relief (e.g., race-based)

Key Holdings in Adarand and Adarand VII

• Adarand extended application of strict scrutiny standard to federal programs

• Adarand VII found that Congress had a compelling interest, key sources of evidence were:

• Analysis of disparities in earnings, commercial loan denial rates, and declining

participation of MBEs after removal of race-conscious programs

• Post-Adarand, Congress revised the federal disadvantaged business enterprise (DBE) 

program to include key Adarand findings, including language on ready, willing and able 

contractor data to determine disparities.
8 Contracting Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing Disparity Studies

Minority Business Development Agency | December 2016 

disparity studies reviewed in this research contained both quantitative and qualitative analyses 

investigating the issues explicitly discussed in Adarand VII.

CONCRETE WORKS OF COLORADO

Concrete Works of Colorado, Inc. v. City & County of Denver is a notable case involving a 

challenge to municipality-enforced minority contracting programs.

14 This case is important 

for two reasons: first, it set the state and local standard for how courts evaluate compelling 

interest with respect to race-preference programs. An inference of discrimination, not proof, 

was acceptable for a government entity to justify a compelling interest in remediating 

discrimination. Also, it placed the ultimate burden of proving a program’s unconstitutionality 

on the plaintiff. Second, this was the first local minority business program upheld after the 

merits of a full trial.15 Third, the case noted that anecdotal testimony revealed behavior that 

was not merely “sophomoric or insensitive, but which resulted in real economic or physical 

harm.”16 The City and County of Denver provided credible witnesses who testified to witnessing 

discriminatory treatment motivated by race or gender.17

WESTERN STATES PAVING

Adarand challenged the implementation of the federal DBE program, as enacted by 

Title 49 Code of Federal Regulations (CFR) Part 26. Since the initial constitutional challenge 

filed by Adarand, there have been a number of legal challenges with respect to State DOT 

implementation of the federal DBE program. Although this report does not include 

a comprehensive review of every challenge to DBE programs, it is important to recognize 

that the legal history of these cases not only provides guidance to state DOTs implementing 

programs to meet the concept of narrowly tailored, but also provides guidance with respect to 

the types of evidence necessary to establish race-based programs and how to narrowly tailor 

those programs.

14 Concrete Works of Colorado, Inc. v. City & County of Denver Colorado, 36 F. 3d 1513 (10th Cir. 1994) and Concrete Works of 

Colorado, Inc. v. City and County of Denver, 321 F. 3d 950 (10th Cir. 2003) (Concrete Works IV).

15 Connecticut State Disparity Study, conducted by the Connecticut Academy of Science and Engineering, Phase I, 2013. After 

a lengthy legal history, the Tenth Circuit Court of Appeals ruled in favor of Denver, noting that Denver did not hold the burden of 

proving the existence of discrimination, rather it only had to demonstrate strong evidence of discrimination in the market to justify 

the race- and gender-based remedial contracting programs (i.e., goals).

16 Concrete Works of Colorado, Inc. v. City and County of Denver, 321 F. 3d 950 (10th Cir. 2003).

17 The Court noted: “After considering Denver’s anecdotal evidence, the district court found that the evidence “shows that race, 

ethnicity and gender affect the construction industry and those who work in it” and that the egregious mistreatment of minority and 

women employees “had direct financial consequences” on construction firms. Id. at 989, quoting Concrete Works III, 86 F. Supp.2d 

at 1074, 1073. Based on the district court’s findings regarding Denver’s anecdotal evidence and its review of the record, the court 

concluded that the anecdotal evidence provided persuasive, unrebutted support for Denver’s initial burden. Id. at 989-90, citing Int’l 

Bhd. of Teamsters v. United States, 431 U.S. 324, 339 (1977) (concluding that anecdotal evidence presented in a pattern or practice 

discrimination case was persuasive because it “brought the cold [statistics] convincingly to life”).” (emphasis added)
Chapter 2: Legal Review 9

December 2016 | Minority Business Development Agency

While ongoing litigation pertaining to state DOT implementation of federal DBE programs 

exists as of the date of this report, the constitutionality of the federal DBE program has been 

upheld in past proceedings. However, in Western States Paving Co. v. Washington State DOT

(Western States Paving),18 the Ninth Circuit Court of Appeals found that although the State 

of Washington DOT DBE program was constitutionally sound (i.e., it met the strict scrutiny on 

its face), the program was not narrowly tailored. The main issue was the extent to which the 

State of Washington considered the capacity of ready, willing and able DBE contractors, where 

capacity represents a firm-level measure of whether a particular DBE contractor has the ability 

to fulfil the requirements of a particular contract (e.g., does it have the capacity to perform the 

contracted work such that it can be considered ready, willing and able to bid on the project). 

The Ninth Circuit found that the state had not adequately supported inclusion of capacity 

considerations in determining the availability of DBE firms.19

Further the Ninth Circuit determined that even where evidence of discrimination exists in a 

recipient’s market, a narrowly tailored program can only apply to those minority groups who 

have actually suffered discrimination. Thus, under a race- or ethnicity-conscious program, for 

each of the minority groups to be included in any race- or ethnicity-conscious elements in 

a recipient’s implementation of the federal DBE Program, there must be evidence that the 

minority group suffered discrimination within the recipient’s marketplace.20

ROTHE AND DYNALANTIC

Figure 2-1 highlighted a series of federal challenges to race-conscious contracting programs 

separate from the Federal DBE DOT challenges. Figure 2-3 summarizes key findings in legal 

decisions related to Rothe Development Corporation and DynaLantic Corporation. The initial 

Rothe case21 involved a challenge to the Department of Defense’s implementation of the Small 

Disadvantaged Businesses (SDB) program, while the DynaLantic22 and second Rothe case23

involved a challenge to the use of the 8(a) set-aside program.

18 Western States Paving Co. v. Washington State DOT, 407 F.3d 983 (9th Cir. 2005), cert. denied, 546 U.S. 1170 (2006)

19 Chapter 3 covers the concept of availability in greater detail. However, the methods of determining what constitutes an 

“available” business for the purposes of analyzing disparities are often a significant point of contention among practitioners. In 

Croson, the City of Richmond failed to analyze specific MBEs, focusing only on the population of minorities in the surrounding 

geographic area. As the Supreme Court noted, the appropriate standard is to look at the specific businesses that can compete for 

and execute contracts within the particular industry and location. These are the available businesses that should be considered in 

the disparity analysis.

20 As a result of the 2005 Western States Paving decision, numerous states implementing the federal DBE program using raceconscious goals suspended existing programs to re-evaluate whether the programs were in compliance with the “narrowly tailored” 

requirements.

21 Rothe Development Corp. v. U.S. Department of Defense, et al., 545 F.3d 1023 (Fed. Cir. 2008)

22 DynaLantic Corp. v. U.S. Department of Defense, 885 F.Supp. 2d 237 (D.D.C. 2012).

23 Memorandum Opinion, United States District Court for the District of Columbia, June 5, 2015, Rothe Development Corp. 

v. Department of Defense, No. 12-CV-744 (filed D.D.C. May 9, 2012).
10 Contracting Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing Disparity Studies

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FIGURE 2-3

KEY HOLDINGS IN THE ROTHE AND DYNALANTIC CASES

The first Rothe case dealt specifically with an issue regarding “relative capacity” which, similar 

to Western States Paving, involves the computation of firms that are ready, willing and able to 

bid and perform on particular contracts. Relative capacity arguments center around whether 

a particular firm can effectively bid on and handle multiple projects, or if the firm happened to 

win a project whether it could have the resources to bid on and perform the work required on 

subsequent contracting opportunities (i.e., would winning one contract stretch firm resources 

too thin to perform other contracts at the same time). 

Key Holdings in Rothe (2008 Federal Circuit Court of Appeals):

• Despite disparity study results offered by the Department of Defense (DoD), there was no

record regarding the studies’ methodology before the federal circuit.

• Court rejected compelling interest argument because studies failed to account for relative 

capacity of firms.

• Court found that Congress did not have a strong basis in evidence before it to conclude

that the Department of Defense (DoD) was a passive participant in racial discrimination in 

relevant markets across the country.

Key Holdings in DynaLantic

• DynaLantic argued that the government did not provide sufficient evidence of prior racebased discrimination in contracting in the relevant market.

• The Court agreed, holding that while the 8(a) program was constitutional on its face, it was 

unconstitutional as implemented in DynaLantic’s situation, as the government did not 

provide sufficient evidence that the discrimination in the relevant market negatively impacts

contractors in that market.

Key Holdings in Rothe (District Court of District of Columbia, 2015)

• Rothe brought a facial challenge to the constitutionality of the 8(a) program.

• In the June 2015 ruling, the Court upheld the constitutionality of the program on its face.

• Rothe appealed, with hearings in March 2016 and a decision due later in 2016.
Chapter 3: Disparity Study Basics 11

 December 2016 | Minority Business Development Agency

CHAPTER 3

Disparity Study Basics

Conducting a disparity study is a comprehensive undertaking designed to analyze and inform 

readers on the specific issues relevant to evaluating contracting behavior within a particular 

geographic and industry area. In general, the primary purpose for conducting a disparity 

study is to assess discrimination in public contracting when evaluating race- and gender-based 

government actions designed to alleviate discriminatory behavior. As a result, the typical 

disparity study covers multiple areas addressing the legal framework, applicable procurement 

laws and regulations, definition of markets, identification of relevant businesses, measuring the 

activity levels of the different businesses providing goods or services, utilizing independent 

third-party data analysis to explore discriminatory behavior, incorporating anecdotal evidence, 

and opining on the current state of existing race-neutral and race-conscious programs.

The central feature of a disparity study is a disparity analysis that determines the levels at which 

minority, women, or disadvantaged business enterprises are utilized on public contracts. These 

contracts can be at the federal, state, or local level and may encompass multiple industries. 

Assuming a fair and equitable system of contracting, one would expect that the proportion 

of contracts and contract dollar awards to minority, women or disadvantaged business 

enterprises should be relatively close to the corresponding proportion of minority, women, or 

disadvantaged business enterprises available to perform that work in the relevant market area.24 

In this respect, disparity studies seek to test whether observed differences are significant, such 

that inferences of discrimination support the observed disparities. 

This section of the report focuses on explaining key components of the typical disparity study, 

including definitions of key terms, calculations, and methodologies.25 A typical disparity study 

has the following components broken into five general areas:

1. Foundation/Background (legal analysis, applicable laws, regulations, rules)

2. Procurement Data and Analysis (market definition and utilization analysis)

3. Availability/Disparity Computations (availability assessment and disparity

 index computation)

4. Discrimination Assessment (statistical analyses, anecdotal evidence)

5. Evaluation & Recommendations (status of current programs, future goals and strategies)

24 Disparity Study: Metropolitan St. Louis Sewer District, Mason Tillman Associates, December 2012. See the Introduction and 

p. 8-1 (as applied to subcontracts).

25 In addition, Appendix B contains a glossary of terms common to many disparity studies.
12 Contracting Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing Disparity Studies

Minority Business Development Agency | December 2016 

The information presented in this chapter is drawn from the review of disparity studies, reports, 

and summaries, and represents the most frequently observed study components. As a result, 

each disparity study, or each consultant conducting a disparity study, may vary in approach to 

these general components as necessitated by the specifics of each investigation. This chapter 

begins with a brief overview of key study report sections, before discussing some of the more 

difficult and contentious topics in greater detail.

GENERAL OVERVIEW OF DISPARITY STUDIES

Foundation/Background

Two elements generally comprise the foundation and background sections of disparity reports. 

The first is a synopsis of relevant case law and legal precedent that provides the standards by 

which consultants conduct disparity studies. The second is an understanding and overview 

of rules, regulations, and ordinances that cover existing procurement procedures or enforce 

existing contracting programs designed to alleviate or remediate contracting disparities. 

The most cited example is requirements associated with the federal disadvantaged business 

enterprise (DBE) program for federally-funded projects. Figure 3-1 outlines key components 

of the legal review and applicable laws, regulations, and rules included in disparity studies.

FIGURE 3-1

LEGAL REVIEW AND REQUIREMENTS FOR DISPARITY STUDIES 

Disparity studies typically include a legal review, as discussed in Chapter 2, but with greater 

detail and application to the relevant jurisdiction and program type. As shown on the right 

hand side of Figure 3-1, disparity studies also typically incorporate an overview of the relevant 

regulations, rules, and ordinances surrounding agency contracting. For state DOTs using 

federal funds for projects, this entails understanding the legislation in the federal DBE program, 

including the considerations of legislation such as the Transportation Equity Act for the 

Legal Analysis and Summary

• Seminal cases ( Croson)

• Strict scrutiny

• Compelling interest

• Narrowly tailored

• Jurisdictional cases

• Circuit courts (appellate rulings)

• District court

• State/county courts

Applicable laws, regulations, rules

• Existing regulations (e.g., Local 

ordinances governing minority

programs)

• Procurement rules for particularly 

agency

• Details/rules about M/WBE or DBE 

programs in place

• Federal DOT DBE rules

• Per 49 CFR 26

• TEA-21 considerations

Foundation/Background:
Chapter 3: Disparity Study Basics 13

 December 2016 | Minority Business Development Agency

21st Century (TEA-21). In contrast, disparity studies involving local or municipal agencies focus 

on the general procurement rules in place for the particular agency, municipality, or state in 

which the agency resides. 

Procurement Data and Analysis

The next element in most disparity studies is a review of the underlying procurement data used 

in conducting a disparity study. By definition, adequate procurement data (i.e., who, when, 

where, what, and how much of contracts) is a prerequisite to determining whether contracting 

disparities exist for minority business enterprises. Figure 3-2 illustrates the key components of 

procurement data analysis.

FIGURE 3-2

KEY COMPONENTS OF PROCUREMENT DATA ANALYSIS 

The left hand side of Figure 3-2 presents the concept of market definition, where a market is 

defined along both geographic and product dimensions. Market definition is an economic 

concept that looks to substitutability and is intended to determine who is competing for public 

contracts along geographic and product lines. Almost every study had an explicit definition of 

both geographic and product markets, as these are required in order to determine the extent to 

which disparities exist among competitive market participants.

With respect to the geographic market definition, some studies define the market based on 

vendor locations that account for a certain percentage (e.g., 75 percent) of dollar expenditures 

Figure 3-2

Key Components of Procurement Data Analysis

Market Definition

• Product

• Geographic

• Usually driven by analysis of

procurement records

• Where are contractors located 

receiving awards?

• In what industries (e.g., NAICS) 

are these awards?

• Typically some threshold measure 

applied to dollars to define product 

and geographic markets

• Typically state, MSA, county, city are

standard starting points

Utilization Analysis

• Identify all relevant procurement

records to:

• Determine award amounts

• Identify and classify recipients

• Typically look at both prime and

subcontracts

• Often quality issues with data, 

particularly on subcontracts

• Goal is to compute the percentage of

contracts and/or dollars going to each

group in a specific geographic and 

product market

• Example, African American

firms received 3.8% of total 

construction prime dollars 

awarded in 2009 within a 

particular jurisdiction

Procurement Data -Based Analysis:
14 Contracting Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing Disparity Studies

Minority Business Development Agency | December 2016 

in the study period. Other studies employed a less rigid threshold, but still examined vendor 

locations where the “majority” or “most” contract dollars were awarded. The most common 

units of geographic boundaries employed were state, county, city, or metropolitan statistical 

area (MSA),26 where study authors examined locations of vendors competing for and winning 

procurement awards for the particular agency. 

Existing disparity studies define product markets in a similar fashion, with a focus on assessing 

the economic parameters that indicate which firms compete for procurement actions given 

particular contract requirements. For example, a construction firm and a janitorial supplies 

firm may not compete on similar contract proposals given the difference in the industry in 

which each company operates. In determining contract disparities, it is erroneous to assume 

that these two firms are both “ready, willing and able” to compete and execute a large scale 

construction project. In fact, only the first firm is available within the defined product market 

of construction. Study authors are especially focused on identifying competing firms within 

particular product or industry categories such that any observed contracting disparities are 

narrowed to the scope of potentially affected firms within the defined product market. In 

most instances, the studies defined product markets at a very high level of aggregation, e.g., 

“Construction” or “Goods and Services.” In other instances, studies defined markets more 

narrowly, grouping firms by North American Industry Classification System (NAICS) codes. 

The right hand side of Figure 3-2 focuses on the extent to which minority-owned firms are 

utilized in contracting by a particular government agency or agencies. Utilization is a core 

disparity study concept and represents the share of prime and/or subcontract dollars that an 

agency awarded to a particular type of business enterprise during a particular time period. It 

is typically expressed as a percentage relative to the total amount awarded to all contractors 

in the same time period. Calculating utilization follows defining applicable geographic and 

product markets. Figure 3-3 illustrates a simple utilization calculation for hypothetical minority 

business enterprises (MBEs) operating in a particular market.

26 MSAs are defined by the Office of Management and Budget (OMB) and are used by multiple agencies to delineate geographic 

areas based on groupings of population data.
Chapter 3: Disparity Study Basics 15

 December 2016 | Minority Business Development Agency

FIGURE 3-3

UTILIZATION EXAMPLE USING CONTRACT AWARDS

Underlying the utilization computation are several key inputs. First, the process requires 

identifying all relevant procurement records to determine award amounts and identify and 

classify recipients by ownership type. Almost always, disparity study consultants are limited by 

the quality of the procurement data collected and maintained by the government agency. In 

some cases, data are incomplete, missing or simply not captured. A common example is that 

a number of municipalities fail to capture subcontractor data in their procurement records. 

Nevertheless, disparity studies typically attempt to examine both prime and subcontractor 

data. Second, the process leverages the definition of the geographic and product markets to 

determine the utilization within these markets.

Availability and Disparity Calculations

The market definition and utilization calculations discussed above only tell part of the 

contracting disparity story. In order to measure actual contracting disparities, studies compute 

the total number of businesses able to perform (or “available”) contract work within the defined 

market areas. The definition of an “available” business is a critical element of disparity studies, 

and as discussed in more detail below, one of the most contentious areas among consultants 

and practitioners. Figure 3-4 highlights some of the different methods that have been used 

over time to compute “available” businesses, while also outlining the disparity 

index computation.

MBE

$100

Non-MBE

$500

Contracts within a Relevant: 

• Geographic Market

• Product Market
16 Contracting Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing Disparity Studies

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FIGURE 3-4

METHODOLOGIES FOR CALCULATING AVAILABILITY AND 

DISPARITY INDICES

After determining the number of available businesses, disparity studies typically include 

disparity indices for each business type (e.g., MBE, WBE or DBE) within each product and 

geographic market. In most cases, existing disparity studies also compute these disparity 

indices over multiple time periods and for individual racial and ethnic groups (e.g., African 

American, Hispanic-American, etc.). Formulaically, the disparity index represents the utilization 

divided by the availability. Some consultants multiply the resulting index by 100 as opposed 

to expressing the result as a fraction. Figure 3-5 illustrates a simple hypothetical calculation of 

a disparity index for African American construction firms operating in a particular geographic 

market in one year.

Availability Assessment

• Measuring the number of ready,

willing and able firms by group within 

market areas

• Numerous sources/methods over the 

years

• City of Richmond’s erroneous

“population measure”

• Use of Census data on number

of businesses

• Use of bidder lists

• Use of vendor, government or

trade association lists

• Use of third-party data (e.g., 

D&B)

• Custom census approaches

• Often one of the most contentious 

areas

• Also subject to arguments regarding 

“capacity” of firms identified as ready,

willing and able

Disparity Index Computation

• Compute disparity indices for each

group within each product and

geographic market

• Determined by dividing utilization by

availability

• Often examined in “expected 

dollar” terms

• Typically a rule of thumb of 0.80

is applied, e.g., a disparity

index of less than 0.80 (or 80 if

on a 100-based scale) indicates

a substantial disparity

• Importance of statistical significance

(ruling out “chance” as a predictor of

disparity)

Availability/Disparity Computations:
Chapter 3: Disparity Study Basics 17

 December 2016 | Minority Business Development Agency

FIGURE 3-5

DISPARITY COMPUTATION EXAMPLE

In this simplified hypothetical example, the disparity index of 0.67 indicates that a disparity 

between African American construction firms and other firms exists. As a general rule of thumb, 

a disparity of less than 0.80 (or 80 if expressed on a scale that multiplies the disparity index 

by 100) indicates a substantial disparity.27 

27 See City and County of Denver Minority/Women Owned/Disadvantaged Business Enterprise Disparity Study MGT of America, 

Inc., July 29, 2013, at p. 5-5: “Since there is no standardized measurement to evaluate the levels of underutilization or overutilization 

within a procurement context, MGT has appropriated the Equal Employment Opportunity Commission’s (EEOC) “80 percent rule” 

in Uniform Guidelines on Employee Selection Procedures. In the context of employment discrimination, an employment disparity 

ratio below 80 indicates a “substantial disparity” in employment. The Supreme Court has accepted the use of the 80 percent rule in 

Connecticut v. Teal (Teal), 457 U.S. 440 (1982), and in Teal and other affirmative action cases, the terms “adverse impact,” “disparate 

impact,” and “discriminatory impact” are used interchangeably to characterize values of 80 and below. Thus, a disparity index below 

80.00 indicates a substantial level of disparity.”

African American 

Contractor

Non-African American

Contractors

Award = $100

Award = $300

African American 

Utilization = 25%

Utilization Calculation

African American

Contractors

Non-African American

Contractors

African American Availability

Availability Calculation
18 Contracting Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing Disparity Studies

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The hypothetical example is a basic example that highlights some, but not all of the 

considerations inherent in availability and disparity index computations. Additional elements 

include whether to weight the calculations by contract values, or alternatively include limits on 

the specific contracts considered in determining utilization and availability.28 Study authors also 

focus on testing the statistical significance of the observed disparity. At the most rudimentary 

level, statistical significance is an outcome or result that is unlikely to have occurred as the result 

of random chance alone.29 The greater the level of statistical significance, the less likely the 

result occurred due to random chance. Study authors typically report statistical significance 

using p-values, which provide a numerical probability that an outcome or result is due purely 

to chance.30 Many studies that include statistical significance will “test” whether the disparities 

are significant at a particular probability level or levels (e.g., at the 10 percent, 5 percent and 

1 percent levels). Disparities that are significant at the 1 percent level have greater statistical 

significance than those that are only significant at the 10 percent level.

