2025 Commonwealth Disparity Study (Commonwealth of Virginia Department of Small Business and Supplier Diversity)
Summary
This is a February 17, 2026 memo from Willis A. Morris, Director, Department of Small Business and Supplier Diversity, to The Honorable Carrie H. Chenery, Secretary of Commerce and Trade, with the subject 2025 Commonwealth Disparity Study, followed by the Final Report prepared by BBC Research & Consulting. The memo says the disparity study analyzed contracting in Virginia from July 1, 2019 to June 30, 2024, and that the recommendations in the report are not the opinion of the Department. The report says BBC analyzed approximately $27.1 billion worth of contracts and procurements the Commonwealth awarded during the study period. It states that state agencies awarded 59.0 percent of relevant project dollars to small businesses and that the availability of small businesses for state agency work is 88.5 percent.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Cite this document
“2025 Commonwealth Disparity Study (Commonwealth of Virginia Department of Small Business and Supplier Diversity).”
Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2026-rd248-93c9bb1cd3/
, SHA-256 60c900909074852f3305081a9bb0abfcbfdba9564021134eb5b7255d14fe595a.Full text
COMMONWEALTH of VIRGINIA
Department of Small Business and Supplier Diversity
To: The Honorable Carrie H. Chenery
Secretary of Commerce and Trade
House of Appropriations & Senate Finance Committees
From: Willis A. Morris, Director /J ,
Department of Small Business and Supplier Diversity
Date: February 17, 2026
CC: Laura L. Wilborn, Division of Legislative Automated Systems
Subject: 2025 Commonwealth Disparity Study
The Appropriation Act - Item 111 I. (2025 Session) requires the Department of Small Business
and Supplier Diversity (SBSD) to produce a new statewide disparity study. As a result, the
Department contracted with BBC Research and Consulting (BBC) to assess procurement
opportunities in Virginia for small, micro, women-owned, minority-owned, and service-disabled
veteran-owned businesses.
The purpose of the study was to examine whether there ale any disparities or differences
between the utilization or participation of small and dived;e businesses and the availability of
small and diverse businesses. The enclosed disparity study analyzed contracting in Virginia
from July 1, 2019 to June 30, 2024. Based on the results of the study, BBC has made
recommendations to address the study outcomes. The recommendations made in this report are
not the opinion of the Department of Small Business and Supplier Diversity.
Thank you very much and please let us know if you have any questions regarding this report.
101 N. 14' Street, 11' Floor• Richmond, Virginia 23219 • (804) 786-6585 • Fax (804) 786-9736
2025 Commonwealth of Virginia
Disparity Study
Final Report
Final Report
February 2026
2025 Commonwealth of Virginia
Disparity Study
Prepared for
Department of Small Business and Supplier Diversity
Commonwealth of Virginia
101 N. 14th Street, 11th Floor
Richmond, VA 23219
Prepared by
BBC Research & Consulting
1999 Broadway, Suite 1470
Denver, Colorado 80202-3025
303.321.2547
www.bbcresearch.com
bbc@bbcresearch.com
Table of Contents
ES. Executive Summary
A. Disparity Study Results....................................................................................................................... ES–1
B. Guidance .......................................................................................................................................... ES–11
1. Introduction
A. Background .......................................................................................................................................... 1–2
B. Study Scope .......................................................................................................................................... 1–3
C. Study Team Members .......................................................................................................................... 1–5
2. Legal Framework and Analysis
A. Legal Standards .................................................................................................................................... 2–1
B. Court Decisions .................................................................................................................................... 2–3
C. Addressing Legal Requirements with the Disparity Study ................................................................... 2–4
3. Marketplace Conditions
A. Historical and Current Marketplace Conditions................................................................................... 3–1
B. Quantitative Analyses of Marketplace Conditions ............................................................................... 3–2
C. Summary ............................................................................................................................................ 3–26
4. Qualitative Insights
A. Data Collection ..................................................................................................................................... 4–1
B. Key Findings.......................................................................................................................................... 4–2
5. Data Collection and Analysis
A. Contract and Procurement Data .......................................................................................................... 5–1
B. Vendor Data ......................................................................................................................................... 5–3
C. Relevant Geographic Market Area (RGMA) ......................................................................................... 5–4
D. Subindustry Classifications................................................................................................................... 5–5
E. Review Process ..................................................................................................................................... 5–7
FINAL REPORT P AGE i
Table of Contents
6. Availability Analysis
A. Purpose ................................................................................................................................................ 6–1
B. Methodology ........................................................................................................................................ 6–2
C. Results .................................................................................................................................................. 6–5
7. Utilization Analysis
A. Purpose ................................................................................................................................................ 7–1
B. Results .................................................................................................................................................. 7–1
8. Disparity Analysis
A. Overview .............................................................................................................................................. 8–1
B. Results .................................................................................................................................................. 8–2
9. Business Programs
A. Program Overview ............................................................................................................................... 9–1
B. Program Measures ............................................................................................................................... 9–2
10. Analysis of the Business Community
A. Available Businesses........................................................................................................................... 10–1
B. Utilized Businesses .............................................................................................................................. 10-7
11. Implications and Recommendations
A. Key Results and Implications .............................................................................................................. 11–1
B. Guidance ............................................................................................................................................. 11-3
FINAL REPORT P AGE ii
Table of Contents
Appendices
A. Definitions of Terms
B. Legal Framework and Analysis
C. Availability Analysis Approach
D. Disparity Analysis Results
FINAL REPORT P AGE iii
CHAPTER ES.
Executive Summary
BBC Research & Consulting (BBC) conducted a disparity study to evaluate whether small businesses and
microbusinesses as well as minority-, woman-, and service-disabled veteran (SDV)-owned businesses
(collectively referred to as small and diverse businesses) face any barriers in the contracts and
procurements the Commonwealth of Virginia state agencies and higher education institutions (HEIs)
(collectively referred to as the Commonwealth) awarded. As part of the disparity study, we examined
whether there are any disparities, or differences, between:
The percentage of contract dollars the Commonwealth spent with small and diverse businesses
during the study period, which was July 1, 2019 through June 30, 2024 (i.e., utilization or
participation); and
The percentage of contract dollars one might expect the Commonwealth to award to those
businesses based on their availability to perform specific types and sizes of the prime contracts and
subcontracts the organization awards (i.e., availability).
The Commonwealth’s Department of Small Business and Supplier Diversity (SBSD) operates the Small,
Women-owned, and Minority-owned Business (SWaM) Program to encourage the participation of small
and diverse businesses in its work. Information from the disparity study will help the Commonwealth
and SBSD better understand outcomes for small and diverse businesses in its contracts and
procurements, and help state agencies and HEIs address any substantial disparities between the
participation and availability of those businesses for that work. Moreover, if the Commonwealth
determines that it is appropriate use race- and gender-based measures as part of its contracting and
procurement processes to address any substantial disparities for minority- and woman-owned
businesses (e.g., awarding individual projects with the use of contract-specific participation goals), then
the organization can rely on information from the disparity study to help ensure that its use of such
measures adheres to the strict scrutiny and intermediate scrutiny standards of constitutional review,
respectively.
A. Disparity Study Results
BBC analyzed approximately $27.1 billion worth of contracts and procurements for the construction,
professional services, and non-professional services and goods contracts and procurements the
Commonwealth awarded during the study period to measure the participation and availability of small
and diverse businesses for that work to assess whether any disparities exist between those measures.1
1 BBC assessed results for small and diverse business groups regardless of certification status based on whether a business’ size or
ownership characteristics aligned with the corresponding certification criteria for that group. To estimate a business' ability to qualify as
a small business or microbusiness, BBC used a combination of primary and secondary data collection as well as data modeling. As part of
BBC's business surveys, business representatives were asked to report business size in terms of revenue and number of employees, and
to disclose any affiliates, parent companies, or subsidiaries. For non-certified utilized businesses with which BBC did not conduct a
business survey, we relied on business size and company structure information from Dun & Bradstreet (D&B). BBC used a predictive
regression model to correct for gaps and errors in D&B's business size information. For businesses that have affiliates, parent companies,
or subsidiaries, BBC used business size for the entire corporate structure, in terms of revenue and number of employees, to determine
business eligibility as a potential small business or microbusiness, rather than on the structure of ownership interests.
FINAL REPORT CHAPTER ES, PAGE 1
We summarize key results from those analyses below and identify sections of the report that provide
more details about the methodology and results of each analysis.
1. Availability analysis (Chapter 6 and Appendix C of the report). BBC conducted a custom
census availability analysis to estimate the availability of small and diverse businesses for
Commonwealth work while accounting for the specific characteristics of relevant businesses that exist
in the state of Virginia (the relevant geographic marketplace, or RGMA) and the specific characteristics of
the relevant prime contracts and subcontracts the Commonwealth awards.
Figure ES-1 presents the availability of each relevant group of small and diverse businesses for all
relevant contracts and procurements state agencies awarded during the study period, considered
together. The availability of small businesses for state agency work is 88.5 percent, indicating that one
might expect state agencies to award approximately 88.5 percent of its project dollars to small
businesses based on the availability of those businesses for that work. The overall availability of
microbusinesses is 40.4 percent.
The overall availability of minority-owned businesses considered together is 23.3 percent. Availability
results differed for the individual minority-owned business groups we studied:
The availability of Asian-owned businesses is 10.5 percent.
The availability of Black-owned businesses is 7.7 percent.
The availability of Hispanic-owned businesses is 4.7 percent.
The availability of Native American-owned businesses is 0.4 percent.
The overall availability of White woman-owned businesses for state agency work is 13.6 percent, and
the overall availability of SDV-owned businesses for state agency work is 7.1 percent.
Figure ES-1.
Business group
Availability estimates for
state agency work
Business size
Note: Small business 88.5 %
Numbers are rounded to the nearest one-tenth of a percent Microbusiness 40.4 %
and thus may not sum exactly to totals.
Race and gender
Minority 23.3 %
Asian 10.5 %
Black 7.7 %
Hispanic 4.7 %
Native American 0.4 %
White woman 13.6 %
Veteran status
Service-disabled veteran 7.1 %
FINAL REPORT CHAPTER ES, PAGE 2
BBC also estimated the availability of small and diverse businesses for tier 2 and tier 3 HEI contracts and
procurements. 2 Tier 2 HEIs have a memorandum of understanding with the Commonwealth that allows
them contracting and procurement autonomy in two of the following three areas: procurement, capital
outlay construction, and technology. In contrast, tier 3 HEIs have complete autonomy in their
contracting and procurement. As shown in Figure ES-2, the overall availability of different business
groups for tier 2 HEI work is as follows:
The overall availability of small businesses is 89.1 percent.
The overall availability of microbusinesses is 45.4 percent.
The availability of minority-owned businesses considered together for all tier 2 HEI work is 17.7
percent. Availability results for that work differed for the individual minority-owned business
groups we studied:
The availability of Black-owned businesses is 5.9 percent.
The availability of Hispanic-owned businesses is 5.9 percent.
The availability of Asian-owned businesses is 5.5 percent.
The availability of Native American-owned businesses is 0.4 percent.
The overall availability of White woman-owned businesses is 11.9 percent.
The overall availability of SDV-owned businesses is 3.2 percent.
The overall availability of different business groups for tier 3 HEI work is as follows:
The overall availability of small businesses is 88.2 percent.
The overall availability of microbusinesses is 38.5 percent.
The availability of minority-owned businesses considered together for all tier 3 HEI work is 19.1
percent. Availability results for that work differed for the individual minority-owned business
groups we studied:
The availability of Asian-owned businesses is 6.7 percent.
The availability of Hispanic-owned businesses is 6.5 percent.
The availability of Black-owned businesses is 4.9 percent.
The availability of Native American-owned businesses is 1.0 percent.
The overall availability of White woman-owned businesses is 9.5 percent.
The overall availability of SDV-owned businesses is 3.0 percent.
2 Tier 2 HEIs are Christopher Newport University, Longwood University, Norfolk State University, Old Dominion University, Radford
University, University of Mary Washington, Virginia Community College System, Virginia Military Institute, and Virginia State University.
Tier 3 HEIs are the University of Virginia, Virginia Polytechnic Institute and State University, Virginia Commonwealth University, James
Madison University, George Mason University, and the College of William & Mary.
FINAL REPORT CHAPTER ES, PAGE 3
Figure ES-2. HEI Tier
Availability estimates for
HEI work Business group Tier 2 Tier 3
Note: Business size
Numbers are rounded to the nearest one-tenth of a Small business 89.1 % 88.2 %
percent and thus may not sum exactly to totals.
Microbusiness 45.4 % 38.5 %
Race and gender
Minority 17.7 % 19.1 %
Asian 5.5 % 6.7 %
Black 5.9 % 4.9 %
Hispanic 5.9 % 6.5 %
Native American 0.4 % 1.0 %
White woman 11.9 % 9.5 %
Veteran status
Service-disabled veteran 3.2 % 3.0 %
2. Utilization analysis (Chapter 7 of the report). BBC also calculated the participation of small and
diverse businesses in the relevant contracts and procurements the Commonwealth awarded during the
study period. 3 As shown in Figure ES-3, state agencies awarded 59.0 percent of relevant project dollars
to small businesses. The overall participation of microbusinesses in state agency work was 18.6 percent.
Additionally, state agencies awarded 10.7 percent of relevant project dollars to minority-owned
businesses considered together. Individual minority-owned business groups exhibited different levels of
participation in state agency work:
The participation of Asian-owned businesses was 8.3 percent.
The participation of Black-owned businesses was 1.2 percent.
The participation of Hispanic-owned businesses was 1.1 percent.
The participation of Native American-owned businesses was 0.1 percent.
In addition, state agencies awarded 4.1 percent of relevant project dollars to White woman-owned
businesses and 0.8 percent to SDV-owned businesses.
3 The Commonwealth tracks the participation of small and diverse businesses in its contracting and procurement through its SWaM
expenditure dashboard. The percentage of certified small business participation in Commonwealth contracts and procurements reported
as part of the disparity study does not align with the percentage reported by the SWaM expenditure dashboard for various reasons. The
Commonwealth has established a hierarchy for reporting participation by SWaM-certified businesses, and it does not count any single
business in multiple categories (i.e., if a business is certified as a small business and a minority-owned business, the Commonwealth
would report that participation as minority-owned business participation; in contrast, BBC would report that participation as both small
business participation and minority-owned business participation). In addition, there are various differences in BBC and the
Commonwealth’s determination of discretionary spending. See Chapter 5 for information about the types of contracts and procurements
that were not considered in-scope as part of the disparity study and the volumes of dollars included in each of those categories.
FINAL REPORT CHAPTER ES, PAGE 4
Figure ES-3.
Business group
Utilization results for Commonwealth
projects
Business size
Note: Small business 59.0 %
Numbers are rounded to the nearest one-tenth of a Microbusiness 18.6 %
percent and thus may not sum exactly to totals.
Race and gender
Minority 10.7 %
Asian 8.3 %
Black 1.2 %
Hispanic 1.1 %
Native American 0.1 %
White woman 4.1 %
Veteran status
Service-disabled veteran 0.8 %
BBC also assessed the participation of small and diverse businesses in tier 2 and tier 3 HEI contracts and
procurements. As shown in Figure ES-4, the overall participation of different business groups in tier 2
HEI work was as follows:
The overall participation of small businesses was 68.9 percent.
The overall participation of microbusinesses was 14.3 percent.
The participation of minority-owned businesses considered together for all tier 2 HEI work was 7.6
percent. Participation in that work differed for the individual minority-owned business groups we
studied:
The participation of Asian-owned businesses was 1.1%.
The participation of Black-owned businesses was 5.1%.
The participation of Hispanic-owned businesses was 1.1%.
The participation of Native American-owned businesses was 0.3%.
The overall participation of White woman-owned businesses was 7.7 percent.
The overall participation of SDV-owned businesses was 0.6 percent.
The overall participation of different business groups in tier 3 HEI work was as follows:
The overall participation of small businesses was 74.9 percent.
The overall participation of microbusinesses was 20.4 percent.
The participation of minority-owned businesses considered together for all tier 3 HEI work was 3.3
percent. Participation in that work differed for the individual minority-owned business groups we
studied:
The participation of Asian-owned businesses was 1.0%.
The participation of Black-owned businesses was 1.0%.
The participation of Hispanic-owned businesses was 1.2%.
FINAL REPORT CHAPTER ES, PAGE 5
The participation of Native American-owned businesses was 0.1%.
The overall participation of White woman-owned businesses was 4.7 percent.
The overall participation of SDV-owned businesses was 0.3 percent.
Figure ES-4. HEI Tier
Utilization results for HEI work
Business group Tier 2 Tier 3
Note:
Numbers are rounded to the nearest one-tenth of a Business size
percent and thus may not sum exactly to totals.
Small business 68.9 % 74.9 %
Microbusiness 14.3 % 20.4 %
Race and gender
Minority 7.6 % 3.3 %
Asian 1.1 % 1.0 %
Black 5.1 % 1.0 %
Hispanic 1.1 % 1.2 %
Native American 0.3 % 0.1 %
White woman 7.7 % 4.7 %
Veteran status
Service-disabled veteran 0.6 % 0.3 %
3. Disparity analysis (Chapter 8 and Appendix D). The crux of the disparity study was to assess
whether any disparities exist between the participation and availability of small and diverse businesses
for Commonwealth work. A substantial disparity between participation and availability—that is, a
disparity index of less than $0.80—indicates that the group is considered to have been substantially
underutilized relative to its availability. Many courts have considered substantial disparities as
inferences of discrimination against particular business groups, and they often serve as justification for
organizations to use relatively aggressive measures—such as race- and gender-based measures—to
address corresponding barriers (for details, see Chapter 2).
Figure ES-5 presents disparity indices for small and diverse businesses for all relevant prime contracts
and subcontracts state agencies awarded during the study period. As shown in Figure ES-5, small
businesses exhibited a disparity index of $0.67 for all relevant contracts and procurements state
agencies awarded during the study period, indicating a disparity where they awarded $0.67 to small
businesses for every $1.00 one might expect state agencies to award to those businesses based on their
availability for state agency work. Microbusinesses exhibited a disparity index of $0.46 for all state
agency work considered together.
Minority-owned businesses considered together exhibited a disparity index of $0.46 for all relevant
contracts and procurements state agencies awarded during the study period. Asian-owned businesses
(disparity index of $0.79), Black-owned businesses (disparity index of $0.16), Hispanic-owned
businesses (disparity index of $0.24), and Native American-owned businesses (disparity index of $0.24)
exhibited substantial disparities for state agency work.
FINAL REPORT CHAPTER ES, PAGE 6
White woman-owned businesses exhibited a substantial disparity (disparity index of $0.30) for all
relevant contracts and procurements state agencies awarded during the study period. SDV-owned
businesses also exhibited a substantial disparity (disparity index of $0.11) for state agency work.
Figure ES-5.
Overall disparity analysis results for state agency work
$2.00
$1.80
$1.60
$1.40
$1.20
Disparity index
$1.00
$0.79
$0.80 $0.67
$0.60 $0.46 $0.46
Substantial
$0.40 $0.30
$0.24 $0.24
$0.16
$0.20 $0.11
$0.00
Note: For more detail see Figure D-1 in Appendix D.
BBC also measured overall disparities of small and diverse businesses for tier 2 and tier 3 HEI contracts
and procurements. As shown in Figure ES-6, overall disparity indices of different business groups for
tier 2 HEI work are as follows:
Small businesses exhibited a substantial disparity with a disparity index of $0.77.
Microbusinesses exhibited a substantial disparity with a disparity index of $0.32.
Minority-owned businesses considered together exhibited a substantial disparity with a disparity
index of $0.43 for all tier 2 HEI work. There were some differences in disparities when considering
each individual minority-owned business group separately:
Asian-owned businesses (disparity index of $0.20), Hispanic-owned businesses (disparity
index of $0.18), and Native American-owned businesses (disparity index of $0.65) exhibited
substantial disparities for tier 2 HEI work.
In contrast, Black-owned businesses exhibited a disparity, though not a substantial disparity,
for tier 2 HEI work (disparity index of $0.87).
White woman-owned businesses exhibited a substantial disparity with a disparity index of $0.65.
SDV-owned businesses exhibited a substantial disparity with a disparity index of $0.19.
FINAL REPORT CHAPTER ES, PAGE 7
The overall disparity indices of different business groups for tier 3 HEI work are as follows:
Small businesses exhibited a disparity, though not a substantial disparity, with a disparity index of
$0.85.
Microbusinesses exhibited a substantial disparity with a disparity index of $0.53.
Minority-owned businesses considered together exhibited a disparity index of $0.17 for all tier 3
HEI work. Each individual minority-owned business group exhibited substantial disparities for tier
3 HEI work, though there were some differences in disparities when considering each individual
minority-owned business group separately:
Asian-owned businesses exhibited a disparity index of $0.15.
Black-owned businesses exhibited a disparity index of $0.20.
Hispanic-owned businesses exhibited a disparity index of $0.18.
Native American-owned businesses exhibited a disparity index of $0.12.
White woman-owned businesses exhibited a substantial disparity with a disparity index of $0.49.
SDV-owned businesses exhibited a substantial disparity with a disparity index of $0.09.
Figure ES-6.
Overall disparity analysis results for HEI work
$2.00
Tier 2 HEIs Tier 3 HEIs
$1.80
$1.60
$1.40
$1.20
Disparity index
$1.00
$0.85
$0.80 $0.65 $0.65
$0.87
$0.77 $0.53
$0.60
$0.43
Substantial
$0.40 $0.32 $0.49
$0.17 $0.20 $0.20 $0.18 $0.19
$0.12
$0.20
$0.00 $0.15 $0.09
Note: For more detail see Figures D-30 and D-37 in Appendix D.
a. Comparison across project sets. BBC assessed disparities across numerous sets of projects associated
with Commonwealth work. Figure ES-7 presents a visualization of various state agency project sets for
which relevant small and diverse business groups exhibited substantial disparities, as indicated by black
circles. Figure ES-8 presents a visualization of various HEI project sets for which relevant small and
FINAL REPORT CHAPTER ES, PAGE 8
diverse business groups exhibited substantial disparities. As shown in Figures ES-7 and ES-8, all
relevant small and diverse business groups exhibited substantial disparities for various project sets BBC
examined as part of the disparity study.
Figure ES-7.
Substantial disparities observed for state agency work
Business Group
Native White
Contract set Small Micro Minority Asian Black Hispanic American woman SDV
1) All work
2) Prime contracts
3) Subcontracts
4) Construction
5) Professional services
6) Non-professional services and goods
7) Large prime contracts
8) Small prime contracts
9) Micro prime contracts
10) Hampton Roads region
11) Southern region
12) Southwest region
13) West Central region
14) Central region
15) Valley region
16) Northern region
17) Eastern region
18) Eastern Shore region
Notes: indicates substantial disparity (i.e., disparity index of $0.80 or less)
Figure ES-8.
Substantial disparities observed for HEI work
Business Group
Native White
Contract set Small Micro Minority Asian Black Hispanic American woman SDV
1) Tier 2 overall
2) Tier 3 overall
3) University of Virginia
4) Virginia Polytechnic Institute & State University
5) Virginia Commonwealth University
6) George Mason University
7) James Madison University
8) College of William & Mary
Notes: indicates substantial disparity (i.e., disparity index of $0.80 or less)
b. Comparisons to 2020 Commonwealth disparity study. BBC last conducted a disparity study for the
Commonwealth in 2020. It is instructive to compare disparity indices for small and diverse businesses in
FINAL REPORT CHAPTER ES, PAGE 9
state agency work between the 2020 and 2025 disparity studies to assess whether outcomes are
improving for those businesses in state agency work over time.
Since the 2020 disparity study was conducted, BBC made two relevant changes in methodology:
The utilization analyses in the 2025 study focused only on businesses that had a location in the
RGMA. In the 2020 study, BBC included businesses outside of the RGMA as part of the utilization
analysis.
As part of the 2025 study, BBC used Markov Chain Monte Carlo (MCMC) simulations to improve the
accuracy of the availability analysis to better account for random error or potential for unintended
bias (see Chapter 6 for more details on MCMC analyses). The availability estimates reported in
Chapter 6 are the availability estimates we observed adjusted for results from the MCMC process.
The 2020 disparity study did not include an MCMC analysis as part of the availability analysis.
To more accurately assess changes in disparity results for minority- and woman-owned businesses
since 2020, BBC presents 2025 disparity results in Figure ES-9 based on availability estimates that have
not undergone the MCMC analysis and utilization results that include businesses both within and
outside the RGMA.
Figure ES-9 presents overall disparity indices for minority- and woman-owned business groups for all
relevant state agency projects considered together from the 2020 and 2025 disparity studies. As shown
in Figure ES-9, minority-owned businesses considered together exhibited smaller disparities in 2025
(disparity index of $0.44) than in 2020 (disparity index of $0.37). Disparity analysis results differed by
individual minority-owned business group and study year:
Asian-owned businesses exhibited a smaller disparity in 2025 (disparity index of $0.62) than in
2020 (disparity index of $0.17).
Black-owned businesses exhibited a larger disparity in 2025 (disparity index of $0.20) than in 2020
(disparity index of $0.49).
Hispanic-owned businesses exhibited a larger disparity in 2025 (disparity index of $0.31) than in
2020 (disparity index of $0.62).
Native American-owned businesses exhibited a smaller disparity in 2025 (disparity index of $0.31)
than in 2020 (disparity index of $0.05).
White woman-owned businesses exhibited a smaller disparity in 2025 (disparity index of $0.39) than in
2020 (disparity index of $0.50).
FINAL REPORT CHAPTER ES, PAGE 10
Figure ES-9.
Overall disparity indices from 2020 and 2025 disparity studies
Minority Asian Black Hispanic Native American White woman
$2.00
2025 2020
$1.80
$1.60
$1.40
$1.20
Disparity index
$1.00
$0.80
$0.62 $0.62
$0.60 $0.49 $0.50
$0.44
Substantial
$0.40 $0.31 $0.31
$0.17 $0.20
$0.37 $0.39
$0.20 $0.05
$0.00
B. Guidance (Chapter 11 of the report)
The disparity study provides substantial information that the Commonwealth could examine as it
considers potential refinements to its implementation of the SWaM Program and other efforts to further
encourage the participation of small and diverse businesses in its contracts and procurements. BBC
presents several recommendations for the Commonwealth’s consideration.
1. Certification. SBSD certifies small businesses and microbusinesses, as well as minority-, woman-,
and SDV-owned businesses, as part of its SWaM Program. Results from the disparity study may suggest
that businesses are unaware of the SWaM Program, that certification is a barrier to some businesses that
would qualify, or perhaps that businesses may not see benefits to obtaining SWaM certification. The
Commonwealth could consider measures it could take to ensure that its certification processes are
accessible, efficient, and aligned with the Commonwealth’s broader inclusion objectives. In particular,
the Commonwealth could consider:
Expanding education and awareness of its SWaM Program to encourage more businesses to seek
out certification and participate in the program measures; and
Re-evaluating its certification criteria to ensure that only businesses that are truly small meet the
agency’s definition and thus can benefit from program measures reserved for small businesses.
2. Small business support. The Commonwealth already uses a variety of race- and gender-neutral
program measures to encourage the participation of all small businesses in its contracts and
procurements. To address the disparities that small businesses and microbusinesses experience in its
work, the Commonwealth could also explore additional program measures targeted toward small
businesses and microbusinesses, with measures tailored to each size tier. In particular, the
Commonwealth could consider:
FINAL REPORT CHAPTER ES, PAGE 11
Refining its use of set asides to ensure that small business set asides are effectively encouraging the
participation of small businesses and microbusinesses; and
Setting contracting goals for small business participation on the individual contracts and
procurements it awards.
3. Business development. The Commonwealth could consider expanding its program measures
designed to support small and diverse businesses by expanding business development opportunities
specifically tailored to helping these businesses build capacity and perform work for the Commonwealth
and other public sector organizations. In particular, the Commonwealth could consider:
Expanding its networking and outreach efforts to introduce new businesses to work opportunities;
Expanding technical assistance programs, including business incubators, administrative assistance,
and bid and proposal support; and
Re-establishing a Mentor-Protégé Program as a permanent statewide measure to introduce new
businesses to prime contractors and Commonwealth decision makers, guide growing businesses,
and increase the capacities of these businesses to perform Commonwealth work as prime
contractors or prime consultants themselves.
4. Procurement policies. The Commonwealth could consider refining its contract and procurement
policies in ways that make Commonwealth work more accessible to a greater number of businesses,
including small and diverse businesses. In particular, the Commonwealth could consider:
Unbundling large contracts into smaller contract elements; and
Exploring different ways to engage with businesses that have not participated in its work in the
past.
5. Monitoring and data collection. The Commonwealth currently maintains comprehensive data on
the participation of certified SWaM businesses in Commonwealth work, which it reports as part of its
SWaM Expenditure Dashboard. The Commonwealth could continue to collect this information, as well as
consider how it can monitor the success of its contracting inclusion methods in greater depth and detail.
In particular, the Commonwealth could consider:
Requiring that all state agencies gather subcontractor data on all subcontractors, regardless of
SWaM certification status;
Requiring bidders and proposers to report whether they plan to work with subcontractors on the
project, and if they are planning to do so, provide information about each subcontractor, regardless
of certification status, as part of their bid and proposal submissions;
Strengthening SWaM Program compliance measures with state agencies and prime contractors;
and
In addition to tracking the overall volume and percentage of dollars the Commonwealth awards to
small and diverse businesses, tracking other Key Performance Indicators that better reflect all the
value that the SWaM Program provides.
FINAL REPORT CHAPTER ES, PAGE 12
6. Race- and gender-based measures. The Commonwealth currently only uses race- and gender-
neutral program measures as part of its implementation of the SWaM Program, which are designed to
encourage small business participation in Commonwealth work, regardless of the race/ethnicity or
gender of business owners. However, disparity study results as well as qualitative evidence collected as
part of the disparity study indicate that the Commonwealth could consider whether race- and gender-
based measures would help address the disparities that minority- and woman-owned businesses in
particular face as part of the organization’s contracting and procurement processes. In particular, the
Commonwealth should consider whether it has maximized its use of race- and gender-neutral measures,
including fully leveraging existing race- and gender-neutral measures and considering whether
additional measures might be sufficient to address disparities without the use of race or gender
classifications. If the Commonwealth decides to implement race- or gender-based measures, then it must
ensure that its use of those measures meets the requirements of the strict scrutiny standard of
constitutional review, including showing a compelling governmental interest for their use and ensuring
that their use is narrowly tailored (see Chapter 2 for more information).
