Measuring Disparity in Government Procurement: Problems with Using Census Data in Estimating Availability

• Author: Melvin T. Stith, Sr.,Dan Voich, Jr.,E. Joe Nosari,Stephen E. Celec
• DOI: http://doi.org/10.1111/0033-3352.00072
• Published date: 01 March 2000
• Date: 01 March 2000

134 Public Administration Review • March/April 2000, Vol. 60, No. 2

The authors are in the College of Business at Florida State University. Stephen

E. Celec is professor of finance. Dan Voich, Jr. is professor and chair of the

management department. E. Joe Nosari is professor of finance and associ-

ate dean and Melvin T. Stith, Sr. is professor of marketing and dean of the

College of Business. As a group, they have completed disparity studies at the

state level for the State of Florida and at the federal level for Resolution Trust

Corporation. As a group and individually, they have served as consultants

on various legal challenges to existing disparity studies.

Stephen E. Celec

Dan Voich, Jr.

E. Joe Nosari

Melvin T. Stith, Sr.

Florida State University

Measuring Disparity in Government

Procurement: Problems with Using Census Data

in Estimating Availability

The Supreme Court’s ruling in

City of Richmond v. J.A. Croson (1989)

has restricted the use of

government procurement assistance programs for minorities and women without the prerequisite

support of a disparity study. Recently, an increasing number of disparity studies have been re-

jected by the courts as “junk science” and the related programs have been ruled unconstitutional.

A central issue in these cases has been the approach used to estimate the availability of minority

and women firms. Data from the Economic Census are commonly used as the basis for these

availability estimates. However, there are significant problems and limitations with the Census

data relative to the

Croson

guideline that the availability of women and minority firms should

reflect the number of qualified, willing, and able firms. Given the number and difficulty of the

required adjustments to the Census data, it is unlikely that these data will provide availability

estimates that are accurate enough to allow for valid statistical tests of an inference of discrimina-

tory exclusion. If minimizing court challenges is a goal of the public administrator who is respon-

sible for the program, then the recommendation here is that a primary source of availability data

should be considered. Furthermore, the information system needed to support the women and

minority assistance programs should be designed and installed prior to initiating the program.

Introduction

Public procurement is a multibillion-dollar business for

vendors who provide a large variety of products and ser-

vices to federal, state, and local governmental agencies.

Thus, there are very large potential dollar benefits to firms

that can qualify for minority and women procurement as-

sistance programs. The goals set for awarding procurement

contracts to minority and women firms in these types of

programs are often quite substantial. Moreover, the use of

minority and women procurement assistance programs has

become widespread in most governmental agencies, and it

is not unusual for a geographic area to have more than one

of these programs. For example, a city, county, and school

board in the same region often have separate programs with

separate goals for using minority and women vendors in

procurement.

Many governmental agencies use procurement assis-

tance programs for minority- and women-owned businesses

on the premise that their procurement processes have sub-

jected these firms to race/gender discrimination. In City of

Richmond v. J.A. Croson (488 U.S. 469; 109 S.Ct. 706;

102L.Ed. 2d 854 [1989]), the United States Supreme Court

established guidelines for determining the constitutional-

ity of race/gender procurement assistance programs by state