Discrimination Assessment

In the prior section, the hypothetical example yielded a disparity ratio of 0.67 for African 

American firms in a relevant market for a particular period of time. While many disparity studies 

test whether this is a statistically significant disparity (i.e., not necessarily by “chance”), support 

for remedial relief is also apparent with analysis of both economy-wide disparities and collection 

of anecdotal evidence. The vast majority of the disparity studies reviewed contained regression 

analysis31 of public economic and employment data to demonstrate marketplace disparities 

arising from discrimination, as well as detailed collection of anecdotal evidence that supported 

the quantitative results. Figure 3-6 shows the key inputs for these two elements typically found 

in disparity studies.

28 An example is only analyzing contracts in relevant markets that are less than a certain dollar amount.

29 Wainwright, Jon and Colette Holt. NCHRP Report 644: Guidelines for Conducting a Disparity and Availability Study for the 

Federal DBE Program. Transportation Research Board, Washington, D.C. 2010, p. 98.

30 Ibid. For example, a p-value of 0.10 or 10 percent indicates that the chance a given statistical difference is due purely to 

chance is 1 in 10.

31 Regression analysis is a statistical approach to measuring the relationships among variables.
Chapter 3: Disparity Study Basics 19

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FIGURE 3-6

DISCRIMINATION ASSESSMENT ANALYSIS SUMMARY

Disparity studies that explore private sector or marketplace disparities typically include data 

analysis driven by legal precedent and existing regulations. A review of existing disparity 

studies indicates evidence of marketplace discrimination by relying on:

•	 Regression analysis comparing business formation rates between MBEs, WBEs and 

non-M/WBEs in the relevant product and geographic markets;

•	 Regression analysis comparing the earnings of owners of MBEs and WBEs compared 

to non-M/WBEs in the relevant product and geographic markets;

•	 Regression analysis comparing self-employment rates of MBEs and WBEs compared 

to non-M/WBEs in the relevant product and geographic markets;

•	 Regression analysis related to access to capital barriers, such as commercial loan denial 

rates for MBEs and WBEs compared to non-M/WBEs in the relevant product and 

geographic markets; and

•	 Analysis of market share data between MBEs, WBEs and non-M/WBEs in the relevant 

product and geographic markets.32

As shown in Figure 3-6, qualitative data analysis incorporates first-hand experiences supporting 

the presence of discrimination, while also providing information on causal factors. Disparity 

studies typically gather anecdotal evidence via interviews, focus groups, public hearings, and 

written testimony. The evolution of disparity studies incorporates a shift towards including 

more robust qualitative data to not only support quantitative findings, but also to provide 

insight into the causes of discrimination in public contracting. Over time, the collection of 

32 This is not meant to be an exhaustive list, and, not all disparity studies included all of these analyses when examining economywide discrimination.

Regression Analysis

• Analysis of private sector and potential 

discriminatory behavior

• Typically look at business formation,

owner earnings, self-employment, access

to capital and credit

• Data sources include Census (Survey of

Business Owners, American Community 

Survey), National Survey of Small 

Business Finances and local data

• Others have looked at macroeconomic 

trends, such as unemployment and 

homeownership.

Anecdotal Evidence

• Seeking first hand experiences

• Identifies causal factors of disparities

• Insufficient as a stand-alone analysis

in justifying race-based remediation,

but very powerful when used with

statistical analysis

• Typically drawn from interviews,

focus groups, public hearings and 

written testimony

Discrimination Assessment:
20 Contracting Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing Disparity Studies

Minority Business Development Agency | December 2016 

anecdotal evidence has become a critical element of well-defined and robust disparity studies. 

However, it is important to note that anecdotal evidence is insufficient as a stand-alone analysis 

in justifying race-based remediation programs, but valuable when used in conjunction with 

statistical analysis.

High quality disparity studies incorporate anecdotal evidence sourced from multiple techniques 

that is sufficient to withstand the strict scrutiny standard. In Croson, the Court defined the value 

of anecdotal evidence, indicating that anecdotal evidence is particularly valuable when coupled 

with robust statistical proof of disparities. As such, anecdotal evidence serves as an important 

causal link for assessing contracting disparities observed via disparity ratios and discrimination 

inferred from market-wide regression analysis. In fact, leading experts recognize that anecdotal 

evidence is “essential if a government is to defend a MBE program successfully.”33 Anecdotal 

evidence is a necessary step for agencies that wish to remedy contracting disparities because 

it provides context for disparity ratios and can explore outcomes related to discriminatory and 

non-discriminatory behavior. This is accomplished by drawing anecdotal evidence from a broad 

composition of stakeholders, including both minorities and non-minorities. Relying on a control 

group of non-minority firms in the anecdotal data collection effort provides a complete picture 

and reduces the potential for anecdotal evidence to be dismissed as “one-sided” or solely 

based on the perceptions of the disaffected group. The most robust and reliable disparity 

studies will implement this best practice by providing as complete an anecdotal analysis 

as feasible. 

Critics of the validity of anecdotal evidence argue that the accounts may not be sufficiently 

verified and that instead of detailing actual accounts of discrimination, the evidence may 

only present perceptions of discrimination.34 Legal proceedings have varied on the level of 

verification needed to support the importance and relevance of anecdotal evidence. In one 

proceeding, the Court rejected the need for widespread verification of anecdotal accounts 

noting that anecdotal evidence is, at its core, “a witness’ narrative of an incident told from 

the witness’ perspective and including the witness’ perceptions.”35 Alternatively, a different 

district court ruling found that “without corroboration [of anecdotal accounts], the Court 

cannot distinguish between allegations that in fact represent an objective assessment of the 

situation, and those that are fraught with heartfelt, but erroneous, interpretations of events and 

circumstances.”36 As a result of the potential pitfalls in failing to capture objective accounts of 

contracting barriers and discrimination, disparity study best practices dictate that consultants 

make every effort to use multiple data collection techniques, incorporating opinions from a 

variety of contractors in the industry and geographic market being studied, and seek to find 

verifiable anecdotal accounts. This reduces the reliance on single accounts, and instead builds 

33 Hanson, Jeffrey. Hanging by Yarns: Deficiencies in Anecdotal Evidence Threaten the Survival of Race-Based Preference 

Programs for Public Contracting. Cornell Law Review 88:1433, 1447-48 (2002).

34 936 F. Supp. At 1373.

35 Rowe, 615 F.3d at 249.

36 943 F. Supp. 1546 (S.D. Fla 1996).
Chapter 3: Disparity Study Basics 21

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a body of evidence demonstrating causal barriers and discriminatory actions that result in 

minority underrepresentation in public contracting. Evidence based on multiple accounts that 

corroborates statistical analysis including regressions and ratios presents the strongest causal 

basis for identifying barriers and discrimination within the context of a disparity study.

Evaluation and Recommendations

Figure 3-7 depicts several key elements typically detailed in the evaluation and 

recommendation sections of disparity studies.

FIGURE 3-7

EVALUATION AND RECOMMENDATION FOCI

The extent to which a disparity study includes evaluation and recommendations varies based 

on the purpose of the report. Studies conducted for litigation purposes often provide an 

evaluation of a program limited to whether the program is necessary in light of observed 

disparities, but exclude recommendations. In contrast, a disparity study conducted for federal 

DBE program purposes (e.g., by a state DOT) typically includes a comparison of results to 

existing or prior contracting goals, as well as recommendations for goals in the next period 

of performance. Disparity studies for municipalities may focus extensively on program 

evaluation and recommendations for how agencies can improve upon program performance 

in procurement data collection, contracting process and procedures, resource allocation, and 

policy actions related to race-neutral or race-based contracting programs. 

CRITICAL AND OFTEN CONTENTIOUS ISSUES

This section explores issues that involve the interpretation of disparity study results and which 

can lead to disagreement among consultants conducting disparity studies or testifying to 

disparity issues in legal proceedings. The following discussion represents insights taken directly 

from a review of the legal precedent and methodologies employed by various consultants in the 

disparity studies reviewed for this report.

Existing Program Status

• Assessment of effectiveness of

program

• Issues with prime versus

subcontracts

• What race-neutral means are in 

place?

• Where is program “failing?”

Recommendations

• Summarize ways to improve existing

programs serving MBEs and DBEs

• Several consistent themes

throughout

• Unbundling, lowering bonding, 

mentorship and training

• Needs to be a push for new 

innovative measures

Evaluation and Recommendations:
22 Contracting Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing Disparity Studies

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Defining Availability

Defining availability is an area of potential disagreement among consultants and experts in 

performing a disparity study or providing expert opinions in a legal challenge. Specifically, 

there are different methods and interpretations of how to determine whether a particular firm 

(regardless of whether it is an MBE or non-MBE) is “available” to bid on a contract and actually 

perform the work required on a particular contract. The legal precedent refers to “ready, 

willing and able” in measuring the availability of firms to use in measuring disparities. This 

characterization entails an analysis that goes beyond assuming that every firm in a particular 

relevant market should be included in the availability determination. In contrast, the term 

“ready, willing and able” ideally necessitates a comprehensive analysis at both the firm and 

contract level.

The review of existing disparity studies and legal precedent yielded numerous methods that 

consultants and experts use to define availability and compute the number of available firms 

in relevant markets. Commonly cited methods include:

•	 Vendor lists;

•	 Bidder lists (i.e., a subset of vendors);

•	 Census data (either population or business count data); and 

•	 Custom census.

The vendor list approach entails identifying available businesses from lists of vendors derived 

from multiple sources including government procurement registration lists, qualified bidder lists, 

government certification lists, business or trade association membership lists, and individual 

consultant outreach (e.g., consultant-generated list of businesses). Bidder lists represent a 

subset of vendor lists, limited to the firms that actually bid on particular projects for the agency 

or agencies subject to the disparity analysis. Census-based approaches to availability include 

using publicly-available population and firm counts, but these typically lack any firm-specific 

characteristics. Lastly, a number of consultants use a “custom census” approach to develop 

results that are representative of the jurisdiction and markets under review.

Legal challenges to race-based contracting programs provide insight into court-preferred 

methodologies. In general, the use of bidder lists as the defining measure of available firms is 

not favorable in the courts or among experts. The main argument is that bidder lists improperly 

exclude ready, willing, and able firms that are not on the bidder list, but should be when 

considering available firms. As one consultant states:
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“Some commentators... have advocated that the appropriate way to estimate 

availability is through the use of bidder lists. In my view this is a singularly 

inappropriate thing to do; using a bidder list assumes away the existence of 

discrimination. It is perfectly possible that discrimination could have infected all 

aspects of a firms work environment including being able to bid.”37

In contrast, custom census approaches address many of the shortcomings of incomplete data 

sets such as bidder lists or Census data. Several leading consultancies use this approach, 

adhering to a general framework described by Wainwright and Holt:

The custom census approach employs a seven-step analysis that (1) creates a database 

of representative [agency] projects, (2) identifies the appropriate geographic market 

for the [agency’s] contracting activity, (3) identifies the appropriate product market for 

the [agency’s] contracting activity, (4) counts all businesses in those relevant markets, 

(5) identifies listed minority-owned and women-owned businesses in the relevant 

markets, (6) verifies the ownership status of listed minority-owned and women-owned 

businesses, and (7) verifies the ownership status of all other firms. This method 

results in an overall ... availability number that is a dollar-weighted average of all the 

underlying industry availability numbers, with larger weights applied to industries with 

relatively more spending and lower weights applied to industries with relatively less 

spending. The availability figure can also be subdivided by race, ethnicity, and gender 

group, as well as by highway district, where appropriate.38

The custom census approach requires considerable time and resources. In executing the last 

steps, consultants typically conduct a comprehensive review of existing businesses, including 

outreach to verify firm-specific characteristics.

Capacity

As discussed in Chapter 2, capacity is a firm-level measure of whether a particular contractor 

has the ability to satisfy the requirements of a particular contract (e.g., does it have the capacity 

to perform the contracted work such that it can be considered ready, willing and able to bid 

on the project). Capacity is a key issue in considering availability and one that experts use in 

advocating for eliminating affirmative action programs. Capacity-based arguments involve 

the perception that smaller firms do not have the capacity to handle larger contracts, or 

alternatively, are constrained by their ability to handle multiple procurement actions at the same 

time. The implication is that when computing availability, it is erroneous to include a firm that 

is ready, willing and able if there is the belief that firm does not have the capacity to be “able” 

to execute the contract, even if it were “ready and willing.” Figure 3-8 demonstrates how the 

37 Report on the City of Chicago’s MWBE Program, David G. Blanchflower, June 10, 2009, p. 82.

38 Wainwright, Jon and Colette Holt. NCHRP Report 644: Guidelines for Conducting a Disparity and Availability Study for the 

Federal DBE Program. Transportation Research Board, Washington, D.C. 2010, p. 30.
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disparity study computation changes based on the presumption of capacity constraints resulting 

in a reduced number of “available” minority-owned firms.

FIGURE 3-8

CAPACITY SENSITIVITY EXAMPLE

In the hypothetical demonstration of Figure 3-8, reducing the number of “available” minorityowned firms by exclusion due to capacity constraints changes the outcome, such that there 

is no longer an observed disparity. More recent disparity studies include proposed solutions 

to evaluate and address capacity issues and concerns. These include:

•	 Performing a contract by contract analysis to determine “bid capacity” of every firm 

on each contract;

•	 Limiting the analysis based on contract thresholds (e.g., only examining contracts under 

a certain dollar amount while also considering the largest bids offered by firms in each 

racial, ethnic or gender group); and 

•	 Limiting the analysis and evaluation of contracting activity to subcontracts, where the 

perception is smaller dollar values lessen concerns about capacity.

Some consultants favor using firm size as a “threshold” for evaluating capacity. However, firm 

size is often not the best measure. Prior cases have illustrated that size can be an outcome of 

discrimination and that small firm capabilities can be highly elastic.39 Examples are construction 

firms that can scale up quickly in response to contract awards. 

39 Concrete Works II, 36 F.3d at 1528-29 and Concrete Works IV, 321 F.3d at 980-982.

African American 

Contract Awards = $100

All Other

Contract Awards = $300

African American Utilization

25% or 0.25

African American 

Contractors = 3

All Other

Contractors = 5

African American Availability 

37.5% or 0.375

Disparity Ratio

Substantial Disparity

African American 

Contractors = 1

All Other

Contractors = 5

African American Availability 

16.7% or 0.167

Disparity Ratio

No Disparity

Changing Availability to Exclude 2 

African American Contractors:
Chapter 3: Disparity Study Basics 25

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The level of detail with which disparity studies address capacity varies and depends on 

resources. Ideally, consultants could go firm by firm to address whether a particular firm has 

the capacity to bid on each project. However, in most cases, this is not feasible. Instead, 

many consultants use a bid capacity approach inherent in the custom census approach.40 By 

weighting contracting results by dollars, one can address capacity without any extra downward 

bias from capacity adjustments (e.g., thresholds). As noted by Wainwright and Holt:

[A capacity adjustment] reduces the availability percentage by controlling for factors 

that are likely to be directly affected by the presence of discrimination in the relevant 

markets. Whether firms have worked or attempted to work on [agency] projects have 

been awarded prime contracts or the size of those contracts should not be used to 

limit the ... availability measure. Not only is this a problem in its own right, but also it 

may hide the existence of discrimination because a downward bias in availability can 

lead to a conclusion of no significant disparity when, in fact, a disparity exists.41

The concept of “relative capacity” extends the discussion to encompass the argument that 

some firms lack the capacity to work on multiple projects at the same time. As a result, the 

belief is that any “availability” measure that fails to recognize this aspect is not sufficient. This 

is an issue for analyses that use either vendor or bidder lists, particularly where companies have 

not been contacted to identify firm-specific characteristics that might provide information on 

relative capacity. One solution is the use of weighted availability data, for example, utilizing 

dollar-weighted averages in computing availability. In this method, disparity study authors 

calculate availability on a contract by contract basis, identifying firms that are available based 

on contract type and size. So for a smaller dollar contract, there might be many more firms 

(including MBEs) that are available than for larger contracts where smaller firms do not have 

the capacity necessary to handle the requirement. Disparity consultants compute availability 

percentages for each contract, then weight the result by the dollar value of the contract. Thus, 

the higher contract value has a higher weight and greater influence on the overall availability 

percentage used in the disparity ratio computation.42

Data Biases and Errors

In an ideal situation, data exist at a level sufficient to satisfy inquiry at a disaggregated level. 

However, claims of insufficient data to analyze contracts by ethnic or racial group at a prime, 

40 One example is Arizona Department of Transportation Disparity Study Report, Keen Independent Research, 7/2015, p. 5-11, 

which states: Using a custom census approach typically results in lower availability estimates for MBEs and WBEs than a headcount 

approach due in large part to Keen Independent’s consideration of “bid capacity” in measuring availability and because of dollarweighting availability results for each contract element (a large prime contract has a greater weight in calculating overall availability 

than a small subcontract). The largest contracts that MBE/WBEs have bid on or performed in Arizona tend to be smaller than those 

of other businesses, as discussed in [the report]. Therefore, MBE/WBEs are less likely to be identified as available for the largest 

prime contracts and subcontracts.

41 Wainwright, Jon and Colette Holt. NCHRP Report 644: Guidelines for Conducting a Disparity and Availability Study for the 

Federal DBE Program. Transportation Research Board, Washington, D.C. 2010, p. 32.

42 Many studies implement the dollar-weighted average approach. One example is 2015-16 State of Indiana Disparity Study, BBC 

Research & Consulting, March 2016, p. 5-4.
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subcontract, or industry level permeate existing disparity studies. This arises as a function of 

the data collection efforts employed at the agency or government level. At best, incomplete 

recordkeeping can limit the usefulness of a study and at worst, can undermine claims of 

discrimination based on insufficient evidence. Complicating matters is that analysis of data at 

a highly disaggregated level can significantly reduce the number of data points upon which the 

disparity study draws conclusions. In this case, the question is whether just a few data points are 

sufficient to establish discriminatory behavior from a statistical perspective or if aggregation is 

necessary. Yet, aggregation can appear at odds with the legal desire to structure programs and 

actions that are narrowly tailored.

In the first case, inadequate data is largely a function of the procurement agencies’ inability 

to implement standardized contract data collection systems, personnel shortages to capture 

these data, or simply that the data are not collected or monitored. The greatest data gap 

encountered in this review was data on subcontracting activity. This is a critical issue given 

that many MBE or DBE programs focus on subcontracting goals as a means to remove 

discriminatory behavior. Disparity studies typically overcome these limitations by excluding 

certain analyses with questionable data or aggregating data across contract types (e.g., prime 

plus subcontract), industry, or ethnic/racial groups (e.g., just reporting overall MBE results). 

In reality, these data should be reported separately and only aggregated under reasonable 

assurances that aggregation increases the reliability of the results. 

Issues also exist with respect to data obtained from third-parties. For example, many 

consultants begin an availability study by using third-party data such as those from Dun & 

Bradstreet, which provide business listings and information including ownership, location, and 

receipts. Tacit acceptance of the reliability of these data with respect to classifications can be 

problematic. For example, one consultant noted significant error rates in M/WBE reporting, 

sufficient to skew the results of an availability computation.43

Yet another issue arises when analyses use small sample sizes or small contract sizes, such that 

one observation can skew the results. An example drawn from one disparity study illustrated 

how the disparity ratio for WBEs changed dramatically based on contracts awarded to a 

single company. The company was apparently certified as a WBE at one time in California, 

but was denied DBE certification in Arizona. During the study period, the company received 

a significant amount of contract awards. If one classified this firm as a WBE, it yields a WBE 

disparity ratio in excess of 1.0. (i.e., no disparity exists). However, if the firm is removed from 

the pool of WBEs due to questions about certification and ownership, the WBE disparity ratio 

changes significantly and drops below 1.0 (i.e., disparity exists). 

43 Report on the City of Chicago’s MWBE Program, David G. Blanchflower, June 10, 2009, p. 88.
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Statistical Significance

Statistical evidence is critical to disparity studies and is necessary to meet the legal standards 

of evidentiary review and support the implementation or need for a race-based contracting 

program. Croson laid out the initial framework by stating that “where there is a statistically 

significant disparity between the number of qualified minority contractors willing and able to 

perform a particular service and the number of such contractors actually engaged by the locality 

or the locality’s prime contractors, an inference of discriminatory exclusion could arise.”44 As 

a result of this and subsequent legal challenges, a key question is what defines a statistically 

significant disparity?

As discussed previously, disparity consultants typically use an 80 percent threshold to identify 

a substantial disparity. While implementing an 80 percent threshold is informative, it still 

raises questions about whether the disparity is statistically significant. In order to address this, 

disparity study consultants implement a number of tests to determine whether a disparity is 

statistically significant. These include:

•	 Parametric analysis on individual contracts. In this method, disparity study consultants 

conduct a statistical test to determine whether an observed disparity index of one group 

is statistically different from that of another group or test value. For example, one can 

conduct a t-test,45 to determine whether the observed disparity index would fall outside 

a certain range of values surrounding the test value (or mean of the other group).46

•	 Non-parametric analysis on individual contracts. This method is typically used when 

there are a lower number of contracts or high variability in dollar amounts observed in 

the procurement data. Instead of using contract values, the disparity study consultant 

will rank each contract on a whole number scale (e.g., rank order) and use these values in 

the statistical tests, as opposed to actual contract values.47

•	 Simulation analysis on expected contracting outcomes. Disparity study consultants also 

use simulation analysis to rule out “chance” as a reason for observing disparity indices 

different from 100 (or 1.0). While simulation can be performed at a contract level or an 

aggregate level (i.e., grouping many contracts), the main goal is to recreate what one 

would expect given inputs on actual bids and availability numbers for each business 

type. If the simulation exercise is unable to replicate the observed disparity indices, then 

one can realistically conclude that the observed disparity index did not occur due to 

chance and is due to separate factors such as discrimination.48

44 Croson, 488 US 469 (1989).

45 A t-test is a statistical hypothesis test based on a test statistic with a particular sampling distribution. It tests whether the means 

of two groups are statistically different based on the distribution. For example, in the context of disparity studies, a t-test might 

determine whether an observed disparity ratio is statistically significant with respect to a hypothesized value (e.g., 1.0).