7. Overall aspirational goals. Currently, the Commonwealth has an overall aspirational goal for the
participation of SWaM-certified small businesses in Commonwealth contracts and procurements. As
part of its implementation of the SWaM Program, the Commonwealth could update its overall
aspirational goal for the participation of small businesses and establish separate annual overall
aspirational goals for the participation of microbusinesses, as well as minority-, woman-, and SDV-
owned businesses in its contracting. The Commonwealth could follow a common two-step process to
develop overall aspirational goals for small and diverse businesses, which would consist of establishing
a base figure (based on the availability of each business group for Commonwealth work) and
considering an adjustment to its base figure based on the past participation of those businesses in
Commonwealth work, information about local marketplace conditions, and other factors that might
impact the ability of those businesses to compete for and perform work on its contracts.
FINAL REPORT CHAPTER ES, PAGE 13
CHAPTER 1.
Introduction
The Commonwealth of Virginia’s Department of General Services (DGS) and Virginia Information
Technologies Agency have statutory authority to establish and enforce statewide procurement policy for
executive branch agencies and certain higher education institutions (HEIs) that lack procurement
autonomy. The Virginia Department of Transportation and HEIs with procurement autonomy have
statutory or delegated authority to establish and enforce procurement policies for their own operations,
consistent with the Virginia Public Procurement Act. The Commonwealth of Virginia’s Department of
Small Business and Supplier Diversity (SBSD) implements the Small, Women-owned, and Minority-
owned Business (SWaM) Program to encourage the participation of small businesses and
microbusinesses as well as minority-, woman-, and service-disabled veteran (SDV)-owned businesses
(collectively referred to as small and diverse businesses) in those contracts and procurements.
Commonwealth of Virginia state agencies and HEIs (collectively referred to as the Commonwealth)
retained BBC Research & Consulting (BBC) to conduct a new disparity study to evaluate whether small
and diverse businesses face any barriers in their contracting and procurement. As part of the study, we
examined whether there are any disparities, or differences, between:
The percentage of contract dollars the Commonwealth spent with small and diverse businesses
during the study period, which was July 1, 2019 through June 30, 2024 (i.e., utilization or
participation); and
The percentage of contract dollars one might expect the Commonwealth to award to those
businesses based on their availability to perform specific types and sizes of the prime contracts and
subcontracts the organization awards (i.e., availability).
The disparity study also provides other quantitative and qualitative information related to:
The legal framework surrounding the Commonwealth’s implementation of the SWaM Program;
Local marketplace conditions for small and diverse businesses; and
Contracting practices and business assistance programs the Commonwealth has in place or could
consider implementing in the future.
BBC relied on results from the disparity study to provide guidance to the Commonwealth on how it
could help address any barriers that small and diverse businesses face as part of the organization’s
contracting and procurement processes and in the surrounding marketplace.
BBC introduces the 2025 Commonwealth of Virginia Disparity Study in three parts:
A. Background;
B. Study scope; and
C. Study team members.
FINAL REPORT CHAPTER 1, PAGE 1
A. Background
In 2006, then-Governor Tim Kaine established the SWaM Program by executive order to enhance
opportunities for small businesses and minority- and woman-owned businesses in Commonwealth
contracting. As part of Executive Order 33 (2006), Governor Kaine established various measures to
assist small businesses and minority- and woman-owned businesses, including:
Setting an overall annual goal of 40 percent for the participation of small businesses in
Commonwealth contracts and procurements;
Requiring prime contractors to include SWaM participation plans as part of their bids or proposals
for Commonwealth contracts and procurements;
Requiring Commonwealth agencies to develop processes to track the participation of SWaM-
certified businesses in their contracts and procurements;
Requiring DGS to create a small business set-aside program and implement other efforts to
enhance small business participation in Commonwealth contracts and procurements;
Requiring Commonwealth agencies to submit SWaM plans that include information about their
implementations of the SWaM Program to SBSD on an annual basis;
Requiring Commonwealth agencies to actively recruit small businesses to bid or propose on their
contract and procurement opportunities; and
Requiring Commonwealth agencies’ purchasing manuals, regulations, and guidelines to include
SWaM purchasing regulations and guidelines. 1
Since the establishment of the SWaM Program, the Commonwealth has established refinements to its
implementation of the program through various Executive Orders:
Executive Order 20, issued by then-Governor Terry McAuliffe in 2014, expanded the program by
introducing the microbusiness category and raising the aspirational goal for small business
participation to 42 percent for professional services and non-professional services and goods work
and 50 percent for construction work.
Executive Order 35, issued by then-Governor Ralph Northam in 2019, formally added SDV-owned
businesses to the SWaM Program, mandated a disparity study (which BBC conducted), and
strengthened subcontracting requirements for large contracts.
The Virginia Association of State College and University Purchasing Professionals (VASCUPP) was
established in 1992 under the objective of identifying opportunities for cooperative procurements and
cost savings for HEIs in Virginia. Tier 2 HEI members have a memorandum of understanding with the
Commonwealth that allows them contracting and procurement autonomy in two of the following three
areas: procurement, capital outlay construction, and technology. In contrast, tier 3 HEIs have complete
autonomy in their contracting and procurement. Figure 1-1 presents a list of HEIs included in the
disparity study and indicates each HEI’s level of procurement autonomy.
1 http://digitool1.lva.lib.va.us:1801/webclient/StreamGate?folder_id=0&dvs=1608248864548~628
FINAL REPORT CHAPTER 1, PAGE 2
Figure 1-1. VASCUPP Tier
VASCUPP HEIs
included in the Tier 2 HEIs Tier 3 HEIs
disparity study
Christopher Newport University University of Virginia
. Longwood University Virginia Polytechnic Institute and State University
Norfolk State University Virginia Commonwealth University
Old Dominion University James Madison University
Radford University George Mason University
University of Mary Washington College of William & Mary
Virginia Community College System
Virginia Military Institute
Virginia State University
The Commonwealth currently uses race- and gender-neutral measures to encourage the participation of
small and diverse businesses in its contracting and procurement. In contrast with race- and gender-
based measures, race- and gender-neutral measures are designed to increase the participation of all
small businesses in Commonwealth contracts and procurements, regardless of the race or gender of the
business’ owners. 2 The Commonwealth does not currently use race- or gender-based measures as part
of its implementation of the SWaM Program.
B. Study Scope
BBC assessed whether any disparities exist between the participation and availability of small and
diverse businesses for the construction, professional services, and non-professional services and goods
contracts and procurements the Commonwealth awards. 3 We based those and other analyses on
contracts and procurements the Commonwealth awarded between July 1, 2019 and June 30, 2024, which
we treated as a proxy for the contracts and procurements the Commonwealth will award in the future.
1. Definitions of small and diverse businesses. To interpret the core analyses presented in the
disparity study, it is useful to understand how BBC defined small businesses and microbusinesses as well
as minority-, woman, and SDV-owned businesses and SWaM-certified businesses in our analyses.
a. Small businesses. BBC defined a small business as a business that, together with affiliates, has 250
employees or fewer or that has average annual revenues of $10 million or less. We considered
businesses to be small based on their revenue and employee characteristics, regardless of whether they
were SWaM-certified or held any other types of certification.
2 Race- and gender-based measures are contracting inclusion measures specifically designed to increase the participation of minority-
owned businesses and woman-owned businesses, respectively, in an organization’s contracts and procurements.
3 BBC assessed results for small and diverse business groups regardless of certification status based on whether a business’ size or
ownership characteristics aligned with the corresponding certification criteria for that group. To estimate a business' ability to qualify as
a small business or microbusiness, BBC used a combination of primary and secondary data collection as well as data modeling. As part of
BBC's business surveys, business representatives were asked to report business size in terms of revenue and number of employees, and
to disclose any affiliates, parent companies, or subsidiaries. For non-certified utilized businesses with which BBC did not conduct a
business survey, we relied on business size and company structure information from Dun & Bradstreet (D&B). BBC used a predictive
regression model to correct for gaps and errors in D&B's business size information. For businesses that have affiliates, parent companies,
or subsidiaries, BBC used business size for the entire corporate structure, in terms of revenue and number of employees, to determine
business eligibility as a potential small business or microbusiness, rather than on the structure of ownership interests.
FINAL REPORT CHAPTER 1, PAGE 3
b. Microbusinesses. BBC defined a microbusiness as a business that, together with affiliates, has 25
employees or fewer and that has average annual revenues of $3 million or less. We considered
businesses to be microbusinesses based on their revenue and employee characteristics, regardless of
whether they were SWaM-certified or held any other types of certification.
c. Minority-owned businesses. BBC focused our analyses on the following minority-owned business
groups: Asian-, Black-, Hispanic-, and Native American-owned businesses. Our definition of minority-
owned businesses included both businesses owned by men of color and women of color. For example,
we grouped results for businesses owned by Black men with results for businesses owned by Black
women to present results for Black-owned businesses in general. We gathered business ownership
information from a variety of different sources, including surveys, business listings, and Internet
research. We considered businesses to be minority-owned based on the known races of their business
owners, regardless of whether they were SWaM-certified or held any other types of certification.
d. Woman-owned businesses. Because we classified businesses owned by women of color according to
their corresponding racial groups, analyses and results for woman-owned businesses pertain
specifically to results for non-Hispanic White woman-owned businesses. As with minority-owned
businesses, we considered businesses to be woman-owned based on the known genders of their
business owners, regardless of whether they were SWaM-certified or held any other types of
certification.
e. SDV-owned businesses. BBC defined an SDV-owned business as a business owned by veterans of the
United States military who suffer from physical or mental disabilities resulting from their military
service. We considered businesses to be SDV-owned based on the known SDV status of their business
owners, regardless of whether they were SWaM-certified or held any other types of certification.
f. SWaM-certified businesses. A SWaM-certified business is a business that is certified as a small
business, microbusiness, minority-owned business, woman-owned, or SDV-owned business by SBSD.
Businesses seeking SWaM certification are required to submit an application to SBSD. Applications
require business owners to submit various information about their companies, including business
names; contact information; tax information; work specializations; and the races, genders, and veteran
statuses of their owners.
g. SWaM-eligible businesses. A SWaM-eligible business is a business in Virginia that BBC determined
meets the criteria to be a SWaM-certified small business; microbusiness; or minority-, woman-, or SDV-
owned business, regardless of whether it is certified as such.
2. Analyses in the disparity study. The crux of the disparity study was to assess whether any
disparities exist between the participation and availability of small and diverse businesses for the
contracts and procurements the Commonwealth awards in the areas of construction, professional
services, and non-professional services and goods. The study also includes various analyses related to
outcomes for small and diverse businesses throughout the local marketplace. BBC presents results from
those analyses as follows:
a. Legal framework and analysis. The study team conducted a detailed analysis of relevant laws, legal
decisions, and other information to guide the methodology for the disparity study and inform our
FINAL REPORT CHAPTER 1, PAGE 4
recommendations for refinements to the SWaM Program. BBC presents the legal framework and
analysis for the study in Chapter 2 and Appendix B.
b. Marketplace conditions. The study team conducted extensive quantitative analyses of conditions and
potential barriers in the local marketplace for minority-, woman-, and SDV-owned businesses. In
addition, we collected qualitative insights about potential barriers small and diverse businesses face in
Virginia through in-depth interviews, focus groups, and public meetings. BBC presents quantitative
information about marketplace conditions in Chapter 3 and qualitative information in Chapter 4.
c. Data collection. BBC examined contract, procurement, and vendor data from multiple sources to
complete the utilization and availability analyses. We present information on our contract, procurement,
and vendor data collection processes in Chapter 5.
d. Availability analysis. The study team analyzed the percentage of contract and procurement dollars
one might expect the Commonwealth to award to small and diverse businesses based on their
availability to perform specific types and sizes of Commonwealth work. That analysis was based on
Commonwealth data and surveys the study team conducted with 1,565 local businesses that work in
industries related to the types of contracts and procurements the Commonwealth awards. We present
results from the availability analysis in Chapter 6 and Appendix C.
e. Utilization analysis. The study team analyzed contract and procurement dollars the Commonwealth
awarded to small and diverse businesses during the study period, including information about
associated subcontracts. We present results from the utilization analysis in Chapter 7.
f. Disparity analysis. BBC examined whether there were any disparities between the participation and
availability of small and diverse businesses for contracts and procurements the Commonwealth
awarded during the study period. We present results from the disparity analysis in Chapter 8 and
Appendix D.
g. Program measures. BBC reviewed the measures the Commonwealth uses to encourage the
participation of small and diverse businesses in its contracting and procurement, as well as its
implementation of the SWaM Program. We present that information in Chapter 9.
h. Analyses of the business community. BBC conducted key analyses of business characteristics, beyond
owner race and gender, of businesses potentially available for the contracts and procurements the
Commonwealth awards and the businesses that performed work for the Commonwealth during the
study period. We present that information in Chapter 10.
i. Recommendations. BBC provided guidance related to additional program options and changes to
current contracting practices the Commonwealth could consider implementing. We present those
recommendations in Chapter 11.
C. Study Team Members
The disparity study was conducted by a study team made up of five firms that, collectively, possess
decades of experience related to conducting disparity studies in connection with contracting inclusion
programs.
FINAL REPORT CHAPTER 1, PAGE 5
1. BBC (prime consultant). BBC is a minority-owned disparity study and economic research firm
based in Denver, Colorado. We had overall responsibility for the study and performed all quantitative
and qualitative analyses.
2. Keisler Social and Behavioral Research (Keisler SBR). Keisler SBR is a minority woman-owned
qualitative and quantitative research firm based in Washington, DC. Keisler SBR conducted in-depth
interviews with businesses located in Virginia and conducted analyses of all qualitative data collected as
part of the study.
3. Yas Consulting Services (YCS). YCS is a minority woman-owned diversity, equity, and inclusion
consulting firm based in Great Falls, Virginia. YCS conducted in-depth interviews and focus groups with
businesses and trade organizations located in Virginia as part of the study team’s qualitative analyses of
marketplace conditions.
4. Davis Research. Davis Research is a survey fieldwork firm based in Calabasas, California that has
conducted tens of thousands of surveys as part of disparity studies across the country. The firm
conducted telephone and online surveys with hundreds of local businesses in connection with the
availability and utilization analyses.
5. Holland & Knight. Holland & Knight is a law firm with offices throughout the country. The firm
conducted a review of the legal framework for the study.
FINAL REPORT CHAPTER 1, PAGE 6
CHAPTER 2.
Legal Framework and Analysis
Commonwealth of Virginia state agencies and higher education institutions (collectively referred to as
the Commonwealth) commissioned a disparity study to assess whether there are any statistical
disparities between the participation and availability of small businesses and microbusinesses, as well
as minority-, woman-, and service-disabled veteran (SDV)-owned businesses, for the contracts and
procurements the Commonwealth awards. One of the primary reasons for those assessments is to
determine whether compelling evidence of discrimination exists for specific business groups in
obtaining work on Commonwealth projects and efforts the Commonwealth could consider using to help
address those barriers. Chapter 2 summarizes the legal standards that govern the use of race- and
gender-based and race- and gender-neutral measures in three parts:
A. Legal standards;
B. Court decisions; and
C. Addressing legal requirements with the disparity study.
A. Legal Standards
The Commonwealth operates the Small, Women-owned, and Minority‐owned Business (SWaM)
Program to encourage the participation of small businesses and microbusinesses, as well as minority-,
woman-, and SDV-owned businesses, in the contracts and procurements it awards. There are different
legal standards for determining the constitutionality of measures government organizations use as part
of contracting inclusion programs, depending on whether they are race- and gender-neutral or race- and
gender-based in nature. In the context of government contracting, race- and gender-based measures are
efforts designed to specifically encourage the participation of minority- and woman-owned businesses,
respectively, in the contracts and procurements a government organization awards (e.g., using
condition-of-award goals for the participation of certain eligible business groups as part of awarding
individual projects). In contrast, race- and gender-neutral measures are efforts designed to encourage
the participation of certain groups of businesses in an organization’s work, regardless of the race or
gender of business owners. The Commonwealth’s SWaM Program is made up entirely of race- and
gender-neutral measures.
1. Race- and gender-neutral measures. Examples of race- and gender-neutral contracting
measures include an organization’s use of small business participation goals or setting aside certain
projects for exclusive competition among SDVs. Because race- and gender-neutral measures are not
based on the race, gender, sexual orientation, or other legally suspect characteristics of business owners,
courts apply the rational basis test—which is the least rigorous test for evaluating the constitutionality
of contracting measures—to assess whether an organization’s use of such measures is constitutional. To
meet the requirements of the rational basis test, an organization must ensure that its use of race- and
gender-neutral measures is rationally related to legitimate government interests (e.g., encouraging the
participation of economically disadvantaged businesses in its work).
FINAL REPORT CHAPTER 2, PAGE 1
2. Race- and gender-based measures. In contrast to race- and gender-neutral contracting
measures, an organization’s use of race-based and gender-based measures must meet the strict scrutiny
and intermediate scrutiny standards of constitutional review, respectively.
a. Strict scrutiny. An organization’s use of race-based contracting measures is subject to the strict
scrutiny standard of review, which is the most stringent standard for evaluating the constitutionality of
contracting measures that include legally suspect classifications. (In 2023, the United States Supreme
Court in Students for Fair Admissions, Inc. v. President and Fellows of Harvard College reaffirmed that the
strict scrutiny standard is the appropriate standard for assessing the constitutionality of race-based
inclusion measures. 1) To meet the strict scrutiny standard, government organizations must show a
compelling governmental interest in using race-based measures and demonstrate that their use is
narrowly tailored.
i. Compelling governmental interest. Government organizations using race-based contracting measures
must have evidence of the existence of discrimination within their own relevant geographic market areas
(RGMAs)—including statistical and anecdotal evidence—that supports the use of such measures.2 It is
not necessary for organizations themselves to have discriminated against minority-owned businesses
for them to demonstrate a compelling governmental interest. If evidence indicates that they are passive
participants in race-based discrimination that exists in their RGMAs, then they could consider using
race-based measures to account for that discrimination as part of their contracting and procurement
processes. 3 Passive participation in discrimination refers to organizations perpetuating discrimination
that exists in their marketplaces through the policies and practices they use to award projects (e.g., by
requiring high insurance requirements to perform work on their projects when demonstrable barriers
exist for minority-owned businesses in local insurance markets).
ii. Narrow tailoring. In addition to demonstrating a compelling governmental interest, government
organizations that use race-based contracting measures must demonstrate that their use of such
measures is narrowly tailored to meet program objectives. There are several factors courts consider in
determining whether an organization’s use of race-based contracting measures is narrowly tailored:
The necessity of such measures and the efficacy of alternative, race-neutral measures;
The degree to which the use of such measures is limited to those groups for which evidence of
discrimination exists in the local marketplace;
The degree to which the use of such measures is flexible and limited in duration, including the
availability of waivers and sunset provisions;
Whether any numerical, race-based participation goals are related to the local marketplace; and
Whether the use of such measures is overly burdensome for businesses not owned by minorities.
1 Students for Fair Admissions v. Harvard, 600 U.S. 181 (2023).
2 See e.g., Concrete Works, Inc. v. City and County of Denver (“Concrete Works I”), 36 F.3d 1513, 1520 (10th Cir. 1994).
3 See e.g., City of Richmond v. J.A. Croson Co., 488 U.S. 469, 492 (1989); Rothe Development Corp v. U.S. Dept of Defense, 545 F.3d 1023, 1048
(Federal Cir. 2008).
FINAL REPORT CHAPTER 2, PAGE 2
b. Intermediate scrutiny. In 1976, the United States Supreme Court (SCOTUS) ruled that a government
organization’s use of gender-based inclusion measures must meet the requirements of the intermediate
scrutiny standard, which is less rigorous than the strict scrutiny standard but more rigorous than the
rational basis test. 4 To meet the requirements of intermediate scrutiny, an organization must
demonstrate that its use of gender-based contracting measures serves an important government
objective and is substantially related to achieving that objective. Although the use of gender-based
measures are technically subject to the requirements of intermediate scrutiny, most courts assess the
constitutionality of both race-based and gender-based contracting measures based on the requirements
of strict scrutiny. In accordance with that practice, BBC Research & Consulting (BBC) generally treats
both race- and gender-based measures as being subject to strict scrutiny requirements.
B. Court Decisions
Two SCOTUS decisions established the strict scrutiny standard as the appropriate standard for
evaluating the constitutionality of race-based measures:
City of Richmond v. J.A. Croson Company (Croson); 5 and
Adarand Constructors, Inc. v. Peña (Adarand). 6
SCOTUS’ decision in the Croson case in particular provides important guidance on the types of evidence
organizations must provide to ensure that their use of race-based contracting measures is
constitutional.
1. Croson and Adarand. SCOTUS’ landmark decisions in Croson and Adarand are the most important
decisions to date in connection with the use of race-based measures in government contracting and
disparity study methodology. In Croson, SCOTUS struck down the City of Richmond’s race-based
subcontracting program as unconstitutional and, in doing so, established various requirements
government organizations must meet when considering the use of such measures as part of their
contracting inclusion programs:
Organizations’ use of race-based measures must meet the strict scrutiny standard of constitutional
review. That is, in remedying any race-based discrimination, they must establish a compelling
governmental interest to do so and must ensure the use of such measures is narrowly tailored.
Organizations must assess the availability of local minority-owned businesses for their work and
their use of race-based contracting measures must be tailored to such assessments.
In assessing the availability of minority-owned businesses for their work, organizations must
account for various characteristics of the projects they award and the degree to which local
minority-owned businesses are ready, willing, and able to perform that work.
4 Craig v. Boren, 429 U.S. 190 (1976).
5 City of Richmond v. J.A. Croson Company, 488 U.S. 469 (1989).
6 Adarand Constructors, Inc. v. Peña, 515 U.S. 200 (1995).
FINAL REPORT CHAPTER 2, PAGE 3
If organizations have evidence of statistical disparities between the percentage of dollars they
awarded to minority-owned businesses and the percentage of dollars those businesses are
available to perform, then inferences of discrimination could exist, supporting the use of narrowly
tailored, race-based measures.
SCOTUS’ decision in Adarand expanded its decision in Croson to include the use of race-based measures
in federal government contracting programs. In Adarand, SCOTUS ruled that federal contracting
programs must also adhere to the requirements of strict scrutiny.
2. Subsequent decisions. Many subsequent decisions in federal courts have refined the requirements
for using race- and gender-based contracting measures as part of contracting inclusion programs,
including cases in the Fourth Circuit, the federal judicial circuit in which the Commonwealth operates.
Examples of those cases include H. B. Rowe Co., Inc. v. W. Lyndo Tippett, North Carolina Department of
Transportation, et al. and Associated Utility Contractors of Maryland, Inc. v. Mayor and City Council of
Baltimore. The study team summarizes those decisions as well as many other decisions relevant to
contracting inclusion programs and disparity study methodology in Appendix B of this report.7, 8
C. Addressing Legal Requirements with the Disparity Study
Many government organizations have used information from disparity studies to:
Determine whether different business groups face barriers as part of their contracting processes or
in their marketplaces that make it more difficult for those businesses to compete for or obtain work
on the projects they award;
Design efforts to encourage the participation of different business groups in their contracts and
procurements; and
Ensure that their use of any race- or gender-based measures meets the requirements of the strict
scrutiny standard.
Various aspects of the 2025 Commonwealth of Virginia Disparity Study specifically address
requirements SCOTUS and other federal courts have established around the use of race- and gender-
based measures:
The study includes extensive econometric analyses and analyses of qualitative insights to assess
whether any economic barriers exist for minorities, women, and minority- and woman-owned
businesses in the RGMA and whether the Commonwealth is actively or passively participating in
those barriers.
BBC accounts for various characteristics of the projects state agencies award—such as work type
and size—as well as the specific characteristics of businesses located in the RGMA—such as
primary lines of work, bid capacities, and interest in performing government work—in estimating
the availability of minority- and woman-owned businesses for state agency work.
7 H. B. Rowe Co., Inc. v. W. Lyndo Tippett, NCDOT, et al., 615 F.3d 233 (4th Cir. 2010).
8 Associated Utility Contractors of Maryland, Inc. v. Mayor and City Council of Baltimore, 218 F. Supp.2d 749.
FINAL REPORT CHAPTER 2, PAGE 4
The study includes assessments of whether minority-, woman-, and SDV-owned businesses exhibit
substantial, statistical disparities between their participation in and availability for state agency
work, indicating whether any inferences of discrimination exist for specific groups of those
businesses.
The study includes various recommendations to help the Commonwealth consider whether the use
of race- and gender-based contracting measures is appropriate and how to do so effectively and
legally.
FINAL REPORT CHAPTER 2, PAGE 5
CHAPTER 3.
Marketplace Conditions
In the United States, numerous legal, economic, and social obstacles have historically inhibited
minorities and women from starting and operating successful businesses. Systemic injustices and
barriers such as slavery, racial oppression, segregation, race-based displacement, labor market
discrimination, and other discriminatory government policies have produced substantial disparities for
minorities and women. Those barriers have limited opportunities for them to obtain quality education,
gain workplace experience, and build wealth, the effects of which still impact these communities today. 1,
2, 3, 4, 5
A. Historical and Current Marketplace Conditions
Historically, minorities and women in Virginia have faced political, economic, and social barriers similar
to those experienced by minorities and women nationwide. Following the Civil War, Virginians had to
adapt to an economy that was devastated by damaged infrastructure, a loss of human capital, and debt.
Free Black business owners and formerly enslaved men and women experienced additional barriers
such as a lack of access to financial capital, intimidation from former Confederates, and political
restrictions that hindered their economic mobility. 6, 7 These restrictions included disenfranchisement
and the 1866 Virginia Vagrancy Law, which permitted local law enforcement to arrest and detain
unemployed former slaves. 8
In 1902, Virginia’s State Constitution codified voting restrictions as well as many other Jim Crow laws
enforcing racial segregation that would persist through the mid-20th century. 9 Jim Crow legislation
became even more rigid in the 1920s when the Virginia Racial Integrity Act established the requirement
that anyone with any non-White ancestry be categorized as “colored,” leading to the mass erasure of
Native American identity and reinforcing discriminatory practices against all minority groups.10
Segregation permeated the daily life of minorities in Virginia, as they were required to use separate
facilities at restaurants, public buildings, and cultural institutions, and had to develop their economies
independently under the pervasive threat of violence.11 For instance, Black residents were forced to live
in segregated neighborhoods and send their children to segregated schools. Several of the most well‐
documented examples of redlining—a practice by which Black residents were systematically denied
access to banking and mortgage services because they were deemed to live in higher‐risk, “undesirable”
neighborhoods—occurred in places like Richmond and Norfolk, Virginia. 12
Segregation also extended into the labor market, as minorities in Virginia and nationwide were
concentrated in low-wage work in agriculture and other industries with few opportunities for
advancement. 13, 14 Moreover, advances in the economic wealth of minorities in Virginia were often
actively dismantled and reversed. For example, in the mid-20th century, urban renewal initiatives in
Charlottesville, Virginia, displaced over 1,000 residents of the historically Black neighborhood of
Vinegar Hill. Because poll taxes prevented many residents from voting in the referendum that
authorized the projects, lower-income minority residents were effectively excluded from the decision. 15
Similarly, the historically Black neighborhood of Jackson Ward, one of the most prominent hubs in the
nation for Black entrepreneurship by the 1950s, was disrupted by the construction of a large highway
FINAL REPORT CHAPTER 3, PAGE 1
system and various other urban renewal projects. The initiative displaced many long-established Black-
owned businesses and about 10 percent of Richmond’s Black population. 16
Women also faced labor market barriers in 20th-century Virginia, as they were typically restricted to
either being homemakers or taking gender-specific jobs with low pay and scarce advancement
opportunities. 17, 18, 19 Even when they were allowed to enroll in college, their studies were often
restricted to certain topic areas well into the 20th century. It was not until 1970 that women were
admitted to all of the undergraduate schools at the University of Virginia.20 Alongside rigid cultural
norms, gender inequalities in Virginia’s education and political systems restricted women from
receiving equal pay and benefits or from participating in the workforce altogether. 21
In the middle of the 20th century, as a result of the Civil Rights movement, many reforms opened up new
opportunities for minorities and women in Virginia and nationwide. For example, Brown v. Board of
Education, The Equal Pay Act, The Civil Rights Act, and The Women’s Educational Equity Act outlawed
many forms of discrimination. Over the course of several decades, workplaces adopted policies and
programs in an effort to diversify their staffs. 22 Those reforms increased diversity in workplaces and
reduced educational and employment disparities for minorities and women. 23, 24, 25, 26 Despite those
improvements, however, minorities and women today experience enduring barriers—such as
incarceration, residential segregation, and disproportionate family responsibilities—that make it more
difficult for them start and operate businesses successfully. 27, 28, 29, 30
B. Quantitative Analyses of Marketplace Conditions
BBC Research & Consulting (BBC) conducted extensive quantitative analyses to assess whether
minorities; women; service-disabled veterans (SDVs); and minority-, woman-, and SDV-owned
businesses face any barriers in the construction, professional services, and non-professional services
and goods industries in Virginia. The study team also examined the potential effects any such barriers
have on the formation and success of businesses as well as their availability for contracts and
procurements that the Commonwealth of Virginia state agencies and higher education institutions
(collectively referred to as the Commonwealth) award. We examined local marketplace conditions in
four primary areas:
Human capital, to assess whether minorities, women, and SDVs face barriers related to education,
employment, and gaining industry experience;
Financial capital, to assess whether minorities, women, and SDVs face barriers related to wages,
homeownership, personal wealth, and financing;
Business ownership, to assess whether minorities and women own businesses at rates
comparable to that of White men and whether SDVs own businesses at rates that are comparable to
that of all others; and
Business success, to assess whether minority- and woman-owned businesses have outcomes
similar to those of businesses owned by White men and whether SDV-owned businesses have
outcomes similar to those of all other businesses.
1. Human capital. Human capital is the collection of personal knowledge, behavior, experience, and
characteristics that make up an individual’s ability to perform and succeed in particular labor markets.
