Office of Business Opportunity
Disparity Study FAQs
Question: What is a Disparity Study?
Answer: A Disparity Study determines whether a government entity, either in the past or currently, engages in exclusionary practices in the solicitation and award of contracts to minority, and women‐owned, and disadvantaged business enterprises (MWDBEs). The City of Houston commissions periodic disparity studies to determine if there is disparity between the availability of firms and the utilization of those firms in its market area.
Question: What is the purpose of a Disparity Study? Why is it necessary?
Answer: The study is necessitated in part by the 1989 U.S. Supreme Court’s decision in the case of City of Richmond v. J.A. Croson. The court decision imposed legal requirements on jurisdictions to establish a “compelling interest” to support the establishment of a minority and women business program. The results of this study will determine if a compelling interest exists for the continuation of the City’s M/WBE program.
Question: What factors are considered in determining whether disparity exists?
Answer: Disparity is calculated in the form of an index. The disparity index is a ratio of the percentage of utilization and the percentage of availability of M/WBE firms. If the disparity index is 100, the utilization of M/WBE is leveled with the availability of M/WBEs in the market area. If the index is less than 80, it indicates that M/WBEs are significantly underutilized by an entity based on availability. Indices between 80 and 100, which is close to full participation, indicates underutilization though not significant. Additional quantitative analyses performed include an analysis of the utilization of M/WBE firms in private sector contracting as well as a statistical analysis of disparities in business formation rates, projected growth rates, and self-employment revenue. Finally, to perform a qualitative analysis, anecdotal evidence – including, but not limited to, survey responses, focus groups, public meetings, interviews, and written responses / comments – is collected and analyzed to fully evaluate potential barriers faced by M/WBE firms in business formation, business growth, and contracting (both public and private).
Question: Has the City of Houston ever conducted a Disparity Study? What were the results the of previous disparity studies?
Answer: Yes, the City of Houston conducted the following Disparity Studies:
- In 2006, the City published a Disparity Study conducted by Mason Tillman that reviewed all city contract types from July 1, 2003 – June 30, 2006.
- In 2012, the City published a Disparity Study conducted by NERA Consulting that reviewed city construction contracts from July 1, 2005 –December 31, 2009. This Disparity Study was conducted pursuant to a settlement agreement in the Kossman case.
- Each disparity study concluded that there were disparities in city contracting regarding Minority and Women businesses requiring that the City implement remedial measures to address those disparities.
- These Studies can be found on the following link: https://www.houstontx.gov/obo/disparity_study.html
Question: When will the next Disparity Study be conducted?
Answer: The City issued a RFP for a Disparity Study consultant in April 2022. The analysis of City contracts and the regional market will be conducted in a period up to three (3) years period following selection.
Question: What information/data will the Disparity Consultant review in making its analysis (e.g. anecdotal, contracts, etc.)?
Answer: Data analyzed for the City of Houston, where available, includes:
- The City’s contracting activity during the five-year period of FY2017-FY2021
- Anecdotal data retrieved from focus groups, public hearings, surveys, and interviews
- Current or past City policies, procedures, and programs that govern the procurement of contracts.
- In addition, to the analysis of M/WBE availability and utilization, the study will look at veteran, DBE, and ACDBE availability and utilization.
Question: What minority groups are being analyzed as part of the disparity study?
Answer: The groups included in the study are:
- Black or African American
- Hispanic or Latino
- Native American
- The study will also evaluate utilization by gender
Question: How can local business owners and stakeholders get involved and stay informed?
Answer: The participation of stakeholders and business owners is crucial to the Disparity Study’s success. The selected consultant will hold a public Disparity Study kickoff/informational session. They will also be conducting stakeholder meetings, business owner interviews, sending surveys, and holding focus groups throughout the course of the Study to gather information; local business owners and stakeholders are encouraged to attend. The selected consultant will be sending invitations to area businesses and trade associations.
The business owner meetings and focus groups will allow the Consultant to document anecdotal testimony from firms and/or individuals that have done business or are interested in doing business directly with the City or indirectly through its prime contractors/lead professional consultants.
Data collected throughout the Study will be considered and incorporated into the final report.
Question: When can we expect to see the results of the disparity study?
Answer: Due to the amount of time needed to conduct interviews, evaluate anecdotal data retrieved from focus groups, public hearings, surveys, and time needed to analyze large amounts of data, this Disparity Study is anticipated to take approximately 3 years to complete.
We welcome your comments throughout the course of the Study. To share your comments or concerns, and for more information on the progress of the Disparity Study, please:
- Visit the City of Houston’s Disparity Study Website: https://www.houstontx.gov/obo/disparity_study.html
- Contact the Katrina Williams at firstname.lastname@example.org