46 For more information on the statistical significance in parametric testing, see Broward County Public Schools Disparity Study, 

Mason Tillman Associates, 10/2015, at p. 9-1.

47 Ibid.

48 Additional information on simulation tests can be found in Arizona Department of Transportation Disparity Study Report, 

Keen Independent Research, 7/2015, at p. 6-15.
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It is also important to note that a non-significant disparity does not mean that discrimination 

does not exist. Rather, there is insufficient information to reject the possibility that the disparity 

is either due to chance or does not exist. For example, one reason for not finding statistical 

significance in observed disparities relates to an insufficient number of data points (i.e., bids 

or contracts) necessary to perform the statistical test. A low frequency of data points does not 

indicate that discrimination does not exist. Instead, disparity study consultants look to other 

means of analyzing discrimination, including aggregating data, examining macroeconomic 

factors of discrimination (i.e., discrimination in private markets), and importantly, anecdotal 

evidence of discrimination.

Appropriate Time Period

The review of existing disparity studies identified a number of permutations when 

analyzing time periods covered in analyzing contracting disparities for procurement agencies. 

These included:

•	 A set number of procurement years, tied to the relevant fiscal year, e.g., analyzing all 

procurement actions between FY2009 and FY2011.

•	 A defined date range, e.g., January 1, 2011 through June 30, 2013;

•	 Individual calendar or fiscal years;

•	 Periods that encompass a time when race-based programs were in effect and periods 

where no race-based programs were in effect;49 and

•	 Distinguishing between pre-recession and post-recession time periods.

In many cases, the study scope may have been determined by the agency, tailored to fit 

available resources. An analysis of results during periods where race-conscious programs exist 

versus those periods without such programs can provide information on the effectiveness of 

race-conscious programs. If awards to minority contractors decline precipitously after the 

suspension of a program, a reasonable hypothesis is that the program was the primary driver in 

overcoming discriminatory behavior and increasing parity in contracting.

IMPORTANCE OF ANECDOTAL INFORMATION

Qualitative data analysis provides an opportunity for disparity studies to supplement 

quantitative data with respect to discrimination in public contracting. As noted in one 

disparity study:

The statistical data can quantify the results of discriminatory practices, while anecdotal 

testimony provides the human context through which the numbers can be understood.50

49 This occurred frequently during the 2006 through time period when many state DOTs suspended existing race-conscious 

programs in light of the Western States Paving decision.

50 Broward County Public Schools Disparity Study, Mason Tillman Associates, 10/2015, p. 8-1.
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There are several ways in which existing disparity studies collect anecdotal information, 

including a combination of surveys, personal interviews, focus groups, public hearings, and 

written testimony. Some studies favored a particular approach (e.g., oral history through 

personal interviews), while others used combinations of methods across multiple forums. Most 

disparity studies contained information on the nature and importance of anecdotal evidence. 

In some cases, disparity studies leveraged anecdotal evidence from other disparity studies 

conducted in nearby or overlapping geographic regions for similar time periods.51 One 

study noted:

Anecdotal research is a widely accepted research methodology that is based upon 

observations, interviews, data collected during focus groups, survey responses and 

other anecdotal data collection methods. The collection and analysis of anecdotal 

data is used in conjunction with other research tools to provide context, and to help 

explain findings based on quantitative data analysis. Unlike conclusions derived from 

other types of analysis in this report, the conclusions derived from anecdotal analysis 

do not rely solely on quantitative data. Anecdotal analysis also utilizes quantitative 

data to describe the context and examined social, political, and economic environment 

in which all businesses and other relevant entities applicable to the survey operate.52

Disparity study protocols evolve over time, and more recent disparity studies typically include 

multiple methods for collecting qualitative data from a large set of respondents. As noted 

previously, verification of actual accounts of discriminatory behavior from a wide crosssection of key stakeholders is far superior to drawing upon a few select, unverified accounts. 

This is necessary to separate perception from reality. For example, in certain cases, firms 

and individuals that do not win a particular contract might feel the principal reason was 

discrimination, even if discrimination played no role in failing to secure the contract. By 

obtaining actual, verifiable accounts from multiple participants, criticisms about sample size and 

relying on only a handful of claims of discriminatory behavior are refuted and a bigger picture of 

actual contracting experiences emerge. In some cases, the benefit of the anecdotal evidence 

is to recognize that discrimination might not be the root cause of disparities, or alternatively, 

that race-neutral solutions might exist to alleviate perceptions of unfair treatment in public 

contracting. One report noted:

It is essential to properly gather comprehensive anecdotal evidence that specifically 

addresses discrimination in a contracting market and discrimination that affects 

business formation and growth to support a government race and gender preference 

program. When gathering anecdotal evidence, researchers also must be able to 

distinguish between evidence of discrimination and a general lack of access.53

51 For example, in its disparity study for the Georgia DOT, BBC Research & Consulting also considered anecdotal evidence from 

other disparity studies conducted for Clayton County and City of Augusta, see 2012 Georgia Department of Transportation Disparity 

Study, BBC Research & Consulting, 6/2012, at J-3-J-5.

52 Disparity Study for Denver Public Schools, MGT of America, October 17, 2014, at p. 6-1

53 Connecticut State Disparity Study, the Connecticut Academy of Science and Engineering, Phase I, August 2013, p. 19.
30 Contracting Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing Disparity Studies

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In order to evaluate the key difference between discrimination and general lack of access, most 

disparity studies include viewpoints from both minority and majority firms. In this respect, the 

disparity study alleviates concerns about focusing too narrowly on a single viewpoint, while at 

the same time collecting additional anecdotal evidence to evaluate claims of discrimination. 

Traditional methods of surveys, personal interviews, focus groups, and public hearings provide 

a substantial amount of anecdotal evidence from a diverse population. The particular method 

utilized is often a function of the disparity study consultant, agency resources, and regulations 

in place requiring public input on the disparity study process. Nevertheless, the best types of 

anecdotal evidence will remain those accounts that are drawn directly from actual contracting 

participants who can share verifiable experiences with disparity study consultants.
Chapter 4: Disparities and Marketplace Discrimination Exist 31

December 2016 | Minority Business Development Agency

CHAPTER 4:

Disparities and Marketplace 

Discrimination Exist

This section of the report summarizes the results of an investigation into contracting disparities 

and quantitative evidence observed in 100 disparity studies, summaries, and reports, collectively 

“the disparity studies” or “the set of disparity studies.” Appendix A of this report includes a 

list of each disparity study reviewed as part of the research effort. Identification of potential 

disparity studies entailed a thorough and comprehensive search of publicly-available studies 

posted on agency, consultant, or other websites. A greater focus was on disparity studies 

published in the last ten years to provide insight into the existing and recent public contracting 

landscape for minority business enterprises (MBEs). While the search was comprehensive, 

it does not purport to capture all publicly available disparity studies that might be available. 

Instead, the set of disparity studies represents a sufficient base upon which to analyze the 

methods, results and conclusions that disparity study consultants undertake to explore factors 

that cause and remedies that address contracting disparities facing MBEs. 

This chapter explores the disparity ratios contained in the set of disparity studies, as well 

as the marketplace discrimination evidence derived from regression analysis and other 

quantitative measures.

DESCRIPTION OF THE SET OF DISPARITY STUDIES

Disparity studies used in this report are drawn from a search of publicly available websites 

for local and state contracting agencies, consultancies, or other websites. The process for 

identifying disparity studies involved general internet searches on key terms and combinations 

of key terms, including “disparity,” “disparity study,” “contracting disparities,” “anecdotal 

evidence,” “contracting,” “barriers,” and “discrimination.” In addition, studies were also 

identified through links in legal cases, articles and government notices. The results contained 

in this report do not exclude any studies that were identified through the internet search 

process. To that end, all studies in the set are publicly available, permitting other municipalities 

or interested parties to replicate the analysis contained herein.54 The studies span a range 

of industries and geographic locations, and examine various program types depending on 

the agency for which the study was conducted. While some cities are represented multiple 

times in the set, the studies usually cover separate time periods or separate agencies within 

a municipality, such that there is not double counting of contracting data and disparity ratios. 

54 Appendix A lists each study and the associated hyperlink where the study is available. As of the publication of this report, two 

study links were no longer active, but the study or summary was still included.
32 Contracting Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing Disparity Studies

Minority Business Development Agency | December 2016 

Notable characteristics of the set of disparity studies include:

•	 The disparity studies covered state or local agencies in 31 different states, including 

representation from every major Census region.

•	 20 different lead organizations authored the disparity studies, dominated by several 

large private, for-profit consultancies. However, most studies involved a team approach, 

including the use of small or disadvantaged business enterprises as part of the research 

team.55

•	 Consistent with the research goal of examining contemporary data, most studies 

encompassed more recent time periods. Of the 100 studies, 40 were published since 

the beginning of 2011, and 81 were published since 2007.56

As noted in the previous chapter, disparity studies include a myriad of combinations for 

computing and reporting disparity ratios and results. Indeed, while there were consistent 

reporting patterns among different studies by a primary consultant, there were often large 

differences in reporting patterns across consultants.57 The lack of standardization in how 

consultants calculate and present disparity ratios underscores the importance of interpreting 

disparity study results appropriately. Specifically, the results of any disparity study are rooted 

in the assumptions and data that consultants use for the particular contracting agency and 

behavior under investigation. As a result, the 100 studies reviewed for this report include 

studies conducted by different consultants for different government agencies, across many 

different geographic areas, related to different time periods and using different methodologies. 

As noted in Chapter 3, different methods exist for calculating utilization, availability and 

capacity, including differences in underlying product and geographic market definitions. In 

addition, numerous differences exist in reporting disparity ratios, including:

•	 Selection of time period for computations: Some studies computed disparity ratios for 

each calendar or fiscal year under investigation (e.g., individual ratios for 2010, 2011, and 

2012). Other studies only reported an aggregate disparity ratio for multiple years (e.g., a 

single disparity ratio encompassing contracting data for 2010 through 2012).

•	 Different grouping of minorities: Some studies focused solely on minority business 

enterprises (MBEs), others disaggregated data and disparity ratios by specific ethnic 

and racial groups. However, even in these instances different consultants often treated 

the “Asian American” group differently, where some consultants grouped all “Asian 

Americans” together, while other consultants reported Pacific Asian Americans and 

55 Primary lead organizations with greatest representation included BBC Research & Consulting, D.J. Miller & Associates, D. 

Wilson Consulting, Griffin & Strong, Keen Independent Research, Mason Tillman Associates, MGT of America, and NERA (usually 

with Collette Holt Associates as part of the team).

56 This is also reflects that more recent studies were more likely to be publicly-available and linked on active websites. Older 

studies are often archived or not publicly-accessible via the internet.

57 For example, consultancies like NERA and Mason Tillman Associates typically employed similar approaches in executing a 

disparity study, although methodological approaches differ when comparing a typical NERA study with a Mason Tillman Associates 

study. This does not mean that one study is necessarily “better” than the other, but reflects the dynamic and differing points of view 

that necessitate careful reading and interpretation of each study on its own merits. 
Chapter 4: Disparities and Marketplace Discrimination Exist 33

December 2016 | Minority Business Development Agency

Subcontinent Asian Americans separately. Some studies included data on Native 

Americans, while others did not. For the purposes of this study, the disparity ratio 

analysis does not include separate categories for Subcontinent Asians or Native 

Americans.58

•	 Different funding sources or geographic areas within the overall area of study: In certain 

cases, consultants reported different iterations of disparity ratios based on the source of 

funding and geographic area. For example, while a disparity study might include statewide contracting for a particular Department of Transportation, the consultant would 

also report additional disparity ratios based on particular geographic regions within the 

state and whether the source of contracting dollars were federal, state or local, even 

though the primary report purpose might have been to compute a statewide disparity 

ratio to use in goal setting.

The computational and reporting differences prohibit a true “apples to apples” comparison 

of disparity ratios, given the unique characteristics applicable to each disparity study. Despite 

methodological and computational variations across studies, there are wide-ranging similarities 

in the disparity ratio results and findings of each study. Foremost is the notable observation 

of substantial contracting disparities prevalent for minority-owned businesses in each of these 

studies, often for similar ethnic and racial groups across similar industries and over many years. 

This includes the underutilization of MBEs in public contracting in multiple geographic areas 

and industry sectors such as construction, professional services, other services and architecture 

and engineering.59

In order to illustrate these broad and extensive disparity observances, this study relied on a 

canvassing effort that cataloged 2,385 disparity ratios drawn from the selected set of disparity 

studies. It is important to recognize that these disparity ratios do not represent the entire set of 

all disparity ratios included in each report. Rather, the cataloging process involved a top-down 

approach to capture the disparity ratios consultants presented in executive summaries, findings 

and conclusions that addressed potential contracting disparities in a particular geographic 

and product market for a particular racial or ethnic minority classification, or across all MBEs 

or M/WBEs. In this respect, these are the primary disparity ratios that consultants are using 

to inform readers of the nature and scope of potential underutilization of affected businesses. 

Nevertheless, the set of 2,385 disparity ratios includes observations at different levels of 

58 The reason for exclusion was due to infrequent observations and minor contracting amounts (i.e., number and dollars) 

reported for these groups of businesses. It does not imply that discrimination either exists or does not exist for these groups of 

business owners.

59 The most robust disparity studies separated architecture and engineering as a different product market from professional 

services, such that there is no double counting inherent in computing disparity ratios for these two industrial sectors.
34 Contracting Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing Disparity Studies

Minority Business Development Agency | December 2016 

aggregation, which lessens or prohibits direct comparison but still allows recognition that 

disparities exist.60

Furthermore, as noted above, some studies include numerous disparity ratio iterations that 

are subsets of an overall disparity ratio summary. As a result, these data are not “new” ratios 

given that the data are already subsumed in the overall disparity ratio calculation. This study 

does not rely on the subsets of observations in presenting disparity ratios, as every effort was 

made to avoid the influence of double counting in disparity ratio reporting for each study.61 

Indeed, this is an area for future investigation, where a more comprehensive set of data of all 

disparity ratios, including specific characteristics of each ratio, can be generated and distilled 

for additional analysis.

For the purposes of this study, the analysis of disparity ratios provides the foundation for 

analyzing anecdotal evidence designed to elucidate the core causes of MBE underutilization in 

public contracting, including both discriminatory and non-discriminatory factors. An analysis 

of potential discriminatory factors assumes a priori that disparities exist. The next few sections 

of the report provide confirmation that disparities, as reported in the selected set of disparity 

studies, are widespread and pervasive. Furthermore, while there may be conformation bias62

inherent in the studies, they nevertheless provide the context for illustrating that MBEs are 

substantially underutilized in the relevant geographic areas and industries, sufficient to use 

these areas as the basis for exploring causal factors identified in Chapter 5.

OBSERVED DISPARITIES IN MINORITY CONTRACTING

A general trend in the review of disparity study results is that disparities in contracting are 

extensive among minority business enterprises regardless of race, ethnicity, industry, or 

geography. Figure 4-1 summarizes the overall findings with respect to the split of contracting 

disparity ratios among categories of minority-owned firms. 

60 One area of concern is whether or not aggregation over multiple years inadvertently excludes observations where disparities 

would not exist. For example, if a study concluded a disparity for African American prime construction contractors in a 2012-2014 

aggregate time period, it is possible that an annual investigation might indicate that a disparity existed in 2012, but not in 2013 or 

2014, yet the 2012 results drive the overall “aggregate” result. In many instances, consultants aggregate data over multiple years 

not to obscure results, but to increase the robustness of the results by including more data to avoid any outliers.

61 The one area that includes “double counting” by definition is reporting an aggregate MBE or M/WBE figure, which includes 

data on all ethnic and racial minority groups.

62 As discussed previously, the selected set of studies is not an independent representative sample of all public contracting in the 

United States. In many cases, the particular state or local agency may have commissioned a study to decide whether to continue 

or modify an existing race-conscious program which assumed a previous determination of disparity in contracting. Although the 

studies reviewed were not subject to litigation, it nevertheless raises questions about whether the study was more likely to find a 

disparity as compared to a situation where a random agency and market is selected for investigation.
Chapter 4: Disparities and Marketplace Discrimination Exist 35

December 2016 | Minority Business Development Agency

FIGURE 4-1

DISPARITY RATIO DISTRIBUTION FOR MINORITY-OWNED BUSINESSES

Figure 4-1 shows that 78.2 percent of contracting disparity ratio observations were less than 

0.8 (or 80 on a scale of 100), indicating a “substantial” disparity. In addition, over 82 percent of 

observations were below 1.0, indicating a disparity. 

Analysis of the contracting disparities by industry, race, and ethnicity mirror the overall trend of 

substantial disparities for minorities. Figure 4-2 presents data based on racial/ethnic group and 

industry, aggregated across all disparity study time periods. The figure contains information 

on African Americans, Asian Americans, Hispanic Americans and overall M/WBEs in the major 

industries of construction, professional services (“Prof Svcs”), goods and supplies (“Goods”), 

architectural and engineering (“A&E”) and other services (“Other Svcs”).63

63 Most studies separated architecture and engineering construction-related services from the overall category of professional 

services, using NAICS codes and specific information about firms and contractors to determine the appropriate product market.

78.2%

4.1%

17.7%

<0.8

>0.8 but <1.0

>1.0 n = 2,385 
36 Contracting Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing Disparity Studies

Minority Business Development Agency | December 2016 

FIGURE 4-2

DISPARITY RATIO OBSERVATIONS BY INDUSTRY 

AND MINORITY CATEGORY

The red portion of Figure 4-2 includes all disparity ratios in excess of 0.8, including those that 

exceed 1.0. In all cases, the number of ratios less than 0.8 exceeds the number greater than 0.8. 

As a result, there were no observations where an ethnic or racial minority had a larger number 

of disparity ratios in excess of 1.0 (i.e., overutilization) when examining the major industry 

groupings of construction, professional services, goods, or architectural and engineering 

services. Table 4-1 summarizes the same data in tabular form, but distinguishes between 

observed disparities (less than 1.0) and substantial disparities (less than 0.8). The largest 

absolute number of observed substantial disparity ratios was for African American owned 

construction businesses, with 170 observations less than 0.8. The groups and industry with the 

highest proportion of substantial disparities were Asian American professional services, African 

American construction services, and Hispanic American architecture and engineering services. 

0

50

100

150

200

250

Construction

Prof Svcs

Good

s

A&

E

Other 

Svcs

Construction

Prof Svcs

Good

s

A&

E

Other 

Svcs

Construction

Prof Svcs

Good

s

A&

E

Other 

Svcs

Construction

Prof Svcs

Good

s

A&

E

Other 

Svcs

African American Asian American Hispanic American Total M/WBE

Observations

<0.8 >0.8
Chapter 4: Disparities and Marketplace Discrimination Exist 37

December 2016 | Minority Business Development Agency

TABLE 4-1

DISPARITY RATIO OBSERVATIONS BY MINORITY CATEGORY 

AND INDUSTRY 

As discussed previously, numerous disparity studies include analysis into whether observed 

disparity ratios are statistically significant. For those disparity studies that explicitly indicated 

whether a disparity ratio was statistically significant or not, approximately 65 percent of all 

disparity ratio observations were classified as statistically significant by study authors. However, 

this may be a conservative estimate since some disparity study consultants did not report 

significance at the individual disparity ratio level, but instead presented significance at an 

aggregate level through simulation. Lastly, 99 percent of statistically significant disparities 

identified by study authors were less than 0.8, lending strong support for discriminatory 

behavior in contracting.

The median disparity ratio across all observations was only 0.19, which is considerably lower 

than the 0.8 threshold for defining a substantial disparity.64 When disaggregating the data 

by race, ethnicity, and industry, the median values were lower than the overall median except 

for the combined M/WBE group. Table 4-2 illustrates the influence of WBEs on the overall 

64 Approximately 31 percent of observed disparity ratios are zero, indicating that there is no utilization of a particular ethnic or 

racial group for a particular product market in a particular geographic area. These represent disparity ratios where one would 

expect minority representation, i.e., availability is not zero, despite utilization being zero. Nevertheless, even if one excludes 

disparity ratios of zero as potential outliers, the median disparity ratio is still 0.43, which indicates substantial underutilization of 

minority-owned businesses.

Group Industry Count < 1 < 0.8 1 0.8

African American Construction 194 173 170 89.2% 87.6%

Professional Services 147 120 116 81.6% 78.9%

Goods and Supplies 127 90 86 70.9% 67.7%

Architecture & Engineering 102 88 85 86.3% 83.3%

Other Services 101 73 71 72.3% 70.3%

Asian American Construction 193 159 151 82.4% 78.2%

Professional Services 143 132 127 92.3% 88.8%

Goods and Supplies 119 89 86 74.8% 72.3%

Architecture & Engineering 102 87 80 85.3% 78.4%

Other Services 105 88 81 83.8% 77.1%

Hispanic American Construction 189 149 139 78.8% 73.5%

Professional Services 133 110 106 82.7% 79.7%

Goods and Supplies 119 98 93 82.4% 78.2%

Architecture & Engineering 88 76 74 86.4% 84.1%

Other Services 106 94 92 88.7% 86.8%

Total M/WBE Construction 80 64 51 80.0% 63.8%

Professional Services 40 34 33 85.0% 82.5%

Goods and Supplies 43 35 29 81.4% 67.4%

Architecture & Engineering 44 35 32 79.5% 72.7%

Other Services 26 22 21 84.6% 80.8%

Disparity Ratio Observations Percent Less Than:
38 Contracting Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing Disparity Studies

Minority Business Development Agency | December 2016 

disparity results. Specifically, disparity ratios for WBEs are generally higher than those for MBEs, 

although both are often below 1.0 and 0.8.