Factors such as education, business experience, and managerial experience have been shown to be
FINAL REPORT CHAPTER 3, PAGE 2
related to business success. 31, 32, 33, 34 Any barriers related to those factors may make it more difficult for
minorities, women, and SDVs to work in relevant industries and may prevent many of them from
starting and operating businesses successfully.
a. Education. Barriers associated with educational attainment may preclude entry or advancement in
certain industries, because many occupations require at least a high school diploma, and some
occupations require at least a four-year college degree. In addition, education is a strong predictor of
both income and personal wealth, which are both shown to be related to business formation and
success. 35, 36, 37 Nationally, minority residents lag behind White residents in terms of both educational
attainment and the quality of education they receive.38, 39, 40 Minority students are more likely than
White students to attend schools that do not provide access to core classes in science and math.41 In
addition, Black students are more likely than White students to be expelled or suspended from high
school. 42 For those and other reasons, minorities are far less likely than people who identify as White to
attend college, enroll at selective four-year college institutions, and earn college degrees. 43
Educational outcomes for minorities in Virginia are similar to those for minorities nationwide. BBC’s
analyses of the labor force of the Virginia marketplace indicate that people who identify with certain
minority groups earn education degrees at lower rates than people who identify as White. Figure 3-1
presents the rates of educational attainment of workers in the Virginia marketplace, broken down by
race, gender, and SDV status. As shown in Figure 3-1, Asian Pacific (94%), Black (94%) Hispanic (77%),
Native American (93%), Subcontinent Asian (96%), and other race minority workers (96%) are less
likely than White workers (97%) to have high school diplomas, and Black (64%), Hispanic (70%), and
Native American workers (68%) are less likely than White workers (77%) to have associate’s degrees.
Additionally, Black (33%), Hispanic (30%), and Native American workers (39%) are less likely than
White workers (51%) to have bachelor’s degrees or higher.
In contrast, Asian Pacific (84%), Subcontinent Asian (94%), and other race minority workers (83%) are
more likely to have associate’s degrees than White workers (77%), and Asian Pacific (62%),
Subcontinent Asian (81%), and other race minority workers (58%) are more likely to have bachelor’s
degrees or higher than White workers (51%). Women are more likely than men to have high school
diplomas (women: 95%; men: 93%), associate’s degrees (women: 77%; men: 74%), and bachelor’s
degrees or higher (women: 50%; men: 45%). SDVs are more likely than all others to have high school
diplomas (SDVs: 99%; all others: 94%), associate’s degrees (SDVs: 78%; all others: 75%), and bachelor’s
degrees or higher (SDVs: 59%; all others: 47%).
FINAL REPORT CHAPTER 3, PAGE 3
Figure 3-1.
Percentage of all workers who have obtained various levels of education, Virginia, 2018-2022
a) Race
Less than high school diploma High school diploma
Associate's degree Bachelor's degree or higher
6%**
94%**
Asian Pacific
84%**
62%**
6%**
94%**
Black
64%**
33%**
23%**
77%**
Hispanic
70%**
30%**
7%**
93%**
Native American
68%**
39%**
4%*
96%*
Subcontinent Asian
94%**
81%**
4%**
96%**
Other race minority
83%**
58%**
3%
97%
White
77%
51%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
FINAL REPORT CHAPTER 3, PAGE 4
b) Gender
5%**
95%**
Women
77%**
50%**
Less than high school diploma
High school diploma
Associate's degree
Bachelor's degree or higher
7%
93%
Men
74%
45%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
c) SDV status
1%**
99%**
SDV
78%**
59%**
Less than high school diploma
High school diploma
Associate's degree
Bachelor's degree or higher
6%
94%
All others
75%
47%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Note: *, ** Denotes that the difference in proportions between the minority group and White, between women and men, or between SDVs and all others is
statistically significant at the 90% and 95% confidence levels, respectively.
Source: 2018-2022 ACS 5% Public Use Microdata sample. The raw data extract was obtained through the IPUMS program of the MN Population Center:
http://usa.ipums.org/usa/.
FINAL REPORT CHAPTER 3, PAGE 5
b. Employment and management experience. An important precursor to business ownership and
success is acquiring direct experience in relevant industries. Any barriers that limit minorities and
women from acquiring that experience could prevent them from starting and operating businesses in
the future.
i. Employment. On a national level, prior industry experience has been shown to be an important
indicator for business ownership and success. However, minorities and women are often unable to
acquire that experience. They are sometimes discriminated against in hiring decisions, which impedes
their entry into the labor market. 44, 45, 46 When employed, they are often relegated to peripheral
positions in the labor market and to industries that already exhibit high concentrations of minorities
and women. 47, 48, 49, 50, 51, 52 In addition, Black, Hispanic, and Native American residents are incarcerated
at greater rates than White residents in Virginia and nationwide, which contributes to many labor
obstacles, including difficulties finding jobs and slow wage growth. 53, 54, 55, 56, 57, 58, 59
The study team’s analyses of the labor force in Virginia are consistent with nationwide findings. Figure
3-2 presents the percentage of minority, woman, and SDV workers in various Virginia industries. The
industries with the highest representations of minority workers are childcare, hair, and nails (52.7%);
other services (49.5%); and transportation, warehousing, utilities, and communications (47.8%). The
industries with the lowest representations of minority workers are extraction and agriculture (24.8%),
education (34.1%), and wholesale trade (35.6%).
The Virginia industries with the highest representations of women are childcare, hair, and nails (85.5%);
healthcare (78.1%); and education (69.7%). The industries with the lowest representations of women
are construction (12.1%), extraction and agriculture (19.5%), manufacturing (29.3%), and wholesale
trade (29.3%).
The Virginia industries with the highest representations of SDVs are public administration and social
services (8.6%) and professional services (4.2%). The industries with the lowest representations of
SDVs are extraction and agriculture (0.6%); childcare, hair, and nails (0.8%); retail (1.2%); and
construction (1.2%).
FINAL REPORT CHAPTER 3, PAGE 6
Figure 3-2.
Percent representation of workers in various industries in Virginia, 2019-2023
a) Race
Native Subcontinent Other race
Asian Pacific Black Hispanic White
American Asian minority
Extraction and agriculture (n=1,751) 1.1 % ** 8.3 % ** 13.5 % ** 0.7 % 0.5 % ** 0.4 % ** 75.2 % **
Construction (n=11,891) 2.3 % ** 10.2 % ** 26.5 % ** 0.8 % ** 0.5 % ** 0.7 % ** 58.2 %
Manufacturing (n=14,376) 4.1 % ** 21.2 % ** 8.2 % ** 0.7 % 1.7 % ** 0.9 % 62.5 % **
Wholesale trade (n=3,268) 3.8 % ** 18.7 % 9.2 % ** 0.5 % 1.1 % ** 0.8 % 64.4 % **
Retail (n=19,107) 5.4 % 23.4 % ** 9.2 % ** 0.7 % * 2.7 % 0.9 % 56.0 % **
Transportation, warehousing, utilities, and
communications (n=12,729) 5.2 % 27.1 % ** 9.1 % ** 0.6 % 2.9 % 0.7 % ** 52.2 % **
Professional services (n=38,863) 7.3 % ** 14.9 % ** 7.3 % ** 0.6 % 7.0 % ** 1.2 % ** 60.0 % **
Education (n=22,066) 4.5 % ** 17.6 % ** 6.6 % ** 0.5 % ** 2.4 % ** 0.9 % * 65.9 % **
Healthcare (n=20,354) 6.3 % ** 26.3 % ** 7.6 % ** 0.5 % ** 2.4 % ** 0.9 % 54.7 % **
Other services (n=26,691) 5.4 % 21.3 % ** 18.0 % ** 0.7 % 1.8 % ** 1.1 % 50.5 % **
Childcare, hair, and nails (n=4,146) 14.0 % ** 20.9 % 12.2 % * 0.5 % * 2.5 % 0.9 % 47.3 % **
Public administration and social services
(n=25,959) 5.3 % 21.6 % ** 8.1 % ** 0.6 % 2.0 % ** 1.1 % 60.0 % **
All Industries 5.5 % 20.0 % 10.9 % 0.6 % 2.9 % 1.0 % 57.7 %
FINAL REPORT CHAPTER 3, PAGE 7
b) Gender
Women Men
Extraction and agriculture (n=1,751) 19.5 % ** 80.5 % **
Construction (n=11,891) 12.1 % ** 87.9 % **
Manufacturing (n=14,376) 29.3 % ** 70.7 % **
Wholesale trade (n=3,268) 29.3 % ** 70.7 % **
Retail (n=19,107) 48.2 % * 51.8 % *
Transportation, warehousing, utilities, and communications (n=12,729) 29.9 % ** 70.1 % **
Professional services (n=38,863) 46.5 % ** 53.5 % **
Education (n=22,066) 69.7 % ** 30.3 % **
Healthcare (n=20,354) 78.1 % ** 21.9 % **
Other services (n=26,691) 46.6 % ** 53.4 % **
Childcare, hair, and nails (n=4,146) 85.5 % ** 14.5 % **
Public administration and social services (n=25,959) 49.2 % ** 50.8 % **
All Industries 47.5 % 52.5 %
FINAL REPORT CHAPTER 3, PAGE 8
c) SDV status
SDV All others
Extraction and agriculture (n=1,751) 0.6 % ** 99.4 % **
Construction (n=11,891) 1.2 % ** 98.8 % **
Manufacturing (n=14,376) 3.0 % 97.0 %
Wholesale trade (n=3,268) 1.7 % ** 98.3 % **
Retail (n=19,107) 1.2 % ** 98.8 % **
Transportation, warehousing, utilities, and communications (n=12,729) 3.3 % 96.7 %
Professional services (n=38,863) 4.2 % ** 95.8 % **
Education (n=22,066) 1.7 % ** 98.3 % **
Healthcare (n=20,354) 1.7 % ** 98.3 % **
Other services (n=26,691) 1.3 % ** 98.7 % **
Childcare, hair, and nails (n=4,146) 0.8 % ** 99.2 % **
Public administration and social services (n=25,959) 8.6 % ** 91.4 % **
All Industries 3.0 % 97.0 %
Note: *, ** Denotes that the difference in proportions between the minority group and White, between women and men, or between SDVs and all others in the specified industry and all industries is statistically significant
at the 90% and 95% confidence levels, respectively.
Source: 2019-2023 ACS 5% Public Use Microdata sample. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/.
FINAL REPORT CHAPTER 3, PAGE 9
BBC also assessed the representation of minority, woman, and SDV workers in the Virginia construction,
professional services, and non-professional services and goods industries compared to their
representation in all Virginia industries considered together. As presented in Figure 3-3:
Smaller percentages of people who identify as Asian Pacific (2.3%), Black (10.2%), Subcontinent
Asian (0.5%), other race minority (0.7%), women (12.1%), and SDVs (1.2%) work in the
construction industry compared to all industries considered together. In contrast, greater
percentages of people who identify as Hispanic (26.5%), Native American (0.8%), men (87.9%),
and all others who are not SDVs (98.8%) work in the construction industry compared to all
industries considered together.
Smaller percentages of people who identify as Black (11.9%), Hispanic (7.6%), women (34.2%),
and all others who are not SDVs (93.2%) work in the professional services industry compared to all
industries considered together. In contrast, greater percentages of people who identify as Asian
Pacific (8.7%), Subcontinent Asian (9.3%), other race minority (1.2%), White (58.7%), men
(65.8%), and SDVs (6.8%) work in the professional services industry compared to all industries
considered together.
Smaller percentages of people who identify as Asian Pacific (3.9%), Native American (0.5%),
Subcontinent Asian (1.7%), White (52.5%), and women (32.0%) work in the non-professional
services and goods industry compared to all industries considered together. In contrast, greater
percentages of people who identify as Black (22.8%), Hispanic (16.6%), and men (68.0%) work in
the non-professional services and goods industry compared to all industries considered together.
FINAL REPORT CHAPTER 3, PAGE 10
Figure 3-3.
Demographic characteristics of workers in study-related contracting industries and all
industries, Virginia, 2019-2023
Professional Non-prof. services
All industries Construction services and goods
Group (n=212,299) (n=11,891) (n=19,299) (n=11,159)
Race/ethnicity
Asian Pacific 5.5 % 2.3 % ** 8.7 % ** 3.9 % **
Black 20.0 % 10.2 % ** 11.9 % ** 22.8 % **
Hispanic 10.9 % 26.5 % ** 7.6 % ** 16.6 % **
Native American 0.6 % 0.8 % ** 0.6 % 0.5 % **
Subcontinent Asian 2.9 % 0.5 % ** 9.3 % ** 1.7 % **
Other race minority 1.0 % 0.7 % ** 1.2 % * 1.0 %
Total minority 40.9 % 41.0 % 39.3 % 46.5 %
White 57.7 % 58.2 % 58.7 % ** 52.5 % **
Total 98.6 % 99.2 % 98.0 % 99.0 %
Gender
Women 47.5 % 12.1 % ** 34.2 % ** 32.0 % **
Men 52.5 % 87.9 % ** 65.8 % ** 68.0 % **
Total 100.0 % 100.0 % 100.0 % 100.0 %
SDV status
SDV 3.0 % 1.2 % ** 6.8 % ** 2.8 %
All others 97.0 % 98.8 % ** 93.2 % ** 97.2 %
Total 100.0 % 100.0 % 100.0 % 100.0 %
Note: *, ** Denotes that the difference in proportions between workers in each study-related industry and workers in all other
industries is statistically significant at the 90% and 95% confidence levels, respectively.
Source: 2019-2023 ACS 5% Public Use Microdata sample. The raw data extract was obtained through the IPUMS program of the MN
Population Center: http://usa.ipums.org/usa/.
BBC also examined the relationships between race, gender, and SDV status and unemployment.
Figure 3-4 presents unemployment rates among minorities, women, and SDVs compared to those of
White people, men, and all others, respectively. Compared to people who identify as White (3%), people
who identify as Asian Pacific (4%), Black (7%), Hispanic (5%), and Native American (5%) are more
likely to be unemployed in Virginia. In contrast, SDVs (3%) are less likely than all others (4%) to be
unemployed in Virginia.
FINAL REPORT CHAPTER 3, PAGE 11
Figure 3-4.
Unemployment rates, Virginia,
2019-2023 Asian Pacific 4%**
Note:
Black 7%**
** Denotes that the difference in proportions
between the minority group and White, between
women and men, or between SDVs and all others Hispanic 5%**
is statistically significant at the 95% confidence
level. Native American 5%**
Source:
2019-2023 ACS 5% Public Use Microdata sample. Subcontinent Asian 3%
The raw data extract was obtained through the
IPUMS program of the MN Population Center: Other race minority 4%
http://usa.ipums.org/usa/.
White 3%
Women 4%
Men 4%
SDV 3%**
All others 4%
0% 10% 100%
20%
We also conducted regression analyses to assess whether there are relationships between race and
gender and unemployment, even after accounting for various personal factors such as age, education,
family status, and location. Figure 3-5 presents results of those analyses, which indicate that, even after
accounting for such factors, people who identify as Asian Pacific, Black, Native American, and
Subcontinent Asian are more likely to be unemployed compared to people who identify as White. In
addition, women are more likely to be unemployed compared to men.
Figure 3-5.
Variable Coefficient
Predictors of unemployment, Virginia
marketplace, 2019-2023
Asian Pacific 0.1202 **
Notes: Black 0.2841 **
The regression included 191,078 observations. Hispanic 0.0085
** Denotes statistical significance at the 95% confidence level. Native American 0.1259 **
The referent for race variables is White. Subcontinent Asian 0.1175 **
Source: Other race minority 0.0478
2019-2023 ACS 5% Public Use Microdata samples. The raw data Women 0.0886 **
extract was obtained through the IPUMS program of the MN
Population Center: http://usa.ipums.org/usa/.
ii. Management experience. Managerial experience is an important predictor of business ownership and
success, but discrimination remains an obstacle to greater diversity in management positions. 60, 61, 62, 63
Nationally, minorities and women are far less likely than White men to work in management
positions. 64, 65, 66 Similar outcomes exist for minorities and women in Virginia. BBC examined the
FINAL REPORT CHAPTER 3, PAGE 12
representation of minorities, women, and SDVs in management positions in the Virginia construction,
professional services, and non-professional services and goods industries. As shown in Figure 3-6:
Smaller percentages of people who identify as Asian Pacific (6.4%), Black (5.2%), Hispanic (4.2%),
and Subcontinent Asian (4.9%) work as managers in the construction industry than people who
identify as White (13.5%). Additionally, smaller percentages of women (7.3%) than men (10.3%)
work as managers in the construction industry.
Smaller percentages of people who identify as Asian Pacific (7.2%), Black (5.9%), Hispanic (6.5%),
Subcontinent Asian (6.1%), and other race minority (6.1%) work as managers in the professional
services industry than people who identify as White (10.0%). Additionally, a smaller percentage of
women (7.8%) work as managers in the professional services industry than men (8.9%).
Smaller percentages of people who identify as Asian Pacific (1.2%), Black (0.8%), Hispanic (0.8%),
and Native American (0.9%) work as managers in the non-professional services and goods industry
than people who identify as White (4.5%). Additionally, a smaller percentage of women (2.4%)
work as managers in the non-professional services and goods industry than men (3.2%), and a
smaller percentage of SDVs (1.6%) work as managers in the non-professional services and goods
industry than all others (3.0%).
Figure 3-6.
Percentage of non-owner workers who worked as a manager in each study-
related industry, Virginia, 2019-2023
Professional Non-prof. services
Group Construction services and goods
Race/ethnicity
Asian Pacific 6.4 % ** 7.2 % ** 1.2 % **
Black 5.2 % ** 5.9 % ** 0.8 % **
Hispanic 4.2 % ** 6.5 % ** 1.0 % **
Native American 13.4 % 8.9 % 0.9 % **
Subcontinent Asian 4.9 % ** 6.1 % ** 3.3 %
Other race minority 22.1 % 6.1 % ** 3.3 %
White 13.5 % 10.0 % 4.5 %
Gender
Women 7.3 % ** 7.8 % * 2.4 % **
Men 10.3 % 8.9 % 3.2 %
SDV status
SDV 9.5 % 7.1 % 1.6 % *
All others 9.9 % 8.6 % 3.0 %
All individuals 9.9 % 8.5 % 2.9 %
Note: *, ** Denotes that the difference in proportions between the minority group and White, between women
and men, or between SDVs and all others is statistically significant at the 90% and 95% confidence levels,
respectively.
Source: 2019-2023 ACS 5% Public Use Microdata sample. The raw data extract was obtained through the IPUMS
program of the MN Population Center: http://usa.ipums.org/usa/.
FINAL REPORT CHAPTER 3, PAGE 13
We also conducted regression analyses to assess whether there are relationships between race and
gender and holding a management position, even after accounting for various personal factors such as
age and family status. Figure 3-7 presents results of those analyses, which indicate that, even after
accounting for such factors, people who identify as Asian Pacific, Black, Hispanic, and Subcontinent
Asian are less likely to hold management positions in the Virginia construction industry than those who
identify as White, and women are less likely to hold management positions in the Virginia construction
industry than men. People who identify as Asian Pacific, Black, Hispanic, and Subcontinent Asian are less
likely to hold management positions in the Virginia professional services industry than those who
identify as White. People who identify as Asian Pacific and Black are less likely to hold management
positions in the Virginia non-professional services and goods industries than people who identify
as White.
Figure 3-7.
Predictors of management in study-related industries,
Virginia, 2019-2023
Coefficient
Professional Non-prof. services
Variable Construction services and goods
Asian Pacific -0.5900 ** -0.1661 ** -0.6023 **
Black -0.4647 ** -0.2308 ** -0.5048 **
Hispanic -0.2615 ** -0.2479 ** -0.2668
Native American 0.1019 0.0777 -0.5123
Subcontinent Asian -0.8341 ** -0.3265 ** -0.3707
Other race minority 0.3837 -0.1746 -0.0166
Women -0.5050 ** -0.0338 -0.1029
Notes: The construction regression included 7,626 observations.
The professional services regression included 14,794 observations.
The non-professional services and goods regression included 7,792 observations.
** Denotes statistical significance at the 95% confidence level.
The referent for each set of categorical variables is as follows: high school diploma for the education variables and White for the race variables.
Source: 2019-2023 ACS 5% Public Use Microdata samples. The raw data extract was obtained through the IPUMS program of the MN Population Center:
http://usa.ipums.org/usa.
2. Financial capital. In addition to human capital, financial capital has been shown to be an important
indicator of business formation and success. 67, 68, 69 Individuals can acquire financial capital through
many sources, including wages, personal wealth, homeownership, and loans. If barriers exist in financial
markets, minorities and women may have difficulty acquiring the capital necessary to start, operate, or
expand businesses.
a. Wages and income. Wage and income gaps between minorities and White people and between
women and men exist nationwide, even when researchers have accounted for various personal
factors. 70, 71, 72, 73 For example, nationally, on average, Black and Hispanic residents have household
incomes less than two-thirds and three-fourths, respectively, those of White residents. 74 Women have
also faced wage and income gaps relative to men. Nationally, the median hourly wage of women is only
85 percent that of men, even after accounting for various personal factors. 75 Such disparities make it
difficult for minorities and women to use wages as a source of business capital.
FINAL REPORT CHAPTER 3, PAGE 14
BBC observed wage disparities in Virginia consistent with those observed nationally. Figure 3-8
presents mean annual wages for Virginia workers by race, gender, and SDV status. People who identify
as Black ($59,148), Hispanic ($62,825), and Native American ($75,053) earn less than people who
identify as White ($87,975). In addition, women ($67,026) earn less than men ($93,832). In contrast,
people who identify as Asian Pacific ($90,232) and Subcontinent Asian ($120,451) earn more than
people who identify as White ($87,975), and SDVs ($108,537) earn more than all
others ($79,945).
Figure 3-8.
Mean annual wages, Virginia, Asian Pacific $90,232*
2019-2023
Black $59,148**
Notes:
Hispanic $62,825**
The sample universe is all non-institutionalized,
employed individuals aged 25-64 who are not in
school, the military, or self-employed. Native American $75,053**
*, ** Denotes that the difference in mean
between the minority group and White, between Subcontinent Asian $120,451**
women and men, or between SDVs and all others
is statistically significant at the 90% and 95% Other race minority $88,898
confidence levels, respectively.
Source: White $87,975
2019-2023 ACS 5% Public Use Microdata sample.
The raw data extract was obtained through the
IPUMS program of the MN Population Center:
http://usa.ipums.org/usa/. Women $67,026**
Men $93,832
SDV $108,537**
All others $79,945
$0 $50,000 $100,000 $150,000
We also conducted regression analyses to assess whether wage gaps for minorities or women exist even
after accounting for various personal factors such as age, family status, and location. Figure 3-9 presents
results of those analyses, which indicate that, in Virginia, workers of all minority race groups earn less
than White workers, and women earn less than men, even after accounting for such factors.
FINAL REPORT CHAPTER 3, PAGE 15
Figure 3-9.
Predictors of annual wages (regression), Exponentiated
Virginia, 2019-2023 Variable coefficient
Notes:
Asian Pacific 0.895 **
The regression includes 112,626 observations.
Black 0.814 **
The sample universe is all non-institutionalized, employed individuals
aged 25-64 who are not in school, the military, or self-employed. Hispanic 0.866 **
For ease of interpretation, the exponentiated form of the coefficients Native American 0.916 **
is displayed in the figure.
Subcontinent Asian 0.909 **
The referent for race variables is White.
Other race minority 0.906 **
** Denotes statistical significance at the 95% confidence level.
Women 0.780 **
Source:
2019-2023 ACS 5% Public Use Microdata sample. The raw data extract
was obtained through the IPUMS program of the MN Population Center:
http://usa.ipums.org/usa/.
b. Personal wealth. Another source of business capital is personal wealth, and there are substantial
disparities between minorities and White people and between women and men in personal wealth, even
after accounting for various personal characteristics. 76, 77, 78, 79 For example, in 2019, Black and Hispanic
residents across the country exhibited average household net worth that was 14 percent and 17 percent,
respectively, that of White residents. 80 In Virginia, 16.8 percent of Black residents, 12.0 percent of
Hispanic residents, 6.8 percent of Asian/Native Hawaiian/Pacific Islander residents, and 22.9 percent of
Native American residents are living in poverty, compared to 8.3 percent of White residents.81
c. Homeownership. Home equity has also been shown to be a key source of business capital, but
minorities appear to face substantial barriers nationwide in owning homes, and those disparities appear
to be at least partly due to discrimination. 82, 83, 84 Research indicates that minorities continue to be given
less information on prospective homes and have their purchase offers rejected because of their races. 85,
86 In addition, minority homeowners tend to own homes worth less than those of White homeowners
and tend to accrue less equity. 87, 88, 89 Differences in home values and equity can be attributed—at least,
in part—to the depressed property values that tend to exist in racially segregated neighborhoods. 90, 91, 92
Minorities appear to face homeownership barriers in Virginia similar to those observed nationally. As
shown in Figure 3-10, people who identify as Asian Pacific (69%), Black (49%), Hispanic (53%), Native
American (65%), Subcontinent Asian (70%), and other race minority (66%) own homes at rates that are
less than that of people who identify as White (75%).
FINAL REPORT CHAPTER 3, PAGE 16
Figure 3-10.
Homeownership rates, Asian Pacific 69%**
Virginia, 2019-2023
Black 49%**
Notes:
The sample universe is all households.
Hispanic 53%**
** Denotes statistically significant
differences from White homeowners at
the 95% confidence level. Native American 65%**
Source:
2019-2023 ACS 5% Public Use Subcontinent Asian 70%**
Microdata sample. The raw data extract
was obtained through the IPUMS
program of the MN Population Center: Other race minority 66%**
http://usa.ipums.org/usa/.
White 75%
0% 100%
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
We also conducted regression analyses to assess whether gaps in homeownership rates for minorities
exist even after accounting for various personal factors such as age, family status, and location. Figure 3-
11 presents results of those analyses, which indicate that, in Virginia, people who identify with all
minority race groups are less likely to own homes than people who identify as White.
Figure 3-11. Exponentiated
Predictors of home ownership (regression), Variable coefficient
Virginia, 2019-2023
Asian Pacific 0.945 **
Notes:
Black 0.572 **
The sample universe is all owner-occupied housing units.
Hispanic 0.742 **
For ease of interpretation, the exponentiated form of the coefficients is
displayed in the figure. Native American 0.830 **
** Denotes statistical significance at the 95% confidence level. Subcontinent Asian 0.780 **
The referent for race variables is White. Other race minority 0.831 **
Source:
2019-2023 ACS 5% Public Use Microdata sample. The raw data extract
was obtained through the IPUMS program of the MN Population Center:
http://usa.ipums.org/usa/.
Figure 3-12 presents median home values among minority homeowners in Virginia. Those data indicate
that Black ($255,000) and Native American ($300,000) homeowners own homes that, on average, are
worth less than those of White homeowners ($325,000). In contrast, Asian Pacific ($450,000), Hispanic
($370,000), Subcontinent Asian ($600,000), and other race minority homeowners ($380,000) own
homes that, on average, are worth more than White homeowners ($325,000).
FINAL REPORT CHAPTER 3, PAGE 17
Figure 3-12.
Median home values, Asian Pacific $450,000
Virginia, 2019-2023
Black $255,000
Note:
The sample universe is all owner-
occupied housing units. Hispanic $370,000
Source:
Native American $300,000
2019-2023 ACS 5% Public Use
Microdata sample. The raw data
extract was obtained through the Subcontinent Asian $600,000
IPUMS program of the MN Population
Center: http://usa.ipums.org/usa/.
Other race minority $380,000
White $325,000
$0 $200,000 $400,000 $600,000 $800,000
We also conducted regression analyses to assess whether differences in median home values for
minorities exist even after accounting for various personal factors such as age, family status, and
location. Figure 3-13 presents results of those analyses, which indicate that, in Virginia, people who
identify as Black, Hispanic, and Native American have lower median home values than people who
identify as White, even after accounting for such factors. In contrast, people who identify as
Subcontinent Asian have higher median home values than people who identify as White, even after
accounting for various personal factors.
Figure 3-13. Exponentiated
Predictors of home value (regression), Variable coefficient
Virginia, 2019-2023
Asian Pacific 1.011
Notes:
Black 0.805 **
The regression includes 109,760 observations.
Hispanic 0.918 **
The sample universe is all owner-occupied households.
** Denotes statistical significance at the 95% confidence level.
Native American 0.913 **
The referent for race variables is White. Subcontinent Asian 1.068 **
For ease of interpretation, the exponentiated form of the Other race minority 1.025
coefficients is displayed in the figure.
Source:
2019-2023 ACS 5% Public Use Microdata sample. The raw data
extract was obtained through the IPUMS program of the MN
Population Center: http://usa.ipums.org/usa/.
d. Access to financing. Minorities and women face many barriers in trying to access credit and
financing, both for home and business capital. Researchers have often attributed those barriers to
various forms of race- and gender-based discrimination that exist in credit markets. 93, 94, 95, 96, 97, 98 BBC
assessed difficulties minorities and women face in home and business credit markets.
i. Home credit. Minorities and women continue to face barriers when trying to access credit to purchase
homes. Examples include discriminatory treatment of minorities and women during pre-application
processes and less favorable loan terms when minority and women borrowers are approved for home
loans. 99, 100 Disparities in home loan denial rates and in mortgage costs may prevent minorities and
women from accessing the wealth-building potential of homeownership. 101, 102, 103, 104, 105 To examine
how minorities fare in the home credit market relative to White residents in Virginia, we analyzed home
FINAL REPORT CHAPTER 3, PAGE 18
loan denial rates for high-income households by race in the marketplace. As shown in Figure 3-14,
people who identify as Black (16%) and Hispanic (10%) in Virginia are denied home loans at greater
rates than people who identify as White (5%).
Figure 3-14.
Denial rates of conventional Asian 6%
purchase loans for high-income
households, Virginia, 2024
Black 16%**
Notes:
** Denotes that the difference in proportions Hispanic 10%**
between the minority group and White is
statistically significant at the 95% confidence level.
High-income borrowers are those households with
Native American 13%
120% or more of the HUD/FFIEC area median
family income (MFI). The MFI data are calculated
by the FFIEC.
