The researchers examined the procurement habits of the D.C. government, Events DC and the University of the District of Columbia between fiscal 2016 and 2020, finding positive trends as well as areas with room for dramatic improvement. The study’s authors also surveyed 1,134 local business owners to gauge their interest in contracting with the city, and to discern any challenges they face while doing so.
In all, the study says, D.C. awarded about $8 billion in contracts and subcontracts during that time frame; about $2.9 billion of those went to businesses that were owned by women and people of color — for a spending rate of 37 percent. The city earned praise for that figure; researchers noted that D.C.’s spending rate for minority businesses far exceeded many other jurisdictions that recently completed disparity studies, including Boston (11 percent), San Diego (19 percent), Charlotte (about 15 percent) and Virginia (13.4 percent).
But that $2.9 billion was not distributed evenly among women- and POC-owned businesses that received city contracts, the study found: About 70 percent of that money was concentrated among 10 percent of such businesses.
Sameer Bawa, managing director with BBC Research and Consulting, said during a presentation about the study’s findings Thursday night that other jurisdictions have had similar challenges with how money is concentrated — he noted that, city governments, including D.C.’s, often develop strong relationships with certain firms and tend to go back to those businesses for additional services and contracts.
“But what is unique about D.C. is the sheer magnitude of some of the dollars some of the businesses received,” Bawa added. He noted that some firms received hundreds of millions of dollars over the five-year period researchers examined: “The outliers were so large they were hard to ignore.”
After researchers removed outlier businesses from their “disparity index” formula to measure parity among racial and ethnic groups, they found “substantial disparities” across the board between the number of minority- and women-owned businesses that were available to receive contracts and the number that D.C. awarded to them.
A summary of the study can be accessed here.
The report also contains anonymous testimony from business owners who detailed the strengths and weaknesses of the city’s contracting efforts. Some expressed difficulty navigating the city’s requirements to earn a contract.
“People should not be misled by the total dollar amount being spent with minorities,” said Council member Kenyan R. McDuffie (I-At Large), who oversees the council’s business and economic development committee and led the effort to fund the study. “The numbers are extraordinarily low, even if the total dollar amount exceeds that of other places.”
The study offers several recommendations for D.C. leaders to correct the disparities, for example, setting aside “certain small projects” for exclusive competition among businesses that have never worked with D.C., or more explicit goals based on the study’s results related to minority participation — a step that would need to be able to stand up to legal scrutiny. The D.C. government took similar steps in the ’90s to set aside contracts for minority-owned firms, but a judge ruled that the law was unconstitutional and said that the city needed to provide statistical evidence to justify it.
McDuffie said Boston, Atlanta and Maryland, among other jurisdictions, have successfully developed minority contracting laws that withstood legal scrutiny.
“It’s not necessarily a one-size-fits-all approach to this work; you have to find a way to ensure the District’s contract and procurement dollars are reaching more women and POC businesses in our city,” McDuffie said. “There’s a positive ripple effect of economic activity when that occurs.”
A coalition of D.C. agencies will spend the next year determining which recommendations are feasible and whether they will have sufficient impact to correct the disparities. A plan outlining these next steps is due March 31, 2024, though some of the recommendations could be implemented sooner.
In a letter accompanying the study, Mayor Muriel E. Bowser (D) noted that D.C. in fiscal 2016 spent $600 million with local, independently owned businesses. In 2021, that number grew to more than $1 billion.
“The question is, how can we use contracting to make an even greater impact on redressing harms and discrimination, and opening doors to opportunity?” Bowser asked in the letter. “The next phase of our work will harness that data and keep moving the District forward to a more equitable and resilient future.”
The District will conduct another disparity study in fiscal 2026, examining how the city government distributed contracts between fiscal years 2021 and 2025.