TABLE 4-2

MEDIAN DISPARITY RATIOS BY MINORITY CATEGORY AND INDUSTRY 

The data drawn from the disparity study review indicate substantial disparities not only in the 

aggregate, but also across subsets of different ethnicities, races, and industries. Furthermore, 

the disparities exist across different time periods and geographic regions. Disparities are also 

prevalent in periods and jurisdictions where race-based programs exist to purportedly support 

MBEs or DBEs in contracting.

SUBCONTRACTING ANALYSIS

Many race-based programs focus on providing opportunities to MBEs via subcontracting goals. 

Subcontracting remains an important avenue for MBE business development and growth and 

warrants exploration with respect to contracting disparities. Yet, some disparity studies either 

failed to include subcontracting as a stand-alone analysis or aggregated subcontracting with 

prime contracting in the computation of disparity ratios. The previous chapter highlighted 

some of the reasons for a lack of subcontracting analysis, although it is largely driven by the lack 

of robust and accurate data at the subcontracting level. Nevertheless, most disparity studies 

Group

Asian American

Total M/WBE

Industry

Construction

Professional Services

Goods and Supplies

Architecture & Engineering

Other Services

Other Services

Construction

Professional Services

Goods and Supplies

Architecture & Engineering

Other Services

Count

193

143

119

102

105

106

80

40

43

44

26

Median

0.072

0.000

0.110

0.036

0.039

African American Construction

Professional Services

Goods and Supplies

Architecture & Engineering

Other Services

194

147

127

102

101

0.160

0.205

0.293

0.041

0.444

Hispanic American Construction

Professional Services

Goods and Supplies

Architecture & Engineering

189

133

119

88

0.126

0.025

0.044

0.003

0.034

0.612

0.550

0.560

0.488

0.535
Chapter 4: Disparities and Marketplace Discrimination Exist 39

December 2016 | Minority Business Development Agency

acknowledge the importance of investigating subcontracting and the studies that can draw 

upon the greatest resources often include subcontracting-specific analyses.

Studies with subcontract-level analyses typically involve the disparity study consultant 

working in tandem with the contracting agency to identify subcontracting activity. While 

the methodologies might differ based on data availability and a particular consultant, 

subcontracting analyses typically follow a similar pattern as prime contracting analyses. 

Specifically, the disparity study will compute both utilization and availability for MBEs but limited 

to subcontracting activity. With respect to utilization, many agencies do not have sufficient 

resources to track subcontracting activity. As a result, disparity study consultants often work 

with the agency to examine all prime contracts, or at least a representative sample of prime 

contracts, in order to “reconstruct” subcontracts issued by the agency in the relevant product 

markets.

Determining the availability of subcontractors is theoretically similar to determining availability 

of MBEs to act as prime contractors. However, given the differences in how disparity study 

consultants compute availability, there are also differences in computations of subcontractor 

availability. For those studies that separated subcontracting and prime contracting for MBEs 

and used a custom census, firms were typically asked if they performed as a subcontractor, 

prime or both. Those that replied either subcontracting or both are included in the 

subcontractor availability analysis. Other studies that rely on lists and the non-customcensus methods described in Chapter 3 often rely on past experience as a subcontractor in 

determining availability. For example, those MBEs that are active subcontractors on agency 

contracts satisfy the “willing” component of the “ready, willing and able” requirements.

Despite differences in treatment of subcontracting activity, disparity studies that included 

subcontracting as a stand-alone disparity analysis typically yielded results consistent with 

those observed at the prime level. As an illustrative example, Table 4-3 presents a summary of 

subcontracting disparity conclusions for a set of disparity studies conducted by Mason Tillman 

Associates (MTA), which typically included a uniform approach to analyzing subcontracting data 

and results.65 Table 4-3 presents a summary of instances where MTA identified underutilization 

as indicated by a disparity ratio less than 1.0. 

65 While this research section highlights Mason Tillman Associates, many other disparity consultants and studies analyzed 

subcontracting activity on a stand-alone basis. In these cases, studies also took steps to ensure that double counting of 

subcontracting activity (e.g., as part of the prime analysis) was either acknowledge and/or addressed.
40 Contracting Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing Disparity Studies

Minority Business Development Agency | December 2016 

TABLE 4-3

SUBCONTRACTING SUBSET ANALYSIS

The data indicate that in almost every case (78 out of 84), MBEs were underutilized on 

subcontracts, indicating a disparity less than 1.0. In addition, MTA identified that 54 percent 

of the underutilized observations were statistically significant.

QUANTITATIVE DATA ON MARKETPLACE DISCRIMINATION

The existence of a numerical disparity drawn from public contracting data does not equate 

to a conclusion of discrimination. To bridge this causal gap, disparity study consultants use 

a combination of quantitative and qualitative analyses to explain why disparities arise in the 

context of public contracting, including the extent to which discrimination drives disparities. 

One area of investigation focuses on a statistical investigation of the possible existence of 

discrimination in the private sector where contacting activity takes place. 

In these cases, the presence of discrimination in the private sector provides additional 

information on the root causes of potential contracting disparities, regardless of the extent of 

public intervention. In addition, an analysis of private sector activity may also indicate bias in 

the business availability calculations, where the presence of prior discrimination can suppress 

Subcontracting Analysis using Mason Tillman Associates Disparity Studies

Agency/Jurisdiction

Year of

Report

Total 

Disparity 

Observations

Disparities 

Indicating

Underutilization % of Total

(a) (b) (c) (d) (e) = (d)/(c) 

Alameda County 2004 9 8 89%

Broward County Schools 2015 6 6 100%

City of Arlington 2010 3 3 100%

City of Cincinnati 2015 6 4 67%

City of Davenport 2009 2 2 100%

City of Houston 2006 6 6 100%

City of Jacksonville 2013 6 3 50%

City of New York 2005 9 9 100%

City of St. Louis 2015 2 2 100%

Commonwealth of Pennsylvania 2007 6 6 100%

Illinois DOT 2011 2 2 100%

Illinois Toll Highway Authority 2011 6 6 100%

San Francisco BART Authority (w/goals) 2009 6 6 100%

San Francisco BART Authority (w/o goals) 2009 6 6 100%

Washington Suburban Sanitary Commission 2010 9 9 100%

Total 84 78 93%
Chapter 4: Disparities and Marketplace Discrimination Exist 41

December 2016 | Minority Business Development Agency

the number of available MBEs in the marketplace. This will lead to an underrepresentation 

of MBEs in the disparity ratio computation for the public agency contracting activity. The 

remainder of this chapter discusses how disparity studies utilize economic data to analyze 

marketplace discrimination, while the next chapter focuses on qualitative data indicating both 

discriminatory and non-discriminatory reasons for observed disparities.

The legal precedent discussed in Chapter 2 provides the foundation for examining marketplace 

data to determine whether public agencies passively participate in markets influenced by 

discrimination. Specifically, both Adarand VII and Concrete Works IV discussed the importance 

of analyzing evidence of marketplace discrimination against MBEs.66 This is because marketbased evidence of discrimination can be used to support a compelling interest in remedying 

past or present discrimination through the use of affirmative action legislation.67 In other words, 

the analyses seek to address the fundamental question of whether or not the market functions 

properly for all businesses, regardless of the race of business ownership. If discrimination 

prevents a well-functioning market, there is a demonstrated need for government intervention 

in those affected sectors where the federal, state or local agency procures goods and services 

to ensure that the government does not passively participate in established patterns of 

discrimination.

Disparity studies typically include evidence of marketplace discrimination through statistical 

analyses of private sector data, given that these contracting activities are generally not subject 

to race-conscious or affirmative action programs. As noted in one disparity study:

Statistical examination of disparities in the private sector of the relevant geographic 

market is important for several reasons. First, to the extent that discriminatory 

practices by contractors, suppliers insurers, lenders, customers, and others limit the 

ability of [MBEs] to compete, those practices will impact the larger private sector as 

well as the public sector. Second, examining the utilization of [MBEs] in the private 

sector provides an indicator of the extent to which [MBEs] are used in the absence of 

race- and gender-conscious efforts, since few firms in the private sector make such 

efforts. Third, the Supreme Court in Croson and other courts acknowledge that state 

and local governments have a constitutional duty not to contribute to the perpetuation 

of discrimination in the private sector of their relevant geographic and product 

markets.68

Regression analysis is one of the most commonly employed statistical methods used to analyze 

private sector data in the context of disparity studies. As noted in Chapter 3 and Figure 3-6, the 

66 Adarand Constructors, Inc. v. Slater, 228 F.3d 1147 (10th Cir. 2000) and Concrete Works of Colorado, Inc. v. 

City and County of Denver, 321 F. 3d 950 (10th Cir. 2003).

67 Ibid, at 1166-67 (Adarand VII) and at 976 (Concrete Works IV).

68 The State of Minority- and Women-owned Business Enterprise: Evidence from Missouri. NERA Economic Consulting. 

June 28, 2012, p. 120.
42 Contracting Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing Disparity Studies

Minority Business Development Agency | December 2016 

regression analysis of marketplace discrimination typically involves analysis of the 

following areas:

•	 Business formation rates between minorities and non-minorities;

•	 Self-employment or business earnings between minority business owners and nonminority business owners;

•	 Analysis of commercial loan denial rates for minority and non-minority business owners;

•	 Minority and non-minority employment representation among certain industries, 

including management positions; and

•	 Home ownership rates and mortgage denial rates among demographic groups.

At the heart of regression analysis is the ability to estimate the effect of a set of independent 

variables (e.g., characteristics such as age, race, education, etc.) on an outcome variable of 

interest (e.g., business formation rates or earnings). As a simple example, consider an analysis 

of business owner earnings for a set of companies or individuals in similar geographic and 

product markets at a similar point in time. By controlling for similarities in other characteristics 

such as education and labor force experience, one can determine whether any differences exist 

in earnings due to other factors, such as race and ethnicity. These analyses demonstrate the 

quantitative effects of discrimination on business formation rates and earnings and provide 

evidence to support the need for race-conscious contracting programs, designed to remedy the 

effects of past or ongoing discrimination. 

Figure 4-3 provides an example of the regression modeling that National Economic Research 

Associates (NERA) undertook as part of its disparity study for the State of Missouri. In this 

example, NERA hypothesized that multiple factors influence business owner earnings, among 

them, race and ethnicity. It used American Community Survey data to evaluate the quantitative 

effects of racial indicator variables on business owner earnings and found that, consistent 

with an inference of discrimination, race negatively influenced business owner earnings for 

multiple racial groups while controlling for other factors. That is, all other factors being 

equal, the regression analysis demonstrates that minority business owners earned less than 

their comparable non-minority counterparts, consistent with a finding of discrimination. The 

regression data and findings were consistent across multiple product and geographic markets.
Chapter 4: Disparities and Marketplace Discrimination Exist 43

December 2016 | Minority Business Development Agency

FIGURE 4-3 

REGRESSION MODELING AND RESULTS EXAMPLE

The example demonstrates the utility of regression analyses, which when controlling for 

differences in other characteristics, can provide a reasonable estimate of the impact that race 

has on observed differences in business earnings. A disparity study can use regression to 

show that discrimination exists in the private sector, which supports potential government 

intervention through a race-conscious program for public contracting. For example, the NERA 

analysis found that African American business owners earned 39 percent less, on average, 

than similarly situated non-minority males (e.g., males that had similar ages, level of education 

and other ownership characteristics), such that the difference or disparity is due to the race 

of the business owner. The result was statistically significant, such that a strong inference of 

discrimination exists with respect to the relationship between race and business owner earnings. 

NERA computed similar results when controlling for the product market (e.g., Construction) 

or geographic market (e.g., the Missouri DOT market area in that particular study). As to the 

impact of potential discriminatory behavior, NERA succinctly summarized the major issues 

related to its regression analysis of business owner earnings:

Method: Regression analysis “testing” the numerical effect of business 

owner race on earnings for similarly situated owners (i.e., controlling for 

other owner characteristics

Question: Does the race of a business owner influence business owner 

earnings when controlling for other characteristics (e.g., age, education, etc.)?

Data Source: Census Bureau’s American Community Survey

(ACS), 2006-2010 Five Year Data Set

Results: Statistically significant business owner earnings

disparities exist for multiple racial groups, including African 

Americans, Hispanics, Asians, Native Americans, and non

minority women.

-

Earnings Level Decrease Relative to Similarly Situated 

Non-Minority Males:

• African Americans = 39.0 percent lower

• Hispanics = 22.5 percent lower

• Asians = 10.3 percent lower

• Native Americans = 38.7 percent lower

• M Non- inority Women = 39.4 percent lower
44 Contracting Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing Disparity Studies

Minority Business Development Agency | December 2016 

As was the case for wage and salary earners, minority and female entrepreneurs earn 

substantially and significantly less from their efforts than similarly situated nonminority 

male entrepreneurs. The situation, in general, differs little in the [relevant geographic] 

market area than in the nation as a whole. These disparities are a symptom of 

discrimination in commercial markets that directly and adversely affect DBEs. Other 

things equal, if minorities and women are prevented by discrimination from earning 

remuneration from their entrepreneurial efforts comparable to that of similarly situated 

nonminority males, then capital reinvestment and growth rates may slow, business 

failure rates may increase and, as demonstrated in the next section, business formation 

rates may decrease. Combined, these phenomena result in lower DBE availability levels 

than would be observed in a race- and gender-neutral market area. As this chapter 

demonstrates, discrimination depresses business owner earnings for women and 

minority entrepreneurs. Business owner earnings, however, are often directly related 

to whether an owner has the capital to reinvest (firm size), how long a firm survives 

(firm age), and how much money a firm takes in (individual firm revenues). These 

observations illustrate why employment size, years in business and individual firm 

revenues are especially inappropriate factors to consider in any sort of “capacity” 

type analysis.69

Disparity studies often include multiple analyses using a variety of different dependent 

variables, such as wages, business formation, or access to credit (via loan denials or interest 

rates). In each case, the regression model may differ in terms of explanatory variables, but 

the purpose of the model is to determine whether marketplace discrimination exists in areas 

where a public agency procures goods and services. Disparity studies that include regression 

results demonstrating that minority business status is a statistically significant factor leading to 

observed disparities help build the case for discrimination in the marketplace. Thus, even if 

an agency does not actively contribute to discriminatory behavior, it can implement programs 

designed to remedy its passive role and achieve greater parity in contracting.

Disparity studies rely on multiple data sources to collect information on formation, earnings, 

loan denials, and other business operations. These sources include the ACS, the U.S. Census 

Bureau’s Survey of Business Owners and Self-Employed Persons (SBO), the Federal Reserve 

Board’s Survey of Small Business Finances (SSBF), and mail or telephone surveys conducted for 

a specific study. Although not uniform across all disparity studies, the majority of the studies in 

the set that utilized quantitative data on marketplace discrimination found that minorities and 

minority business enterprises:

•	 Earned significantly lower wages than similarly situated non-minority male counterparts 

in relevant markets;

•	 Had significantly lower business earnings than similarly situated non-MBEs in 

relevant markets;

69 Ibid, p. 136.
Chapter 4: Disparities and Marketplace Discrimination Exist 45

December 2016 | Minority Business Development Agency

•	 Had lower rates of business formation than non-minority males;

•	 Were more likely to be denied commercial or personal loans than similarly situated nonminority males or non-MBEs; and 

•	 Had lower revenues and market shares than similarly situated non-MBEs.

Several disparity studies also considered issues such as employment within particular industries, 

the proportion of employees in management positions, general population statistics, and other 

business characteristics such as education, age of business, and fear of loan denials (i.e., without 

actually applying and being denied), all of which affect the ability of minority-owned businesses 

to compete for and win public contracts.

Chapter 5: Anecdotal Analysis and Summary 47

December 2016 | Minority Business Development Agency

CHAPTER 5:

Anecdotal Analysis and Summary

One of the fundamental objectives of this research report is to identify and characterize factors 

and barriers that lead to contracting disparities for MBEs, including identifying which factors 

and barriers can arise due to discrimination. As discussed in the previous chapter, a review of 

existing publicly-available disparity studies showed the widespread occurrence of substantial 

contracting disparities, indicated by a disparity ratio less than 0.8 and often with statistical 

significance. Yet, a numerical disparity alone does not equal discrimination, which is a primary 

reason why disparity studies include additional analysis aimed at investigating discrimination 

and causation. This includes not only the regression analyses discussed in the previous chapter, 

but also valuable systematically-collected anecdotal evidence that helps characterize instances 

of discrimination and areas where contractors face barriers in public contracting independent 

of racial or ethnic preferences. This chapter explores the relationship between anecdotal 

evidence, observed disparities, and discrimination, as drawn from the set of disparity studies. 

The chapter also includes selected anecdotes from disparity studies, which provide context and 

illustrate the depth of the barriers identified by and the experiences of affected MBEs.

IMPORTANCE OF ANECDOTAL EVIDENCE IN SUPPORTING 

RACE-BASED PROGRAMS

Anecdotal findings provide insight into the “why” of disparities and lend support to the use of 

both race-neutral and race-based remedial programs. Anecdotal evidence does not establish 

the predicate for race-conscious programs, but instead, aids policymakers in evaluating 

whether a contracting program is needed and if so, that it is narrowly tailored. Several patterns 

of exclusionary behavior in public contracting have emerged over time, including instances 

of outright discrimination on the part of non-MBE prime contractors and public agencies.70 

Anecdotal accounts of discrimination and exclusionary behavior serve to provide the context 

that disparity studies seek regarding contracting disparities. As noted by one prominent 

disparity study consultant:

Some courts and other observers have asserted that [anecdotal] findings such as 

[these] tell us nothing about discrimination against M/WBEs since, even though they 

are current, even though they come directly from the businesses alleging disparate 

70 For example, Association of General Contractors v. California Department of Transportation, 2013 WL 1607239 (9th Cir., 2013) 

details instances of M/WBEs told that they were not qualified, although they were later found to be qualified when evaluated by 

outside parties and harassment of M/WBEs by an entity’s personnel to discourage them from bidding on an entity’s contracts.
48 Contracting Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing Disparity Studies

Minority Business Development Agency | December 2016 

treatment, even though they are restricted to the relevant geographic and product 

markets, even though they are disaggregated by procurement category, and even 

though they are disaggregated by race and sex, they still do not compare firms of 

similar size, qualifications, or experience... Size, qualifications, and experience are 

precisely the factors that are adversely impacted by discrimination. [emphasis added]71

Chapter 3 covered the general aspects of a strong anecdotal evidence gathering process, 

including gathering information from not only qualified minority contractors, but also from 

non-MBE contractors.72 Exploring contracting barriers and the impact of discriminatory or 

exclusionary behavior using qualitative data also includes identifying and cataloging specific, 

verifiable instances of discrimination within the relevant jurisdictions and market area,73

discussing the harm that the improper conduct has inflicted on the businesses in question, and 

revealing that discriminatory exclusion and impaired contracting opportunities are systemic 

rather than isolated or sporadic. Disparity studies that adhered to the aforementioned 

requirements yielded anecdotal accounts and findings that were more transparent and 

complete than studies with less rigorous anecdotal approaches.

DISPARITY STUDY REVIEW FINDINGS ON COLLECTION METHODS

This research project included a review of 100 disparity studies and summaries, 86 of 

which explicitly implemented a methodology to obtain qualitative data on contracting barriers 

and exclusionary practices via anecdotal accounts. As noted in Chapter 3, there are different 

methods to collect anecdotal evidence and the methods used to collect anecdotal data 

varied by study and consultant. The most prevalent methods included personal interviews, 

focus groups, public hearings, surveys, and submission of written testimony. Where possible, 

consultants verified accounts and pooled the results of multiple anecdotal data collection 

mechanisms to determine the prevalence of the barriers and/or discrimination detailed. 

This ensures that the views of a single contractor are not deemed “representative” by the 

consultants.74 Figure 5-1 presents a tabulation of the percentage of studies that included each 

anecdotal data collection mechanism.

71 NERA, The State of Minority- and Women-Owned Business Enterprise: Evidence from Cleveland, Prepared for the City of 

Cleveland, December 24, 2012, p. 274.

72 In addition, many of the studies with more detailed anecdotal evidence sections included input from industry and trade groups, 

as well as public procurement officials. While these may not reflect a first-hand account of discriminatory behavior, soliciting input 

from these other groups can help support general patterns or accounts of discrimination.

73 As noted by one disparity consultant, “The probative value of anecdotal evidence of discrimination increases when it comes 

from active businesses in the relevant geographic and procurement markets. The value of such evidence increases further when 

it comes from firms that have actually worked or attempted to work for the public sector within those markets”, Race, Sex, and 

Business Enterprise: Evidence from Augusta, Georgia. NERA Economic Consulting. September 4, 2009, p. 250.

74 There are conflicting opinions regarding the importance of verifying anecdotal accounts in the case law and literature.
Chapter 5: Anecdotal Analysis and Summary 49

December 2016 | Minority Business Development Agency

FIGURE 5-1

DISTRIBUTION OF ANECDOTAL DATA COLLECTION MECHANISMS

There is no single preferred method for collecting anecdotal evidence. The legal precedent 

and existing disparity studies often focus on the quality and breadth of information shared via 

qualitative data collection, while also ensuring that a sufficient amount of evidence is collected. 

Indeed, there are advantages and disadvantages to each method, as summarized in Table 5-1. 

However, the most robust and reliable disparity studies incorporate multiple data collection 

techniques to ensure collection of a wide range of anecdotal experiences from all types of 

contracting participants. This alleviates concerns that the anecdotal evidence is merely a 

summary of perceived instances of discrimination from disgruntled bidders who might have 

lost out on a contract for any number of reasons apart from discrimination. With a large enough 

set of reliable anecdotal accounts, disparity consultants can analyze prevalence and themes 

to explore core barriers and issues faced by MBEs in contracting with a particular agency.