White 5%
Source:
FFIEC HMDA data 2024. The raw data extract was
obtained from the Federal Financial Institutions 0% 10% 20% 100%
30%
Examination Council's HMDA data tool:
https://ffiec.cfpb.gov/data-browser/.
ii. Business credit. Minority- and woman-owned businesses also face difficulties accessing business
credit. For example, during pre-application meetings, minority-owned businesses are given less
information about loans, are subjected to more information requests, and are offered less support than
White-owned businesses. 106 In addition, minority- and woman-owned businesses are more likely to
forego submitting business loan applications because of fears of denial.107, 108, 109 They are also more
likely to be denied business credit when they do seek loans and are less likely to receive all the financing
they originally sought if their loans are approved. 110, 111, 112, 113, 114, 115 Finally, minority and women
business owners face worse loan outcomes even after accounting for creditworthiness. 116, 117, 118
Without equal access to capital, minority- and woman-owned businesses operate with less capital than
White-owned businesses and businesses owned by men, respectively, and must rely more on personal
finances. 119, 120, 121, 122
BBC analyzed denial rates for loans, lines of credit, and cash advances for minorities and women relative
to White people and men, respectively, at a national level. As shown in Figure 3-15, minority-owned
businesses are denied loans at greater rates than White-owned businesses, and businesses owned by
women are denied loans at greater rates than businesses owned by men.
FINAL REPORT CHAPTER 3, PAGE 19
Figure 3-15.
Loan, line of credit, and Asian (n=175) 24%
cash advance denial rates,
United States, 2024
Source: Black (n=500) 39%
2024 Small Business Credit Survey.
Hispanic (n=354) 29%
White (n=1,649) 18%
Women (n=1,369) 21%
Men (n=1,136) 18%
0% 10% 20% 30% 40% 100%
50%
We also analyzed the degree to which minority- or woman-owned businesses do not apply for loans due
to a fear of denial at a national level. Figure 3-16 presents the rates at which those businesses forego
loan applications due to fears of denial relative to White-owned businesses and businesses owned by
men, respectively. Nationally, minority-owned businesses are more likely than White-owned businesses
to not apply for loans due to a fear of denial.
FINAL REPORT CHAPTER 3, PAGE 20
Figure 3-16.
Businesses that did not apply Asian (n=178) 12%
for loans due to fear of denial,
United States, 2024
Source: Black (n=334) 44%
2024 Small Business Credit Survey.
Hispanic (n=264) 33%
White (n=2,146) 5%
Women (n=1,435) 8%
Men (n=1,187) 12%
0% 10% 20% 30% 40% 50% 100%
60%
3. Business ownership. Nationally, there has recently been substantial growth in the number of
minority- and woman-owned businesses. For example, from 2017 to 2020, the number of woman-
owned businesses with employees increased by 9 percent, Black-owned businesses increased by 14
percent, and Hispanic-owned businesses increased by 17 percent.123, 124 However, important barriers in
starting and operating businesses remain. People who identify as Black, Hispanic, and women are still
less likely to start businesses than White men. 125, 126, 127, 128, 129 In addition, minorities and women have
not been able to penetrate all industries equally. They disproportionately own businesses in industries
that require less human and financial capital to be successful and that already include large
concentrations of minorities and women. 130, 131, 132 BBC examined rates of self-employment (i.e.,
business ownership) in the Virginia marketplace for each relevant industry by race, gender, and SDV
status. As shown in Figure 3-17:
People who identify as Black (13.6%), Hispanic (16.5%), and Native American (16.2%) own
construction businesses at rates less than that of people who identify as White (22.7%). In addition,
women (14.0%) own construction businesses at a rate less than men (21.0%), and SDVs (14.3%)
own construction businesses at a rate less than all others (20.3%).
People who identify as Asian Pacific (6.9%), Black (6.7%), Hispanic (8.6%), and Subcontinent Asian
(8.4%) own professional services businesses at rates less than that of people who identify as White
(10.8%). In addition, women (8.9%) own professional services businesses at a rate less than men
(9.9%), and SDVs (7.5%) own construction businesses at a rate less than all others (9.7%).
People who identify as Asian Pacific (8.7%), Black (11.9%), and Subcontinent Asian (9.7%) own
non-professional services and goods businesses at rates less than that of people who identify as
White (14.8%). In addition, women (13.1%) own non-professional services and goods businesses
at a rate less than men (14.7%).
FINAL REPORT CHAPTER 3, PAGE 21
BBC also conducted regression analyses to determine whether differences in business ownership rates
in the Virginia marketplace exist based on race and gender even after statistically controlling for various
personal factors such as income, education, and familial status. As shown in Figure 3-18, even after
accounting for various personal factors, in Virginia, people who identify as Black and Subcontinent Asian
are less likely to own construction businesses than people who identify as White, and women are less
likely to own construction businesses than men. People who identify as Asian Pacific are less likely to
own professional services businesses than people who identify as White. People who identify as Asian
Pacific and Black are less likely to own non-professional services and goods businesses than people who
identify as White, and women are less likely to own non-professional services and goods businesses
than men.
Figure 3-17.
Self-employment rates in study-related contracting industries, Virginia,
2019-2023
Professional Non-prof. services
Group Construction services and goods
Race/ethnicity
Asian Pacific 26.6 % 6.9 % ** 8.7 % **
Black 13.6 % ** 6.7 % ** 11.9 % **
Hispanic 16.5 % ** 8.6 % * 16.7 %
Native American 16.2 % ** 13.5 % 18.3 %
Subcontinent Asian 13.0 % 8.4 % ** 9.7 % *
Other race minority 17.7 % 11.9 % 18.4 %
White 22.7 % 10.8 % 14.8 %
Gender
Women 14.0 % ** 8.9 % * 13.1 % *
Men 21.0 % 9.9 % 14.7 %
SDV status
SDV 14.3 % * 7.5 % * 13.5 %
All others 20.3 % 9.7 % 14.2 %
All individuals 20.2 % 9.6 % 14.2 %
Note: *, ** Denotes that the difference in proportions between the minority group and White, between
women and men, or between SDVs and all others is statistically significant at the 90% and 95%
confidence levels, respectively.
Source: 2019-2023 ACS 5% Public Use Microdata samples. The raw data extract was obtained through the
IPUMS program of the MN Population Center: http://usa.ipums.org/usa/.
FINAL REPORT CHAPTER 3, PAGE 22
Figure 3-18.
Predictors of business ownership in study-related industries
(regression), Virginia, 2019-2023
Coefficient
Professional Non-prof. services
Variable Construction services and goods
Asian Pacific 0.0616 -0.1624 ** -0.3678 **
Black -0.3152 ** -0.0931 -0.1210 *
Hispanic -0.0631 -0.0411 0.1175
Native American -0.2249 0.2522 0.1435
Subcontinent Asian -0.4808 ** -0.0865 -0.1145
Other race minority -0.1580 0.1319 0.3206
Women -0.3914 ** -0.0539 -0.0796 *
Notes: The construction regression included 9,886 observations.
The professional services regression included 17,124 observations.
The non-professional services and goods regression included 9,277 observations.
*, ** Denotes statistical significance at the 90% and 95% confidence levels, respectively.
Source: 2019-2023 ACS 5% Public Use Microdata samples. The raw data extract was obtained through
the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/.
4. Business success. Research indicates that, nationally, minority- and woman-owned businesses fare
worse than businesses owned by White men. For example, minority- and woman-owned businesses are
more likely to experience financial challenges relative to those owned by people who identify as White
and men, respectively.133, 134 In addition, minority- and woman-owned businesses have been shown to
be less successful than those owned by White people and men, respectively, based on a number of
different indicators such as profits and business size. 135, 136, 137, 138 BBC examined data on business
financial conditions, business receipts, and business owner earnings to further explore business success
nationally and in the Virginia marketplace.
a. Financial condition. BBC examined the reported financial condition of businesses in the United States
by the race and gender of their owners at the national level according to the Small Business Credit
Survey. Financial condition refers to a business’ increase or decrease in revenue and number of
employees in the past 12 months as well as anticipated increase in revenue and number of employees
over the next 12 months. Financial condition also assesses financial challenges a business may have
experienced in the past 12 months, including weak sales, difficulty paying expenses, uneven cash flow,
and credit availability. As shown in Figure 3-19, Asian- (39%), Black- (29%), and Hispanic-owned
businesses (27%) are more likely than White-owned businesses (17%) to report being in poor financial
condition. Woman-owned businesses are equally likely as businesses owned by men to report being in
poor financial condition.
FINAL REPORT CHAPTER 3, PAGE 23
Figure 3-19.
Businesses in poor Asian (n=494) 39%
financial condition, United
States, 2024
Source: Black (n=1,136) 29%
2024 Small Business Credit Survey.
Hispanic (n=872) 27%
White (n=5,051) 17%
Women (n=3,696) 21%
Men (n=3,179) 21%
0% 10% 20% 30% 40% 100%
50%
b. Business receipts. BBC also examined data on business receipts to assess whether minority- and
woman-owned businesses in the Virginia marketplace earn as much as those owned by people who
identify as White and men, respectively. Figure 3-20 indicates that Asian- ($1.71 million), Black- ($1.23
million), and Hispanic-owned businesses ($1.36 million) in Virginia have mean annual business receipts
less than White-owned businesses ($3.14 million). In addition, woman-owned businesses ($1.37
million) have mean annual business receipts less than businesses owned by men ($3.46 million). In
contrast, Native Hawaiian and other Pacific Islander-owned businesses ($4.77 million) have mean
annual business receipts greater than White-owned businesses ($3.14 million).
FINAL REPORT CHAPTER 3, PAGE 24
Figure 3-20.
Mean annual business Asian $1,708
receipts (in thousands),
Virginia
Black $1,231
Note:
Includes employer firms. Does not include
publicly traded companies or other firms not Hispanic $1,362
classifiable by race/ethnicity and gender.
Source: Native Hawaiian and
$4,771
2022 Annual Business Survey. Other Pacific Islander
White $3,143
Women $1,369
Men $3,461
$0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000
c. Business owner earnings. BBC also analyzed the earnings of business owners to assess whether
business owners who are minorities, women, and SDVs in Virginia earn as much as business owners
who identify as White, men, and all others, respectively. Figure 3-21 indicates that Black ($40,214),
Hispanic ($48,426), and Native American ($40,912) business owners earn less on average than White
business owners ($57,445), and women business owners ($38,590) earn less on average than business
owners who are men ($66,680). In contrast, Subcontinent Asian business owners ($89,786) earn more
on average than White business owners ($57,445), and business owners who are SDVs ($74,769) earn
more on average than all other business owners ($53,920).
FINAL REPORT CHAPTER 3, PAGE 25
Figure 3-21.
Mean annual business Asian Pacific $53,715
owner earnings, Virginia,
2019-2023 Black $40,214**
Notes:
Hispanic $48,426**
The sample universe is business owners
aged 16 and over who reported positive
earnings. All amounts in 2023 dollars. Native American $40,912**
** Denotes that the difference in mean
between the minority group and White, Subcontinent Asian $89,786**
between women and men, or between
SDVs and all others is statistically
significant at the 95% confidence level. Other race minority $48,165
Source:
White $57,445
2019-2023 ACS 5% Public Use Microdata
sample. The raw data extract was obtained
through the IPUMS program of the MN
Population Center:
http://usa.ipums.org/usa/. Women $38,590**
Men $66,680
SDV $74,769**
All others $53,920
$0 $50,000 $100,000 $150,000
BBC also conducted regression analyses to determine whether race- or gender-based differences in
business owner earnings in Virginia exist even after statistically controlling for various personal factors
such as age, education, family status, and location. Figure 3-22 presents the results of those analyses. As
shown in Figure 3-22, women business owners earn substantially less compared to business owners
who are men. In contrast, Hispanic business owners earn substantially more than White business
owners.
Figure 3-22. Exponentiated
Predictors of business owner
Variable coefficient
earnings (regression), Virginia,
2019-2023 Asian Pacific 0.983
Notes: Black 0.979
The regression includes 9,863 observations. Hispanic 1.143 *
For ease of interpretation, the exponentiated form of Native American 0.704
the coefficients is displayed in the figure. Subcontinent Asian 1.073
The sample universe is business owners aged 16 and Other race minority 0.903
over who reported positive earnings.
Women 0.562 **
*, ** Denotes statistical significance at the 90% and
95% confidence levels, respectively.
The referent for race variables is White.
Source:
2019-2023 ACS 5% Public Use Microdata sample. The
raw data extract was obtained through the IPUMS
program of the MN Population Center:
http://usa.ipums.org/usa/.
FINAL REPORT CHAPTER 3, PAGE 26
C. Summary
BBC’s analyses of marketplace conditions indicate that minorities and women face barriers in industries
relevant to Virginia’s contracts and procurements. Both existing and primary research we conducted
indicate that disparities exist in acquiring human capital, accruing financial capital, owning businesses,
and operating successful businesses. In many cases, there is evidence those disparities exist even after
accounting for various personal factors. There is also evidence many disparities are due—at least, in
part—to race- and gender-based discrimination. Barriers in the marketplace likely have important
effects on the ability of minorities and women to start businesses in relevant industries—construction,
professional services, and non-professional services and goods—and to operate those businesses
successfully. Any difficulties those individuals face in starting or operating businesses may reduce their
availability for government work and the degree to which they are able to successfully perform such
work.
1 Haney-López, Ian. 2006. White by Law: The Legal Construction of Race. New York: NYU Press.
2 Woodward, Comer Vann. 1955. The Strange Career of Jim Crow. Oxford: Oxford University Press.
3 Prucha, Francis Paul. 1986. The Great Father: The United States Government and the American Indians. Lincoln: University of Nebraska
Press.
4 Lee, Erika. 2003. At America’s Gates: Chinese Immigration During the Exclusion Era, 1882-1943. Chapel Hill, NC: University of North
Carolina Press.
5 Melish, Joanne Pope. 1998. Disowning Slavery: Gradual Emancipation and ‘Race’ in New England, 1780-1860. Cornell University Press.
6 Schweninger, Loren. "The Roots of Enterprise: Black-Owned Businesses in Virginia, 1830-1880." The Virginia Magazine of History and
Biography 100, no. 4 (1992): 515-542.
7 Smith, J. Douglas. Managing white supremacy: Race, politics, and citizenship in Jim Crow Virginia. Univ of North Carolina Press, 2003.
8 Lowe, Richard. Republicans and Reconstruction in Virginia, 1856–1870. Charlottesville: University Press of Virginia, 1991
9 Article VI, Section 44, Virginia Constitution, 1902, Virginia Bar Association,
https://cdn.ymaws.com/www.vba.org/resource/resmgr/2021_meetings/vba_on_main/annual_meeting/1902.pdf
10 Coleman, Arica L. That the Blood Stay Pure: African Americans, Native Americans, and the Predicament of Race and Identity in Virginia.
Indiana University Press, 2013.
11 De Fazio, Gianluca, ed. 2024. Lynching in Virginia: Racial Terror and Its Legacy. University of Virginia Press.
12 Schmidt, N. Kristian. "The Impact of Historical Residential Discrimination Policies in Richmond, Virginia." (2022).
13 Sites, W., & Parks, V. 2011. “What Do We Really Know About Racial Inequality? Labor Markets, Politics, and the Historical Basis of Black
Economic Fortunes. Politics & Society, 39(1),” 40-73.
14 Lewis, Earl. In their own interests: Race, class, and power in twentieth-century Norfolk, Virginia. Univ of California Press, 1991.
15 Saunders, James Robert, and Renae Nadine Shackelford. Urban Renewal and the End of Black Culture in Charlottesville, Virginia: An Oral
History of Vinegar Hill. Jefferson, NC: McFarland, 1998.
16 Bowen, Dawn S. “The Transformation of Richmond’s Historic African American Commercial Corridor.” Southeastern Geographer 43, no.
2 (2003): 260–78.
17 Goldin, Claudia. “The Quiet Revolution That Transformed Women’s Employment, Education, and Family.” The American Economic
Review 96, no. 2 (2006): 1–21.
18 Thurston, Chloe N. At the Boundaries of Homeownership: Credit, Discrimination, and The American State. Cambridge University Press,
2018.
19 Tyack, David, and Elizabeth Hansot. Learning Together: A History of Coeducation in American Public Schools. Russell Sage Foundation,
1992.
20 Library of Virginia. Working Out Her Destiny: Women’s History in Virginia – Education. Richmond: Library of Virginia, 2003.
https://www.lva.virginia.gov/exhibits/destiny/education/.
FINAL REPORT CHAPTER 3, PAGE 27
21 Shockley, Megan Taylor. Creating a Progressive Commonwealth: Women Activists, Feminism, and the Politics of Social Change in Virginia,
1970s-2000s. Baton Rouge: Louisiana State University Press, 2018.
22 Dobbin, Frank. 2009. Inventing Equal Opportunity. Princeton: Princeton University Press.
23 Holzer, Harry and David Neumark. 2000. “Assessing Affirmative Action.” Journal of Economic Literature 38(3):483–568
24 Kalev, Alexandra, Frank Dobbin, and Erin Kelly. 2006. “Best Practices or Best Guesses? Assessing the Efficacy of Corporate Affirmative
Action and Diversity Policies.” American Sociological Review 71(4):589–617.
25 Kao, Grace and Jennifer S. Thompson. 2003. “Racial and Ethnic Stratification in Educational Achievement and Attainment.” Annual
Review of Sociology 29(1):417–42.
26 DiPrete, Thomas A. and Claudia Buchmann. 2013. The Rise of Women: The Growing Gender Gap in Education and What It Means for
American Schools. New York: Russell Sage Foundation.
27 Travis, Jeremy, Bruce Western, and Steve Redburn. 2014. The Growth of Incarceration in the United States: Exploring Causes and
Consequences. National Research Council. Washington D.C.: Division of Behavioral and Social Sciences and Education. Retrieved January
6, 2015 (http://www.nap.edu/booksearch.php?booksearch=1&record_id=18613&term=Black&chapter=33-69).
28 Charles, Camille Zubrinsky. 2003. “The Dynamics of Racial Residential Segregation.” Annual Review of Sociology 29:167–207.
29 Bianchi, Suzanne M., Liana C. Sayer, Melissa A. Milkie, and John P. Robinson. 2012. “Housework: Who Did, Does or Will Do It, and How
Much Does It Matter?” Social Forces 91(1):55–63.
30 Alexander, Michelle. 2010. The New Jim Crow: Mass Incarceration in the Age of Colorblindness. New York: The New Press.
31 Fairlie, Robert W. and Alicia M. Robb. “Why Are Black‐owned Businesses Less Successful than White‐owned Businesses? The Role of
Families, Inheritances, and Business Human Capital.” Journal of Labor Economics 25, no. 2 (2007): 289–323.
32 Fairlie, Robert W. and Alicia M. Robb. Race and Entrepreneurial Success: Black-, Asian-, and White-Owned Businesses in the United
States. MIT Press, 2008.
33 Fairlie, Robert W. and Alicia M. Robb. “Gender Differences in Business Performance: Evidence From the Characteristics of Business
Owners Survey.” Small Business Economics 33, no. 4 (2009): 375–95.
34 Hout, Michael and Harvey Rosen. “Self-Employment, Family Background, and Race.” Journal of Human Resources 35, no. 4 (2000):
670–692.
35 Emmons, William R. and Bryan J. Noeth. Why Didn't Higher Education Protect Hispanic and Black Wealth? Center for Household
Financial Stability, 2015.
https://www.stlouisfed.org/~/media/Publications/In%20the%20Balance/Images/Issue_12/ITB_August_2015.pdf.
36 Shapiro, Thomas, Tatjana Meschede, and Sam Osoro. The Roots of the Widening Racial Wealth Gap: Explaining the Black-White
Economic Divide. Institute on Assets and Social Policy, 2013. http://iasp.brandeis.edu/pdfs/Author/shapiro-thomas-
m/racialwealthgapbrief.pdf.
37 Guo, Xuguang, Wei Chen, and Andy Yu. “Is College Education Worth it? Evidence from its Impacts on Entrepreneurship in the United
States.” Journal of Small Business & Entrepreneurship, 28, no. 1 (2016): 1-26.
38 National Center for Education Statistics. Status and Trends in Education of Racial and Ethnic Groups. National Center for Education
Statistics, 2019. https://files.eric.ed.gov/fulltext/ED592833.pdf.
39 Kao, Grace and Jennifer S. Thompson. “Racial and Ethnic Stratification in Educational Achievement and Attainment.” Annual Review of
Sociology 29, no. 1 (2003): 417–442.
40 Hung, Man, William A. Smith, Maren W. Voss, Jeremy D. Franklin, Yushan Gu, and Jerry Bounsanga. "Exploring Student Achievement
Gaps in School Districts Across the United States." Education and Urban Society 52, no. 2 (2020): 175-193.
41 U.S. Department of Education Office for Civil Rights. STEM Course Taking. U.S. Department of Education, 2018.
https://ocrdata.ed.gov/assets/downloads/stem-course-taking.pdf.
42 U.S. Department of Education Office for Civil Rights. School Climate and Safety. U.S. Department of Education, 2019.
https://ocrdata.ed.gov/assets/downloads/school-climate-and-safety.pdf.
43 Bozkick, Robert and Erich Lauff. Education Longitudinal Study of 2002 (ELS:2002): A First Look at the Initial Postsecondary
Experiences of the High School Sophomore Class of 2002. National Center for Education Statistics, 2007.
http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2008308.
44 Correll, Shelley J., Stephen Benard, and In Paik. “Getting a Job: Is There a Motherhood Penalty?” American Journal of Sociology 112, no.
5 (2007): 1297–1339.
FINAL REPORT CHAPTER 3, PAGE 28
45 Pager, Devah, Bruce Western, and Bart Bonikowski. “Discrimination in a Low-Wage Labor Market A Field Experiment.” American
Sociological Review 74, no. 5 (2009): 777–799.
46 Bertrand, Marianne and Sendhil Mullainathan. “Are Emily and Greg More Employable than Lakisha and Jamal? A Field Experiment on
Labor Market Discrimination.” American Economic Review 94, no. 4 (2004): 991–1013.
47 Scheider, Jessica and Elise Gould. “’Women’s Work’ and the Gender Pay Gap: How Discrimination, Societal Norms, and Other Forces
affect Women’s Occupational Choices.” Economic Policy Institute, 2016. http://www.epi.org/publication/womens-work-and-the-gender-
pay-gap-how-discrimination-societal-norms-and-other-forces-affect-womens-occupational-choices-and-their-pay/.
48 Beck, E. M., Patrick M. Horan, and Charles M. Tolbert II. “Industrial Segmentation and Labor Market Discrimination.” Social Problems
28, no. 2 (1980): 113–130.
49 Catanzarite, Lisa. “Race-Gender Composition and Occupational Pay Degradation.” Social Problems 50, no. 1 (2003): 14–37.
50 Cohen, Philip N. and Matt L. Huffman. “Occupational Segregation and the Devaluation of Women’s Work Across U.S. Labor Markets.”
Social Forces 81, no. 3 (2003): 881–908.
51 Huffman, Matt L. and Philip N. Cohen. “Racial Wage Inequality: Job Segregation and Devaluation across U.S. Labor Markets.” American
Journal of Sociology 109, no. 4 (2004): 902–936.
52 Funk, Cary, and Kim Parker. Diversity in the STEM Workforce Varies Widely Across Jobs. Pew Research Center, 2018.
https://www.pewresearch.org/social-trends/2018/01/09/diversity-in-the-stem-workforce-varies-widely-across-jobs/.
53 Travis, Jeremy, Bruce Western, and Steve Redburn. The Growth of Incarceration in the United States: Exploring Causes and
Consequences. National Research Council: Division of Behavioral and Social Sciences and Education, 2014.
54 Sakala, Leah. 2014a. Breaking Down Mass Incarceration in the 2010 Census: State-by-State Incarceration Rates by Race/Ethnicity.
Prison Policy Initiative. http://www.prisonpolicy.org/reports/rates.html.
55 Initiative, Prison Policy. “Virginia Profile.” Virginia profile | Prison Policy Initiative.
https://www.prisonpolicy.org/profiles/VA.html#articles.
56 Pager, Devah. “The Mark of a Criminal Record.” American Journal of Sociology 108, no. 5 (2003): 937–975.
57 Western, Bruce and Becky Pettit. “Incarceration & Social Inequality.” Daedalus 139, no. 3 (2010): 8–19.
58 Shannon, Sarah KS, Christopher Uggen, Jason Schnittker, Melissa Thompson, Sara Wakefield, and Michael Massoglia. "The Growth,
Scope, and Spatial Distribution of People with Felony Records in the United States, 1948–2010." Demography 54, no. 5 (2017): 1795-
1818.
59 Stewart, Robert, and Christopher Uggen. "Criminal Records and College Admissions: A Modified Experimental Audit." Criminology 58,
no. 1 (2020): 156-188.
60 Wilson, George and Debra Branch McBrier. “Race and Loss of Privilege: African American/White Differences in the Determinants of Job
Layoffs From Upper-Tier Occupations.” Sociological Forum 20, no. 2 (2005): 301–321.
61 Roscigno, Vincent J., Lisette M. Garcia, and Donna Bobbitt-Zeher. 2007. “Social Closure and Processes of Race/Sex Employment
Discrimination.” The Annals of the American Academy of Political and Social Science 609 (1): 16-48.
62 Roscigno, Vincent J. Lisa M. Williams, and Reginald A. Byron. “Workplace Racial Discrimination and Middle Class Vulnerability.”
American Behavioral Scientist 56, no. 5 (2012): 696-710.
63 Mong, Sherry N., and Vincent J. Roscigno, 2010. “African American Men and the Experience of Employment Discrimination.” Qualitative
Sociology, 33, no. 1 (2010): 1-21.
64 Smith, Ryan A. “Race, Gender, and Authority in the Workplace: Theory and Research.” Annual Review of Sociology 28 (2002): 509–542.
65 Wilson, George. “Pathways to Power: Racial Differences in the Determinants of Job Authority.” Social Problems 44, no. 1 (1997): 38–54.
66 Bloch, Katrina R., Tiffany Taylor, Jacob Church, and Alison Buck. "An Intersectional Approach to the Glass Ceiling: Gender, Race and
Share of Middle and Senior Management in US Workplaces." Sex Roles 84, no. 5 (2021): 312-325.
67 Robb, Alicia and Robert Fairlie. “Access to Financial Capital among U.S. Businesses: The Case of African American Firms.” The Annals of
the American Academy of Political and Social Science 613, no. 1 (2007): 47–72.
68 Fairlie, Robert W. and Harry A. Krashinsky. “Liquidity Constraints, Household Wealth, and Entrepreneurship Revisited.” Review of
Income & Wealth 58, no. 2 (2012): 279–306.
69 Bahn, Kate, Regina Willensky, and Annie Mcgrew. A Progressive Agenda for Inclusive and Diverse Entrepreneurship. Center for
American Progress, 2016. https://www.americanprogress.org/issues/economy/reports/2016/10/13/146019/a-progressive-agenda-
for-inclusive-and-diverse-entrepreneurship/.
FINAL REPORT CHAPTER 3, PAGE 29
70 Cha, Youngjoo and Kim A. Weeden. “Overwork and the Slow Convergence in the Gender Gap in Wages.” American Sociological Review
79, no. 3 (2014): 457–484.
71 McCall, Leslie. “Sources of Racial Wage Inequality in Metropolitan Labor Markets: Racial, Ethnic, and Gender Differences.” American
Sociological Review 66, no. 4 (2001): 520–541.
72 Tomaskovic-Devey, Donald. “The Gender and Race Composition of Jobs and the Male/Female, White/Black Pay Gaps.” Social Forces 72,
no. 1 (1993): 45–76.
73 Manduca, Robert. "Income Inequality and the Persistence of Racial Economic Disparities." Sociological Science 5 (2018): 182-205.
74 Economic Policy Institute. By the Numbers: Income and Poverty, 2020. Economic Policy Institute, 2021. https://www.epi.org/blog/by-
the-numbers-income-and-poverty-2020/.
75 Fry, Richard, and Carolina Aragão. "Gender Pay Gap in U.S. Has Narrowed Slightly Over 2 Decades." Pew Research Center, March 4,
2025. https://www.pewresearch.org/short-reads/2025/03/04/gender-pay-gap-in-us-has-narrowed-slightly-over-2-decades/
76 Herring, Cedric, and Loren Henderson. "Wealth Inequality in Black and White: Cultural and Structural Sources of the Racial Wealth
Gap." Race and Social Problems 8, no. 1 (2016): 4-17.
77Shapiro, Thomas, Tatjana Meschede, and Sam Osoro. The Roots of the Widening Racial Wealth Gap: Explaining the Black-White
Economic Divide. Institute on Assets and Social Policy, 2013. http://iasp.brandeis.edu/pdfs/Author/shapiro-thomas-
m/racialwealthgapbrief.pdf.
78 Sullivan, Laura, Tatjana Meschede, Lars Dietrich, Thomas Shapiro, Amy Traub, Catherine Ruetschlin, and Tamara Draut. The Racial
Wealth Gap: Why Policy Matters. Demos, 2015. http://www.demos.org/sites/default/files/publications/RacialWealthGap_1.pdf.
79 Bhutta, Neil, Jesse Bricker, Andrew C. Chang, Lisa J. Dettling, Sarena Goodman, Joanne W. Hsu, Kevin B. Moore, Sarah Reber, Alice
Henriques Volz, and Richard Windle. "Changes in US Family Finances from 2016 to 2019: Evidence from the Survey of Consumer
Finances." Federal Reserve Bulletin 106, no. 5 (2020).
80 Bhutta, Neil, Andrew C. Chang, Lisa J. Dettling, and Joanne W. Hsu. Disparities in Wealth by Race and Ethnicity in the 2019 Survey of
Consumer Finances. FEDS Notes: Board of Governors of the Federal Reserve System, 2020. https://doi.org/10.17016/2380-7172.2797.
81 Kaiser Health Foundation. Poverty by Race/Ethnicity. Kaiser Health Foundation, 2023. http://kff.org/other/state-indicator/poverty-
rate-by-raceethnicity/.
82 Berger, Allen N. and Gregory F. Udell. “The Economics of Small Business Finance: The Roles of Private Equity and Debt Markets in the
Financial Growth Cycle.” Journal of Banking & Finance 22, no. 6–8 (1998): 613–673.
