Contracting Barriers and Factors Affecting Minority Business Enterprises A Review of Existing Disparity Studies

Foreword

Contracting Barriers and Factors Affecting Minority Business Enterprises A Review of Existing Disparity StudiesWinning 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.

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, National Director and Albert K. Shen, National Deputy Director

*U.S. Department of Commerce, Minority Business Development Agency performance and CRM systems, Retrieved December 12, 2016.

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