Monday, June 5, 2023

There’s ‘substantial disparity’ in city contracts to minority and women-owned businesses, study shows

VIRGINIA BEACH — The private company hired to perform a study on the city’s business practices with small, women, and minority-owned businesses (SWaM) presented their results to City Council Tuesday.

The study revealed “substantial disparities” between the amount of contracting money SWaM businesses receive from the city versus how much should be available to those businesses.

The results of the study, conducted BBC Research and Consulting, were presented by Sameer Bawa, a principal of the company. The study was intended to identify racial disparities in the city’s business contracts and provide recommendations for alleviating any of those disparities.

“Do women and minority-owned business face barriers — this is one of the main questions that this study was meant to answer,” Baw said.

The study analyzed the number of city contract dollars that went to SWaM businesses, how much money they should have received based on their size, as as well as those businesses’ participation in competitive contracting bids with the city.

The study looked at $1.2 billion in city contracts from July 1, 2013 through June 30, 2017.

The city awarded 18.2 percent, or $222 million of the $1.2 billion in contracting dollars subject to the study, to SWaM-owned businesses, Bawa said.

Bawa said the data revealed there should have been $296.5 million in city contracts available to SWaM owned businesses — or 25.2 percent of $1.2 billion in city contracts subject to the study.

Related story: Virginia Beach Disparity Study is nearly complete, and City Council will hear results Tuesday

Bawa’s company then divided the amount of contracting dollars that should have been available to SWaM businesses into the number of contracting dollars actually received to reach the “disparity index” — a number representing the gap between those dollars.

An index of “1” would indicate full utilization, while an index of 0.8 or less is considered “substantial underutilization” of SWaM businesses and is a “legally important” benchmark at the federal level, which allows cities to take swift correctional measures, Bawa said.

According to the study, all SWaM businesses — African-Americans, Hispanic-Americans, Native-Americans, and non-Hispanic, white women-owned businesses — in the City of Virginia Beach fell below the “legally important” benchmark of 0.8 percent.

“This is a significant disparity,” Bawa said.

SWaM businesses that sought contracts with the city received a disparity index of 0.75 — meaning that overall, SWaM businesses only received three-fourths of the city contracting dollars that they should be receiving.

Asian-Americans were the only group that received more contracting money than statistically available, according to the study, with an index of 2, meaning they received twice the amount that should have been available.

White, non-Hispanic women received an index of 0.62, African-Americans received a score of 0.56, Hispanics received a 0.2, while Native-Americans received a disparity index of 0.05.

Bawa’s study provided several recommendations, which included “unbundling” large construction contracts. Breaking up large contracts might be helpful to SWaM businesses, which tend to be smaller companies, according to the study.

Bawa also suggested the city provide greater notification of contracts to everyone, which would include SWaM businesses, so that more people know what contracts are available.

The full report will be made available to City Council in the next two weeks.

Bawa said “18.2 percent is nothing to sneeze at. That is still a substantial amount of money going to SWaM businesses. But there is still room to improve.”

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