83 Fairlie, Robert W. and Harry A. Krashinsky. “Liquidity Constraints, Household Wealth, and Entrepreneurship Revisited.” Review of
Income & Wealth 58, no. 2 (2012): 279–306.
84 Bhutta, Neil, Andrew C. Chang, Lisa J. Dettling, and Joanne W. Hsu. Disparities in Wealth by Race and Ethnicity in the 2019 Survey of
Consumer Finances. FEDS Notes: Board of Governors of the Federal Reserve System, 2020. https://doi.org/10.17016/2380-7172.2797.
85 Turner, Margery Austen, Rob Santos, and Diane K. Levy, Doug Wissoker, Claudia Aranda, and Rob Pitingolo. Housing Discrimination
Against Racial and Ethnic Minorities 2012. U.S. Department of Housing and Urban Development, 2013.
http://www.huduser.org/portal/publications/fairhsg/hsg_discrimination_2012.html.
86 Roscigno, Vincent J., Diana L. Karafin, and Griff Tester. “The Complexities and Processes of Racial Housing Discrimination.” Social
Problems 56, no. 1 (2009): 49–69.
87 Kochhar, Rakesh and Richard Fry. Wealth Inequality Has Widened along Racial, Ethnic Lines since End of Great Recession. Pew
Research Center, 2014. http://www.pewresearch.org/fact-tank/2014/12/12/racial-wealth-gaps-great-recession/.
88 Burd-Sharps, Sarah and Rebecca Rasch. Impact of the US Housing Crisis on the Racial Wealth Gap Across Generations. Social Science
Research Council, 2015. http://www.ssrc.org/publications/view/129CDF74-1F11-E511-940A-005056AB4B80/.
89 Bhutta, Neil, Andrew C. Chang, Lisa J. Dettling, and Joanne W. Hsu. Disparities in Wealth by Race and Ethnicity in the 2019 Survey of
Consumer Finances. FEDS Notes: Board of Governors of the Federal Reserve System, 2020. https://doi.org/10.17016/2380-7172.2797.
90 Charles, Camille Zubrinsky. “The Dynamics of Racial Residential Segregation.” Annual Review of Sociology 29 (2003): 167–207.
91 Shapiro, Thomas, Tatjana Meschede, and Sam Osoro. The Roots of the Widening Racial Wealth Gap: Explaining the Black-White
Economic Divide. Institute on Assets and Social Policy, 2013. http://iasp.brandeis.edu/pdfs/Author/shapiro-thomas-
m/racialwealthgapbrief.pdf.
92 Aaronson, Daniel, Daniel Hartley, and Bhashkar Mazumder. “The Effects of the 1930s HOLC ‘Redlining’ Maps.” American Economic
Journal: Economic Policy, 13, no. 4 (2021): 355–392.
93 Blanchard, Lloyd, Bo Zhao, and John Yinger. “Do Lenders Discriminate Against Minority and Woman Entrepreneurs?” Journal of Urban
Economics 63, no. 2 (2008): 467–497.
FINAL REPORT CHAPTER 3, PAGE 30
94 Cavalluzzo, Ken S., Linda C. Cavalluzzo, and John D. Wolken. “Competition, Small Business Financing, and Discrimination: Evidence from
a New Survey.” The Journal of Business 75, no. 4 (2002): 641–679.
95 Cavalluzzo, Ken and John Wolken. “Small Business Loan Turndowns, Personal Wealth, and Discrimination.” The Journal of Business 78,
no. 6 (2005): 2153–2178.
96 Gruenstein Bocian, Debbie, Wei Li, Carolina Reid, and Robert G. Quercia. Lost Ground, 2011: Disparities in Mortgage Lending and
Foreclosures. Center for Responsible Lending, 2011. https://www.responsiblelending.org/research-publication/lost-ground-2011.
97 Mijid, Naranchimeg and Alexandra Bernasek. “Gender and the Credit Rationing of Small Businesses.” The Social Science Journal 50, no.
1 (2013): 55–65.
98 Ross, Stephen L. and John Yinger. The Color of Credit: Mortgage Discrimination, Research Methodology, and Fair-Lending Enforcement.
MIT Press, 2002.
99 Ross, Stephen L., Margery Austin Turner, Erin Godfrey, and Robin R. Smith. “Mortgage Lending in Chicago and Los Angeles: A Paired
Testing Study of the Pre-Application Process.” Journal of Urban Economics 63, no. 3 (2008): 902–919.
100 Williams, Richard, Reynold Nesiba, and Eileen Diaz McConnell. “The Changing Face of Inequality in Home Mortgage Lending.” Social
Problems 52, no. 2 (2005): 181–208.
101 Rugh, Jacob S. and Douglas S. Massey. “Racial Segregation and the American Foreclosure Crisis.” American Sociological Review 75, no.
5 (2010): 629–651.
102 Burd-Sharps, Sarah and Rebecca Rasch. Impact of the US Housing Crisis on the Racial Wealth Gap Across Generations. Social Science
Research Council, 2015. http://www.ssrc.org/publications/view/129CDF74-1F11-E511-940A-005056AB4B80/.
103 Quillian, Lincoln, John J. Lee, and Brandon Honoré. “Racial Discrimination in the US Housing and Mortgage Lending Markets: A
Quantitative Review of Trends, 1976–2016.” Race and Social Problems 12, no. 1 (2020): 15-28.
104 Goodman, Laurie S., and Christopher Mayer. "Homeownership and the American Dream." Journal of Economic Perspectives 32, no. 1
(2018): 31-58.
105 Shinn, Lora. Addressing the Racial Homeownership Gap in America. The Balance, 2023.
https://www.thebalancemoney.com/addressing-the-racial-homeownership-gap-in-america-4178236.
106 Bone, Sterling A., Glenn L. Christensen, and Jerome D. Williams. “Rejected, Shackled, and Alone: The Impact of Systematic Restricted
Choice on Minority Consumers’ Construction of Self.” Journal of Consumer Research 41, no. 2 (2014): 451-474.
107 Wiersch, Ann Marie, and Lucas Misera. Small Business Credit Survey: 2022 Report on Firms Owned by People of Color. Federal
Reserve Bank of Cleveland, 2022. https://www.fedsmallbusiness.org/survey/2022/2022-report-on-firms-owned-by-people-of-color.
108 Battisto, Jessica, Dell Gines, and Claire Kramer Mills. Small Business Credit Survey 2016: Report on Women-owned Firms. Federal
Reserve Banks of New York, Kansas City, 2017. https://www.fedsmallbusiness.org/survey/2017/report-on-women-owned-firms.
109 Fairlie, Robert, Alicia Robb, and David T. Robinson. "Black and White: Access to Capital Among Minority-owned Start-
ups." Management Science 68, no. 4 (2022): 2377-2400.
110 Blanchard, Lloyd, Bo Zhao, and John Yinger. “Do Lenders Discriminate Against Minority and Woman Entrepreneurs?” Journal of Urban
Economics 63, no. 2(2008): 467–497.
111 Blanchflower, David G., Phillip B. Levine, and David J. Zimmerman. “Discrimination in the Small Business Credit Market.” The Review
of Economics and Statistics 85, no. 4 (2003): 930–943.
112 Bates, Timothy and Alicia Robb. “Impacts of Owner Race and Geographic Context on Access to Small Business Financing.” Economic
Development Quarterly 3, no. 2 (2016): 159-170.
113 Wiersch, Ann Marie, and Lucas Misera. Small Business Credit Survey: 2022 Report on Firms Owned by People of Color. Federal
Reserve Bank of Cleveland, 2022. https://www.fedsmallbusiness.org/survey/2022/2022-report-on-firms-owned-by-people-of-color.
114 Mijid, Naranchimeg and Alexandra Bernasek. “Gender and the Credit Rationing of Small Businesses.” The Social Science Journal 50, no.
1 (2013): 55–65.
115 Battisto, Jessica, Dell Gines, and Claire Kramer Mills. Small Business Credit Survey 2016: Report on Women-owned Firms. Federal
Reserve Banks of New York, Kansas City, 2017. https://www.fedsmallbusiness.org/survey/2017/report-on-women-owned-firms.
116 Blanchflower, David G., Phillip B. Levine, and David J. Zimmerman. “Discrimination in the Small Business Credit Market.” The Review
of Economics and Statistics 85, no. 4 (2003): 930–43.
117 Wiersch, Ann Marie, and Lucas Misera. Small Business Credit Survey: 2022 Report on Firms Owned by People of Color. Federal
Reserve Bank of Cleveland, 2022. https://www.fedsmallbusiness.org/survey/2022/2022-report-on-firms-owned-by-people-of-color.
FINAL REPORT CHAPTER 3, PAGE 31
118 Battisto, Jessica, Dell Gines, and Claire Kramer Mills. Small Business Credit Survey 2016: Report on Women-owned Firms. Federal
Reserve Banks of New York, Kansas City, 2017. https://www.fedsmallbusiness.org/survey/2017/report-on-women-owned-firms.
119 Coleman, Susan and Alicia Robb. “A Comparison of New Firm Financing by Gender: Evidence from the Kauffman Firm Survey Data.”
Small Business Economics 33, no. 4 (2009): 397–411.
120 Robb, Alicia and Robert Fairlie. “Access to Financial Capital Among U.S. Businesses: The Case of African American Firms.” The Annals
of the American Academy of Political and Social Science 613, no. 1 (2007): 47–72.
121 Robb, Alicia, Susan Coleman, and Dane Stangler. Sources of Economic Hope: Women’s Entrepreneurship. Ewing Marion Kauffman
Foundation, 2014. http://www.kauffman.org/what-we-do/research/2014/11/sources-of-economic-hope-womens-entrepreneurship.
122 Robb, Alicia. Access to Capital Among Young Firms, Minority-owned Firms, Woman-owned Firms, and High-tech Firms. Small Business
Administration Office of Advocacy, 2013. https://www.sba.gov/sites/default/files/files/rs403tot(2).pdf.
123 United States Census Bureau. Annual Business Survey. United States Census Bureau, 2017.
https://data.census.gov/table?tid=ABSCS2017.AB1700CSA01&hidePreview=true.
124 United States Census Bureau. Annual Business Survey. United States Census Bureau, 2020.
https://data.census.gov/table?tid=ABSCS2020.AB2000CSA01&hidePreview=true.
125 Fairlie, Robert W. and Alicia M. Robb. “Gender Differences in Business Performance: Evidence from the Characteristics of Business
Owners Survey.” Small Business Economics 33, no. 4 (2009b): 375–395.
126 Fairlie, Robert W. “Entrepreneurship among Disadvantaged Groups: Women, Minorities, and the Less Educated.” In The Life Cycle of
Entrepreneurial Ventures, ed. Simon Parker (New York: Springer Science & Business Media, 2006), 437-475.
127 Fairlie, Robert W. and Alicia M. Robb. Race and Entrepreneurial Success: Black-, Asian-, and White-Owned Businesses in the United
States. MIT Press, 2008.
128 Bahn, Kate, Regina Willensky, and Annie McGrew. A Progressive Agenda for Inclusive and Diverse Entrepreneurship. Center for
American Progress, 2016. https://www.americanprogress.org/issues/economy/reports/2016/10/13/146019/a-progressive-agenda-
for-inclusive-and-diverse-entrepreneurship/.
129 Fairlie, Robert. "Racial Inequality in Business Ownership and Income." Oxford Review of Economic Policy 34, no. 4 (2018): 597-614.
130 Budig, Michelle J. “Intersections on the Road to Self-Employment: Gender, Family and Occupational Class.” Social Forces 84, no. 4
(2006): 2223–2239.
131 Lofstrom, Magnus and Timothy Bates. “African Americans’ Pursuit of Self-Employment.” Small Business Economics 40, no. 1 (2013):
73–86.
132 Bahn, Kate, Regina Willensky, and Annie McGrew. A Progressive Agenda for Inclusive and Diverse Entrepreneurship. Center for
American Progress, 2016. https://www.americanprogress.org/issues/economy/reports/2016/10/13/146019/a-progressive-agenda-
for-inclusive-and-diverse-entrepreneurship/.
133 Wiersch, Ann Marie, and Lucas Misera. Small Business Credit Survey: 2022 Report on Firms Owned by People of Color. Federal
Reserve Bank of Cleveland, 2022. https://www.fedsmallbusiness.org/survey/2022/2022-report-on-firms-owned-by-people-of-color.
134 Battisto, Jessica, Dell Gines, and Claire Kramer Mills. Small Business Credit Survey 2016: Report on Women-owned Firms. Federal
Reserve Banks of New York, Kansas City, 2017. https://www.fedsmallbusiness.org/survey/2017/report-on-women-owned-firms.
135 Fairlie, Robert W. and Alicia M. Robb. Race and Entrepreneurial Success: Black-, Asian-, and White-Owned Businesses in the United
States. MIT Press, 2008.
136 Coleman, Susan and Alicia Robb. “A Comparison of New Firm Financing by Gender: Evidence from the Kauffman Firm Survey Data.”
Small Business Economics 33, no. 4 (2009): 397–411.
137 Robb, Alicia M. and John Watson. “Gender Differences in Firm Performance: Evidence from New Ventures in the United States.” Journal
of Business Venturing 27, no. 5 (2012): 544–558.
138 Wright, Graham, Rebecca Loya, Tatjana Meschede, Jessica Santos, and Thomas M. Shapiro. Redefining Risk: Racial Disparities in
Entrepreneurship and Financial Wellbeing. Institute on Assets and Social Policy, 2019. https://heller.brandeis.edu/iere/pdfs/racial-
wealth-equity/racial-wealth-gap/redefining-risk-racial-disparities.pdf.
FINAL REPORT CHAPTER 3, PAGE 32
CHAPTER 4.
Qualitative Insights
As part of the disparity study, business owners, trade association representatives, and other
stakeholders had the opportunity to share personal insights about their experiences working in Virginia,
as well as with the Commonwealth of Virginia state agencies and higher education institutions
(collectively referred to as the Commonwealth) and other government agencies. BBC Research &
Consulting (BBC) documented those insights and identified key themes about conditions in Virginia for
small businesses and microbusinesses as well as minority-, woman-, and service-disabled veteran
(SDV)-owned businesses (collectively referred to as small and diverse businesses) and other businesses.
We used that information to augment many of the quantitative analyses we conducted as part of the
disparity study to provide context for study results and provide explanations for various barriers
diverse businesses potentially face as part of Commonwealth contracting and procurement.
A. Data Collection
The study team collected personal insights about marketplace conditions, experiences working with the
Commonwealth, and recommendations for the Commonwealth’s implementation of the Small, Women-
owned, and Minority-owned Business (SWaM) Program. We made various efforts between June 2025
and December 2025 to collect that information:
Public meetings: BBC solicited stakeholders to provide written and verbal insights at four public
meetings—two in-person meetings on June 17, 2025, and two virtual meetings on June 10 and 25,
2025.
In-depth interviews: The study team conducted 65 in-depth interviews with owners and other
high-level representatives of local construction, professional services, and non-professional
services and goods businesses to collect interviewees’ perceptions of, and experiences with, the
local contracting industry, working or attempting to work with government organizations in
Virginia, the Commonwealth’s implementation of its business assistance programs, and other
relevant topics. BBC identified some interview participants from a random sample of businesses
the study team contacted during the availability survey process (see Chapter 6 for details). Other
interview participants were identified from a database of registered businesses in the
Commonwealth. Businesses were stratified by business type; location; and the race/ethnicity,
gender, and SDV status of business owners (if available).
Availability surveys: As part of the availability analysis, the study team conducted surveys with
1,565 businesses located and operating in the Virginia marketplace. The survey included an
opportunity for participants to share qualitative insights about whether they have experienced
barriers starting or expanding businesses in their industries, obtaining work in Virginia, or working
with government organizations in Virginia. A total of 355 survey participants provided such
comments.
Focus groups: The study team conducted four focus groups with representatives of
microbusinesses certified as part of the SWaM Program, as well as representatives of business
organizations, such as chambers of commerce, business assistance organizations, and other
FINAL REPORT CHAPTER 4, PAGE 1
business groups. We conducted the focus groups in October and November 2025 with a total of 13
participants across the four groups. During each group, participants engaged in discussions and
shared insights about working in Virginia with public and private sector organizations.
Written comments: Throughout the study, stakeholders and community members had the
opportunity to submit written comments directly to BBC regarding their experiences working in
Virginia. A total of six stakeholders and community members shared such comments.
B. Key Findings
Various themes emerged from the personal insights BBC collected as part of the disparity study. We
summarize the most prevalent themes by relevant topic area and present illustrative quotations for
each one:
1. Financial capital;
2. Obtaining work;
3. Doing business with public agencies;
4. Workforce and labor;
5. Barriers related to race and gender;
6. Business inclusion programs;
7. Supporting Commonwealth businesses.
In an effort to protect the anonymity of individuals and businesses, we coded the source of each
quotation with a random number and prefix that represents the individual who submitted the comment
and the data collection method:
“AV” indicates availability survey comments;
“FG” indicates focus group comments;
“PT” indicates public forum comments; and
In-depth interview comments do not have a prefix.
We preface each quotation with a brief description of the ownership characteristics of the business and
the business’ line of work. We indicate whether each participant represents a business that holds a
SWaM certification or any other relevant certifications. BBC edited quotations for clarity and brevity.
1. Financial capital. Business owners discussed barriers related to their ability to secure financial
capital, which includes the business’ revenue in addition to lines of credit, loans, and bonds.
a. Financing barriers. Business owners and representatives shared that it can be difficult for small or
emerging businesses to get approved for any kind of financing or loans to support the growth of their
businesses. For example:
The owner of a White woman-owned, SWaM-certified non-professional services and goods
firm stated, “I was about to bid three different bids at the same time, and I probably wasn't
going to win all of each of them, but I might win a part of each of them and I was going to
FINAL REPORT CHAPTER 4, PAGE 2
have to do deposits and it was going to stretch us out too thin. And I remember going to
[the bank] and laying it all out and them saying, ‘Well, you're probably about to turn the
corner, but you're too young, you're too new as a company.’" [#47]
The representative of a White male-owned, certified SDV-owned business stated, “I can't
get a small business loan for my business until I have a minimum of two years of
operational business revenue is what I'm being told by just about every creditor that's out
there. They want to have at least two years of financial stability and workflow of how
much money I've been taking in over the last however long. It's a huge list of stuff that they
require in order to get a $50,000 [loan] … that's nothing for me as far as going and
purchasing equipment or specialized things.” [#27]
The representative of a Woman-owned Business Enterprise (WBE)-certified non-
professional services and goods microbusiness stated, “As a new startup, having a cash
flow was very difficult and for the first three to five years was definitely living day-to-day.
And even though I had a very valid business model, and even with a couple of years of proof
of product, there's no funding. As a small business owner, that's extremely difficult.” [#52]
b. Insurance barriers. Some small business representatives described difficulties they faced in affording
insurance and obtaining the type of insurance coverage needed for their work. In addition, some
business owners expressed that insurance requirements for contracts can be difficult to understand. For
example:
The White male owner of a professional services company stated, “What I found the most
difficult thing about insurance is how much you want to be insured for. So when you're
small and you only have so much gross receipts, they limit the amount of insurance that
you can have, which limits the size of the projects you can go after.” [#62]
The White male-owner of a professional services company stated, “There's a lot of
documents that are sitting here on my desk. It's like more than 100 pages worth of
legalese. … I suppose I am insured for stuff, but [the insurance company is] not making that
abundantly clear. It's not in their interest to, and there's nothing to hold them accountable
for doing that. … When something goes wrong, there's probably a pretty good chance that
there's something in there that says they don't have to pay for that thing.” [#37]
c. Payments. Most of the business owners and representatives interviewed reported experiencing
delayed payments at some point, limiting their cash flow and affecting their financial well-being. For
example:
A representative of a Native American male-owned professional services company stated,
“One of the bigger issues we face is people just deciding not to pay, period. That is a
problem in our industry.” [#33]
The Asian Pacific male owner of a professional services company stated, “I would say that
a small business has less recourses to demand payment. Even through the courts, it
becomes a time-consuming and costly proposition if you have to hire a lawyer to get your
payment. … We have less resources to invest in fraud detection. So if you think about
something like checks or credit card chargebacks, I feel like smaller businesses are at
greater risk than large businesses.” [#35]
FINAL REPORT CHAPTER 4, PAGE 3
Business owners and representatives also shared instances of non-payment. Recuperating those
payments is often time-consuming and costly, which interviewees feel places a disproportionate burden
on smaller businesses that may have inadequate resources to pursue legal action.
The White male owner of a non-professional services and goods business stated, “There are
people out there … who look to contract with small businesses knowing full well that
they're not going to have lawyers and they're not going to be able to spend the time to
chase money and things like that.” [#65]
The Black male owner of a SWaM-certified professional services business stated, “It will
never be a fight we can win. Large businesses, they have [resources to make] a dispute.
They send it to their general counsel. The client in the public sector, they have their general
counsel. … Us little guys will never win that fight. ... If a public sector [client] disputes a
charge after you've demonstrated it's a legitimate charge, you're not getting paid. I think
that's a serious disadvantage to small businesses, because we don't have the legal
resources to stand up for us. … I've been involved in litigation, and it's me, getting in the
car and driving to the courthouse, making sure I'm there on time to state my case. So if we
don't have somebody who can go to court on this, it's not happening.” [#63]
The White male owner of a SWaM-certified construction microbusiness stated, “The
amount [owed by a private sector client] was about $20,000, and the attorney that I
contacted basically said, ‘It's going to cost you more to recoup it than it is to get it. So, just
write it off.’” [#58]
2. Obtaining work. Business owners and representatives shared their experience learning about and
bidding on upcoming work, including attending networking events and forming project teams. Small
business owners and representatives described the challenges they faced in obtaining work, particularly
when they have fewer resources than larger businesses.
a. Networking and business development. Business owners and representatives described how
important networking and relationship-building can be for business success. For example:
A participant in the SWaM-certified microbusiness focus group stated, “That's why I'm
always going to these events, learning who does [what], getting the contacts, and then
somehow we connect again down the road, become business friends and go to events, make
money together.” [FG #1]
The White woman owner of a SWaM-certified construction company stated, “There's a
couple of … social networks where you go out and you have brunch and then they have a
small webinar of different things that's going on in the community, and then you get the
network with the different businesses there. That was very helpful.” [#40]
Some business owners and representatives described their perceptions that networking and
relationship building were more useful for finding work in the private sector, and that it was more
challenging to use those tools to obtain public sector work. For example:
FINAL REPORT CHAPTER 4, PAGE 4
A representative of a White male-owned, SWaM-certified professional services
microbusiness stated, “The majority of our work comes through direct referral, which is
great because what better way to know what you're getting than somebody saying, ‘Hey, I
trust these guys. You should trust them too.’ Unfortunately, that referral system cannot
work for the government bidding process.” [#5]
Some business owners and representatives described experiencing discrimination at networking events,
giving them the impression that networking events can be easier to navigate and more fruitful for White,
male business owners than for minority and women business owners. For example:
The Black woman owner of a professional services business stated, “But a lot of networking
and trying to do business with larger companies, they don't use objective selection criteria.
So even if you can get a company to sign you as a partner, why would they work with me
over somebody else? Over someone who maybe is male or a little older or maybe they find
to be more compelling? It's very subjective and it kind of reinforces that deficit that you're
experiencing as a female-owned, minority-owned business.” [#14]
A representative of a White male-owned professional services company shared, “And it still
is the case that, at networking events, I find it much easier to … look for someone that you
can identify with in some ways, you have something in common [with], so you can start a
conversation. And so I do think that socially that it's a barrier that we all, hopefully in the
DC area, are big enough and smart enough to get past, but it is still a thing for how you get
started and you make connections and you make those conversations.” [#32]
Perhaps the most prevalent barrier small business owners described related to networking and
business development was the challenge of performing those activities (e.g., monitoring solicitation
requests, conducting market research, scoping programmatic needs of clients) while also conducting the
day-to-day work of the business.1 In particular, small business owners discussed not having the
dedicated staff that large businesses may have to pursue networking opportunities. For example:
The Black male owner of a SWaM-certified professional services business stated, “I mean,
the large businesses I compete with, they actually have somebody whose job it is to just
play golf with their commercial clients. I mean, I can't afford to do that. And it's under the
guise of business development, and we do business development activities. But we can't fly
folks across the country to see our integration facility, and we can't take every client to a
ballgame or a golfing event just to keep the relationship. It's very hard to compete like
that. It's very hard to compete against the larger businesses.” [#63]
Business owners also described how it can be time-consuming to monitor solicitation platforms for bid
opportunities, which can be a barrier for smaller businesses that may not have staff members dedicated
to this process. For example:
The White male owner of a non-professional services and goods business stated, “I mean,
as a small business, I don't have a significant amount of business development people or
1 See also Section 3: Doing business with public agencies.
FINAL REPORT CHAPTER 4, PAGE 5
salespeople that get to hear about things before they're put out the bid. And then once
they're put out the bid, generally speaking, there's people who already have, I won't say
inside track, but have knowledge of it that gives them a leg up.” [#65]
The Asian Pacific female owner of a WBE- and Minority-owned Business Enterprise (MBE)-
certified professional services microbusiness stated, “It's like you need a full-time person to
[monitor solicitations] … it takes too much time on eVA to look for something that you can
actually do and make some money off of.” [#50]
b. Forming project teams. Business owners and representatives discussed how they assemble project
teams and the factors that influence their decisions to work with other businesses. Prime contractors
interviewed for the study shared a few different tools they use to develop their pool of subcontractors
and potential project partners. Some prime contractors shared that they actively conduct outreach with
subcontractors, consult business lists, or rely on previous partners and word of mouth to find potential
project partners. Other prime contractors rely on referrals from other businesses and customers to find
potential subcontractors. For example:
A representative of a Native American male-owned professional services company stated,
“I looked at our list of consultants and then tried to find out if they were certified by going
to their website or oftentimes they say so in their email signatures. And that's usually
where I would start because I like working with people that we have relationships with
and not just picking people because they have a certification or whatever.” [#33]
The White woman-owner of a SWaM-certified professional services company shared, “We
typically look for somebody with the expertise that the RFP [request for proposals] is
calling for. It just so happens that 50 percent of the time, they are SWaM certified. … So, I
don't pick and choose my partners like, "Oh, we could both be SWaM." We go for the
expertise first.” [#36]
The Black male-owner of a SWaM-certified, MBE-certified non-professional services and
goods microbusiness stated, “I look at reviews, and then I call around to the companies
that I do want to use. I also would put out a little ad or whatever for subcontractors to see.
And then we just interview them and ask them about their experience, their work
experience. And we see that they may be a good fit. We'll bring them on for a job or two,
depends on the scope of work. And, that's pretty much how we do it.” [#51]
The Black male owner of a SWaM-certified professional services business stated, “So we
have a network of folks we trust. We have contacts [on which] maybe [we] can't do the
work, but know someone who can do the work. It's not hard. And we have enough
relationships where we end up with a trusted subcontractor.” [#63]
Subcontractors interviewed for the study shared how they find project partners, largely mirroring the
tools and methods prime contractors use to find subcontractors. Some subcontractors said they
preferred to work as subcontractors for financial reasons and the relative ease of performing the work
for prime contractors instead of directly with government agencies.
FINAL REPORT CHAPTER 4, PAGE 6
The Asian Pacific male owner of a professional services company stated, “So I see who has
a reliable history of payment and I also look at rate of pay and geographic location of the
prime contractor.” [#35]
The White non-binary owner of a WBE-certified construction microbusiness stated, “Some
of that is just from longevity and reputation that they have found me, because I do a
specialty part of construction. So I have just over the years, either they've contacted me or
I've contacted them and gotten on their bid lists, so they have me on their generic list of
people to reach out to because they've heard of me or found me, whatever.” [#56]
The Black male owner of a SWaM-certified professional services business stated, “Now,
being a subcontractor to a prime is a totally different story. You have to prove yourself.
You have to stay in front of them. You have to market yourself. You have to always be in
contact with them, so that when they need a subcontractor that does what we do, they
remember who we are and they call us. So that's hard.” [#63]
3. Doing business with public agencies. Business owners and representatives discussed their
experiences learning about, bidding on, and performing work with the Commonwealth and other public
agencies, and how those aspects of doing business compare with private sector clients.
a. Registration. Interviewees representing businesses that work with the Commonwealth described the
administrative burden associated with registering to work with the Commonwealth and individual
localities and voiced a desire for a shared registration process or consistency across agencies’
registration processes. For example:
The Asian Pacific male owner of a professional services company stated, “Each locality has
their own process, their own pre-submission requirements and setting up a business
account for each location is time-consuming.” [#35]
b. Identifying opportunities. Interviewees remarked on the considerable differences in the process of
identifying work opportunities between private and public sector organizations. Whereas the private
sector relies on word-of-mouth and direct advertising, the public sector relies heavily on formal
solicitations and bidding processes. For example:
The owner of an Asian Pacific male-owned, SWaM-certified construction company stated,
“I need to spend three hours every week going through and trying to sift through that
nonsense set of [published solicitations on solicitations boards] for my projects.” [#22]
The representative of a construction firm stated, "We don't know how to get into
government projects. There is no advertisement for it. You need to know where to go. As a
young owner, we don't know how to get into it.” [#AV123]
Some expressed that it is time-consuming to review solicitations from public sector organizations to
understand the requirements and determine whether an opportunity is a good fit. For example:
The Asian Pacific female owner of a WBE- and MBE-certified professional services
microbusiness stated, “There are a couple of filters in [eVA]. I think that the eVA system
FINAL REPORT CHAPTER 4, PAGE 7
itself is pretty archaic when you have to know commodity codes as opposed to what I do. If
somebody said, ‘What's your commodity code for screen printing?’ I don't know.” [#50]
The White male owner of a professional services firm stated, “But, it's last-minute all the
time. … It's not enough time to react when you've got other things going on. It's not enough
time to download, and digest the RFP, and come up with your questions.” [#62]
The representative of a White male-owned, SWaM-certified microbusiness stated, “There's
so many portals that you really can't see everything. … Who has got time to look at every
county's website in case they have one job that you can do?” [#28]
Others, however, voiced satisfaction with the eVA system and the transparency in the public sector
solicitation process. For example:
The owner of a White woman-owned, SWaM- and MBE-certified professional services
business stated, “Well, obviously it's like the eVA platform that has been I think most
advantageous, and that was what I was referring to, just in the overarching identifying,
finding available contracts. They separated out by ... I think they have the set-asides for the
micro and small businesses, but that's just been I think really helpful.” [#8]
The owner of a woman-owned, SWaM-certified business stated, “It seems like things are
pretty transparent, especially with how they've gone to online bid openings and everybody.