7%

64%

66%

76%

79%

0% 20% 40% 60% 80% 100%

Written Testimony

Survey

Public Hearing

Focus Groups

Interviews

n = 86
50 Contracting Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing Disparity Studies

Minority Business Development Agency | December 2016 

TABLE 5-1

SUMMARY OF ANECDOTAL EVIDENCE COLLECTION METHODS

As shown in Table 5-1, surveys and personal interviews provided a substantial amount of 

anonymity to providers of anecdotal evidence, which allows individuals to provide honest and 

detailed accounts, without fear of any perceived or potential repercussions.75 Anonymity is 

important, given that personal interviews and surveys allow participants to make comments that 

will not be challenged by peers or panelists as in the case of focus groups or public hearings. 

In contrast, focus groups and public hearings offer less anonymity, but can be a more costeffective way to obtain anecdotal accounts from a greater number of potential respondents in 

a single setting. Focus groups permit consensus building and discussion of major issues, as 

well as corroboration, which provides a clear picture of multiple perspectives on the issue being 

discussed. One drawback is that groupthink or bias could arise through the course of a focus 

group discussion.

Bias is a concern in collecting anecdotal accounts from interviews, focus groups, public hearings 

and also surveys. This includes both interviewer bias and response bias.76 Interviewer bias 

arises when the disparity study consultant or interviewer phrases questions in a suggestive 

or leading manner, which elicits responses that confirm the political purpose of a question. 

Response bias occurs when a poorly constructed group of respondents is too homogeneous 

and not indicative of all potential respondents. Most disparity consultants recognize the 

potential for bias and are able to address these issues by using multiple techniques, including 

75 A Procurement Disparity Study of the Commonwealth of Virginia. MGT of America. January 12, 2004.

76 Sullivan, John. Anecdotes as Evidence: Proving Public Contracting Discrimination in a Strict Scrutiny World. Engage, 

Volume 16, Issue 2, pp. 16-22. 

Advantages Disadvantages

Anonymity Small Sample Size

First-hand Personal Account Resource Intensive

Allows Discussion

Anonymity Resource Intensive

Large Sample Size No Additional Discussion

Provides Quantitative Results Statistical Rigor Issues

Accessible to Multiple Participants Less Anonymity

Can Select Specific Participants Subject to Bias (Groupthink)

Can Control Discussion Resource Intensive

Method

Personal Interviews

Surveys

Focus Groups

Public Hearings Accessible to Everyone Can Lack Control of Discussion

Can Solicit Numerous Viewpoints Lack of Anonymity

Relatively Resource Efficient
Chapter 5: Anecdotal Analysis and Summary 51

December 2016 | Minority Business Development Agency

a control group (i.e., disaffected individuals) and soliciting a representative set of verifiable 

accounts from a large enough sample of respondents.

Indeed, anecdotal evidence collection from the set of disparity studies was not limited to MBEs. 

In fact, 85 percent of the studies analyzed with anecdotal sections included anecdotal data 

collection from non-minority firms via surveys, personal interviews, focus groups, and public 

hearings. This provided a complete picture of exclusionary behavior, including identifying 

whether any common patterns were attributable directly to discrimination or were an issue for 

businesses without regard to race or ethnicity. As an example, if both MBEs and non-MBEs 

identified “receiving timely payment” as a critical barrier, there is less evidence that the matter 

is racially motivated and more evidence to suggest that the agency’s practices hamper all firms 

in the contracting process.

The overall credibility and validity of the set of disparity studies anecdotal evidence is supported 

by the measures most of the disparity study consultants took in ensuring that anecdotal 

accounts were drawn from reliable and verifiable sources. With respect to surveys, many studies 

relied on statistically significant random samples of respondents drawn from lists of businesses 

that either comprised the availability of firms in the relevant product and geographic markets 

or were actual recipients of prime or subcontracts from the procurement agency. One disparity 

study encompassed the typical operating procedure for a particular national consultancy to 

ensure the credibility of anecdotal evidence drawn from surveys:

[W]e conducted a large scale survey of business establishments in the market area—

both M/WBE and non-M/WBE—and asked owners directly about their experiences, 

if any, with contemporary business-related acts of discrimination. We find that M/WBEs 

in the City’s markets report suffering business-related discrimination in large numbers 

and with statistically significantly greater frequency than non-M/WBEs ... The mail 

survey sample was stratified by industry and drawn directly from the Master M/WBE 

Directory and the Baseline Business Universe compiled for this study. Firms were 

sampled randomly within strata. M/WBE firms were oversampled to facilitate statistical 

comparisons with non-M/WBEs.77

This effort is typical of disparity study consultants invested in not only ensuring a representative 

sample of businesses for anecdotal inquiry, but also for developing reliable indicators that 

individual anecdotal accounts are representative of what other similar firms are experiencing 

when contracting or interacting with a particular agency. Similar verification procedures also 

exist for personal interviews and focus groups. Consider the process typically undertaken by 

another large, reputable disparity study consultant:

77 “The State of Minority- and Women- Owned Business Enterprise in Construction: Evidence from Houston”, NERA Economic 

Consulting, 4/2012. P. 212-213.
52 Contracting Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing Disparity Studies

Minority Business Development Agency | December 2016 

The initial stage of the interview process includes screening businesses for their 

interest in being interviewed. The screener collected basic demographic data and 

specific information to determine the relevant experiences of the business owners. 

The screener captured information regarding the interviewee’s experience with 

discrimination and interest in relating those experiences to a trained interviewer. 

Anecdotal probes were used to solicit information from the interviewees who provided 

construction, professional services, including architecture and engineering, or supplies 

and services. The questions sought to determine if the business owner encountered or 

had specific knowledge of instances where formal or informal contracting practices had 

an adverse impact on small, minority, or women-owned businesses (S/M/WBEs) during 

the January 1, 2009, through December 31, 2013, study period. A total of 60 interviews 

were conducted with African American, Hispanic American, Asian American, Native 

American, and Caucasian female, and non-minority male business owners that provide 

construction, professional services, or supplies and services procured by the City.78

In both examples illustrated by the two preceding quotations, the consultants employed a 

combination of a survey and personal interviews to raise the level of verification and increase 

credibility by focusing on multiple techniques of obtaining verifiable anecdotal evidence.

CHARACTERIZING BARRIERS IDENTIFIED IN EXISTING DISPARITY STUDIES

The disparity studies’ qualitative analyses identify a number of contracting barriers that lead to 

the observed disparity ratios for MBEs. These barriers arise in the context of market-wide issues 

facing MBEs, as well as those created as a direct result of the specific procurement process for a 

particular agency within a particular market. Many barriers are the direct result of discrimination, 

although other barriers affect businesses regardless of race or ethnicity. The goal of this section 

is to describe the primary barriers faced by MBEs to provide local governments and policy 

makers with information regarding systemic issues, noting the discriminatory nature of each 

barrier where appropriate. Figure 5-2 illustrates the different barriers identified in disparity 

studies, with a focus on where barriers arise within the public contracting framework. Figure 5-2 

is not exhaustive of all barriers that MBEs may face in a particular jurisdiction. 

78 “City of Cincinnati Disparity Study”, Mason Tillman Associates, 7/2015. – p. 10-3.
Chapter 5: Anecdotal Analysis and Summary 53

December 2016 | Minority Business Development Agency

FIGURE 5-2

BARRIERS FACED BY MBES IN PUBLIC CONTRACTING

As shown in Figure 5-2, a number of barriers are external to the specific contracting processes 

associated with a particular agency. These include barriers that arise due to discriminatory 

behavior with respect to access to capital, exclusionary networks, and outright prejudicial 

treatment of MBEs in a particular market. An important note is that just because a study 

does not identify a particular barrier in a market, that no MBEs in that market face that barrier. 

Government 

Agency

Non-MBE 

Prime

MBE

MBE as Prime

MBE as 

Subcontractor

Prime Level 

Discriminatory Barriers

• Timely bid notification

• Explicit discrimination

• Stereotypes

• MBE/DBE stigma

Subcontractor Level 

Discriminatory Barriers

• Timely bid notification

• Bid shopping

• Held bid

• Lack of good faith effort

• Only using an MBE if required

• Explicit discrimination

• Stereotypes

• MBE/DBE stigma

• Higher/double standards

Prime Level 

Non-Discriminatory Barriers

• Large project sizes

• Bonding/insurance

• Pre-qualification

• Timely payment

Pervasive Barriers Across

Contracting Levels***

• Access to capital

• Network access

• Marketplace discrimination

***Access to Capital and Network Access barriers can arise due to both discriminatory and non-discriminatory reasons
54 Contracting Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing Disparity Studies

Minority Business Development Agency | December 2016 

Instead, the studies identify the most prevalent barriers and causes of underrepresentation. 

The regression analyses described in the previous chapter support the existence of these 

types of barriers and the anecdotal accounts drawn from the disparity studies provide 

additional confirmation. 

A separate set of barriers include those arising from a contracting agency’s bid procedures and 

process. These include large project sizes, bid requirements related to bonding and insurance, 

bid timing, and timely payment once a contract is in place. The disparity studies’ anecdotal 

evidence sections indicate that these barriers were often applicable to a large number of nonMBE businesses as well, such that race-neutral means were often recommended as a remedial 

solution. However, the anecdotal evidence noted the relationship between these bid-specific 

non-discriminatory barriers and market-based issues such as access to capital. In this respect, 

issues such as obtaining bonding and insurance are not universally free from the influence or 

impact of discriminatory behavior. Nonetheless, they are barriers that negatively affect the 

ability of MBEs to effectively compete in the public marketplace.

The most obvious barriers arising due to discrimination lie in actions by procurement agencies 

and non-MBE prime contractors (when considering MBE subcontractors) to purposely 

exclude or hinder MBE participation. These include outright prejudicial treatment, attitudes, 

stereotypes, implementing higher and double standards for MBEs, or manipulating the 

bid process. In these cases, the anecdotal accounts provide supporting evidence that 

discrimination drives contracting disparities facing MBEs.

The last category of barriers includes network access barriers, which represent a gray area 

concerning whether the barrier arises due to discrimination or as a result of general business 

practices. As such, this barrier is complicated to address and will require work from multiple 

parties. In certain cases, the exclusion of a particular racial or ethnic group from a network 

arises due to discriminatory behavior, but it can be very difficult to prove. In other cases, 

exclusionary behavior may arise because businesses and agencies tend to like who they have 

worked with in the past, regardless of whether that business is an MBE or non-MBE. 

Figure 5-3 shows the frequency with which disparity studies included specific barriers identified 

by minority contractors. The most commonly cited barriers were networking barriers, restrictive 

contracting requirements (e.g., bonding levels), and receiving timely payment.
Chapter 5: Anecdotal Analysis and Summary 55

December 2016 | Minority Business Development Agency

FIGURE 5-3

FREQUENCY OF BARRIERS IDENTIFIED BY M/WBES

The list of barriers in Figure 5-3 is not an exhaustive list and is limited to observations drawn 

from a review of the set of disparity studies that included anecdotal evidence. In addition, the 

disparity studies helped characterize where and how MBEs experienced these barriers and 

related exclusionary practices during the procurement process. 

The remainder of this chapter provides an overview of each major barrier, identifying evidence 

of discriminatory behavior, as applicable. While some barriers were explicitly identified via the 

surveys administered and the analysis thereof, others were fleshed out in conversations as part 

of interviews, focus groups, and public hearings.

NETWORKING BARRIERS

Nearly every disparity study reviewed identified contracting disparities arising due to MBEs’ lack 

of access within social entrepreneurial networks colloquially referred to as “the good ole boy” 

or “good old boys” network. Yet, the issue of exclusionary networks does not lend itself to a 

simple, direct conclusion of active discrimination on the part of procurement agencies or nonMBE prime contractors. One of the most critical challenges facing disparity study consultants 

(and readers of these studies) is how to interpret discrimination as opposed to general lack of 

access due to business conditions, where the latter point could have an impact on any business, 

14%

34%

41%

42%

43%

49%

56%

60%

64%

66%

77%

78%

83%

86%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

DBE Stigma

Double Standards

Held Bid

Capability Stereotypes

Bid Shopping

Higher Standards

Insurance Requirements

Large Project Sizes

Late Bid Notification

Discriminatory Attitude

Access to Capital

Receiving Timely Payment

Bonding Requirements

Networking Barriers

n = 86
56 Contracting Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing Disparity Studies

Minority Business Development Agency | December 2016 

regardless of race or ethnicity. Regardless of the source, MBE’s general lack of network access 

is a problem across agencies and geographies.

Disparity studies typically present anecdotal evidence that characterizes the network access 

barrier as one where an MBE might not obtain a contract due to the following factors:

•	 Informal relationships among agencies and majority firms that yield preferential 

treatment in bid reviews;

•	 “Friends help friends” where decisions of “who to work with” lie in preexisting 

relationships that can be personal as well as professional;

•	 Lack of information on informal networks, such that MBEs are unable to cultivate these 

relationships;

•	 Majority prime contractors dealing directly with agencies to determine upcoming 

projects and bid conditions to the detriment of MBEs; and

•	 Prejudicial treatment by agencies or primes in not selecting an MBE to do the work.

The most obvious cases of exclusionary access due to discrimination arise in the outright 

unjust or prejudicial treatment of firms based on racial or ethnic grounds. In this case, the 

procurement official or majority prime elects to exclude the MBE from the networks required 

to succeed in contracting, based primarily on the fact of minority-ownership. Firms are acutely 

aware of these challenges, as noted from the anecdotal evidence collected in the disparity 

studies reviewed. For example, in a disparity study conducted for the municipality of Saint Paul, 

Minnesota, a nonminority male participant noted that he “knows there’s an informal network in 

Saint Paul that gives advantages to certain businesses but does not know how it operates.”79 

Others in the same study and in the remaining studies echoed his sentiment, noting that 

“friends help friends,” which excludes firms that are not well-established in the local network. 

These sentiments are echoed throughout the set of studies and are not a prima facie indication 

of discrimination, but raise the level of attention necessary to understand how each network 

might work. As noted in another study:

I think that sometimes the majority of times, more work is won between the hours of 

five and eight than eight and five.80

This statement is indicative of the difficulty of segregating causal factors of exclusionary 

networks between race-based reasons (i.e., discrimination) versus race-neutral factors 

(i.e., impacts all business owners). The issue becomes one of how companies build trust, 

relationships, and social capital on a professional and personal level. If prejudice and bigotry 

inhibit the ability to cultivate these relationships, then the anecdotal evidence supports 

remedial efforts through the use of race-based contracting programs.

79 A Disparity Study for the City of Saint Paul and the Saint Paul Housing and Redevelopment Authority. MGT of America. 

August 4, 2008, p. 7-28.

80 Race, Sex, and Business Enterprise: Evidence from Augusta Georgia. NERA Economic Consulting. September 4, 2009, p. 259.
Chapter 5: Anecdotal Analysis and Summary 57

December 2016 | Minority Business Development Agency

Many interviewees who act as subcontractors reported that they often secure work with 

prime contractors through their past relationships with those firms.81 If minorities cannot 

break into networks to establish initial relationships, the problem of network exclusion and 

resulting contracting disparities continues. Prime contractors reported that they tend to utilize 

subcontractors that they know and trust. In addition to issues with potential subcontracting, 

MBEs face challenges in terms of network access among agency employees. One contractor 

noted that he operates at a disadvantage because of the actions of agency officials:

The majority firms get the opportunity to go into state agencies, sit down, and they talk 

about ideas and theories. They also can come up with solutions. By the time the bid’s 

put out there, they’ve already got something they’ve developed with management that 

will match so they’re going to be the successful winner.82

The lack of information on informal networks also acts as a barrier to MBEs, leading to observed 

contracting disparities. Almost every disparity study that covered network access provided 

anecdotal accounts summarizing issues with MBEs gaining access to information on these 

networks, and notably, how to access the “inside information” exchanged as part of the 

network. Per one study:

The added disadvantage of being African American or Hispanic, or one of those, is 

that you are not necessarily plugged into a network of information. Information is 

power and you don’t have access to some of the information. Whereas, a friend of 

yours working in public works could call you up, if you were his fraternity brother or a 

member of his club, or whatever, and say, ‘Hey, look out for business coming down the 

pike.’ That’s what we fundamentally don’t have access to... that inside information. 

We don’t have the networks that many other people in the majority culture have. And 

that is the fundamental difference.83

PROCESS-BASED BARRIERS

A number of barriers that lead to observed disparities reside with agency and prime contractor 

management of the bids and bid process when MBEs seek to work as either a prime or 

subcontractor. These include bonding & insurance, large project sizes, and bid-specific issues 

(bid shopping, held bid, late bid notification).

81 Availability and Disparity Study: California Department of Transportation. BBC Research & Consulting. June 29, 2007.

82 A Historically Underutilized Business (HUB) Disparity Study of State Contracting. MGT of America. March 30, 2010, p. 7-14.

83 Nevada Department of Transportation Disparity Study Final Report, Keen Independent Research, December 6, 2013, p. J-87.
58 Contracting Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing Disparity Studies

Minority Business Development Agency | December 2016 

Bonding & Insurance Requirements

Most public contracting projects involving construction or large investments up-front require a 

contractor to be bonded, which protects the agency if the contractor fails to perform the job, 

fails to pay for necessary licenses and permits, fails to pay subcontractors, or fails to monitor a 

job site or contract resulting in employee theft, damage or destruction. As a result, a bidder 

on a contract requiring bonding needs to show proof that it has obtained the requisite level 

of bonding from a surety corporation. Similarly, many public contracts include requirements 

for contractors to carry certain types of insurance, typically liability insurance (general and 

professional) and workers compensation insurance. The liability insurance protects the public 

agency from contractor-caused damage (not covered by the bond), professional liability pertains 

to errors made and losses incurred in professional matters (e.g., finance or property valuation), 

and workers compensation insurance covers payment for lost wages and medical services for 

contractor employees.

Most MBEs indicated difficulty in obtaining bonding, which is a barrier to obtaining contracts 

and leads to contracting disparities. One reason is that minority-owned firms are typically 

smaller in terms of revenue and employees than non-minority firms,84 which leads surety 

companies to avoid providing a high enough bond to meet a particular contract requirement. 

Another reason is that public contracting agencies set the bonding requirements at a level 

that is too high for most MBEs to meet, given the aforementioned size and scale. In this 

respect, when public agencies set the bonding requirement at a level above what might be the 

minimum necessary, it excludes a large number of MBEs that might be ready, willing, and able 

(i.e., available) to bid but cannot due to the bonding requirement.

The anecdotal summaries in disparity studies noted that bonding issues were not limited to 

MBEs. Many interviewees indicated that bonding requirements adversely affected all small 

businesses and their opportunities to bid on public contracts, and those barriers related 

to bonding are linked to capital access.85 However, third party macroeconomic data on 

discrimination in credit markets, often included in disparity study analyses as part of the 

regression analyses sections, clearly indicate a relationship between bonding issues and 

discrimination. Anecdotal evidence supports the quantitative results. One trade association 

head stated:

Lending institutions have discriminated against the small companies and the American 

Americans and what have you. They go in and give them their balance sheet and they 

84 Survey of Business Owners. United States Census Bureau. 2012. SBO data confirm that average receipts and number of paid 

employees for minority-owned businesses are lower than those of firms owned by white males. For more information, please see 

http://www.census.gov/programs-surveys/sbo.html

85 For example, see 2015 State of Indiana Disparity Study. BBC Research & Consulting. March 2016. In another study, an MBE 

stated: “It’s a combination of all factors. Being small with limited resources and being a minority because if it didn’t matter, why 

would they ask you your ethnicity on the form?” 2014 San Diego Association of Governments Disparity Study. BBC Research & 

Consulting. May 2, 2014.
Chapter 5: Anecdotal Analysis and Summary 59

December 2016 | Minority Business Development Agency

don’t show a steady flow of cash and they don’t have an asset base. So they don’t get 

the bonding.”86 

Consistent disparities and statistically significant findings related to loan denials and credit 

access for MBEs versus non-MBEs complement these anecdotal insights. 

Arguments also exist with respect to insurance requirements prohibiting MBEs from obtaining 

contracts, increasing contracting disparities. Many interviewees said that they could obtain 

insurance, but that the cost of obtaining it, especially for small businesses, was a barrier to 

sustaining their businesses or bidding certain projects. This perspective is not unique to MBEs, 

but consistent with discriminatory lending practices, the inability to obtain insurance can include 

the impact of discrimination. 

Large Project Sizes

An issue that is closely related to bonding and insurance involves large project sizes. Most 

disparity studies identified project size as an impediment to contracting for smaller businesses. 

The disparity studies indicated that owners of large firms did not necessarily feel that there was 

a problem with the current project sizes, but that small firms (including both MBEs and nonMBEs) almost always discussed project size as a barrier to contracting. One entrepreneur noted 

that “project specifications are designed in such a way that only large companies can provide 

supplies.”87 As a result, the issue impacts small versus large, as opposed to strictly MBE versus 

non-MBE. Nevertheless, larger, bundled contracts typically preclude smaller firms from 

acting as a prime, as the smaller firms might not meet contract requirements such as 

bonding and insurance. As discussed in the previous section, discrimination in capital 

markets can further contribute to the inability of MBEs to get bonding and insurance. This 

results in MBE underrepresentation on bidding for large contracts and perpetuates existing 

contracting disparities.

Bid Specific Issues (Late Bid Notification, Held Bid, Bid Shopping)

The anecdotal insights provided additional evidence that bid specific issues cause large 

contracting disparities. These include exclusionary or discriminatory practices that not only 

arise out of prejudicial treatment, but also are a response to race-based program requirements. 

This section focuses on the issues of late bid notification, bid shopping, and held bids.

Anecdotal accounts of late bid notification arose largely in the context of MBEs indicating 

that prime contractors requested bids from MBEs at the last minute, purportedly to satisfy 

good faith efforts in meeting race-based contracting program requirements. In these cases, 

86 2014 San Diego Association of Governments Disparity Study. BBC Research & Consulting. May 2, 2014, p. 4-14.

87 A Disparity Study for the City of Saint Paul and the Saint Paul Housing and Redevelopment Authority. MGT of America. 

August 4, 2008, p. 7-24.
60 Contracting Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing Disparity Studies

Minority Business Development Agency | December 2016 

late bid notification and inadequate lead time were due to a combination of discrimination 

and exclusionary networks. If a prime contractor sends out a late bid notification to an MBE, 

they fully expect not to receive a bid from that MBE, allowing them to use a non-MBE. Yet, 

the prime contractor can rationalize that it satisfied good faith efforts to include MBEs by 

telling procurement agencies that it sent out bid invitations to MBEs. While this scenario was 

presented throughout the set, one study summarized the situation as:

Unscrupulous tactics by prime contractors seeking to avoid [Emerging Business 

Enterprise or EBE] program requirements were reported by many interviewees. 

Inadequate lead time to respond to prime contractors’ bid requests was reported 

as a tactic prime contractors utilized to prevent EBE subcontractors from submitting 

timely bids. Some interviewees complained that prime contractors listed them on bid 

documents for their EBE certification status with no intent of working with them.88

With respect to the relationship between late bid notification and exclusionary network issues, 

minority business owners expressed concern that they were the last to know about upcoming 

opportunities and did not find out about opportunities with sufficient time to prepare a 

thorough bid. This puts minority-owned firms at a distinct disadvantage, partially stemming 

from the depressed network access detailed at the start of this segment. Studies reviewed 

cited instances where social networks affected the availability of information and lead time, 

indicating a relationship between bid notification and also the barriers due to network access. 

Business owners who were currently working for an agency or who had personal relationships 

with agency staff often found out about opportunities ahead of time, increasing their ability to 

prepare and submit a bid. As discussed above, many minority business owners are not part of 

these networks and suffer as a result.

In other instances, anecdotal evidence indicated that late bid notification was not to the result 

of active discriminatory behavior, but a product of poor planning or bid process execution 

by agencies. Some agencies send out notices at the last minute, preventing all prospective 

bidders from having a chance to submit a competitive bid or proposal. These situations can 

arise due to miscommunication between agencies and primes, instead of discriminatory 

behavior. As a result, verifiable anecdotal accounts that detail late bid notification issues that 

affect all small businesses, particularly subcontractors, will provide deeper insight into whether 

race-neutral remedies are necessary at the outset to address agency issues.

Anecdotal experiences with bid shopping and held bids often exhibited a strong discriminatory 

pattern throughout the set of disparity studies. A held bid occurs when a prime contractor 

solicits information from a subcontractor and includes them on a prime bid. When the prime 

contractor wins the bid, however, they do not engage the original subcontractor and instead 

work with another firm. Minority business owners identified this barrier often in the anecdotal 

88 City of Milwaukee, Study to Determine the Effectiveness of the City’s Emerging Business Enterprise Program, Mason Tillman 

Associates, August 2007, p. 7-29.
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December 2016 | Minority Business Development Agency

summaries, noting that they were included to reach minority goals, but never contracted or 

received any work as a result. The contracting agency never followed up to ensure that the 

bid was fulfilled as submitted in terms of subcontractors. In addition, no repercussions were 

noted for the prime that switched subcontractors despite meeting goals with a minority 

contractor. Local governments and contracting agencies must improve monitoring of 

subcontracting activity. 

Held bids and not using MBEs after submitting a bid is a pervasive and damaging issue. For 

example, in a survey for a disparity study for the City of Columbia, 40 percent of subcontractors 

reported being dropped from a City project after the award of the contract to the prime 

contractor. Of all M/WBEs surveyed, 34 percent mentioned this issue as a significant 

impediment to their business success.89 It is an issue rooted in discrimination. As an 

illustrative example of the phenomenon observed throughout the set, in one study, an 

interviewee was explicit about the discrimination inherent in held bids and not receiving work 

after being on the bid:

I had an incident where I was sent a good faith – I mean, a request for good faith effort. 

I sent them my request. And then that particular contractor, GC, received the job, but 

when I called him, he said, “I just sent you that for a request for bid because I have to 

because of the good faith effort, but I will never use a minority firm for the service 

that I do.”90

Bid shopping is another activity that was frequently reported in the bid process, but can be 

difficult to prove as resulting from discrimination. Figure 5-4 presents a hypothetical example of 

this practice, where a prime contractor might share a bid with other potential bidders to see if 

they can get a lower price. Bid shopping arising out of discrimination (i.e., the desire to not use 

an MBE because of race or ethnicity) was frequently cited in the anecdotal accounts from the 

disparity studies.

89 A Historically Underutilized Business (HUB) Disparity Study for the City of Columbia. MGT of America. August 15, 2006, p. 6-10.

90 Race, Sex, and Business Enterprise: Evidence from the City of Austin. NERA Economic Consulting. May 15, 2008,

p. 243.
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FIGURE 5-4

EXAMPLE OF BID SHOPPING

In Figure 5-4, the prime requests a bid from an MBE. The MBE provides a bid of $5,000. Yet, 

the prime does not want to work with the MBE and instead, shares the MBE bid information 

with his non-MBE friends. The prime provides the bid information to see if he or she can get 

a non-MBE to bid under the MBE bid. In this hypothetical, one of the non-MBEs, armed with 

the MBE bid information, is able to undercut the MBE bid and successfully win the project. 

This insider track of information and “behind closed doors” bid shopping harms minority 

entrepreneurs and is an unfair and unethical practice.

When asked about bid shopping, one disparity study included an anecdotal account from a 

Hispanic American female owner of an MBE- and WBE-certified specialty contracting firm, 

who responded that the practice was continual. She explained that she has twice had a 

prime contractor swap around the subcontractors after hearing that competitors had seen her 

offers. She noted that this practice is discouraging because of the time involved to prepare 

bid responses.91 Despite the reported prevalence of bid shopping, it is difficult for affected 

contractors to prove that it occurs due to discriminatory behavior related to race and ethnicity. 

One Hispanic American owner of a construction firm noted that some prime contractors engage 

in bid shopping to avoid meeting M/WBE requirements.92 This sentiment was echoed 

91 2015 State of Indiana Disparity Study. BBC Research & Consulting. March 2016, p. E-113.

92 Alameda County Availability Study. Mason Tillman Associates. October 2004, p. 9-25.

MBEs

Initial Bid = $5000

Stage 1 

Prime Solicits Bids from

Potential Subcontractors

Stage 2

Prime Solicits Secondary 

Bid from non-MBE to

Undercut MBE Bid

No Second Bid 

Opportunity

Can you 

do it for 

less than

$5000?

MBEs Prime

Contractor

Prime

Contractor

Non-MBEs

Initial Bid = $5200

Secondary Bid = $4900

Non-MBEs
Chapter 5: Anecdotal Analysis and Summary 63

December 2016 | Minority Business Development Agency

throughout the set when examining the survey, focus groups, and other data collection results. 

The difficulty in proving such actions presents a challenge in finding remedies for bid shopping. 

This difficulty reinforces the need to draw from verified experiences that help provide context to 

instances where bid issues arise as a means to avoid working with a particular business due to 

race or ethnicity. 

DISCRIMINATORY ATTITUDES AND PERCEPTIONS

Almost every disparity study contained anecdotal accounts detailing explicit instances of 

discrimination in public contracting. These insights took the form of outright prejudice and 

incorporation of capability stereotypes and the use of double or higher standards in assessing 

MBEs for contracting opportunities. In other instances, outright discriminatory behavior was 

tied to previously discussed barriers, such as shopping bids or excluding access explicitly 

due to the desire not to work with a firm whose ownership was a particular race or ethnicity. 

As a result, many of the barriers discussed in this section interact with or contribute to other 

barriers and were mentioned throughout the anecdotal analyses and data in the disparity study 

set analyzed. One issue that requires attention in assessing anecdotal accounts is whether 

the contracting outcome arises from a perception of discrimination, as opposed to actual 

discriminatory behavior. A single selected anecdote might reflect the opinion or perception of 

a business owner, when in fact the loss of a bid or contract might be due to factors unrelated 

to discrimination. However, the selected anecdotes included in this section are drawn from 

disparity studies that implement the processes described previously to increase the verifiability 

and reliability of the anecdotal evidence, collected not only from interviews but also surveys, 

focus groups and/or public hearings. As a result, the anecdotes reflect a broader range 

of experiences from business owners and other stakeholders that interact with the 

contracting agencies. 

Discriminatory Attitude and Racism

Instances of outright discrimination permeated the anecdotal summaries of the disparity 

studies reviewed in this research. The disparity studies captured countless accounts of 

disparate treatment and overt racism experienced by MBEs and DBEs. Across geographies 

and industries, the anecdotes provided by minority entrepreneurs corroborated one another 

and centered around the issue of lack of respect and discrimination based on race or gender. 

In some instances, the discriminatory behavior is overt but in others, minority entrepreneurs 

picked up on more nuanced acts of discrimination. One example is embodied by the following 

anecdotal account:

“I have been called ‘beaniard,’ ‘wetback,’ and a ‘spic,’ I had two guys sit to the right 

of me, where one was making arguments to let the other one use a very expensive 

piece of equipment on a high-rise building for free. But, that same guy was charging 

us a very large amount of money per hour to have access to the same equipment. And 

when they made the agreement, the one guy told the other guy, ‘That’s very white of 
64 Contracting Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing Disparity Studies

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you. I appreciate it.’ And the other guy told him, ‘Don’t mention it.’ This was a project 

that had an [Emerging Business Enterprise] requirement.”93

Derogatory insults and preferential treatment for non-MBE firms due to outright discrimination 

extended to all ethnic, racial, and gender groups. In one disparity study, interviewees reported 

instances of racial slurs, sexist comments and sexual harassment, race-related graffiti on work 

sites, and other incidents affecting women and minorities throughout the data collection 

mechanisms employed.94 The disparity studies also included a number of different instances 

where racism occurred based on prejudice, yet MBEs did not report them due to fears of 

retaliation. This presents a significant policy challenge in terms of rectifying the issue. As 

expressed in one study:

A representative of a Hispanic American owned construction firm inquired from a 

winning prime why his firm was not selected to subcontract on a job. The prime’s 

representative asked the firm’s representative what the owner’s surname was. When 

the surname was given, the prime responded, ‘that’s the reason.’ No action was taken 

by the potential subcontractor due to concern over retaliation.95

Although not every instance of racism or discrimination was overt, business owners said that 

they could “feel it.”96 In other cases, there was little doubt about intent. As an example of the 

experiences reported in the set, one participant was told by City staff that he was “a black boy 

with an attitude.”97 

Capability Stereotypes

In numerous disparity studies, survey responses, focus groups, and interviews reported that 

some agency staff and prime contractors consider minority-owned firms to be less qualified 

than majority-owned firms. This issue was pervasive throughout the set analyzed and is typified 

by several accounts. In one study, an African American male owner of an architectural firm for 

twenty years explained why he does not want to be labeled as a minority architect:

“I don’t [like] to be called a minority architect. The word ‘minority’ implies inferiority 

in the minds of many of the people who are making the decisions. Not that it is [true], 

but that is what they think. So I want to be known as an architect. I don’t want to be 

listed as a minority architect [because that is not a] benefit for me. As a matter of fact, 

93 City of Milwaukee Study to Determine the Effectiveness of the City’s Emerging Business Enterprise Program. Mason Tillman 

Associates. August 2007, p. 7-4.

94 Availability and Disparity Study: California Department of Transportation. BBC Research & Consulting. August 31, 2012, p. 3-4.

95 Availability Analysis and Disparity Analysis for the Arizona Department of Transportation. MGT of America. March 16, 2009,

p. 8-46.

96 Disparity Study for Denver Public Schools. MGT of America. October 17, 2014.

97 Mecklenburg County Disparity Study Final Report, MGT of America, January 22, 2004, p. 6-37.
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December 2016 | Minority Business Development Agency

it’s a strike against me to say I’m a minority architect. The playing field, in terms of 

how the selection process is made, is not level. In spite of what is heard, it’s not a level 

playing field.”98

In a disparity study of the Commonwealth of Virginia, 65 percent of M/WBE respondents 

agreed with the statement that “M/WBEs are viewed as less competent than nonminority 

firms.” When examining the control group of nonminority male owned firms, only 17 percent 

agreed with the same statement. This characterizes a persistent informational and experiential 

asymmetry on the part of the affected population, MBEs, and the non-affected population when 

it comes to stereotypes and their damaging effects on business performance. In each case, the 

offender is a priori judging a particular firm not on capability or performance, but stereotyping 

performance based on perceptions about race or ethnicity.

Double or Higher Standards

Double or higher standards pertain to the additional requirements imposed on minorityowned firms in public contracting that are not imposed on non-MBEs. The studies reviewed 

contained anecdotal data to support the presence of double or higher standards for MBEs. The 

data collection was supported by multiple anecdotal accounts detailing MBEs encountering 

increased scrutiny regarding their work product as well as increased administrative requirements 

or “hoops to jump through” once hired. As noted by one anecdotal account:

There is a hidden expectation amongst any African American or minority company that we 

better do the job and do it better than anybody else if you want to maintain that contract or do 

businesses again in the future.99

All contractors should be subjected to the same standards and expectations while working as 

a prime contractor or as a subcontractor on public projects. However, the anecdotal analyses 

indicated that many minority business owners believed that their work was systematically held 

to a higher standard than their Caucasian male counterparts.100 The higher standards barrier 

is a systemic issue for minority entrepreneurs. Often, higher standards cause undue economic 

hardships for minority entrepreneurs.101 One business owner who previously worked for a 

Caucasian-male-owned firm stated that he sees striking differences in his treatment since 

starting his own business.102 A minority male owner of a construction company reported that 

certain City managers hold his work to a higher standard than his colleagues, noting: 

98 City of New York Disparity Study, Mason Tillman Associates, January 2005, p. 9-7.

99 City of Cincinnati Disparity Study. Mason Tillman Associates. July 2015, p. 10-6.

100 For an example, please see San Francisco Bay Area Rapid Transit District Availability and Utilization Study. Mason Tillman 

Associates. April 2009.

101 For an example, please see City of Milwaukee Study to Determine the Effectiveness of the City’s Emerging Business Enterprise 

Program. Mason Tillman Associates. August 2007.

102 Disparity Study for Denver Public Schools. MGT of America. October 17, 2014.
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Some City managers will require me as a minority-owned business to do work that was 

not requested of others doing similar work. I did demolition work for the City. The 

side was supposed to be seeded and the ground should be very smooth which is how I 

complete by jobs. I have seen other jobs where the work was not nearly as professional 

as mine but they did not have to redo it.103

Disparity studies also noted that some minority and female business owners report double 

standards for performance of work that had a negative impact on contracting experiences. 

Many attributed the double standards directly to race and gender discrimination. Some owners 

and managers of MBEs and DBEs report that double standards for work adversely affected their 

companies and decreased competitiveness:

When asked if she had experienced any double-standards for minority- or womenowned firms, the Asian Pacific female owner of a SBA- and DBE-certified environmental 

company said, “Yes, of course. You can feel it. More [so] being a minority than being 

a woman.”104

The existence of double and higher standards impacts the observed disparity ratios. First, the 

presence of these standards influences agency and prime selection of minority contractors, such 

that if the bids do not meet the inflated expectations, the MBE will not be selected. Second, 

the perception of these standards acts as a deterrent to MBEs that might otherwise bid on 

public contracts. In other words, if an MBE already assumes that the deck is stacked against 

them, what incentive is there to actually bid on these contracts? Theoretically, this influences 

the availability of firms, if one determines that a particular MBE is not “ready and willing,” given 

it has no intention of bidding on a contract.

DBE Stigma

Although not as pervasive as the overt discrimination discussed above, disparity studies 

contained anecdotes and systematically-collected anecdotal data detailing stigma associated 

with certification as a disadvantaged business enterprise (DBE). Firms reported that the mere 

mention of DBE certification or that the business is owned by a minority was a turnoff when 

attempting to do subcontracting work for prime contractors on public contracts. Minorityowned firms reported that primes did not want to hear about MBE or DBE status105 and minorityowned businesses took note and began excluding that information from their business cards and 

when searching for new business because it is “a slap against us.”106 As stated in one report:

103 City of Cincinnati Disparity Study. Mason Tillman Associates. July 2015, p. 10-6.

104 Nevada Department of Transportation Disparity Study Final Report, Keen Independent Research, December 6, 2013, p. J-82.

105 The State of Minority- and Women-owned Business Enterprise: Evidence from Cleveland. NERA Economic Consulting. 

December 24, 2012.

106 The State of Minority- and Women-owned Business Enterprise: Evidence from Missouri. NERA Economic Consulting. 

June 28, 2012, p. 245.
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December 2016 | Minority Business Development Agency

The African American diversity marketing manager of an MBE/SBE/DBE-certified 

environmental consulting company stated that the disadvantages of certification 

are that “the rest of the firms that are not certified view your company differently, in 

a more negative light due to the lack of education around what a DBE certification 

entails. The view in the marketplace is that companies with that certification have poor 

qualifications and are not qualified.”107

BARRIERS AFFECTING FIRM FINANCIAL PERFORMANCE AND 

ABILITY TO COMPETE

As noted in Chapter 3, most studies include a section dedicated to analysis of publicly-available 

data with respect to evidence of discrimination related to access to capital. Indeed, most 

disparity studies provided data and results showing that MBEs faced discriminatory lending 

practices with respect to gaining and obtaining credit. In this review of disparity studies, distinct 

anecdotal accounts with respect to access to capital and receipt of timely payment directly 

support the statistical evidence pertaining to discrimination, barriers to public contracting, and 

contracting disparities.

Access to Capital

Substantial research demonstrates discriminatory practices in lending, depressed access to 

capital and credit, and lower net worth among minority business owners.108 Financial institutions 

restrict the amount of debt capital available to MBEs, engage in redlining of minority areas, 

and discriminate in mortgage application approvals. Suppliers offer difficult credit terms 

and higher prices to MBEs, and unions restrict the number of training and job slots available 

to minority and women workers,109 further compounding the problem. Anecdotal data and 

individual illustrative accounts drawn from the disparity studies highlighted the perception of 

discrimination, but predominantly focused on size issues that affect access to capital for all small 

businesses, independent of race or ethnicity. As stated in one report:

An African American male-owned DBE/MBE/SBE-certified masonry subcontractor, 

stated that he has had difficulties obtaining financing. This is a part of the reason 

why he is a disadvantaged business. He has had personal issues in the past that has 

affected his ability to receive financing on projects. It does not make sense to him when 

he is trying to make payroll and payments to rent equipment and has an outstanding 

history of making those payments as it relates to his business, but when it comes to 

obtaining financing for his work related projects, he has difficulty obtaining financing 

107 California Department of Transportation, Availability and Disparity Study, BBC Research and Consulting, August 31, 2012, 

p. J-6.

108 For a discussion of general access to capital issues, please see Analysis of Essex County Procurement and Contracting: 

Final Report prepared by the University of Minnesota Disparity Study Research Team, 2005.

109 MWBE Local Business Disparity Study for the City of Evanston. D.J. Miller & Associates. April 1996.
68 Contracting Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing Disparity Studies

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because of issues in his personal life. He stated that with respect to obtaining bonding, 

on a $1 million bond, 2.5 percent is required. He said that if he had that kind of cash 

available, he would not qualify for disadvantaged status. He feels that this is another 

way that small businesses are disqualified for projects.110

As another example of access to capital issues, interviewees in a 2007 California Department 

of Transportation study reported that financing was difficult for smaller companies with fewer 

assets and new companies with less history, although not necessarily due to race.111 Small 

business owners indicated that access to financing was a barrier in general and more specifically 

at startup and the initial growth phases. In a study of Cleveland, Ohio, a sizeable number of 

entrepreneurs used personal resources to finance their businesses, including second mortgages 

and credit cards.112

Receiving Timely Payment

In almost every disparity study analyzed, receiving timely payment was raised as a barrier to 

successful contracting. Time and time again, study authors noted that “the worst problem 

overall for MBEs was receiving timely payment for work performed.”113 This issue was noted 

repeatedly at both the prime and subcontractor levels and is pervasive, hitting at access to 

capital as well as issues related to MBEs remaining as going concerns given potential liquidity 

issues that arise out of lack of timely payment. As an example, California Department of 

Transportation (Caltrans) contractors who were interviewed went so far as to say that they would 

prefer not to work for Caltrans because the agency is so slow to make payments.114

Late payments by prime contractors and government agencies are problematic for small 

business owners who are struggling to maintain solvency, pay creditors, and meet payroll. 

Some interviewees, including MBEs, WBEs, and majority-owned firms, reported that lack of 

timely payment on contracts and subcontracts led to an increased need for loans, business 

capital, and financing.115 For example, two-thirds of the written complaints that the Georgia 

Department of Transportation received within a particular study period included assertions by 

DBE subcontractors that the prime contractor had improperly delayed or withheld payment to 

the subcontractor.116

110 Metro Disparity Study Final Report, Los Angeles County Metropolitan Transportation Authority, BBC Research and Consulting, 

January 22, 2010, p. B-178.

111 Availability and Disparity Study: California Department of Transportation. BBC Research & Consulting. June 29, 2007.

112 The State of Minority- and Women-owned Business Enterprise: Evidence from Cleveland. NERA Economic Consulting. 

December 24, 2012.

113 Race, Sex, and Business Enterprise: Evidence from Augusta, Georgia. NERA Economic Consulting. September 4, 2009, p. 252.

114 Availability and Disparity Study: California Department of Transportation. BBC Research & Consulting. June 29, 2007.

115 The State of Minority- and Women-owned Business Enterprise: Evidence from Cleveland. NERA Economic Consulting. 

December 24, 2012.

116 2012 Georgia Department of Transportation Disparity Study. BBC Research & Consulting. June 15, 2012.
Chapter 6: Research Findings 69

December 2016 | Minority Business Development Agency

CHAPTER 6:

Research Findings

The objective of this report is to provide insight into how the qualitative data and evidence 

included in disparity studies identifies contracting barriers and discriminatory behavior which 

lead to the observed contracting disparities for MBEs. The report analyzes the impetus for 

disparity studies, including the components and methodologies of sound disparity studies. As 

part of the analysis, the report summarizes existing disparity ratios contained in a select set of 

disparity studies. Lastly, the report includes an analysis of additional quantitative and qualitative 

evidence that facilitates an investigation into what causes disparities such that the findings can 

advance the dialogue into finding effective policy solutions to remediate contracting disparities 

for MBEs.

A review of 100 disparity studies, reports, and summaries indicated significant contracting 

disparities for minority business enterprises (MBEs), pervasive across different ethnic and racial 

groups, industries, and geographies. The disparity results were substantial, with over 78 percent 

of disparity ratio observations falling below a 0.8 or 80 percent threshold used to classify a 

“substantial” disparity. In many cases, these disparity ratios were statistically significant at high 

levels, such that disparity study consultants could reject chance as a prime driver of contracting 

disparities. However, the presence of significant disparities observed from numerical disparity 

ratios does not imply discrimination. Instead, disparity studies rely on a wealth of additional 

information to characterize inferences of discrimination and the need for race-based contracting 

programs implied by substantial and significant disparities.

Anecdotal data collection and analysis is an essential disparity study component in terms of 

understanding what discriminatory behaviors are most pervasive. The anecdotal evidence 

captured in each disparity study reviewed as part of the research design provided the 

foundation for evaluating contracting barriers, how these barriers arise, and in what context they 

arise (e.g., discriminatory or non-discriminatory). Key barriers identified in the qualitative data 

analysis include:

•	 Barriers arising largely from discriminatory behavior: Agency and prime contractors 

employing capability stereotypes, double or higher standards, and manipulating 

bid processes based on prejudicial factors unrelated to business performance; also 

systemic discrimination against MBEs related to key market-based issues including 

access to capital.
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•	 Barriers arising largely from non-discriminatory behavior: Actions that influence all 

businesses regardless of race or ethnicity, including large project sizes, bid qualifications, 

and timely payment.

•	 Barriers related to network access: Exclusion of MBEs from formal or informal networks 

that would facilitate greater access to public contracting opportunities, although these 

represent a gray area between discriminatory and non-discriminatory behavior.

With respect to the last bullet, there is a fine line between claims of discrimination and a general 

lack of access. MBEs often cited network exclusion as a barrier, but often the reasons why were 

split between claims of discrimination versus understanding that most businesses prefer to work 

with firms they know and trust, regardless of race or ethnicity.

The review of existing disparity studies yielded several common themes and insights beyond 

the characterization of contracting barriers and evidence of discrimination. These included:

•	 The “needle has not moved” with respect to overcoming disparities. Every study 

identified contracting disparities and many supported these findings with additional 

quantitative and anecdotal evidence that emphasized the need for both race-neutral 

and race-conscious remedial efforts. Yet over time, disparities were prevalent even 

within the same jurisdiction.117

•	 Disparity studies often reported the same race-neutral remedies (e.g., unbundling large 

contracts, improving payment processes, improving data collection) and race-conscious 

remedies (e.g., improved goal setting and monitoring) to address contracting disparities, 

yet the studies fail to detail the extent to which agencies have actually implemented and 

measured the success or failure of these recommendations.

•	 Race-conscious programs typically helped MBEs when enacted; however the legal 

history has illustrated that these programs need to comply with the strict scrutiny 

standard and be narrowly tailored.

In addition to common observations, the disparity studies and anecdotal evidence highlighted 

common problems and issues with contracting disparities experienced by MBEs. These include:

•	 Enforcement and accountability of race-conscious programs by contracting agencies. 

There is a perception among some MBEs that prime contractors do not engage in good 

117 For example, the Washington Suburban Sanitary Commission commissioned disparity studies in 1999, 2005, 2010 and 2015. 

Although the 2015 study has yet to be published, the first three studies indicated that substantial disparities continued to exist 

for many racial and ethnic groups. While the 2005 study noted improvement over the 1999 study, the disparity consultants, which 

were different for each of the first three studies, often recommended similar approaches to addressing disparities. Likewise, 

disparity studies conducted in 2007 and 2012 for the California Department of Transportation (Caltrans) both contained substantial 

statistically significant disparities for specific racial and ethnic groups. As a result, Caltrans still failed to meet DBE goals. What 

remains unclear and a major policy issue is to what extent Caltrans implemented recommendations provided in the 2007 disparity 

study that might provide insight into why continued disparity observations existed in 2012.
Chapter 6: Research Findings 71

December 2016 | Minority Business Development Agency

faith efforts to comply with race-conscious programs and agencies do not monitor or 

enforce these efforts.118

•	 Resource constraints are a major issue facing contracting agencies. Many suggestions 

for program improvements, both race-neutral and race-conscious, require a substantial 

monetary investment (both human capital and infrastructure) at the public agency level. 

Based on the political and economic environment, some of these recommendations are 

prohibitive given lack of resources.

•	 There is often insufficient analysis and evidence of subcontracting activity at the agency 

level. Given that subcontracting is an important and critical component of increasing 

MBE participation in public contracting, greater oversight and accountability of 

subcontracting behavior coupled with better and more reliable data collection should 

be a priority.

These three bullet points also raise an important question for future research. Do disparity 

studies and conclusions provide insight into how governments are doing with respect to 

rectifying disparities? A logical next step in the research process is to investigate what is (and is 

not) being done to help address the causal factors of contracting disparities, including the role 

or influence of discrimination against MBEs.

THERE IS A NEED FOR INNOVATIVE POLICIES

The disparity study review indicated that both discriminatory and non-discriminatory actions 

lead to contracting disparities for MBEs. Additional research is needed to understand what 

steps public agencies have taken to address these disparities. Specifically, whether agencies 

have been effective at implementing the common policy prescriptions that most disparity 

studies include and to what extent these policies have either succeeded or failed. Beyond this, 

there are a number of areas to explore and research with respect to lessening barriers faced by 

MBEs in public contracting. Suggestions include, but are not limited to:

•	 Developing a uniform approach to determining the capacity of firms. A holistic 

definition could consider key individuals, equipment, financing, technology, and the 

availability to compete, among other factors. This can alleviate disagreements of which 

firms are available in a particular geographic and product market.

•	 An analysis of how often disputes are brought against municipalities/agencies could 

be a useful tool to help agencies and policymakers evaluate the current state of public 

contracting for minorities. Key issues include what is the cost of these actions and who 

pays? What level of resources is being dedicated to defend the program that could be 

used to improve the program? 

118 Numerous disparity studies included anecdotal accounts which touted the belief that without a race-conscious program in 

place, prime contractors would never use an MBE.
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•	 Research into the real ramifications for a firm that engages in discriminatory behavior 

and is caught. How do different municipalities and agencies deal with this scenario? A 

large-scale survey and interview effort could offer clarity and assist in developing policies 

that will deter firms from engaging in discriminatory behavior by dis-incentivizing it.

•	 To reduce informational asymmetries resulting from established and often exclusive 

networks, governments can create a centralized bidding notification hub for all city/

related agencies where bid posting is mandatory. This will ensure equal access to 

information as well as timely and equal notification.

•	 The Federal Government should be a model for state and local governments in 

addressing and understanding the public contracting process. To what extent can new 

technology or innovative tools be used to educate and inform government contracting 

officers with respect to barriers faced by MBEs? Would these tools be transferable 

to local contracting agencies? Can tools be developed at a federal level to help 

standardize and assist all agencies in the collection and management of procurement 

data at the prime and subcontractor level? Organizations like the MBDA can push 

for ways to standardize data collection procedures and elements. This will be a long 

process but one that will ultimately result in greater information and better-informed 

policies to affect change.

•	 Little work exists to understand the economic impact of discrimination in public 

contracting for MBEs. A study that demonstrates the value of these firms to the 

agencies and communities in which they work is necessary to drive home the business 

case for affirmative-action programs that remedy existing contracting disparities.

•	 Agencies such as the MBDA could host and sponsor working groups of leading disparity 

study professionals to discuss and contrast the merits and difficulties of current disparity 

study methodologies, particularly with respect to the issue of defining both “availability” 

and “ready, willing, and able” firms.

•	 Agencies can generate disparity study fact sheets and distribute them to buyers and 

office staff. This allows staff to see exactly what issues the disparity study identified with 

respect to discrimination and should advance the discussion towards finding solutions. 

An ongoing education process could focus on understanding specific problems and 

using teamwork to solve them. It could also encourage buy-in across the organization 

by starting with a thorough understanding of the problem.

•	 Certifying organizations could offer different levels of certifications and certify, for 

example, that a firm can do a specific type of work at a specific dollar amount. This 

would reduce the risk to municipalities and states, and would remove the rationale for 

disparities that capacity is the main issue.

•	 Contractors who did not win a bid require objective and accurate feedback to improve 

in subsequent bidding opportunities. Although not cited as a major barrier, multiple 

minority business owners reported that they lack feedback on failed proposals. 

Because most proposals contain evaluation criteria in the performance work statement, 

government agencies should provide the information on firm and proposal ratings to 
Chapter 6: Research Findings 73

December 2016 | Minority Business Development Agency

contractors who did not win in an effort to correct their mistakes in their next proposal to 

increase their chances of winning.

•	 States and municipalities should evaluate the feasibility and implementation of 

completely anonymous incident reporting systems. Staff members involved in issues 

should be apprised of the situation and if found that they contributed to the problem, 

should face monitored corrective action or other sanctions.

•	 A study that examines the economic impact of discrimination in public contracting 

could help quantify lost revenue and the impact on communities. This study could 

help organizations like the MBDA and the Department of Justice (DOJ) to create a 

centralized data system going forward where state and municipality data flows in, 

collecting anecdotal information, incident reports, payment speed, etc. The data 

would be publicly available and would permit the MBDA and the DOJ to proactively 

develop and run well-informed initiatives to alleviate discriminatory behavior that causes 

disparities in public contracting.

Appendix A: List of Disparity Studies (Chronological) 75

 December 2016 | Minority Business Development Agency

APPENDIX A

List of Disparity Studies (Chronological)

• “2015-16 State of Indiana Disparity Study”, BBC Research & Consulting, 3/2016. (Indiana) 

https://www.in.gov/idoa/mwbe/files/Final_Disparity_Study_Report_IDOA.pdf

• “Disadvantaged Business Enterprise Availability, Utilization, and Disparity Study for the San Francisco Municipal 

Transportation Agency (SFMTA)”, Rosales Business Partners LLC, 11/2015. (San Francisco, California) 

https://www.sfmta.com/sites/default/files/agendaitems/2016/4-19-16%20Item%2014%20Disparity%20Study%20- 

%20report.pdf

• “Minority- and Women-owned Business Enterprise (M/WBE) Program Disparity Study”, MGT of America, 

10/2015. (San Antonio, Texas) 

http://www.saws.org/business_center/SMWB/study/docs/SAWS_MWBE_Disparity_Study_20150104.pdf

• “Minority- and Women-owned Business Enterprise (M/WBE) Program Disparity Study”, MGT of America, 

10/2015. (San Antonio, Texas) 

http://www.saws.org/business_center/SMWB/study/docs/SAWS_MWBE_Disparity_Study_20150104.pdf

• “Minority- and Women-owned Business Enterprise (M/WBE) Program Disparity Study”, MGT of America, 

10/2015. (San Antonio, Texas) 

http://www.saws.org/business_center/SMWB/study/docs/SAWS_MWBE_Disparity_Study_20150104.pdf

• “Broward County Public Schools Disparity Study”, Mason Tillman Associates, 10/2015. (Broward County, Florida) 

http://www.broward.k12.fl.us/supply/sdop/docs/disparity/SBBC%20Disparity%20Study%20Final%20Report%20

10-4-15%20(Posted%2003.2016).pdf 

• “City of Atlanta 2015 Disparity Study Report”, Keen Independent Research, 10/2015. (Atlanta, Georgia) 

http://citycouncil.atlantaga.gov/15-O-1556-Full-Keen-Independent-2015-City-of-Atlanta-Disparity-Study.pdf

• “City of Atlanta 2015 Disparity Study Report”, Keen Independent Research, 10/2015. (Atlanta, Georgia) 

http://citycouncil.atlantaga.gov/15-O-1556-Full-Keen-Independent-2015-City-of-Atlanta-Disparity-Study.pdf

• “City of Philadelphia Fiscal Year 2014 Annual Disparity Study”, Econsult Corporation, 8/2015. 

(Philadelphia, Pennsylvania) 

http://www.phila.gov/commerce/Documents/Fiscal%20Year%202014%20Annual%20Disparity%20Study.pdf

• “City of Cincinnati Disparity Study”, Mason Tillman Associates, 7/2015. (Cincinnati, Ohio) 

https://www.cincinnati-oh.gov/manager/assets/File/City%20of%20Cincinnati%20Disparity%20Study%20Final%20

Report%209-27-2015.pdf

• “Arizona Department of Transportation Disparity Study Report”, Keen Independent Research, 7/2015. (Arizona) 

https://www.azdot.gov/docs/default-source/beco-library/2015-adot-disparity-study-report-may-2015.pdf?sfvrsn=4

• “City of St. Louis Disparity Study”, Mason Tillman Associates, 4/2015. (St. Louis, Missouri) 

https://www.stlouis-mo.gov/government/departments/sldc/upload/City-of-St-Louis-Disparity-Study-Final-5-11-15.pdf

• “Durham County/City of Durham, North Carolina Multi-Jurisdictional Disparity Study”, Griffin & Strong, P.C., 

1/2015. (Durham, North Carolina) https://durhamnc.gov/DocumentCenter/View/2648
76 Contracting Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing Disparity Studies

Minority Business Development Agency | December 2016 

• “Disparity Study for Denver Public Schools”, MGT of America, 10/2014. (Denver, Colorado) 

http://businessdiversity.dpsk12.org/wp-content/uploads/2014/10/DPS-Disparity-Study-Draft-Report-10.17.2014.pdf

• “State of Missouri Office of Administration Disparity Study”, Colette Holt & Associates, 10/2014. (Missouri) 

https://oa.mo.gov/sites/default/files/2014MOOADisparityStudyFinal.pdf

• “North Carolina Department of Transportation Disparity Study, 2014”, Colette Holt & Associates, 7/2014. (North 

Carolina) https://www.ncdot.gov/download/about/regulations/ncdotdisparitystudy2014.pdf

• “City of Philadelphia Fiscal Year 2013 Annual Disparity Study”, Econsult Corporation, 6/2014. 

(Philadelphia, Pennsylvania) 

http://www.phila.gov/commerce/Documents/City%20of%20Philadelphia-FY13%20Annual%20Disparity%20Study.pdf

• “Connecticut Disparity Study: Phase 2”, The Connecticut Academy of Science and Engineering, 5/2014. 

(Connecticut) http://www.ctcase.org/summaries/disparity_phase2_sum.pdf

• “2014 San Diego Association of Governments Disparity Study”, BBC Research & Consulting, 5/2014. (San Diego, 

California) http://www.bbcresearch.com/images/SANDAG_Final_Disparity_Study_Report_web.pdf

• “City of Mobile Disparity Study 2010-2012”, Speeches ETC., 2/2014. (Mobile, Alabama) 

https://www.cityofmobile.org/announcement_files/dsfinal_report.pdf

• “Nevada Department of Transportation Disparity Study Final Report”, Keen Independent Research, 12/2013. 

(Nevada) https://nevadadot.com/uploadedFiles/NDOT/About_NDOT/NDOT_Divisions/Administration/

Contract_Compliance/Disparity%20Study%20Final%20Report%20Dec%202013.pdf

• “Connecticut Disparity Study: Phase 1”, The Connecticut Academy of Science and Engineering, 8/2013. 

(Connecticut) http://www.ctcase.org/reports/disparity/disparity.pdf

• “Jacksonville Multi-Jurisdictional Disparity Study Volume 1”, Mason Tillman Associates, 8/2013.

 (Jacksonville, Florida) http://www.coj.net/departments/jedc/docs/equal-business-opportunity/contractcompliance/final-city-of-jacksonville-disparity-study-report-.aspx

• “Disadvantaged Business Enterprise Disparity Study: Volume 1”, NERA Economic Consulting, 7/2013. (Maryland) 

http://www.mdot.maryland.gov/Office%20of%20Minority%20Business%20Enterprise/Resources_Information/

DBEDisparityStudy%202013%20Vol1.pdf

• “Disadvantaged Business Enterprise Disparity Study: Volume 1”, NERA Economic Consulting, 7/2013. (Maryland) 

http://www.mdot.maryland.gov/Office%20of%20Minority%20Business%20Enterprise/Resources_Information/

DBEDisparityStudy%202013%20Vol1.pdf

• “Disadvantaged Business Enterprise Disparity Study: Volume 1”, NERA Economic Consulting, 7/2013. (Maryland) 

http://www.mdot.maryland.gov/Office%20of%20Minority%20Business%20Enterprise/Resources_Information/

DBEDisparityStudy%202013%20Vol1.pdf

• “City and County of Denver: Minority/Women Owned/Disadvantaged Business Enterprise Disparity Study”, 

MGT of America, 7/2013. (Denver, Colorado) 

https://www.denvergov.org/Portals/690/documents/DSBO/Disparity%20Study%202013.pdf

• “2012 Disadvantaged Business Enterprise (DBE) Program Disparity Study Update”, Mason Tillman Associates, 

3/2013. (Los Angeles County, California) 

http://media.metro.net/about_us/disparity_study/images/Final_Disparity_Study_Report.pdf

• “Disparity Study Metropolitan St. Louis Sewer District”, Mason Tillman Associates, 12/2012. (St. Louis, Missouri) 

http://www.stlmsd.com/sites/default/files/misc/disparity-study.pdf

• “The State of Minority- and Women- Owned Business Enterprise: Evidence from Mississippi”, NERA Economic 

Consulting, 12/2012. (Mississippi) 

http://jmaa.com/wp-content/uploads/2013/01/NERA_JMAA_Disparity_Study_FinalRev.pdf
Appendix A: List of Disparity Studies (Chronological) 77

 December 2016 | Minority Business Development Agency

• “The State of Minority- and Women- Owned Business Enterprise: Evidence from Cleveland”, NERA Economic 

Consulting, 12/2012. (Cleveland, Ohio) 

https://www.ceacisp.org/sites/default/files/images/disparity_study_cleveland_2006-2010_pub_dec_2012.pdf

• “Memphis Light, Gas, and Water Division Comprehensive Disparity Study and Policy Formulation”, MGT of 

America, 12/2012. (Memphis, Tennessee) 

http://www.mlgw.com/images/content/files/pdf/FinalDisparityStudyReport_01_18_2013.pdf

• “Comprehensive Disparity Study for the City of Pensacola”, MGT of America, 9/2012. (Pensacola, Florida) 

http://www.ci.pensacola.fl.us/DocumentCenter/Home/View/131

• “Availability and Disparity Study: California Department of Transportation”, BBC Research & Consulting, 8/2012. 

(California) http://www.dot.ca.gov/hq/bep/docs/2012_Caltrans_Availability_and_Disparity_Study_Final.pdf

• “The State of Minority- and Women- Owned Business Enterprise: Evidence from Missouri”, NERA Economic 

Consulting, 6/2012. (Missouri) http://www.modot.org/ecr/documents/NERAMODOTDisparityStudyFinal3.pdf

• “2012 Georgia Department of Transportation Disparity Study”, BBC Research & Consulting, 6/2012. 

(Georgia) http://www.dot.ga.gov/PartnerSmart/Business/Documents/2012%20Disparity%20Study/

Final/2012DisparityStudy-FinalReport.pdf

• “The State of Minority- and Women- Owned Business Enterprise in Construction: Evidence from Houston”, 

NERA Economic Consulting, 4/2012. (Houston, Texas) 

http://www.houstontx.gov/obo/disparitystudyfinalreport.pdf

• “City of Philadelphia Fiscal Year 2010 Annual Disparity Study”, Econsult Corporation, 10/2011. (Philadelphia, 

Pennsylvania) http://www.phila.gov/commerce/Documents/2010%20Disparity%20Study.pdf

• “The City of Charlotte Update Disparity Study”, MGT of America, 9/2011. (Charlotte, North Carolina) 

http://charlottenc.gov/mfs/cbi/Documents/2011DisparityStudy.pdf#search=disparity%20study

• “Illinois Department of Transportation/Illinois Tollway Disadvantaged Business Enterprises Disparity Study: 

Volume 2”, Mason Tillman Associates, 9/2011. (Illinois) 

http://www.diversity.dot.illinois.gov/pdf/DBEDisparityStudy.pdf

• “Illinois Department of Transportation/Illinois Tollway Disadvantaged Business Enterprises Disparity Study: 

Volume 1”, Mason Tillman Associates, 8/2011. (Illinois) 

https://www.illinoistollway.com/documents/10157/15890/Final+Disparity+Study+Report 

• “The State of Minority- and Women- Owned Business Enterprise: Evidence from Maryland”, NERA Economic 

Consulting, 2/2011. (Maryland) http://www.mdot.maryland.gov/Office%20of%20Minority%20Business%20

Enterprise/Resources_Information/NERA_MD_Disparity_Study_Final_20110218.pdf

• “Portsmouth Public Schools Procurement Disparity Study Final Report”, MGT of America, 1/2011. 

(Portsmouth, Virginia) http://pps.k12.va.us/UserFiles/Servers/Server_794494/File/MWBE%20Program/

PPS%20Procurement%20Disparity%20Study.pdf

• “Washington Suburban Sanitary Commission 2010 Disparity Study”, Mason Tillman Associates, 1/2011. 

(Maryland/Washington, DC) https://www.wsscwater.com/files/live/sites/wssc/files/SLMBE/WSSC%202010%20

Disparity%20Study%20Final%20Report.pdf

• “Disparity Study for the City of Milwaukee”, D. Wilson Consulting Group, 12/2010. (Milwaukee, Wisconsin) 

http://city.milwaukee.gov/ImageLibrary/Groups/doaEBEP/Events/Disparity_Study_-_Full_Report.pdf

• “The State of Minority- and Women- Owned Business Enterprise: Evidence from Broward County”, NERA 

Economic Consulting, 11/2010. (Broward County, Florida) 

http://www.broward.org/zArchive/econdev/Documents/NERABrowardDisparityStudyFinal112210.pdf
78 Contracting Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing Disparity Studies

Minority Business Development Agency | December 2016 

• “A Study to Determine DBE Availability and Analyze Disparity in the Transportation Contracting Industry in 

Oklahoma”, BBC Research & Consulting, 11/2010. (Oklahoma) 

https://www.ok.gov/odot/documents/02_dbe_dis_title-page.pdf

• “The State of Minority- and Women-Owned Business Enterprise: Evidence from Hawai’i”, NERA Economic 

Consulting, 10/2010. (Hawaii) 

http://www.oahumpo.org/wp-content/uploads/2013/01/ReportNERA_HDOT_final.pdf

• “The State of Minority- and Women- Owned Business Enterprise: Evidence from Minneapolis”, NERA Economic 

Consulting, 10/2010. (Minneapolis, Minnesota) 

http://www.ci.minneapolis.mn.us/www/groups/public/@civilrights/documents/webcontent/wcms1p-084807.pdf

• “Joint Availability and Disparity Study: City of Arlington”, Mason Tillman Associates, 6/2010. (Arlington, Texas) 

http://www.arlington-tx.gov/finance/wp-content/uploads/sites/24/2014/06/NCTOG-Joint-Availability-andDisparity-Study-for-the-City-of-Arlington.pdf

• “Airport Concessions Disparity Study”, Exstare Federal Services Group, 5/2010. (Phoenix, Arizona) 

https://skyharbor.com/docs/default-source/pdfs/airport-concessions-disparity-study-final-report.pdf?sfvrsn=2

• “The State of Minority- and Woman- Owned Business Enterprise: Evidence from New York”, NERA Economic 

Consulting, 4/2010. (New York) http://esd.ny.gov/mwbe/Data/NERA_NYS_Disparity_Study_Final_NEW.pdf

• “A Historically Underutilized Business (HUB) Disparity Study of State Contracting 2009”, MGT of America, 3/2010. 

(Texas) http://trcc.state.tx.us/procurement/prog/hub/disparity/Texas_DS_2009_ExeSum.pdf

• “City of Memphis, Tennessee Comprehensive Disparity Study”, Griffin & Strong, P.C., 3/2010. (Memphis, 

Tennessee) http://www.memphistn.gov/portals/0/pdf_forms/diversity_study.pdf

• “A Disparity Study for the Commonwealth of Virginia”, MGT of America, 1/2010. (Virginia) http://static.

mgnetwork.com/rtd/pdfs/20100328_race_disp04.pdf

• “OCTA Disparity Study Final Report”, BBC Research & Consulting, 1/2010. (Orange County, California) 

https://cammnet.octa.net/files/OCTA%20Disparity%20Study%20Final%20Report.pdf

• “Metro Disparity Study Final Report: Los Angeles County Metropolitan Transportation Authority”, BBC Research 

& Consulting, 1/2010. (Los Angeles County, California) 

http://media.metro.net/about_us/deod/images/disparity_study/Metro-Disparity-Study-Final-Report-01-22-10.pdf

• “Colorado Department of Transportation Statewide Transportation Disparity Study”, D. Wilson Consulting 

Group, 11/2009. (Colorado) 

https://www.codot.gov/library/studies/2009-disparity-study-and-appendices/CDOT_2009_Disparity_Study.pdf

• “State of Minnesota Joint Availability and Disparity Study: Department of Transportation”, MGT of America, 

10/2009. (Minnesota) http://www.mmd.admin.state.mn.us/disparity/Revised2009MnDOTDisparityStudy.pdf

• “State of Minnesota Joint Availability and Disparity Study: Department of Administration”, MGT of America, 

10/2009. (Minnesota) http://www.mmd.admin.state.mn.us/disparity/Revised2009AdminDisparityStudy.pdf

• “State of Minnesota Joint Availability and Disparity Study: Metropolitan Airports Commission”, MGT of America, 

10/2009. (Minnesota) https://www.metroairports.org/documents/MAC-2009-Disparity-Study.aspx

• “State of Minnesota Joint Availability and Disparity Study: Metropolitan Mosquito Control District”, 

MGT of America, 10/2009. (Minnesota) 

http://www.mmd.admin.state.mn.us/disparity/Revised2009MMCDDisparityStudy.pdf

• “State of Minnesota Joint Availability and Disparity Study: Metropolitan Council”, MGT of America, 10/2009. 

(Minnesota) http://www.mmd.admin.state.mn.us/disparity/Revised2009METCDisparityStudy.pdf

• “State of Minnesota Joint Availability and Disparity Study”, MGT of America, 10/2009. (Minnesota) 

http://www.mmd.admin.state.mn.us/disparity/Revised2009MnDOTDisparityStudy.pdf
Appendix A: List of Disparity Studies (Chronological) 79

 December 2016 | Minority Business Development Agency

• “Race, Sex, and Business Enterprise: Evidence from Augusta, Georgia”, NERA Economic Consulting, 9/2009. 

(Augusta, Georgia) http://www.augustaga.gov/DocumentCenter/Home/View/2072

• “Measuring Business Opportunity: A Disparity Study of NCDOT’s State and Federal Programs”, Euquant, 8/2009. 

(North Carolina) https://connect.ncdot.gov/business/SmallBusiness/Documents/Business%20Opportunity%20

Compliance%20-%20Full%20Version.pdf

• “Disparity/Availability Study for the Montana Department of Transportation”, D. Wilson Consulting Group, 

8/2009. (Montana) 

http://www.mdt.mt.gov/other/webdata/external/research/docs/research_proj/disparity/final_report.pdf

• “City of Davenport Disparity Regarding Minority and Women Participation in Contracting”, Mason Tillman 

Associates, 6/2009. (Davenport, Iowa) 

http://www.davenportnaacp.org/downloads/Davenport_Disparity_Study_2009.pdf

• “Report on the City of Chicago’s MWBE Program”, David G. Blanchflower, 6/2009. (Chicago, Illinois) 

http://www.dartmouth.edu/~blnchflr/papers/chicago%20sunset%20final%20report%20june%2010th%202009-0.pdf

• “San Francisco Bay Area Rapid Transit District Availability and Utilization Study”, Mason Tillman Associates, 

4/2009. (San Francisco, California) 

https://www.bart.gov/sites/default/files/docs/Final_Availability_and_Utilization_Study_4-6-09.pdf

• “Availability Analysis and Disparity Analysis for the Arizona Department of Transportation”, MGT of America, 

3/2009. (Arizona) https://repository.asu.edu/items/28164

• “A Comprehensive Disparity Study of the City of Tucson MWBE Program”, D. Wilson Consulting Group, 9/2008. 

(Tucson, Arizona) https://www.tucsonaz.gov/files/oeop/DisparityStudy08.pdf

• “A Disparity Study for the City of Saint Paul and the Saint Paul Housing and Redevelopment Authority”, MGT of 

America, 8/2008. (Saint Paul, Minnesota) https://www.stpaul.gov/DocumentCenter/Government/

Human%20Rights%20&%20Equal%20Economic%20Opportunity/Publications%20&%20Resources/

Disparity%20Study/2008%20Disparity%20Study_201506161151224076.pdf

• “A Second-Generation Disparity Study for the City of Dayton, Ohio”, MGT of America, 8/2008. (Dayton, Ohio) 

http://www.mvfairhousing.com/ai2015/2008-08-08_Disparity_Study_Dayton.PDF

• “Race, Sex, and Business Enterprise: Evidence from the City of Austin”, NERA Economic Consulting, 5/2008. 

(Austin, Texas) 

https://www.austintexas.gov/sites/default/files/files/Small_Minority_Business/Report-neracoa_may2008.pdf

• “Measuring Minority- and Woman-Owned Construction and Professional Service Firm Availability and 

Utilization”, CRA International - Mark Berkman, Matthew Johnson, Robert Fairlie, 12/2007. (Santa Clara Valley, 

California) http://www.vta.org/sfc/servlet.shepherd/version/download/068A0000001FbwY

• “A Study to Determine DBE Availability and Analyze Disparity in the Transportation Contracting Industry in 

Idaho”, BBC Research & Consulting, 12/2007. (Idaho) https://itd.idaho.gov/civil/pdf/Disparity/Study.pdf

• “Quantitative Analysis of the Availability of Minority- and Women-Owned Businesses and their Utilization by the 

Corpus Christi Regional Transportation Authority”, Jim Lee, 11/2007. (Corpus Christi, Texas) 

https://www.ccrta.org/wp-content/uploads/2016/06/ccrta-disparity-study-2007.pdf

• “City of Birmingham Disparity Study Report”, Pendleton, Friedberg, Wilson & Hennessey, P.C., 9/2007.

• “For Development and Revision of Small, Minority & Women Business Enterprise Program”, Griffin & Strong, 

P.C., 9/2007. (Nashville, Tennessee) 

https://www.flynashville.com/business-diversity-development/Documents/MNAADisparityStudy.pdf

• “Disparity Study in Building Construction and Building Design”, Mason Tillman Associates, 8/2007. 

(Pennsylvania) http://www.dgs.pa.gov/Businesses/Minority,%20Women%20and%20Veteran%20Businesses/

Documents/Disparity%20Study.pdf
80 Contracting Barriers and Factors Affecting Minority Business Enterprises: A Review of Existing Disparity Studies

Minority Business Development Agency | December 2016 

• “City of Milwaukee Study to Determine the Effectiveness of the City’s Emerging Business Enterprise Program”, 

Mason Tillman Associates, 8/2007. (Milwaukee, Wisconsin) 

http://www.city.milwaukee.gov/ImageLibrary/Groups/doaBusinessOp/EBEP_STUDY.pdf

• “Availability and Disparity Study: California Department of Transportation”, BBC Research & Consulting, 6/2007. 

(California) http://www.dot.ca.gov/hq/bep/study/Avail_Disparity_Study_Final_Rpt.pdf

• “Fairness in Purchasing and Contracting Disparity Study”, Mason Tillman Associates, 5/2007. (Oakland, 

California) http://cces.oaklandnet.com/ContComp/Pdf/CityofOaklandVolumeIMasterReportMay20075-11-07.pdf

• “City of Philadelphia Fiscal Year 2006 Annual Disparity Study”, Econsult Corporation, 5/2007. 

(Philadelphia, Pennsylvania) 

http://mbec.phila.gov/HOME/forms/FY%202006%20Disparity%20Study%20-%20FINAL%202007-06-01.pdf

• “The City of Houston Disparity Study”, Mason Tillman Associates, 12/2006. (Houston, Texas) 

https://www.houstontx.gov/obo/reports/cohdisparitystudy2006.pdf

• “The Prince George’s County Government Disparity Study Final Report”, D.J. Miller & Associates, 11/2006. 

(Prince George’s County, Maryland) http://www.pfccoalition.org/Study/Disparity+Study+Final+Report.pdf

• “A Business Underutilization Causation Analysis Study for the City of Columbia”, MGT of America, 8/2006. 

(Columbia, South Carolina) https://www.columbiasc.net/depts/obo/docs/extprod012139.pdf

• “Race, Sex, and Business Enterprise: Evidence from the State of Illinois and the Chicago Metropolitan Area”, 

NERA Economic Consulting, 6/2006. (Illinois)

https://www.illinoistollway.com/documents/10157/dcef5ab6-c681-4156-a364-e8413aa4f0f1

• “Race, Sex, and Business Enterprise: Evidence from Denver, Colorado”, NERA Economic Consulting, 5/2006. 

(Denver, Colorado) https://www.denvergov.org/Portals/690/documents/060505FinalDenverReport.pdf

• “Multi-Jurisdictional Disparity Consultant Services”, Mason Tillman Associates, 4/2006. (Tampa, Florida) 

http://www.tampagov.net/sites/default/files/minority-business-development/files/disparity_study_final_

report_050206_vol_1.pdf http://www.tampagov.net/sites/default/files/minority-business-development/files/

disparity_study_report_final_report_vol_2_050406.pdf

• “Race, Sex, and Business Enterprise: Evidence from the State of Maryland”, NERA Economic Consulting, 3/2006. 

(Maryland) http://www.mdot.maryland.gov/Office%20of%20Minority%20Business%20Enterprise/Resources_

Information/FinalReportNERAMaryland.pdf

• “Analysis of Essex County Procurement and Contracting”, University of Minnesota Disparity Study Research 

Team, 10/2005. (Essex County, New Jersey) http://essexcountynj.org/report.pdf

• “Race, Sex, and the Business Enterprise: Evidence from the State of Washington”, NERA Economic Consulting, 

10/2005. (Washington) https://assets.documentcloud.org/documents/367581/nera-wsdot-study-2005.pdf

• “State of New Jersey Construction Services Disparity Study 2000-2002”, Mason Tillman Associates, 10/2005. 

(New Jersey) https://dspace.njstatelib.org/xmlui/bitstream/handle/10929/22390/e192005.pdf?sequence=1

• “State of New Jersey Disparity Study of Procurement in Processional Services, Other Services, and Goods and 

Commodities”, Mason Tillman Associates, 6/2005. (New Jersey) http://www.cdapc.com/assets/Documents/

IG_REPORTS_AND_DISPARITY_REPORT/NJ_STATE_DISPARITY_FINAL_REPORT_6-13-2005.pdf

• “WSSC 2005 Disparity Study - Summary and Recommendations”, BBC Research & Consulting, 6/2005. 

(Washington) http://dlslibrary.state.md.us/publications/ICA/WSSC/DisparityStudy_2005.pdf

• “City of New York Disparity Study”, Mason Tillman Associates, 1/2005. (New York, New York) 

http://masontillman.com/sites/masontillman.com/files/attachments/1312%20City%20of%20New%20York%20

Final%20REPORT%201-24-05.pdf

• “Alameda County Availability Study”, Mason Tillman Associates, 10/2004. (Alameda County, California) 

https://www.acgov.org/government/documents/availabilitystudy.pdf
Appendix A: List of Disparity Studies (Chronological) 81

 December 2016 | Minority Business Development Agency

• “A Procurement Disparity Study of the Commonwealth of Virginia”, MGT of America, 1/2004. (Virginia) 

http://static.mgnetwork.com/rtd/pdfs/20100328_race_disp04.pdf

• “Mecklenburg County Disparity Study”, MGT of America, 1/2004. (Mecklenburg County, North Carolina) 

http://charmeck.org/mecklenburg/county/edo/MWSBE/Documents/FR2168County.pdf

• “State of Ohio Predicate Study”, D.J. Miller & Associates, 7/2001. (Ohio) https://www.dot.state.oh.us/groups/

DisparityStudies/Documents/Study%20Resources/2001%20Predicate%20Study%20Final%20Report.pdf

• “Colorado Department of Transportation Disparity Study Update”, MGT of America, 4/2001. (Colorado) 

http://hermes.cde.state.co.us/drupal/islandora/object/co%3A5196

• “MWBE Local Business Disparity Study for the City of Evanston”, D.J. Miller & Associates, 4/1996. 

(Evanston, Illinois) 

http://www.cityofevanston.org/assets/DJ%20Miller%20%20Associates%20Disparity%20Study%20April%201996.pdf

• “State of Texas Disparity Study”, National Economic Research Associates, 12/1994. (Texas) 

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APPENDIX B

Glossary

anecdotal evidence. Qualitative data derived through personal interviews, focus groups, public 

hearings, surveys, written testimony and other means, that details accounts of discrimination, disparate 

treatment, or barriers faced by individuals with respect to business operations.

availability. A measure of the number of firms in a particular geographic and product market that are 

ready, willing, and able to perform work for procurement agencies. Availability is typically expressed on 

an expected contract-dollar basis and can be reported at different levels of aggregation depending on 

race, ethnicity and gender combinations.

bid capacity. Analysis of the sizes of contracts and subcontracts that a particular business has bid on or 

been awarded in the past.

bid shopping. The practice of a prime contractor providing bid information from a minority-owned 

subcontractor to a non-minority subcontractor with the intent of receiving a new bid from the nonminority subcontractor to undercut the bid received from the minority-owned subcontractor.

bonding. A type of surety bond that guarantees reimbursement to the agency/authority for any financial 

losses caused by fraudulent or dishonest acts by officers or employees of the contractor or subcontractor. 

This includes theft, embezzlement, and forgery. Bonding is required for most public contracting projects 

involving construction or large up-front investments. 

bundled contracts. Multiple, smaller contracts or goods/services that are combined into one 

larger contract.

capacity. A firm-level measure of whether a particular DBE contractor has the ability to fulfil the 

requirements of a particular contract (e.g., does it have the capacity to perform the contracted work such 

that it can be considered ready, willing, and able to bid on the project).

compelling interest. Pertains to the first prong of the strict scrutiny standard, where the constitutionality 

of race-conscious contracting programs is evaluated to assess whether the benefits of exclusion of others 

offers significant benefits to the government.
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disadvantaged business enterprise (DBE). For-profit small business concerns where socially and 

economically disadvantaged individuals own at least a 51% interest and also control management 

and daily business operations. African Americans, Hispanics, Native Americans, Asian-Pacific and 

Subcontinent Asian Americans, and women are presumed to be socially and economically disadvantaged.

Other individuals can also qualify as socially and economically disadvantaged on a case-by-case basis.

disaggregation. The process of splitting a larger group into smaller constituent parts. For example, 

statistics presented for minority business enterprises include data pertaining to African Americans, 

Hispanic Americans, Asian Americans, etc. Disaggregation is typically used in the context of analyzing 

disparity ratios at a finer level of detail based on particular ethnic or racial groups, as well as within major 

industry groupings.

discrimination. The unjust or prejudicial treatment of different categories of people or things, especially 

on the grounds of race, age, or sex.

disparity index or disparity ratio. The utilization of minority-owned firms divided by the availability of 

minority-owned firms in a particular geographic and product market. A disparity index or ratio is often 

expressed as a decimal, or alternatively multiplied by 100. When expressed as a decimal, an index of 1.0 

indicates parity. When multiplied by 100, an index of 100 equals parity. Values less than 0.8 or 80 typically 

indicate a substantial disparity.

Dun & Bradstreet (D&B). A business services company that provides commercial data on businesses 

including credit history and ownership status.

federal disadvantaged business enterprise (DBE) program. A program designed to remedy ongoing 

discrimination and the continuing effects of past discrimination in federally-assisted highway, transit, 

airport, and highway safety financial assistance transportation contracting markets nationwide. The 

primary remedial goal and objective of the DBE program is to level the playing field by providing 

small businesses owned and controlled by socially and economically disadvantaged individuals a fair 

opportunity to compete for federally funded transportation contracts. Established by the USDOT after 

enactment of the Transportation Equity Act for the 21st Century (TEA-21) as amended in 1998. 49 CFR 

Part 26 includes the regulations covering the Federal DBE Program.

metropolitan statistical area (MSA) Geographic regions and entities used in the collection and 

tabulation of Federal statistics. MSAs are defined by the Office of Management and Budget (OMB) and 

are used by multiple agencies to delineate geographic areas.

minority business enterprise (MBE). Minority group members are United States citizens who are Asian, 

Black, Hispanic and Native American. Ownership by minority individuals indicates that the business is at 

least 51% owned by such individuals or, in the case of a publicly-owned business, at least 51% of the stock 

is owned by one or more such individuals i.e. the management and daily operations are controlled by 

those minority group members.
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M/WBE. An aggregate measure of all minority- and women-owned business establishments for a 

particular disparity study.

narrowly tailored. Relates to the second prong of the strict scrutiny standard, where a narrowly tailored 

program is one that remedies discrimination for affected groups while considering race-neutral means 

and the rights of third parties.

North American Industrial Classification System (NAICS). A standardized method of identifying the 

sector or industry in which a company operates using a numerical system ranging from two to six digits.

p-value. A measure of statistical significance, where the p-value provides a numerical probability that an 

outcome or result is due purely to chance. The lower than p-value, the less likely that the outcome is due 

to chance, as opposed to other causal factors.

prime. A business that contracts directly with the government agency.

race-based or race-conscious program: A government initiated program that specifically includes racial 

or ethnic preferences in alleviating discriminatory behavior against affected racial or ethnic minority 

business enterprises in public contracting.

race-neutral measures. Contracting programs or initiatives that apply to all businesses regardless 

of race. Examples include assisting all small businesses in overcoming barriers to bonding and 

insurance, simplifying bidding procedures, providing technical assistance or establishing start-up 

assistance programs.

regression analysis. A statistical method that examines the relationship between variables using 

mathematical models to determine the best fit of data points. Regression involves estimating the 

relationship between a dependent variable and one or more independent variables which can influence 

the dependent variable result. 

relevant geographic market. The geographic market in which disparity ratios are computed for MBEs in 

an particular industry. Typically, geographic markets are determined through an analysis evaluating where 

a substantial number of contract dollars are awarded from a procurement agency or agencies.

relevant product market. The industry in which disparity ratios are computed for MBEs in a particular 

geographic area. Typically, industries are determined through an analysis evaluating where a substantial 

number of contract dollars are awarded from a procurement agency or agencies to firms operating within 

particular industries. Most disparity studies include analyses involving “Construction,” “Professional 

Services,” “Goods and Supplies,” and “Architecture & Engineering Services.”

set-aside. A contracting preference program where certain contracts are earmarked for restricted 

competition. These contracts are only available to a subset of businesses, for example, minorityowned firms.
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statistically significant. A result is statistically significant if it is determined that the observed result is 

not attributable to chance. The level of significance depends on p-values, where a greater the level of 

significance equates with a lower probability that the result is due to chance alone.

strict scrutiny. A form of judicial review that courts use to determine the constitutionality of certain laws. 

The two prongs of the strict scrutiny standard include establishing a compelling governmental interest 

and narrowly tailoring a race-conscious remedial program.

subcontractor. A contractor that provides contract work to prime contractors, not directly to the 

government agency.

utilization. A measure of what percentage of contracts or dollars are awarded to minority-owned 

businesses. Calculated by dividing the total contracts or dollars awarded to minority-owned firms by the 

total contracts or dollars awarded to all firms.

woman-owned business enterprise (WBE). A business with at least 51 percent ownership and control 

by women. Some studies restrict the WBE definition to include only non-minority women, while others 

include minority-owned women in the definition.