What are disparity studies and are local governments required to have them?

As noted in the previous question, disparity studies are designed to document past discrimination in the awarding of contracts by a particular jurisdiction as well as in the industry in general. Local governments are not required to have them, but they may work to support the constitutionality of a local government’s M/WBE program.

Greatly simplified, a disparity study evaluates the past contracting practices of a local government that proposes to implement an M/WBE program, the market area from which the contractors doing business with the unit are drawn, and the availability of qualified M/WBE contractors within that market area in the trades used by the unit. The study then analyzes whether there is a statistically significant disparity between the firms available to and those used by the local government, attempting to control for race-neutral factors such as firm size and experience. Such a disparity is evidence of discrimination. A disparity study also evaluates anecdotal evidence and statistical evidence, where available, of discrimination in the local marketplace to determine if the governmental unit has been a passive participant in industry-wide discrimination. Evidence may be drawn from census data, the records of the unit being studied, federal studies, public hearings, surveys, and interviews.

A number of private consulting firms have developed expertise in conducting disparity studies. The studies can be costly (ranging from $50,000 to hundreds of thousands of dollars, depending on the size of the unit), time consuming, and demanding for local government staff.