… I think the way that it's moving is much easier and more transparent than it was.” [#39]
c. Submitting bids and proposals. Some common sentiments expressed by business owners and
representatives are that they find the bid and proposal submission process to be burdensome and time-
consuming; they find the bid and past performance requirements to be challenging for small businesses;
and the time allocated to provide a response to solicitations is often insufficient. In addition, some
voiced a desire for more time to prepare responses and feedback on the outcome and evaluation of their
bids.
Business owners and representatives expressed that they must weigh the administrative and labor costs
of preparing a bid with the likelihood of winning the work, and some felt that they did not experience a
high enough success rate in the public sector to justify the opportunity cost to their business. Small
business owners and representatives often compared their own capacity to prepare bids with the
capacity of large businesses, many of which have dedicated teams for bidding. For example:
A representative of a White male-owned, SWaM-certified professional services
microbusiness stated, “You almost have to have a full-time person to fill out all of these
RFPs. It is very time-consuming. That non-billable time takes away from our billable staff's
project time. … I'm a paper pusher and I'm learning a lot, but in order to read through a
desired scope of work, that takes some technical expertise that I don't have.” [#5]
The representative of a professional services firm stated, "We primarily work in the private
sector. As a small firm, it is hard to devote the time necessary to apply to follow all the way
through the public RFQ [request for quotes]/RFP process from beginning to end. The
process can get lengthy and take away a lot of billable hours since we are not large enough
to employ the admin staff necessary to respond to many of these.” [#AV 79]
FINAL REPORT CHAPTER 4, PAGE 8
Multiple interviewees shared that the bid requirements and past performance requirements are
challenging for them because of the degree of specificity of the work scope or the years of experience
required. For example:
The Black woman owner of a professional services firm stated, “What was really
challenging as a small business is listing the experience that you have. So say you're
applying to [work for] a university and you want to do a student center, while they ask for
examples of student centers that you've done before. Well, if you're a small firm and you're
trying to get into a job with a student center, you don't have any student center projects.”
[#14]
A representative of a Black woman-owned professional services company stated, "Past
performance requirements can preclude small businesses as it can be very specific. … I can
out price larger firms but don't have the past performance and very few are willing to sub.”
[#AV 397]
The representative of a White woman-owned, WBE-certified professional services company
stated, “When we look at the RFPs and we read through the quick quotes, a lot of times, it
can be a very small requirement and we can have a person who's an expert. It could be
something that work that is fulfilled by one person and they could have 20 years of
experience, but we don't have three or four years of past performance as a firm. So a lot of
times the way the criteria is written disqualifies us from providing those expert consulting
services despite the fact that we have the personnel and the knowledge to do so.” [#3]
Largely due to the challenges described above, some interviewees expressed the feeling that larger
companies have an advantage when bidding for jobs, as they are likely to have more time, resources, and
personnel to dedicate to the bid process. For example:
A participant in the SWaM-certified microbusiness focus group stated, “Typically I do all
the work myself and I was bidding against an agency that had I don't know how many
people. And so you had five people working on an RFP versus one person. Because they
have all these different people doing different parts and I'm doing all of it, plus proofing it,
plus writing it, plus laying it out, it is a big difference.” [FG #1]
The Asian Pacific male owner of a professional services company stated, “I think it's just
having a lot of financial documentation that a mid- or more large-size business would
have, but things like formal accounting statements is something that a small business
might not have. And so I think [it] took a lot of time. It's just you need more flexibility on
how small businesses can meet the internal control requirements.” [#35]
Some business owners voiced frustration with not receiving feedback on the outcome of their bid or, in
the case of a losing bid, why they were not successful. For example:
A representative of a Black woman-owned professional services company stated, "There’s
not really a good feedback process. We need follow up info to directly improve upcoming
bids to potentially get them.” [#AV236]
FINAL REPORT CHAPTER 4, PAGE 9
The Black woman owner of a professional services business stated, “It’s been very difficult
to know if we should take a different approach because we're not receiving any feedback to
refine the approach.” [#14]
The Black woman owner of a SWaM-certified non-professional services and goods
microbusiness stated, “I do get notifications when I submit, but I don't get a notification as
to when it's been awarded. So I have to go out there myself and find out. … I don't get
notifications when the bid has been opened and awarded, like it used to be.” [#48]
Some business owners and representatives compared the experience of bidding on public sector work
to the experience of bidding on private sector work, noting that the process for public sector work is
typically more burdensome. For example:
The representative of a White woman-owned, WBE-certified professional services company
stated, “It's just kind of fruitless to even apply because also the application process takes
many, many hours. And with private [sector clients], I can land a job with … an hour-long
walk-through. My client [has] full faith in me and I'm done. I don't need to do eight pages
of paperwork and find these references and freshen up my resume. And it's like hours and
hours of time for a job I'm not going to get, it just starts to feel fruitless.” [#3]
The owner of a White male-owned, SWaM-certified professional services company stated,
“I've already mentioned RFP process and all the different portals and opportunities. It's
just me as a small microbusiness [owner] doing [the bid preparation] … I spend the four
hours, eight hours, 10 hours … on that RFP getting in the door [whereas] with a private
vendor [I’m] turning something over a little more quickly.” [#4]
d. Getting paid in the public sector. Generally, business owners and representatives expressed that they
have fewer challenges getting paid, both in terms of receiving timely payments and getting paid what
they felt they were owed, in the public sector versus the private sector.
The representative of a WBE-certified non-professional services and goods microbusiness
stated, “When I have a customer [i.e., a public sector client] that is so regulated to pay on
time, why do I want to go into the private sector and worry about collection costs? So,
what rare issues we have with payments are 99 percent of the time … a problem with the
process that got messed up along the payment process on the government side. So that just
involves me following up and finding the right person to make the changes, so not an
issue.” [#52]
The representative of a White-owned, WBE-certified construction firm stated, “With the
state, no [I don’t have problems]. [I] just [send] a reminder email or two that this is past
due, and I usually get it taken care of. Some [of our private-sector clients] are right on
time, on schedule [with payments], and some [pay] when they get to it. … [The
Commonwealth is] nothing like working in the private sector where we're chasing
payments from contractors.” [#46]
The owner of a White woman-owned, SWaM-certified non-professional services and goods
firm stated, “When I had the biggest [private sector] customer we had, they stretched me
out 90 days on $60,000. And I'm like, ‘I don't know where I'm going to get this money.’ And
FINAL REPORT CHAPTER 4, PAGE 10
it just finally worked out. And it can be very, very challenging. No one prepares you for that
cashflow stress.” [#47]
Small business owners emphasized the need for prompt payment policies to be enforced and noted that
failure to do so adversely affects their ability to do business. For example:
A participant in the SWaM-certified microbusiness focus group stated, “Some of these
contracts you really have to have some capital and reserve to be able to fulfill the contracts
because the payment … they got some of them having net 30s, net 60s [payment schedules].
Waiting all that time before you even get paid, you still got to make sure you're keeping
your business afloat. … So I feel like that's kind of a barrier. I wish they really could change
that. I mean, it's 2025, why do we have to wait 30, 60 days?” [FG #1]
Another participant in the SWaM-certified microbusiness focus group stated, “We have just
started receiving our payment, but we just received our payments for our August service by
September 15th. That left me well over 45 days with no currency. And this is on multiple
contracts that they have and, like they said, if the person that's supposed to process it just
sees it as an invoice, that's all it is, is a piece of paper on the desk. But to the person who
submitted, it's their lifeline.” [FG #1]
4. Workforce and labor. When trying to hire new employees, small business owners reported facing
challenges due to their inability to provide the same kind of benefits that a larger company could
provide. The cost of health insurance can also be a challenge when trying to retain existing employees,
according to some business owners. For example:
The White male owner of a non-professional services and goods business stated, “I would
tell you that owning a small business and trying to get health insurance is extremely
painful and we get charged significantly more because they're obviously not making
money off of us because of the size.” [#65]
The Black male owner of a SWaM-certified professional services business stated, “The
health insurance part of our benefits package escalates 5 percent year after year after
year, and there's sometimes 10 percent. And we had one instance where it was 12
percent. ... We pay a portion of our healthcare, of our employee's healthcare, and then they
pay a portion, we do a matching, and [when] the employee's costs go up, our costs go up.
Our employees are vocal when that happens, and our employees' families are vocal when
that happens. … Because of our size, we don't have access to plans that are [better].” [#63]
Some small business owners reported that the process of finding quality candidates and hiring new
personnel can be difficult and time-consuming. For example:
The representative of a Black woman-owned, SWaM-certified non-professional services
and goods business stated, “I can't afford to hire anyone. Not that I don't want to hire
anyone, I do, but I just can't afford it.” [#42]
A representative of a Native American male-owned professional services company stated,
“I think that's been our biggest struggle. … We just don't have access to as great a talent
pool unless people are getting desperate, I think. Because we're a good half hour, 40
FINAL REPORT CHAPTER 4, PAGE 11
minutes from downtown DC and that's without traffic. And a lot of the young talent, they
want to live in the city. So I think to be out in the burbs basically is going to limit the access
for us.” [#33]
The White male owner of a non-professional services and goods business stated, “But even
now after COVID, it's been a struggle to find employees. They either want $20, $25 an hour,
which I'm not going to pay that, and I'm only looking for part-time help. Or they come in
and they think they can just sit here and not do anything.” [#20]
Due to the uncertainty associated with contracted work and the current market conditions, some small
business owners reported feeling hesitant to hire new personnel out of fear that they will not have
enough work in the future to afford to pay them. For example:
The Asian Pacific male owner of a professional services company stated, “I've been hesitant
to hire because of my concerns about being able to provide them a decent income. So both
a living wage and then also my ability to keep them on the payroll full time.” [#35]
A representative of a White male-owned, SWaM-certified professional services
microbusiness stated, “And since then, since COVID, our ability to, I guess predict and our
confidence level in our ability to predict workflow out really past four months is very low.
Very rare. So we are … hesitant to go through a hiring process.” [#5]
5. Barriers related to race and gender. Interviewees discussed additional barriers related to the
race or gender of business owners and staff, such as stereotypical attitudes that ascribe negative
assumptions to the capabilities of minority- and woman-owned businesses or their employees.
a. Discrimination based on gender. Business owners shared perceptions of gender-based
discrimination when trying to obtain work and while performing work. Interviewees reported perceived
preference among men to work with other men, discrediting women's ideas or suggestions, and other
stereotypical attitudes and beliefs based on gender. Some voiced that they feel discrimination is
lessening over time and is more prevalent among older men. For example:
The White woman owner of a SWaM-certified non-professional services and goods
microbusiness stated, “I do believe that, being a female in my industry … I have literally
had men call me and ask to speak to other men, and I am literally the top person in this
company. Not only do I own it, but I know everything inside and out and I run it, and my
employees are my employees. But they hear a woman and they want to talk to a man.”
[#44]
The owner of a White woman-owned, SWaM-certified non-professional services and goods
firm stated, “A little bit later we're walking through the building and he goes, ‘Well, you do
know that if we were to renegotiate your line, we would want to have all your operating
[accounts] with us as well.’ And I said, ‘I understand that. Any large bank is going to want
the whole package, the operating account, the line of credit and the savings or whatever.’
He said, ‘Well, is your husband going to be okay with that?’” [#47]
The White non-binary owner of a WBE-certified construction microbusiness stated, “It's
just a completely male-dominated field and very exclusive. … There are places where I walk
in and they're like, ‘Oh, I think you're in the wrong place, and I’m like, ‘No, I am actually.
FINAL REPORT CHAPTER 4, PAGE 12
I'm a contractor. Thank you.’ The amount of times that I have people doubt my knowledge
and skills and capability, where I know that they wouldn't doubt it if the same thing came
out of a dude's mouth is innumerable. I think that that is a very real concern because if
someone presumes that you're unknowledgeable about something, then they often will
presume that they can charge you more for it.” [#56]
The Black woman owner of a professional services business stated, “I have gone to trade
conferences, I've gone to Chamber of Commerce events, different things. I've invested a lot
of money into them. And sometimes some people will ask if you're someone's assistant,
sometimes it can be difficult to be taken seriously. And that's something I've dealt with my
entire career.” [#14]
The woman representative of a White male-owned, SWaM-certified non-professional
services and goods business stated, “When I first started this position, speaking to a lot of
manufacturers, suppliers, which is who we need quotes from in order to get opportunities
and bids. A lot of them were more standoffish at first because they wanted to talk to the
man of the company, but they either have since retired or we've worked past that. But in
the beginning, and like I said, things have definitely changed in the past five years. It
doesn't seem to matter who you are, what you are, the person will either talk to you or not.
So it definitely seems like it has changed, but have I experienced [discrimination]? Yes.”
[#41]
The Asian Pacific woman owner of a professional services company stated, “If myself and
my prior designer, who is definitely a Caucasian male, would show up at a client meeting,
the automatic assumption was he was the lead and I would be the assistant.” [#15]
b. Discrimination based on race. Business owners shared experiences of race-based discrimination
when trying to obtain work and while performing work. Interviewees reported a perceived resistance to
working with minority-owned businesses and other stereotypical attitudes and beliefs based on race.
For example:
The owner of an Asian Pacific male-owned, SWaM-certified construction company stated,
“When you are starting, when you don't have any business, nobody wants to be the first
person to give you the opportunity. It's very hard. And being a minority … makes it even
more [difficult], particularly in construction.” [#22]
The representative of a WBE-certified non-professional services and goods microbusiness
stated, “I think it certainly makes it harder to break into the businesses. … We struggle
with some of our vendors who don't like working with women or minorities … because we
live in Southwest Virginia, it is very much an old boys’ network in this area. We've had a
couple of incidents where a particular customer might not be comfortable with one of our
employees who is a minority, so English is his second language, but we just manage that as
company and that's going to happen on the individual level. … We have had very few
incidents with the government itself, with the state employees itself, just one offs, tiny
things.” [#52]
The Black woman owner of a SWaM-certified non-professional services and goods
microbusiness stated, “There would be [potential clients] that would reach out to me to do
group transportation and they would ask for a meeting. And I noticed, when I would
FINAL REPORT CHAPTER 4, PAGE 13
actually see them in person, it wasn't the same energy that we [had] on the phone. … And
then I didn't get those jobs.” [#49]
Some business owners and representatives reported facing financing or insurance barriers due to
discrimination based on race. For example:
The representative of a Black woman-owned, SWaM-certified non-professional services
and goods business stated, “Well, I know that when I tried to obtain funding, sometimes we
were denied before they even looked at our paperwork. ... And so before they would even sit
down and consider us, there were times when we were just escorted on out. I know this for
a fact." [#42]
The Black male owner of a SWaM-certified non-professional services and goods business
stated, “Other businesses that may not be diverse in face, the funding opportunities are
easier. Even though people say that's not true. I mean, that could be very well so, but in my
experience, that's been the case.” [#25]
The Asian Pacific male owner of a professional services company stated, “I've heard stories
about different risks. Like, if you operate in certain neighborhoods that insurance
companies are more likely to drop you. So I don't work in the retail field, but I do know in
that sector they have a lot of barriers in minority communities.” [#35]
6. Business inclusion programs. Interviewees discussed their experiences with the
Commonwealth’s implementation of the SWaM Program, as well as how participation in the SWaM
Program impacts their ability to compete at the local level.
a. Perceptions of SWaM certification. Interviewees shared their experiences with SWaM certification
and discussed the benefits and disadvantages of being certified. Some business owners reported finding
SWaM certification to be helpful in getting work and working with companies that would otherwise rely
more heavily on pre-existing relationships. For example:
The White woman owner of a SWaM-certified non-professional services and goods
microbusiness stated, “I ended up getting some good deals with some entities and having
that certification, it does help. People, when I say, ‘look, I'm SWaM certified’… they're like,
‘yay,’ because they know that that opens up more opportunities of being able to work with
us.” [#44]
The White non-binary owner of a WBE-certified construction microbusiness stated, “The
ears perk up when I tell people I'm SWaM-certified, and I know that I get reached out to by
other construction companies because they've got a requirement on what percentage of
the work has to be done by SWaM-certified businesses. And I think otherwise they would
not give a [expletive] and it would just go straight to the good old boy network. So I
definitely think that it forces the hand for people to think outside of their friend group or
whatever for who they can work with. And I think that's helpful.” [#56]
A representative of a Hispanic woman-owned, SWaM-certified construction microbusiness
stated, “And from what I heard … Virginia has to provide [a certain percentage] of all of its
revenue … to [SWaM-certified] businesses. And that's huge. That's an amazing regulation
or requirement for the state. And I feel that those [types] of things set in place allow for the
FINAL REPORT CHAPTER 4, PAGE 14
opportunity for small businesses like myself to be involved in something that is essentially a
life-changing experience to be able to have a government contract.” [#24]
The representative of a WBE-certified non-professional services and goods microbusiness
stated, “The problem is that men who are not minorities start off with more experience,
more education, more money, more acceptance, more trust than women or minority males.
And so I think that the SWaM Program and any program that runs along this line is really
needed in order to help level the playing field and help pull women and minorities out of
poverty.” [#52]
The White woman-owner of a SWaM-certified professional services company shared, “We
were getting more and more involved in these State RFPs, and we just kept seeing it come
up like, you get 10 points for this and 15 points for being SWaM. And we just kept seeing
SWaM, and we thought, ‘Man, we got to get on this because it couldn't be the thing that
precluded us for moving forward in RFPs.’ And that's why we felt it was so essential. But it
was also essential for us to be recognized as such. … We were very proud of the fact that we
were a small woman-, minority-owned business. So, yeah, again, I go back to the word
necessary to win business, but it also was important, I think, to be recognized as such an
agency.” [#36]
Other business owners expressed feeling as though Virginia public agencies implement the SWaM
Program only to “check a box” without creating meaningful pathways for small and diverse businesses
to have greater opportunities. Additionally, one business owner shared the feeling that SWaM
certification can be perceived as an indicator that a business cannot provide larger companies with the
service that they need. For example:
A representative of an Asian Pacific woman-owned, SWaM-, WBE-, and MBE-certified
professional service microbusiness stated, “We don't want to be just teamed up with to
fulfill some quotas for having SWaM-certified businesses and then not end up being used.”
[#19]
The White male owner of a SWaM-certified non-professional services and goods
microbusiness stated, “I think they look at it as capacity to do the work or capability. I
think [SWaM certification] slaps a label on you. If the State slaps a label on me that says I
am a small or microbusiness, I think micro designation has hurt me just as much as
anything because then they automatically have the assumption that we don't have the
capacity to serve them in the way that they need, which has never been true.” [#45]
b. Certification process. While some business owners and representatives reported finding the SWaM
certification process to be easy and straightforward, others found it more complicated. For example:
The owner of a White male-owned, SWaM-certified professional services company stated,
“The [SWaM certification process], I just remember it being simple and easy. I thought it
was going to take weeks. I remember, I think it took like two weeks. It took me an hour or
two to submit everything and then just the turnaround time of getting approved wasn't
that long. I had no complaints.” [#4]
FINAL REPORT CHAPTER 4, PAGE 15
The representative of a construction firm stated, "It is really hard to sign up for SWaM. A
lot of paperwork. I keep running into time and paperwork restraints. I used to be on those
lists, but I'm having trouble getting back on small business lists.” [#AV 368]
A representative of a Hispanic woman-owned, SWaM-certified construction microbusiness
stated, “The process and being able to attain all of these requirements and qualifications
and certifications was pretty smooth. It was a pretty smooth process overall, and I
appreciated the welcoming assistance that was available through the State, through the
different agencies that would answer questions and [help me understand] how to go about
this process and successfully attain the required documents that were needed. … It felt
good, it was very welcoming.” [#24]
Interviewees who found the certification process to be more challenging expressed frustration with the
paperwork requirements. Additionally, some business owners felt that they were not able to get the help
they needed when they had questions about certain steps in the process. For example:
The representative of a White male-owned, SWaM-certified non-professional services and
goods microbusiness stated, “It takes a long time. They want documentation that they
want to show where the company was sold. They want shares, they want tax documents,
but they don't want them redacted. … I know one of the stipulations was they wanted the
president and the vice president's resumé. … It was just very tedious and cumbersome and
I'm thankful that it's not often that we have to do it. … It's just a headache to get all the
documents and then it's done and then you're like, ‘Great, totally forgetting about it until
we have to do it again.’… And then it takes them forever to review. If your SWaM
[certification] expires in December, you have to start it in June in order for it to be
reviewed in a timely fashion.” [#41]
The White woman owner of a SWaM-certified non-professional services and goods
microbusiness stated, “It was a little bit of a challenge because I couldn't get anybody to
really help me. … Because I was like, ‘What do you mean you want proof?’ They wanted
proof of deposits of how we paid for the business. … It was a challenge because I didn't
know exactly what they wanted and … it made it difficult. That's why I didn't certify early
… It was just like, ‘Jump through this hoop, jump through that hoop.’ And I didn't really see
any benefit of it.” [#44]
c. Pass-throughs, fronts, and fraud. Interviewees also shared knowledge of instances of abuse of
Commonwealth business programs in the form of “pass-throughs” or fronts. For example:
The White male owner of a professional services company stated, “I know somebody …
she's a woman and a veteran who has a business and she's like, ‘I can sub out.’ It's some
huge percentage of their work. And it's like, well, what's the point of you even existing
then? You know what I mean? It's like they exist just to pass stuff through.” [#34]
The representative of a WBE-certified non-professional services and goods microbusiness
stated, “And then the other hole in the system … I will notice a competitor and then I will
go and look at that competitor on the internet with very little time and under an hour, and
I can determine that that SWaM competitor is a front for a larger company or for a male-
owned company who's using his wife's name.” [#52]
FINAL REPORT CHAPTER 4, PAGE 16
Finally, some interviewees reported experiencing larger companies falsely reporting participation of
SWaM-certified companies in their bids to win contracts. For example:
The owner of a White woman-owned, SWaM-certified non-professional services and goods
firm stated, “So I've since heard from a lot of contractors who say, ‘Yeah, we got listed for
the purpose of the bid, but when the rubber hit the road and the contract was awarded,
they never saw a dime.’ ... So [they] use your resumé and say, ‘This is who we're going to
use. They're going to be on our team.’ And then you never got invited to the table.” [#47]
The representative of a WBE-certified non-professional services and goods microbusiness
stated, “We've had contractors reach out to us in the past and ask us, they're not micro-
SWaM, and they want to use our company to help them get a bid. And so they found us on
eVA as a micro-SWaM. … So they've reached out to us and asked us to bid, and then used us
as a way to get the bid because they've got micro-SWaM subcontractors, and then they
don't use us.” [#52]
7. Supporting Commonwealth businesses. Many interviewees shared their own
recommendations on how the Commonwealth could further support businesses operating in
the marketplace, particularly small and diverse businesses.
a. Start-up assistance. Some business owners recommended programs to assist small businesses during
the start-up period, such as reduced-rate office space, start-up funding, informational support, and set-
aside contracts for new small businesses. For example:
A participant in the SWaM-certified microbusiness focus group stated, “They actually
should have a grant program just for SWaM[-certified] people that we can apply for.
Because otherwise it's just a logo that looks really nice, but is it really benefiting me? Is it
really setting me aside when I'm bidding for these contracts?” [FG #1]
The Asian Pacific male owner of a professional services company stated, “Think about
grants and loans, that's a kind of large factor in what would allow my business to grow. So
I did receive a moderate-sized grant from the Small Business Investment Grant program
and I think that was helpful to at least stabilize one of our service offerings.” [#35]
The White male owner of a professional services business stated, “Start-up funding to get
people underway, to give them the space to be able to build out a business. So … funds that
could be linked to that, or even just banking introductions where they sell relationships
with [banks].” [#16]
A participant in the SWaM-certified microbusiness focus group stated, “But I think they
need to … make more, I guess, small office spaces or something like that where they give
you some time to get your business together.” [FG #1]
The representative of a WBE-certified non-professional services and goods microbusiness
stated, “So the incubators that I'm familiar with [in another state], they do have work
space that's at a reduced rate. And we do have one of those here in Arlington. So that's very
beneficial for startups, but they also have a lot of resources as it relates to people you can
call who have information … and then they have a strong network of mentors.” [#52]
FINAL REPORT CHAPTER 4, PAGE 17
The owner of a woman and Black-owned professional services business stated, “It would be
great if they had a startup set aside … work that the government says, 'Hey, we're going to
pull this business aside for companies that have less than 20 employees and have been in
business for only a couple years, but have a very interesting angle or market offering that
we want to take advantage of.'” [#14]
b. Resources and communication. During interviews, business owners expressed a desire for direct
communication with representatives from the Commonwealth as well as easier access to information
regarding operating a business in Virginia. For example:
The Asian Pacific female owner of a WBE- and MBE-certified professional services
microbusiness stated, “Give me a person to talk to instead of a computer and I will happily
jump through hoops to market my company. … But talking to a computer or looking to a
computer, it's just not, unfortunately, it's not my thing.” [#50]
The owner of an Asian Pacific male-owned professional services business stated, “One thing
I don't know is where to find out more information about how things run in Virginia,
where to get information, where to find the kind of businesses that I would target. Are
there programs in Virginia? Probably. I don't know how to find that. I don't know where
they are.” [#2]
c. Business administration assistance. Business owners also recommended programs designed to
provide administrative assistance to small businesses, including providing employee benefits, legal
counsel, and accounting services. For example:
The representative of a WBE-certified non-professional services and goods microbusiness
stated, “Yeah, ideally some program that helps support small businesses to provide
insurance for their employees.” [#52]
The owner of a White woman-owned, SWaM- and MBE-certified professional services
business stated, “Supporting roles that every business needs, whether that's legal counsel,
accounting, and tax preparation, I think those types of supporting services and structures, I
would consider that a value add if the Commonwealth provided guidance and instruction
on getting those set up.” [#8]
d. SWaM Program recommendations. During interviews, some business owners expressed a desire for
the SWaM Program to expand to include more minority groups, such as businesses owned by members
of the LGBTQ+ community. For example:
The White non-binary owner of a WBE-certified construction microbusiness stated, “I think
it would be cool if the state had something like that for sexual minority-type folks. If that
became part of the SWAM thing or whatever, that would be interesting.” [#56]
The White male owner of a professional services business stated, “I'm a gay man and years
ago … I was discriminated against and lost business because I was gay. … I remember
talking to somebody from the Small Business Administration and I said, ‘Could I qualify as
a disadvantaged minority?’ And they said, ‘Yes, but you'd have to build a case for it.’” [#7]
FINAL REPORT CHAPTER 4, PAGE 18
e. Finding work and networking. Some business owners recommended additional methods to advertise
upcoming work, including posting anticipated future projects as well as more direct outreach about
existing opportunities. For example:
The Black male owner of a SWaM-certified professional services business stated, “Put your
plans, your five-year plan on your website so that we can go, ‘Hey, we can help you there.
We can help you there.’ We can send you collateral, ‘Here's some things you should
consider before you write that RFP.’ We already know we're ahead of it, but if you just go
to bid boards and try to respond to our piece, it doesn't work.” [#63]
The White male owner of a professional services firm stated, “We don't receive a regular
notification from any of them about opportunities, which I think would be beneficial if you
just send out these opportunities or notices, instead of you having to scour their websites,
so you just sign up for, and then they send it.” [#62]
Additionally, many interviewees recommended networking events for small business owners to meet
and learn from each other, local government representatives, and other vendors. Along with learning
about existing and upcoming opportunities, interviewees believe these events could provide attendees
with a better understanding of contract procurement and working with the Commonwealth. For
example:
The representative of a White woman-owned, WBE-certified professional services company
stated, “So maybe having a platform where local governments and vendors can just meet
one another or they know that they have projects coming up and so they have a table
where the architects could come or the janitors could come or what have you. Just an
opportunity to get some of that face time, some of that dialogue literally. So it's not just
forms and paperwork and kind of anonymous.” [#3]
The White male owner of a non-professional services and goods business stated, “I would
say if there was anything that I would recommend to the people of the state … getting
upfront introductory type, ‘Hey, this is what we do, this is who we are, this is how we can
help type of meetings.’” [#65]
A participant in the small business support organization focus group stated, “If the
Commonwealth held … some sort of government contracting conference or something
along those lines so that at least people could get in the room with those decisionmakers.”
[FG #2]
The owner of a Hispanic male-owned professional services business stated, “Yeah, it's
almost like if it was a small business conference where people came together and talked
about their business … what would happen is you might come in and say, ‘Well, here's what
my business is like and here's where we're having issues with growth,’ and you might be
talking about your business and other people are listening to you talk about your business
and then saying, ‘Well, hey, I can provide, I could help you in this way. Here's my card.’”
[#21]
f. Bid process. Interviewees recommended relaxing certain criteria for some RFPs, such as past
performance and years of experience, which often exclude new and small businesses. For example:
FINAL REPORT CHAPTER 4, PAGE 19
The owner of a woman- and Black-owned professional services business stated, “I also
think that for some smaller, lower-risk requirements, for them to really consider whether
past performance is necessary to demonstrate that we have the knowledge and expertise.
Maybe there is other criteria that we can utilize, we can provide samples of some of our
work, I think that would be a more effective way of demonstrating our capabilities without
precluding us from the business because we haven't done it for as long as some of the other
companies.” [#14]
The Black male owner of a SWaM-certified non-professional services and goods
microbusiness stated, “Another thing that I'm finding is kind of hard is that for small
business owners who don't have that past performance. And this is another big thing that
we face, because we don't have [an] abundance of past performance. It's like, how can I
build past performance where I can't even get a nice size contract to even prove ourselves?
So, some type of micro contracting tiers or starter contracts that allow small businesses to
be able to build past performance, that would be amazing.” [#51]
The White male owner of a professional services firm stated, “Eliminating all the
regulation and the RFP saying you have to have this past experience, or this, or that, you
have to have a certain size firm, or whatever it might be. 10 years [of] experience in this, or
this project's experience. Relaxing this somewhat, you're going to get a larger pool of A/E
[architecture and engineering] firms bidding is what I'm trying to get at. And, making it
knowledgeable to the industry that you're putting out these RFPs that are less regulated.”
[#62]
Additionally, some interviewees recommended that the Commonwealth notify applicants when a
contract is awarded and provide feedback on proposal evaluations in order to understand scoring and to
improve future submissions. For example:
A representative of a White male-owned, SWaM-certified professional services
microbusiness stated, “You don't necessarily have to show us the rubric, but that would be
great. Where did we score? What exactly are you looking for that we didn't meet your
expectations, so that we can do it better the next time? That would be extraordinarily
helpful.” [#5]
g. Mentorship programs. Interviewees voiced the need for more mentorship programs in the
Commonwealth, recommending programs that pair more established, larger businesses with
new, smaller businesses in order to provide guidance and support. Additionally, some
interviewees recommended mentorship programs specifically aimed at assisting new and small
businesses in working with the Commonwealth.
A Black woman owner of a professional services business stated, “In [the] federal
government market, there are mentor-protege programs where you have the larger
organizations…who will take on a small business and mentor them…That would be very
helpful because you would at least have some sort of guidance and maybe you would make
less mistakes and not take as much time trying to support the Commonwealth by going in
as a sub under a prime within the Commonwealth. It just feels like it's a pattern that works
on the federal side.” [#11]
FINAL REPORT CHAPTER 4, PAGE 20
The woman owner of a general services business stated, “So you have an experienced
company that's been through the financing and the startup. And you have these young
bucks that come in … and you explain to them how it works. … You take experienced
knowledge from people that have been there and share that with the newbies.” [#43]
The owner of a general services business stated, “I'll say that I would like the opportunity
to do business with the Commonwealth, and I don't know how. I have all of the tools
already. It's just that it doesn't seem to work. And I fully admit that that could 100% be my
[problem] that I'm not making it work right. But if that's the case, then I'd like to have
some guidance from someone on what I'm doing wrong.” [#45]
FINAL REPORT CHAPTER 4, PAGE 21
CHAPTER 5.
Data Collection and Analysis
Chapter 5 provides an overview of the contracts and procurements BBC Research & Consulting (BBC)
analyzed as part of the 2025 Commonwealth of Virginia Disparity Study and the processes we used to
collect relevant prime contract, subcontract, and vendor data from Commonwealth of Virginia state
agencies and higher education institutions (HEIs) (collectively referred to as the Commonwealth) and
other sources. Chapter 5 is organized in five parts:
A. Contract and procurement data;
B. Vendor data;
C. Relevant geographic market area (RGMA);
D. Subindustry classifications; and
E. Review process.
A. Contract and Procurement Data
BBC collected information on contracts and procurements that the Commonwealth awarded between
July 1, 2019 and June 30, 2024 (the study period) from the Commonwealth’s eVA system, which is an
electronic procurement platform. 1 Those data served as the basis for key disparity study analyses,
including the utilization, availability, and disparity analyses. We collected the most comprehensive data
available on the prime contracts the Commonwealth awarded during the study period. We sought those
data regardless of the businesses’ statuses as small businesses, microbusinesses, or as minority-,
woman-, or service-disabled veteran (SDV)-owned businesses.
1. Prime contract data. The Commonwealth provided BBC with electronic data from eVA on relevant
prime contracts and procurements it awarded during the study period. We requested the following
information about each relevant prime contract or procurement:
Contract or purchase order number;
Prime contractor name;
Prime contractor identification number;
Contract title;
Description of work;
Location where the work took place;
Award date;
1 Some state agencies and HEIs use various other contract management systems in addition to eVA, but eVA was the primary source of
contract and procurement data for the disparity study.
FINAL REPORT CHAPTER 5, PAGE 1
Award amount (including change orders and amendments); and
Amount paid-to-date.
The Commonwealth advised BBC on how to interpret the data it provided, including how to best identify
unique bid opportunities and how to aggregate related award or payment amounts, where possible.
2. Subcontract data. Not all state agencies and HEIs collect comprehensive data on the subcontracts
associated with all of the prime contracts they award. Figure 5-1 presents information on the agencies
that do collect comprehensive subcontract information, which was provided to BBC as part of the
disparity study, along with the number of prime contracts for which those agencies submitted
comprehensive subcontract data, and the volume of dollars those contracts represent.
Figure 5-1. Number of prime Dollar value of
Subcontract data contracts
Organization prime contracts
collection from
Commonwealth State agencies
agencies
Virginia Department of Transportation 274 $991,703,012
Note: Virginia Information Technologies Agency 26 $2,326,902,313
Numbers rounded to nearest Tier 2 HEIs
dollar and thus may not sum Christopher Newport University 10 $83,846,887
exactly to totals.
Tier 3 HEIs
University of Virginia 25 $573,958,493
Virginia Polytechnic Institute and State University 32 $785,366,709
George Mason University 29 $442,501,339
James Madison University 15 $410,437,741
Total 506 $5,913,515,098
To gather additional information on subcontracts for Commonwealth agencies that do not collect that
information, BBC conducted surveys with prime contractors to collect data on the subcontracts
associated with the projects the Commonwealth awarded to them during the study period and that we
deemed to likely have included subcontract opportunities. We made that determination based on the
work types involved in each project and project sizes, primarily including engineering, highway street
and bridge construction, and non-residential building construction projects. We requested the following
information from prime contractors about each subcontract associated with each relevant project state
agencies awarded to them:
Associated prime contract number;
Award amount for the project;
Amount paid-to-date for the project;
Amount paid on each subcontract;
Description of work; and
Subcontractor name.
Figure 5-2 presents the volume of prime contract dollars for which BBC requested subcontract data as
well as the volume of prime contract dollars for which BBC received those data. Response rates varied
FINAL REPORT CHAPTER 5, PAGE 2
by organization. Because BBC was unable to collect subcontract data on all relevant prime contracts
each organization awarded during the study period, we weighted the data we received to simulate
subcontract dollars associated with prime contracts likely to have included such opportunities.
Figure 5-2.
Associated contract dollars
Subcontract data collection
Subcontract Subcontract Response
from prime contractors
Organization data requested data received rate
Note:
Numbers rounded to nearest dollar and
State agencies $2,656,369,649 $211,905,571 8.0 %
thus may not sum exactly to totals. Tier 2 HEIs $962,012,514 $112,095,793 11.7 %
Tier 3 HEIs $617,911,755 $114,560,862 18.5 %
Total $4,236,293,918 $438,562,226 10.4 %
3. Prime contract and subcontract amounts. For each prime contract and subcontract
(i.e., contract element) included in our analyses, BBC examined the dollars state agencies and HEIs
awarded to each prime contractor and the dollars each prime contractor committed to any
subcontractors. If a project did not include any subcontracts, we attributed the project’s entire award
amount to the prime contractor. If a project included subcontracts, we calculated the prime contract
amount as the total project award amount less the sum of dollars committed to all subcontractors.
4. Contracts and procurements included in study analyses. Figure 5-3 presents the number of
contract elements and associated dollars BBC included in our analyses. We present that information
separately for state agencies, tier 2 HEIs, and tier 3 HEIs.
B. Vendor Data
BBC also compiled information on the businesses that participated in relevant prime contracts and
subcontracts the Commonwealth awarded during the study period, including:
Business name;
Physical addresses and phone numbers;
Ownership status (i.e., whether each business was minority-, woman-, or SDV-owned);
Race of owners (if minority-owned);
Status as a certified Small, Women-owned, and Minority-owned Business (SWaM) business;
Primary lines of work;
Business size; and
Year of establishment.
FINAL REPORT CHAPTER 5, PAGE 3
Figure 5-3.
Contract elements and associated dollars included in the Percent of in-
disparity study Agency scope dollars
Note: State agencies 80.6 %
Numbers rounded to nearest dollar and thus may not sum exactly to totals. Tier 2 HEIs 85.3 %
Source: Tier 3 HEIs 82.0 %
eVA data. Total 81.4 %
We relied on a variety of sources for that information, including:
The Commonwealth’s contract and vendor data;
Surveys the study team conducted with business owners and managers;
Data from the United States Small Business Administration;
The Commonwealth’s SWaM directory;
Dun & Bradstreet (D&B) business listings and other business information sources; and
Business websites and other secondary research.
C. RGMA
BBC used data from the Commonwealth to determine the RGMA—the geographical area in which the
agency spends the substantial majority of its contract and procurement dollars—for the disparity study.
As shown in Figure 5-4, overall, the Commonwealth awarded approximately 81.4 percent of relevant
contract and procurement dollars to businesses located in the state of Virginia. State agencies (80.6%),
tier 2 HEIs (85.3%), and tier 3 HEIs (82.0%) considered separately also awarded the vast majority of
relevant contract and procurement dollars to businesses located in the state of Virginia. As a result, our
analyses—including the availability analysis and quantitative analyses of marketplace conditions—
focused on the entire state.
FINAL REPORT CHAPTER 5, PAGE 4
Figure 5-4. Dollars
Contract and procurement Organization and industry Number (in thousands)
dollars the Commonwealth
awarded to businesses State agencies
located in Virginia Construction 17,714 $3,453,149
Professional services 36,805 $8,717,919
Source:
Non-professional services and goods 188,572 $4,938,491
eVA data.
Total 243,091 $17,109,559
Tier 2 HEIs
Construction 3,399 $1,232,116
Professional services 5,678 $452,878
Non-professional services and goods 22,661 $806,804
Total 31,738 $2,491,798
Tier 3 HEIs
Construction 22,156 $4,197,363
Professional services 33,833 $1,420,063
Non-professional services and goods 362,336 $1,866,486
Total 418,325 $7,483,913
D. Subindustry Classifications
For each prime contract and subcontract included in our analyses, BBC determined the subindustry that
best characterized the vendor’s primary line of work (e.g., concrete work). We determined subindustries
based on the Commonwealth’s contract, procurement, and vendor data; surveys the study team
conducted with prime contractors and subcontractors; business certification lists; D&B business listings;
and other sources. Figure 5-5 presents subindustry classifications for the construction, professional
services, and non-professional services and goods contracts and procurements we included in our
analyses as well as the dollars the Commonwealth awarded related to each subindustry during the study
period.
Figure 5-5. Total (in thousands)
Contract and
Industry State agencies Tier 2 HEIs Tier 3 HEIs
procurement
dollars by Construction
subindustry Nonresidential building construction $185,153 $257,576 $2,738,033
Plumbing and HVAC $657,376 $316,154 $196,627
Note:
Electrical work $545,161 $175,301 $160,526
Numbers rounded to
nearest dollar and thus Masonry, stonework, tile setting, and plastering $452,006 $133,494 $124,146
may not sum exactly to Highway, street, and bridge construction $551,359 $49,064 $69,128
totals.
Excavation, drilling, wrecking, and demolition $242,801 $45,820 $59,154
Source: Roofing, siding, and sheet metal work $142,427 $74,346 $52,873
eVA data. Concrete work $92,407 $67,979 $27,854
Water, sewer, and utility lines $74,185 $20,363 $26,683
Other special trade contractors $321,925 $78,966 $243,467
Other building construction $146,093 $10,265 $416,113
Other heavy construction $42,256 $2,789 $82,759
Total construction $3,453,149 $1,232,116 $4,197,363
FINAL REPORT CHAPTER 5, PAGE 5
Figure 5-5
Total (in thousands)
(continued).
Contract and Industry State agencies Tier 2 HEIs Tier 3 HEIs
procurement
dollars by Professional services
subindustry IT and data services $5,370,155 $133,947 $488,780
Engineering $532,166 $208,674 $415,039
Note: Financial services and consulting $815,282 $1,514 $31,606
Numbers rounded to Business and management consulting $616,895 $7,908 $51,262
nearest dollar and thus
may not sum exactly to Human resources and job training services $356,709 $486 $6,761
totals. Advertising, marketing, and public relations $217,912 $54,974 $38,673
Source: Construction management $61,063 $1,784 $231,206
eVA data. Environmental services $121,958 $2,952 $25,929
Architectural and design services $16,188 $23,736 $48,075
Testing and inspection $56,608 $3,971 $10,487
Transportation planning services $27,788 $276 $13
Landscape architecture $9,499 $2,342 $11,036
Other professional services $477,714 $10,193 $59,966
Other architecture and engineering $37,982 $121 $1,231
Total professional services $8,717,919 $452,878 $1,420,063
Non-professional services and goods
Staffing services $1,294,749 $30,360 $64,961
Communications equipment $468,731 $33,458 $93,836
Furniture $129,377 $50,021 $180,444
Rebar and reinforcing steel $139,936 $89,060 $70,750
Cleaning and janitorial services $77,525 $74,496 $128,408
Industrial equipment and machinery $136,792 $17,425 $99,087
Autombiles and vehicle parts and supplies $205,316 $10,700 $20,080
Office equipment and supplies $163,644 $17,523 $54,211
Electrical equipment and supplies $57,365 $15,073 $130,265
Trucking, hauling, and storage $183,280 $2,503 $16,561
Printing, copying, and mailing $101,563 $8,744 $44,341
Security guard services $69,516 $5,594 $73,894
Landscaping services $99,185 $8,356 $27,907
Petroleum and petroleum products $112,505 $6,330 $14,658
Safety equipment $106,034 $2,685 $12,825
Facilities support services $105,774 $83 $6,602
Heavy construction equipment rental $63,756 $14,230 $29,066
Uniforms and apparel $41,395 $11,538 $20,531
Security systems services $28,786 $3,948 $25,773
Concrete, asphalt, sand, and gravel products $44,532 $1,534 $1,253
Other goods $401,553 $97,370 $239,539
Other construction materials $283,239 $135,130 $244,105
Other non-professional services $195,010 $162,433 $200,835
Other transit services $428,926 $8,209 $66,554
Total non-professional services and goods $4,938,491 $806,804 $1,866,486
GRAND TOTAL $17,109,559 $2,491,798 $7,483,913
FINAL REPORT CHAPTER 5, PAGE 6
BBC combined related subindustries that accounted for relatively small percentages of total contract
and procurement dollars into nine “other” subindustries: other special trade contractors, other building
construction, other heavy construction, other architecture and engineering, other professional services,
other transit services, other non-professional services, other construction materials, and other goods.
For example, the dollars state agencies awarded to contractors for carpentry represented less than 1
percent of the total dollars we examined as part of the study. So, we combined carpentry work with
other special trade contractors that also accounted for relatively small percentages of total dollars into
the “other special trade contractors” subindustry. There were also various contracts and procurements
we classified into subindustries that we did not ultimately include in our analyses:
Purchases and grants the Commonwealth made with or awarded to government agencies, utility
providers, hospitals, or nonprofit organizations (state agencies: $3.9 billion; tier 2 HEIs: $255.8
million; tier 3 HEIs: $242.5 million);
Contracts and procurements that reflected “national markets”—that is, subindustries dominated by
large national or international businesses—or subindustries where the Commonwealth awarded
most of the dollars to businesses located outside the RGMA (state agencies: $1.9 billion; tier 2 HEIs:
$214.1 million; tier 3 HEIs: $1.1 billion);2
Purchases that often include property purchases, leases, or other pass-through dollars
(state agencies: $952.6 million; tier 2 HEIs: $19.3 million; tier 3 HEIs: $135.5 million); 3 or
Types of work not typically included in disparity studies and that account for relatively small
percentages of the Commonwealth’s contract and procurement dollars (state agencies: $546.4
million; tier 2 HEIs: $55.8 million; tier 3 HEIs: $383.5 million). 4
E. Review Process
The Commonwealth reviewed contract, procurement, and vendor data throughout the study process.
BBC consulted with the Commonwealth to discuss the data collection process, review information the
study team gathered, and present summary results. We incorporated that feedback in the final contract,
procurement, and vendor data we used for our analyses.
2 Examples of such work include computer manufacturing and proprietary software.
3 An example of such work is real estate consulting.
4 An example of an industry not typically included in disparity studies is legal services.
FINAL REPORT CHAPTER 5, PAGE 7
CHAPTER 6.
Availability Analysis
BBC Research & Consulting (BBC) analyzed the availability of small businesses and microbusinesses, as
well as minority-, woman-, and service disabled veteran (SDV)-owned businesses (collectively referred
to as small and diverse businesses) ready, willing, and able to perform work on the construction,
professional services, and non-professional services and goods contracts and procurements
Commonwealth of Virginia state agencies and higher education institutions (HEIs) (collectively referred
to as the Commonwealth) awards. 1, 2 Chapter 6 presents the analysis in three parts:
A. Purpose;
B. Methodology; and
C. Results.
Appendix C provides more information about the analysis and the methodology we used to conduct it.
A. Purpose
BBC examined the availability of small and diverse businesses for Commonwealth prime contracts and
subcontracts to use as benchmarks against which to compare the actual participation of those
businesses in its work to assess whether any disparities exist between participation and availability.
Assessing disparities between the participation and availability of small and diverse businesses allowed
us to determine whether certain business groups were substantially underutilized during the study
period, which is crucial in determining whether the use of race- or gender-based measures is appropriate
and, if so, ensuring their use meets the strict scrutiny and intermediate scrutiny standards of
constitutional review, respectively (for details, see Chapter 2). Moreover, this information is crucial for
informing the Commonwealth’s implementation of the Small, Women-owned, and Minority-owned
Business (SWaM) Program. In addition, estimating availability is useful to the Commonwealth in setting
overall aspirational goals for the participation of small and diverse businesses in the projects it awards
as well as setting race- or gender-based contracting goals for the participation of those businesses in its
projects, if the Commonwealth determines the use of such measures is appropriate.
1 “Woman-owned businesses” refers to White woman-owned businesses. Information and results for businesses owned by women of
color are included along with those of businesses owned by men of color according to their corresponding race/ethnic groups.
2 BBC assessed results for small and diverse business groups regardless of certification status based on whether a business’ size or
ownership characteristics aligned with the corresponding certification criteria for that group. To estimate a business' ability to qualify as
a small business or microbusiness, BBC used a combination of primary and secondary data collection as well as data modeling. As part of
BBC's business surveys, business representatives were asked to report business size in terms of revenue and number of employees, and
to disclose any affiliates, parent companies, or subsidiaries. For non-certified utilized businesses with which BBC did not conduct a
business survey, we relied on business size and company structure information from Dun & Bradstreet (D&B). BBC used a predictive
regression model to correct for gaps and errors in D&B's business size information. For businesses that have affiliates, parent companies,
or subsidiaries, BBC used business size for the entire corporate structure, in terms of revenue and number of employees, to determine
business eligibility as a potential small business or microbusiness, rather than on the structure of ownership interests.
FINAL REPORT CHAPTER 6, PAGE 1
B. Methodology
BBC used a custom census approach—which accounts for specific business and project characteristics
such as work type, role, size, capacity, location, and interest—to estimate the availability of small
businesses; microbusinesses; and minority-, woman-, and SDV-owned businesses for Commonwealth
work. The availability analysis focused on specific areas of work, or subindustries, associated with the
contracts and procurements the Commonwealth awarded between July 1, 2019 and June 30, 2024 (the
study period), which serves as a proxy for the work it might award in the future. We began the analysis
by identifying the specific subindustries in which the Commonwealth awarded most of its contracting
dollars as well as the geographic area in which most of the businesses to which it awards those dollars
are located (i.e., the relevant geographic market area, or RGMA). Based on the volume of dollars the
organization spent with businesses in various geographical areas, we determined that the RGMA for the
study should be the state of Virginia. 3
1. Availability surveys. After identifying the RGMA, BBC conducted extensive surveys with 1,565
businesses in the marketplace to develop a representative and unbiased database of businesses located
in the RGMA that perform types of work relevant to Commonwealth projects. The objective of the survey
process was not to collect information from every relevant business located in the RGMA, but rather, to
collect information from an unbiased subset of the relevant business population that appropriately
represents the entire relevant business population in a statistically valid manner. BBC worked with
Davis Research to conduct telephone and online surveys with business owners and managers to collect
specific characteristics about their companies and identify local businesses potentially available for
Commonwealth prime contracts and subcontracts.
a. Business directory. BBC began the survey process by compiling a phone book of all types of
businesses—regardless of ownership characteristics—that perform work relevant to Commonwealth
projects and are located in the RGMA, based primarily on information from Dun & Bradstreet (D&B)
Marketplace. We compiled information about businesses based on 8-digit Standard Industry
Classification (SIC) codes most related to the contracts and procurements the Commonwealth awarded
during the study period. We obtained listings on 21,357 local businesses that perform work related to
those work specializations. We did not have working phone numbers for 3,666 of those businesses, but
we attempted surveys with the remaining 17,691 businesses.
b. Survey information. The study team conducted availability surveys with businesses listed in our
directory to collect various pieces of information about each one, including:
Status as a private sector business (as opposed to a public agency or nonprofit organization);
Status as a subsidiary or branch of another company;
Primary lines of work;
Interest in performing work for government organizations;
Interest in performing work as a prime contractor or subcontractor;
Largest prime contract or subcontract the business is able to perform;
3 See Chapter 5 for more information about how BBC determined the RGMA for the study.
FINAL REPORT CHAPTER 6, PAGE 2
Whether the business is able to work or serve customers in Virginia;
Business size in terms of revenue and number of employees;
Race of the owner(s);
Gender of the owner(s); and
SDV status of the owner(s).
c. Availability database. After conducting availability surveys, BBC compiled an availability database
that included information about businesses potentially available for relevant Commonwealth projects.
We included businesses in the database if they reported possessing the following characteristics:
Being a private sector business that is active and operational;
Having primary lines of work relevant to Commonwealth projects;
Being able to perform work or serve customers in Virginia; and
Being interested in working for government organizations.
After those exclusions and reconciliations, BBC compiled a database of 1,255 businesses we considered
potentially available for Commonwealth work. Figure 6-1 presents the percentage of businesses in the
availability database that were small businesses, microbusinesses, minority-owned businesses, woman-
owned businesses, and SDV-owned businesses. As shown in Figure 6-1, 95.7 percent of the businesses in
the database were small businesses and 64.5 percent were microbusinesses. In addition, 23.6 percent
were minority-owned, 13.5 percent were White woman-owned, and 4.4 percent were SDV-owned. The
businesses that were counted as small businesses, microbusinesses, and SDV-owned businesses were
not exclusive of other business categories. For example, if a business was owned by a Black person who
was also an SDV, that business would have been counted as both a Black-owned business and an SDV-
owned business. In addition, all microbusinesses were automatically considered small businesses.
Figure 6-1.
Business group
Percent of businesses in the availability
database by relevant business group
Business size
Small business 95.7 %
Microbusiness 64.5 %
Race and gender
Minority 23.6 %
Asian 4.9 %
Black 10.8 %
Hispanic 6.8 %
Native American 1.1 %
White woman 13.5 %
Veteran status
Service-disabled veteran 4.4 %
2. Calculating availability. BBC only considered a portion of the businesses in the availability
database as potentially available for any given prime contract or subcontract (referred to generally as a
FINAL REPORT CHAPTER 6, PAGE 3
contract element). BBC identified the type of work, Figure 6-2.
contract size, and contract role for each contract element, Example of calculating
availability for a state agency
and then took the following steps to estimate the subcontract
availability of small businesses, microbusinesses,
On a contract a state agency awarded during
minority-owned businesses, woman-owned businesses,
the study period, the prime contractor
and SDV-owned businesses for each one: awarded a subcontract worth $456,123 for
electrical work in Central Virginia. To
1. We identified businesses in the availability database determine the overall availability of minority-
that reported that they: owned businesses for the subcontract, BBC
identified businesses in the availability
Perform work in that particular role (i.e., as a database that indicated they:
prime contractor or a subcontractor);
a. Perform electrical work;
Perform that type of work; and
b. Perform work as subcontractors;
Can perform work of that size or larger. c. Can perform work in Central Virginia; and
2. We then counted the number of small businesses, d. Are able to perform work of equal size or
microbusinesses, minority-owned businesses, larger than $456,123.
woman-owned businesses, and SDV-owned We found 73 businesses in the availability
businesses as well as all other businesses that met database that met those criteria, 19 of which
the criteria in step 1. were minority-owned. Thus, the availability of
minority-owned businesses for the
3. We translated the counts of businesses in step 2 into subcontract was 26.0 percent (i.e., 19/73 x 100
percentages for each relevant business group relative = 26.0).
to all businesses we identified as available for the
contract element.
Figure 6-2 provides an example of how we estimated availability for a subcontract associated with a
project the Commonwealth awarded during the study period.
BBC repeated the above steps for each contract element the Commonwealth awarded within a particular
project set (e.g., construction projects) and then multiplied the percent availability of small businesses,
microbusinesses, minority-owned businesses, woman-owned businesses, and SDV-owned businesses
for each contract element by the dollars associated with it. We then added results across all contract
elements and divided by the total dollars the Commonwealth awarded as part of the project set,
resulting in estimates of the percent of relevant project dollars one would expect the organization to
award to small businesses; microbusinesses; and minority-, woman-, and SDV-owned businesses based
on their availability for the specific types and sizes of the projects included in the set.
3. Markov Chain Monte Carlo (MCMC). With any survey effort where the survey sample does not
represent the entire population and the response rate is less than 100 percent, there is some amount of
random error or potential for unintended bias associated with the survey process itself. BBC used MCMC
simulations to adjust our observed availability estimates to help account for any such issues as part of
the availability survey process. For the simulations, we specified a prior for the MCMC model, which
represented any initial knowledge we had about the population of local businesses potentially available
for relevant projects the Commonwealth awarded. Such knowledge was available to us from the United
States Census Bureau, which provides percentages of small and diverse businesses located in Virginia
that work in the local construction, professional services, and non-professional services and goods
FINAL REPORT CHAPTER 6, PAGE 4
industries. We specified data from the United States Census Bureau as a prior in our model so it could
better estimate business availability for each contract element included in the analysis.
Once we specified the prior, we ran four MCMC models each with six sequential chains of Monte Carlo
simulations for each contract element in our analysis: one model for simulating the availability of small
businesses, one for microbusinesses, one for minority- and woman-owned businesses, and one for SDV-
owned businesses. Each chain included 4,000 simulations, so in total, we ran 24,000 Monte Carlo
simulations for each model for each contract element. 4 Essentially, the model generated estimated
availability for each contract element if we had repeatedly run our availability survey process 24,000
times, resulting in less random error and mitigating any unintended bias in the survey process. The
availability estimates we report in the next section and in subsequent analyses are the availability
estimates we observed adjusted for results from the MCMC process.
C. Results
BBC estimated the overall availability of small businesses, microbusinesses, minority-owned businesses,
woman-owned businesses, and SDV-owned businesses for the construction, professional services, and
non-professional services and goods work the Commonwealth awards as well as separately for various
subsets of that work. For each set of projects, we present availability estimates for all minority-owned
businesses together and separately for each relevant race group: Asian-owned businesses, Black-owned
businesses, Hispanic-owned businesses, and Native American-owned businesses. We based availability
estimates on the prime contracts and subcontracts the Commonwealth awarded during the study
period. A key assumption of the availability analysis is that the work each organization awarded during
the study period is representative of the work that the organization will award in the future. If the types
and sizes of the projects an organization awards in the future differ substantially from the work it
awarded during the study period, then the organization should adjust availability estimates accordingly.
1. Overall. Figure 6-3 presents dollar-weighted estimates of the overall availability of small and
diverse businesses for state agency work. 5, 6 As shown in Figure 6-3, the availability of small businesses
for state agency work is 88.5 percent, indicating that one might expect the organization to award
approximately 88.5 percent of its project dollars to small businesses based on the availability of those
businesses for that work. The overall availability of microbusinesses is 40.4 percent.
4 Across all the more than 693,000 contract elements included in the analyses, there were 2,431 unique sets of combinations of business
and project characteristics (i.e., availability sets). For computational efficiency, we ran MCMC simulations on each unique availability set
and then applied them to each appropriate contract element.
5 BBC examined study results for state agencies separately from results for HEIs. We present availability analysis results for all
Commonwealth work (state agencies and HEIs considered together) in Appendix D.
6 BBC assessed results for small and diverse business groups regardless of certification status based on whether a business’ size or
ownership characteristics aligned with the corresponding certification criteria for that group. To estimate a business' ability to qualify as
a potential small business or microbusiness, BBC used a combination of primary and secondary data collection as well as data modeling.
As part of BBC's business surveys, business representatives were asked to report business size in terms of revenue and number of
employees, and to disclose any affiliates, parent companies, or subsidiaries. For non-certified utilized businesses with which BBC did not
conduct a business survey, we relied on business size and company structure information from D&B. BBC used a predictive regression
model to correct for gaps and errors in D&B's business size information. For businesses that have affiliates, parent companies, or
subsidiaries, BBC used business size for the entire corporate structure, in terms of revenue and number of employees, to determine
business eligibility as a potential small business or microbusiness, rather than on the structure of ownership interests.
FINAL REPORT CHAPTER 6, PAGE 5
The overall availability of minority-owned businesses considered together is 23.3 percent. Availability
results differed for the individual minority-owned business groups we studied:
The availability of Asian-owned businesses is 10.5 percent.
The availability of Black-owned businesses is 7.7 percent.
The availability of Hispanic-owned businesses is 4.7 percent.
The availability of Native American-owned businesses is 0.4 percent.
The overall availability of White woman-owned businesses for state agency work is 13.6 percent, and
the overall availability of SDV-owned businesses for state agency work is 7.1 percent.
Figure 6-3.
Business group
Availability estimates for
state agency work
Business size
Note: Small business 88.5 %
Numbers are rounded to the nearest one-tenth of a Microbusiness 40.4 %
percent and thus may not sum exactly to totals.
Race and gender
Minority 23.3 %
Asian 10.5 %
Black 7.7 %
Hispanic 4.7 %
Native American 0.4 %
White woman 13.6 %
Veteran status
Service-disabled veteran 7.1 %
BBC also estimated the availability of small and diverse businesses for tier 2 and tier 3 HEI contracts and
procurements. 7 Tier 2 HEIs have a memorandum of understanding with the Commonwealth that allows
them contracting and procurement autonomy in two of the following three areas: procurement, capital
outlay construction, and technology. In contrast, tier 3 HEIs have complete autonomy in their
contracting and procurement. As shown in Figure 6-4, the overall availability of different business
groups for tier 2 HEI work is as follows:
The overall availability of small businesses is 89.1 percent.
The overall availability of microbusinesses is 45.4 percent.
7 Tier 2 HEIs are Christopher Newport University, Longwood University, Norfolk State University, Old Dominion University, Radford
University, University of Mary Washington, Virginia Community College System, Virginia Military Institute, and Virginia State University.
Tier 3 HEIs are the University of Virginia, Virginia Polytechnic Institute and State University, Virginia Commonwealth University, James
Madison University, George Mason University, and the College of William & Mary.
FINAL REPORT CHAPTER 6, PAGE 6
The availability of minority-owned businesses considered together for all tier 2 HEI work is 17.7
percent. Availability results for that work differed for the individual minority-owned business
groups we studied:
The availability of Black-owned businesses is 5.9 percent.
The availability of Hispanic-owned businesses is 5.9 percent.
The availability of Asian-owned businesses is 5.5 percent.
The availability of Native American-owned businesses is 0.4 percent.
The overall availability of White woman-owned businesses is 11.9 percent.
The overall availability of SDV-owned businesses is 3.2 percent.
The overall availability of different business groups for tier 3 HEI work is as follows:
The overall availability of small businesses is 88.2 percent.
The overall availability of microbusinesses is 38.5 percent.
The availability of minority-owned businesses considered together for all tier 3 HEI work is 19.1
percent. Availability results for that work differed for the individual minority-owned business
groups we studied:
The availability of Asian-owned businesses is 6.7 percent.
The availability of Hispanic-owned businesses is 6.5 percent.
The availability of Black-owned businesses is 4.9 percent.
The availability of Native American-owned businesses is 1.0 percent.
The overall availability of White woman-owned businesses is 9.5 percent.
The overall availability of SDV-owned businesses is 3.0 percent.
FINAL REPORT CHAPTER 6, PAGE 7
Figure 6-4. HEI Tier
Availability estimates for
HEI work Business group Tier 2 Tier 3
Note: Business size
Numbers are rounded to the nearest one-tenth of a Small business 89.1 % 88.2 %
percent and thus may not sum exactly to totals.
Microbusiness 45.4 % 38.5 %
Race and gender
Minority 17.7 % 19.1 %
Asian 5.5 % 6.7 %
Black 5.9 % 4.9 %
Hispanic 5.9 % 6.5 %
Native American 0.4 % 1.0 %
White woman 11.9 % 9.5 %
Veteran status
Service-disabled veteran 3.2 % 3.0 %
2. Industry. BBC also examined the availability of small and diverse businesses separately for state
agency construction, professional services, and non-professional services and goods work to assess
whether the availability of those businesses differs by industry. As shown in Figure 6-5, small businesses
exhibit greater availability for state agency professional services (90.8%) and construction (90.4%)
work than for its non-professional services and goods work (83.3%). Microbusinesses exhibit greater
availability for state agency professional services (41.3%) and non-professional services and goods
(40.9%) work than for its construction work (37.6%). The availability of other business groups differs
by industry:
Minority-owned businesses considered together exhibit greater availability for state agency
professional services work (30.2%) than for its construction (19.8%) and non-professional services
and goods work (13.5%). The availability of individual minority-owned business groups differs by
industry:
Hispanic-owned businesses exhibit the greatest availability for state agency construction
work (9.8%) compared to Asian-owned businesses (4.7%), Black-owned businesses (4.3%),
and Native American-owned businesses (1.0%).
Asian-owned businesses exhibit the greatest availability for state agency professional services
work (17.1%) compared to Black-owned businesses (9.2%), Hispanic-owned businesses
(3.6%), and Native American-owned businesses (0.3%).
Black-owned businesses exhibit the greatest availability for state agency non-professional
services and goods work (7.3%) compared to Hispanic-owned businesses (3.1%), Asian-
owned businesses (2.8%), and Native American-owned businesses (0.3%).
White woman-owned businesses exhibit greater availability for state agency non-professional
services and goods work (16.1%) than for its professional services (14.5%) and construction work
(7.5%).
SDV-owned businesses exhibit greater availability for state agency professional services work
(10.6%) than for its non-professional services and goods (4.0%) and construction work (2.7%).
FINAL REPORT CHAPTER 6, PAGE 8
Figure 6-5.
Availability estimates for state agency construction, professional services,
and non-professional services and goods work
Industry
Professional Non-professional
Business group Construction services services and goods
Business size
Small business 90.4 % 90.7 % 83.3 %
Microbusiness 37.6 % 41.3 % 40.9 %
Race and gender
Minority 19.8 % 30.2 % 13.5 %
Asian 4.7 % 17.1 % 2.8 %
Black 4.3 % 9.2 % 7.3 %
Hispanic 9.8 % 3.6 % 3.1 %
Native American 1.0 % 0.3 % 0.3 %
White woman 7.5 % 14.5 % 16.1 %
Veteran status
Service-disabled veteran 2.7 % 10.6 % 4.0 %
Note: Numbers are rounded to the nearest one-tenth of a percent and thus may not sum exactly to totals.
3. Contract role. Many diverse businesses are small businesses, and thus often work as
subcontractors. Prime contracts are usually bigger in size than subcontracts, and project size is typically
inversely related to the availability of small and diverse businesses for organization work (i.e., the larger
the project, the less the availability of small and diverse businesses). For these reasons, it is instructive
to examine availability estimates separately for state agency prime contracts and subcontracts. As
shown in Figure 6-6, the availability of small businesses for state agency prime contracts (88.1%) is less
than for its subcontracts (90.3%). The availability of microbusinesses for state agency prime contracts
(39.8%) is also less than for its subcontracts (42.7%).
The availability of other business groups differs by contract role:
The availability of minority-owned businesses considered together for state agency prime
contracts (23.2%) is similar to their availability for subcontracts (23.8%). The availability of
individual minority-owned business groups differs by contract role:
Asian-owned businesses exhibit the greatest availability for prime contracts (11.1%)
compared to Black-owned businesses (7.6%), Hispanic-owned businesses (4.1%), and Native
American-owned businesses (0.4%).
Asian-owned businesses also exhibit the greatest availability for subcontracts (8.2%)
compared to Black-owned businesses (7.9%), Hispanic-owned businesses (7.2%), and Native
American-owned businesses (0.5%).
The availability of White woman-owned businesses for state agency prime contracts (14.4%) is
greater than for its subcontracts (10.6%).
FINAL REPORT CHAPTER 6, PAGE 9
The availability of SDV-owned businesses for state agency prime contracts (7.6%) is greater than
for its subcontracts (5.3%).
Some groups exhibit similar or greater availability for prime contracts than for subcontracts. This result
may be due to variations in availability for different industries, and the industry compositions of prime
contracts as compared to subcontracts.
Figure 6-6. Role
Availability estimates for state
agency prime contracts and Business group Prime contracts Subcontracts
subcontracts
Business size
Note: Small business 88.1 % 90.3 %
Numbers are rounded to the nearest one-
Microbusiness 39.8 % 42.7 %
tenth of a percent and thus may not sum
exactly to totals.
Race and gender
Minority 23.2 % 23.8 %
Asian 11.1 % 8.2 %
Black 7.6 % 7.9 %
Hispanic 4.1 % 7.2 %
Native American 0.4 % 0.5 %
White woman 14.4 % 10.6 %
Veteran status
Service-disabled veteran 7.6 % 5.3 %
4. Prime contract size. To assess whether prime contract size is related to the availability of small
and diverse businesses for state agency work, BBC examined the availability of small and diverse
businesses separately for three different size categories of prime contracts state agencies awarded
during the study period:
Large prime contracts, which are contracts worth more than $2 million for construction, more than
$4.7 million for professional services, or more than $1 million for non-professional services and
goods;
Small prime contracts, which are contracts worth less than $2 million but more than $400,000 for
construction, less than $4.7 million but more than $400,000 for professional services, or less than
$1 million but more than $200,000 for non-professional services and goods; and
Micro prime contracts, which are contracts worth $400,000 or less for construction, $400,000 or
less for professional services, or $200,000 or less for non-professional services and goods.
As shown in Figure 6-7, the availability of small businesses for state agency micro prime contracts
(93.8%) and small prime contracts (93.2%) is greater than for its large prime contracts (86.0%). The
availability of microbusinesses for micro prime contracts (61.0%) is also greater than for small prime
contracts (58.2%) and large prime contracts (32.3%). The availability of other business groups differs
by prime contract size:
The availability of minority-owned businesses considered together is greater for state agency small
prime contracts (26.0%) than for its micro prime contracts (23.4%) and large prime contracts
FINAL REPORT CHAPTER 6, PAGE 10
(22.6%). The availability of individual minority-owned business groups differs by prime contract
size:
Asian-owned businesses exhibit the greatest levels of availability for large prime contracts
(11.9%) compared to Black-owned businesses (6.2%), Hispanic-owned businesses (4.1%),
and Native American-owned businesses (0.3%).
Black-owned businesses exhibit the greatest levels of availability for small prime contracts
(11.3%) compared to Asian-owned businesses (10.5%), Hispanic-owned businesses (3.7%),
and Native American-owned businesses (0.5%).
Black-owned businesses exhibit the greatest levels of availability for micro prime contracts
(11.1%) compared to Asian-owned businesses (7.6%), Hispanic-owned businesses (4.1%),
and Native American-owned businesses (0.7%).
The availability of White woman-owned businesses for state agency micro prime contracts (15.5%)
is greater than for its small prime contracts (14.9%) and large prime contracts (14.0%).
The availability of SDV-owned businesses for state agency large prime contracts (8.3%) is greater
than for its small prime contracts (6.4%) and micro prime contracts (4.7%).
Some groups exhibit similar or greater availability for larger contracts than for smaller contracts. This
result may be due to variations in availability for different industries and the industry compositions of
each contract size category.
Figure 6-7. Contract Size
Availability estimates for state
Business group Micro Small Large
agency large, small, and micro
prime contracts
Business size
Note: Small business 93.8 % 93.2 % 86.0 %
Numbers are rounded to the nearest one
Microbusiness 61.0 % 58.2 % 32.3 %
tenth of a percent and thus may not sum
exactly to totals.
Race and gender
Minority 23.4 % 26.0 % 22.6 %
Asian 7.6 % 10.5 % 11.9 %
Black 11.1 % 11.3 % 6.2 %
Hispanic 4.1 % 3.7 % 4.1 %
Native American 0.7 % 0.5 % 0.3 %
White woman 15.5 % 14.9 % 14.0 %
Veteran status
Service-disabled veteran 4.7 % 6.4 % 8.3 %
FINAL REPORT CHAPTER 6, PAGE 11
CHAPTER 7.
Utilization Analysis
BBC Research & Consulting (BBC) measured the participation of small businesses and microbusinesses,
as well as minority-, woman-, and service disabled veteran (SDV)-owned businesses (collectively
referred to as small and diverse businesses) in the construction, professional services, and non-
professional services and goods contracts and procurements Commonwealth of Virginia state agencies
and higher education institutions (HEIs) (collectively referred to as the Commonwealth) awarded
between July 1, 2019 and June 30, 2024 (the study period). 1, 2 We measured participation in terms of
utilization—the percentage of project dollars the Commonwealth awarded to those businesses during
the study period. Chapter 7 presents the analysis in two parts:
A. Purpose; and
B. Results.
A. Purpose
Calculating the percentage of dollars the Commonwealth awarded small and diverse businesses during
the study period is useful in determining whether certain business groups face barriers related to the
organization’s contracting and procurement processes. Moreover, assessing whether any business
groups are substantially underutilized relative to their availability for that work allows the
Commonwealth to determine whether the use of race- or gender-based measures is appropriate and
ensure that its use of such measures is tailored to those business groups for which compelling evidence
of such barriers exist.
B. Results
BBC calculated the overall participation of small businesses, microbusinesses, minority-owned
businesses, woman-owned businesses, and SDV-owned businesses located in the relevant geographic
market area (RGMA) (i.e., local small and diverse businesses) in the construction, professional services,
and non-professional services and goods projects the Commonwealth awarded during the study period
1 “Woman-owned businesses” refers to White woman-owned businesses. Information and results for businesses owned by women of
color are included along with those of businesses owned by men of color according to their corresponding race/ethnic groups.
2 BBC assessed results for small and diverse business groups regardless of certification status based on whether a business’ size or
ownership characteristics aligned with the corresponding certification criteria for that group. To estimate a business' ability to qualify as
a small business or microbusiness, BBC used a combination of primary and secondary data collection as well as data modeling. As part of
BBC's business surveys, business representatives were asked to report business size in terms of revenue and number of employees, and
to disclose any affiliates, parent companies, or subsidiaries. For non-certified utilized businesses with which BBC did not conduct a
business survey, we relied on business size and company structure information from Dun & Bradstreet (D&B). BBC used a predictive
regression model to correct for gaps and errors in D&B's business size information. For businesses that have affiliates, parent companies,
or subsidiaries, BBC used business size for the entire corporate structure, in terms of revenue and number of employees, to determine
business eligibility as a potential small business or microbusiness, rather than on the structure of ownership interests.
FINAL REPORT CHAPTER 7, PAGE 1
as well as separately for various subsets of those projects. 3, 4 The businesses that were counted as small
businesses, microbusinesses, and SDV-owned businesses were not exclusive of other business
categories. For example, if a business was owned by a Black person who was also an SDV, that business
would have been counted as both a Black-owned business and an SDV-owned business. In addition, all
microbusinesses are automatically considered to also be small businesses.5
1. Overall. Figure 7-1 presents the overall participation of local small and diverse businesses in state
agency work. 6 As shown in Figure 7-1, state agencies awarded 59.0 percent of relevant project dollars to
small businesses. The overall participation of microbusinesses in state agency work was 18.6 percent.
Overall, state agencies awarded 10.7 percent of relevant project dollars to minority-owned businesses
considered together. Individual minority-owned business groups exhibited different levels of
participation in state agency work:
Asian-owned businesses (8.3%),
Black-owned businesses (1.2%),
Hispanic-owned businesses (1.1%); and
Native American-owned businesses (0.1%).
In addition, state agencies awarded 4.1 percent of relevant project dollars to White woman-owned
businesses and 0.8 percent to SDV-owned businesses.
3 The RGMA on which BBC focused our analyses was the state of Virginia. See Chapter 5 for more information on how we determined the
RGMA.
4 BBC assessed results for small and diverse business groups regardless of certification status based on whether a business’ size or
ownership characteristics aligned with the corresponding certification criteria for that group. To estimate a business' ability to qualify as
a potential small business or microbusiness, BBC used a combination of primary and secondary data collection as well as data modeling.
As part of BBC's business surveys, business representatives were asked to report business size in terms of revenue and number of
employees, and to disclose any affiliates, parent companies, or subsidiaries. For non-certified utilized businesses with which BBC did not
conduct a business survey, we relied on business size and company structure information from Dun & Bradstreet (D&B). BBC used a
predictive regression model to correct for gaps and errors in D&B's business size information. For businesses that have affiliates, parent
companies, or subsidiaries, BBC used business size for the entire corporate structure, in terms of revenue and number of employees, to
determine business eligibility as a potential small business or microbusiness, rather than on the structure of ownership interests.
5 The Commonwealth tracks the participation of small and diverse businesses in its contracting and procurement through its SWaM
expenditure dashboard. The percentage of certified small business participation in Commonwealth contracts and procurements reported
as part of the disparity study does not align with the percentage reported by the SWaM expenditure dashboard for various reasons. The
Commonwealth has established a hierarchy for reporting participation by SWaM-certified businesses, and it does not count any single
business in multiple categories (i.e., if a business is certified as a small business and a minority-owned business, the Commonwealth
would report that participation as minority-owned business participation; in contrast, BBC would report that participation as both small
business participation and minority-owned business participation). In addition, there are various differences in BBC and the
Commonwealth’s determination of discretionary spending. See Chapter 5 for information about the types of contracts and procurements
that were not considered in-scope as part of the disparity study and the volumes of dollars included in each of those categories.
6 BBC examined study results for state agencies separately from results for HEIs. We present utilization analysis results for all
Commonwealth work (state agencies and HEIs considered together) in Appendix D.
FINAL REPORT CHAPTER 7, PAGE 2
Figure 7-1.
Business group
Utilization results for Commonwealth
projects
Business size
Note: Small business 59.0 %
Numbers are rounded to the nearest one tenth of a Microbusiness 18.6 %
percent and thus may not sum exactly to totals.
Race and gender
Minority 10.7 %
Asian 8.3 %
Black 1.2 %
Hispanic 1.1 %
Native American 0.1 %
White woman 4.1 %
Veteran status
Service-disabled veteran 0.8 %
BBC also assessed the participation of small and diverse businesses for tier 2 and tier 3 HEI contracts
and procurements. 7 Tier 2 HEIs have a memorandum of understanding with the Commonwealth that
allows them contracting and procurement autonomy in two of the following three areas: procurement,
capital outlay construction, and technology. In contrast, tier 3 HEIs have complete autonomy in their
contracting and procurement. As shown in Figure 7-2, the overall participation of different business
groups for tier 2 HEI work was as follows:
The overall participation of small businesses was 68.9 percent.
The overall participation of microbusinesses was 14.3 percent.
The participation of minority-owned businesses considered together for all tier 2 HEI work was 7.6
percent. Individual minority-owned business groups exhibited different levels of participation in
that work:
Black-owned businesses (5.1%);
Asian-owned businesses (1.1%);
Hispanic-owned businesses (1.1%); and
Native American-owned businesses (0.1%).
The overall participation of White woman-owned businesses was 7.7 percent.
The overall participation of SDV-owned businesses was 0.6 percent.
The overall participation of different business groups for tier 3 HEI work was as follows:
7 Tier 2 HEIs are Christopher Newport University, Longwood University, Norfolk State University, Old Dominion University, Radford
University, University of Mary Washington, Virginia Community College System, Virginia Military Institute, and Virginia State University.
Tier 3 HEIs are the University of Virginia, Virginia Polytechnic Institute and State University, Virginia Commonwealth University, James
Madison University, George Mason University, and the College of William & Mary.
FINAL REPORT CHAPTER 7, PAGE 3
The overall participation of small businesses was 74.9 percent.
The overall participation of microbusinesses was 20.4 percent.
The participation of minority-owned businesses considered together for all tier 3 HEI work was 3.3
percent. Individual minority-owned business groups exhibited different levels of participation in
that work:
Hispanic-owned businesses (1.2%);
Asian-owned businesses (1.0%);
Black-owned businesses (1.0%); and
Native American-owned businesses (0.1%).
The overall participation of White woman-owned businesses was 4.7 percent.
The overall participation of SDV-owned businesses was 0.3 percent.
Figure 7-2. HEI Tier
Utilization results for HEI work
Business group Tier 2 Tier 3
Note:
Numbers are rounded to the nearest one tenth of a Business size
percent and thus may not sum exactly to totals.
Small business 68.9 % 74.9 %
Microbusiness 14.3 % 20.4 %
Race and gender
Minority 7.6 % 3.3 %
Asian 1.1 % 1.0 %
Black 5.1 % 1.0 %
Hispanic 1.1 % 1.2 %
Native American 0.3 % 0.1 %
White woman 7.7 % 4.7 %
Veteran status
Service-disabled veteran 0.6 % 0.3 %
2. Industry. BBC also examined the participation of small and diverse businesses separately for state
agencies’ construction, professional services, and non-professional services and goods work to assess
whether the participation of those businesses differed by industry. As shown in Figure 7-3, the
participation of small businesses was greater in state agency construction work (79.8%) than in its
professional services (54.2%) and non-professional services and goods work (52.9%). Similarly, the
participation of microbusinesses was greater in state agency construction work (32.8%) than its non-
professional services and goods work (15.2%) and professional services work (14.9%).
The participation of other business groups differed by industry:
The participation of minority-owned businesses considered together was greater in state agency
professional services work (15.9%) than in its non-professional services and goods (7.4%) and
construction work (2.5%). The participation of individual minority-owned business groups in state
agency work differed by industry:
FINAL REPORT CHAPTER 7, PAGE 4
Hispanic-owned businesses exhibited the greatest level of participation in construction work
(1.4%) compared to Black-owned businesses (0.5%), Asian-owned businesses (0.4%), and
Native American-owned businesses (0.2%).
Asian-owned businesses exhibited the greatest level of participation in professional services
work (14.5%) compared to Hispanic-owned businesses (0.8%), Black-owned businesses
(0.5%), and Native American-owned businesses (0.1%).
Black-owned businesses exhibited the greatest level of participation in non-professional
services and goods work (3.0%) compared to Asian-owned businesses (2.9%), Hispanic-
owned businesses (1.5%), and Native American-owned businesses (0.0%).
White woman-owned businesses exhibited greater participation in state agency non-professional
services and goods work (8.7%) than in its professional services (2.4%) and construction work
(1.9%).
SDV-owned businesses exhibited greater participation in state agency professional services work
(1.3%) than in its non-professional services and goods work (0.3%) and construction work (0.1%).
Figure 7-3.
Utilization analysis results by industry
Industry
Professional Non-professional
Business group Construction services services and goods
Business size
Small business 79.8 % 54.2 % 52.9 %
Microbusiness 32.8 % 14.9 % 15.2 %
Race and gender
Minority 2.5 % 15.9 % 7.4 %
Asian 0.4 % 14.5 % 2.9 %
Black 0.5 % 0.5 % 3.0 %
Hispanic 1.4 % 0.8 % 1.5 %
Native American 0.2 % 0.1 % 0.0 %
White woman 1.9 % 2.4 % 8.7 %
Veteran status
Service-disabled veteran 0.1 % 1.3 % 0.3 %
Note: Numbers are rounded to the nearest one tenth of a percent and thus may not sum exactly to totals.
3. Contract role. Many diverse businesses are small businesses, and thus often work as
subcontractors. Prime contracts are usually bigger in size than subcontracts, and project size is typically
inversely related to the participation of small and diverse businesses for organization work (i.e., the
larger the project, the less the participation of small and diverse businesses). For these reasons, it is
instructive to examine utilization results separately for state agency prime contracts and subcontracts.
As shown in Figure 7-4, the participation of small businesses was greater in state agency subcontracts
(78.5%) than in its prime contracts (53.9%). Similarly, the participation of microbusinesses was greater
in state agency subcontracts (38.1%) than its prime contracts (13.5%).
FINAL REPORT CHAPTER 7, PAGE 5
The participation of other business groups differed by contract role:
The participation of minority-owned businesses considered together was slightly greater in state
agency prime contracts (10.9%) than in its subcontracts (10.0%). The participation of individual
minority-owned business groups in state agency work differed by contract role:
Asian-owned businesses exhibited the greatest level of participation in prime contracts (8.5%)
compared to Hispanic-owned businesses (1.3%), Black-owned businesses (1.0%), and Native
American-owned businesses (0.1%).
Asian-owned businesses exhibited the greatest level of participation in subcontracts (7.4%)
compared to Black-owned businesses (2.0%), Hispanic-owned businesses (0.6%), and Native
American-owned businesses (0.0%)
The participation of White woman-owned businesses was greater in state agency prime contracts
(4.2%) than in its subcontracts (3.6%).
The participation of SDV-owned businesses was also greater in state agency prime contracts (0.8%)
than its subcontracts (0.6%).
Figure 7-4. Role
Utilization analysis
results by contract role Business group Prime contracts Subcontracts
Note: Business size
Numbers are rounded to the nearest one tenth of Small business 53.9 % 78.5 %
a percent and thus may not sum exactly to totals.
Microbusiness 13.5 % 38.1 %
Race and gender
Minority 10.9 % 10.0 %
Asian 8.5 % 7.4 %
Black 1.0 % 2.0 %
Hispanic 1.3 % 0.6 %
Native American 0.1 % 0.0 %
White woman 4.2 % 3.6 %
Veteran status
Service-disabled veteran 0.8 % 0.6 %
4. Prime contract size. To assess whether prime contract size is related to the participation of small
and diverse businesses for state agency work, BBC examined the participation of small and diverse
businesses separately for three different size categories of prime contracts state agencies awarded
during the study period:
Large prime contracts, which are contracts worth more than $2 million for construction, more than
$4.7 million for professional services, or more than $1 million for non-professional services and
goods;
Small prime contracts, which are contracts worth less than $2 million but more than $400,000 for
construction, less than $4.7 million but more than $400,000 for professional services, or less than
$1 million but more than $200,000 for non-professional services and goods; and
FINAL REPORT CHAPTER 7, PAGE 6
Micro prime contracts, which are contracts worth $400,000 or less for construction, $400,000 or
less for professional services, or $200,000 or less for non-professional services and goods.
As shown in Figure 7-5, the participation of small businesses for state agency micro prime contracts
(57.8%) was greater than for its small prime contracts (56.0%) and large prime contracts (52.7%). The
participation of microbusinesses for micro prime contracts (20.0%) was greater than for small prime
contracts (17.1%) and large prime contracts (11.6%).
The availability of other business groups differs by prime contract size:
The participation of minority-owned businesses considered together was greater in state agency
micro prime contracts (11.7%) than in its large prime contracts (11.3%) and small prime contracts
(8.6%). The participation of individual minority-owned business groups in state agency work
differed by prime contract size:
Asian-owned businesses exhibited the greatest level of participation in state agency large
prime contracts (9.5%) compared to Hispanic-owned businesses (1.3%), Black-owned
businesses (0.4%), and Native American-owned businesses (0.1%).
Asian-owned businesses exhibited the greatest level of participation in state agency small
prime contracts (5.8%) compared to Black-owned businesses (1.6%), Hispanic-owned
businesses (1.1%), and Native American-owned businesses (6.4%).
Asian-owned businesses exhibited the greatest level of participation in state agency micro
prime contracts (6.0%) compared to Black-owned businesses (3.9%), Hispanic-owned
businesses (1.4%), and Native American-owned businesses (0.4%).
The participation of White woman-owned businesses was greater in state agency micro prime
contracts (9.2%) than in its small prime contracts (6.4%) and its large prime contracts (2.9%).
The participation of SDV-owned businesses was greater in state agency micro prime contracts
(1.3%) and small prime contracts (1.3%) than its large prime contracts (0.6%).
Figure 7-5. Contract Size
Utilization analysis
results by prime contract size Business group Micro Small Large
Note: Business size
Numbers are rounded to the nearest one tenth of a percent Small business 57.8 % 56.0 % 52.7 %
and thus may not sum exactly to totals.
Microbusiness 20.0 % 17.1 % 11.6 %
Race and gender
Minority 11.7 % 8.6 % 11.3 %
Asian 6.0 % 5.8 % 9.5 %
Black 3.9 % 1.6 % 0.4 %
Hispanic 1.4 % 1.1 % 1.3 %
Native American 0.4 % 0.1 % 0.1 %
White woman 9.2 % 6.4 % 2.9 %
Veteran status
Service-disabled veteran 1.3 % 1.3 % 0.6 %
FINAL REPORT CHAPTER 7, PAGE 7
FINAL REPORT CHAPTER 7, PAGE 8
CHAPTER 8.
Disparity Analysis
BBC Research & Consulting (BBC) compared the percentage of contract and procurement dollars
Commonwealth of Virginia state agencies and higher education institutions (HEIs) (collectively referred
to as the Commonwealth) awarded to small businesses and microbusinesses, as well as minority-,
woman-, and service disabled veteran (SDV)-owned businesses (collectively referred to as small and
diverse businesses) during the study period (i.e., utilization or participation) with the percentage of
contract and procurement dollars one might expect the Commonwealth to award to those businesses
based on their availability for that work. 1, 2 The analysis focused on construction, professional services,
and non-professional services and goods work the Commonwealth awarded between July 1, 2019 and
June 30, 2024 (the study period). Chapter 8 presents the analysis in two parts:
A. Overview; and
B. Results.
A. Overview
BBC used the following formula to calculate a disparity index to help compare utilization and availability
for relevant business groups and different sets of contracts the Commonwealth awarded during the
study period:
$ of participation
Disparity Index ($) =
$ of availability
The disparity index indicates the proportion of the organization’s project dollars it awarded to a
business group for every $1.00 of that group’s availability for that work. A disparity index of $1.00
indicates parity between actual participation and availability. That is, the participation of a particular
business group is in line with its availability. A disparity index of less than $1.00 indicates a disparity
between participation and availability. That is, the group is considered to have been underutilized
relative to its availability. Finally, a disparity index of less than $0.80 indicates a substantial disparity
between participation and availability. That is, the group is considered to have been substantially
underutilized relative to its availability. Many courts have considered substantial disparities as
1 “Woman-owned businesses” refers to White woman-owned businesses. Information and results for businesses owned by women of
color are included along with those of businesses owned by men of color according to their corresponding race/ethnic groups.
2 BBC assessed results for small and diverse business groups regardless of certification status based on whether a business’ size or
ownership characteristics aligned with the corresponding certification criteria for that group. To estimate a business' ability to qualify as
a small business or microbusiness, BBC used a combination of primary and secondary data collection as well as data modeling. As part of
BBC's business surveys, business representatives were asked to report business size in terms of revenue and number of employees, and
to disclose any affiliates, parent companies, or subsidiaries. For non-certified utilized businesses with which BBC did not conduct a
business survey, we relied on business size and company structure information from Dun & Bradstreet (D&B). BBC used a predictive
regression model to correct for gaps and errors in D&B's business size information. For businesses that have affiliates, parent companies,
or subsidiaries, BBC used business size for the entire corporate structure, in terms of revenue and number of employees, to determine
business eligibility as a potential small business or microbusiness, rather than on the structure of ownership interests.
FINAL REPORT CHAPTER 8, PAGE 1
inferences of discrimination against particular business groups, and they often serve as justification for
organizations to use relatively aggressive measures—such as race- and gender-based measures—to
address corresponding barriers. 3
B. Results
BBC measured overall disparities between the participation and availability of small and diverse
businesses for all relevant contracts and procurements the Commonwealth awarded during the study
period considered together. We also measured disparities separately for various subsets of contracts
and procurements it awarded during the study period for small and diverse businesses. The businesses
that were counted as small businesses, microbusinesses, and SDV-owned businesses were not exclusive
of other business categories. For example, if a business was owned by a Black person who was also an
SDV, that business would have been counted as both a Black-owned business and an SDV-owned
business. In addition, all microbusinesses are automatically considered to also be small businesses.
There is a red box at the disparity index level of $0.80 and below, which indicates a substantial disparity.
We provide detailed disparity analysis results in Appendix D.
1. