SD7 - Disparity Assessment on the Status of Minority and Women Owned Business Participation in the Commonwealth's Procurement Transactions


Executive Summary:
Senate Joint Resolution No. 359, approved unanimously in the 2003 Session of the General Assembly, requested the Department of Minority Business Enterprise (DMBE) in conjunction with the Department of General Services, the Virginia Employment Commission, and the Department of Transportation, to direct the development of a disparity assessment to determine the status of the participation of minority-owned businesses in the Commonwealth's procurement transactions.

This request, prompted by the 1996 report of the Joint Legislative Audit and Review Commission and the subsequent findings of two joint subcommittees, created in 1996 and 1999, attesting that reasonable participation by minority-owned firms may not have been achieved, prompted the state to seek an independent assessment of the actual level of minority business participation in state procurement transactions and a determination of the effectiveness of its efforts to facilitate the participation of these businesses in the Commonwealth's purchasing program.

Disparity studies of the kind envisioned for the Commonwealth have typically costed upwards of $1 million and can take more than a year to conclude. Working with MGT of America (MGT), a leader in this field of study, DMBE was able to negotiate the cost to about half that amount and to, at the same time, expand its study to include women-owned businesses. The study covers the five-year period from 1998-2002 and includes Virginia Department of Transportation highway construction, which will be reported separately.

In April 2003, MGT began work on the first-ever disparity study undertaken for the Commonwealth. A summary of the findings and recommendations resulting from this study can be found in this Report to the Governor and General Assembly. The full study report (consisting of several hundred pages) is accessible on DMBE's Web site.

The study documents the extremely low levels of both minority and women-owned businesses in the State's procurement transactions. Indeed, the study reports that our Commonwealth is behind where both Maryland and North Carolina were ten years ago. The study revealed extremely low availability and utilization of these businesses; and it details the substantial disparity that now diminishes our efforts and potentially leaves us with troubling exposure. Of note is that the number of minority and women-owned firms available to perform state work, is extremely low. And, the utilization of these firms was also extremely low at 1.27 percent.

The study, though, provides us with recommendations and gives us the opportunity to begin remedial efforts to address our weaknesses and to build policies and programs that will encourage the full participation of minority and women owned businesses in future procurement transactions in Virginia. It also provides us with the opportunity to realize, as Governor Warner has stated, "the vision of one Virginia - shared by all its citizens - and one future - filled with hope and opportunity."