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Disparity Study

A disparity study examines whether businesses have opportunities to participate in government contracting. The City conducts these studies to understand current marketplace conditions, identify potential barriers to participation, and evaluate its Minority Business Enterprise (MBE) and Women Business Enterprise (WBE) programs. The findings help inform the City’s efforts to maintain programs that promote fair and meaningful opportunities for businesses to compete for City contracts.
FAQ 

A disparity study examines whether there is a statistically significant difference between the percentage of City contract dollars awarded to minority- and women-owned businesses and the availability of those businesses within the City’s relevant geographic market area. The study also evaluates whether any identified disparities can be explained by factors unrelated to race or gender. These findings help governments determine whether there is a compelling governmental interest in maintaining race- and gender-conscious programs, such as MBE and WBE programs, and inform how those programs may be structured to address identified disparities.

Key Terms:

  • Compelling Governmental Interest: The initial burden government organizations must establish by showing evidence of contracting discrimination that supports the use of race- and gender conscious measures.
  • Relevant Geographic Market Area (RGMA): The area where the majority of a government's dollars are spent. The City spends a majority (75% or more) of its dollars within Hamilton County, making Hamilton County the City's RGMA.

 

The City has established through prior disparity studies that minority- and women-owned businesses within the City's relevant geographic market area of Hamilton County continue to experience contracting disparities that cannot be accounted for by factors unrelated to race or gender, establishing Compelling Governmental Interest in administering the City's current economic inclusion programs. In order to maintain legally defensible race- and gender-conscious economic inclusion programs, the City must undergo periodic disparity studies to assess current marketplace conditions, evaluate program effectiveness, and ensure the program continues to meet narrow tailoring and strict scrutiny requirements. 

Key Terms:

  • Compelling Governmental Interest: The initial burden government organizations must establish by showing evidence of contracting discrimination that supports the use of race- and gender conscious measures.
  • Narrow Tailoring: In addition to demonstrating a compelling governmental interest, government organizations must also demonstrate their use of race- and gender-conscious measures is narrowly tailored to address specific barriers impacting their contracting and procurement.
  • Relevant Geographic Market Area (RGMA): The area where the majority of a government's dollars are spent. The City spends a majority (75% or more) of its dollars within Hamilton County, making Hamilton County the City's RGMA.
  • Strict Scrutiny: Under strict scrutiny, government organizations must show a compelling governmental interest in using race- and gender-conscious measures and ensure the use of such measures is narrowly tailored.

Contracting disparities are identified by comparing the utilization of minority- and women-owned businesses with the availability of those businesses within the City's relevant geographic market area during the study period. The comparison is expressed as a disparity index, which is calculated by dividing utilization by availability. An index of 100 indicates that utilization is proportional to availability. An index below 100 indicates that a group is being utilized at a lower rate than its availability would suggest.

A disparity index of 80 or less is commonly used in disparity studies as a benchmark for identifying a substantial disparity, meaning that a group is receiving 80% or less of the contract participation that would be expected based on its availability. The 80% benchmark is commonly referred to as the "80 percent rule" and has been used in legal and statistical analyses of disparities.

The disparity index is one part of the analysis. Additional statistical tests may be used to determine whether an observed disparity is statistically significant and unlikely to have occurred by chance. The study may also examine other quantitative and qualitative evidence to assess potential explanations for identified disparities.

​Key Terms:​

  • Availability: The availability of minority- and women-owned firms within the City's relevant geographic market area that are ready, willing, and able to participate in City contracting. 

  • Disparity Index: A measure of the relationship between utilization and availability, calculated by dividing utilization by availability and multiplying by 100. An index of 100 indicates utilization proportional to availability. An index of 80 indicates utilization at 80% of availability.

  • Study Period: The specific, bounded historical timeframe, (typically spanning 3 to 5 years) for which a government agency’s prime contracts, subcontracts, and procurement data are statistically analyzed.

  • Statistical Significance: A statistical assessment of whether an observed difference between utilization and availability is unlikely to have occurred by chance. Disparity studies may use statistical tests, such as standard deviation analysis, to evaluate the significance of identified disparities.

  • Utilization: The percentage of contract dollars the City currently spends with minority- and women-owned firms within the City's relevant geographic market area during the study period.

Previous Disparity Studies

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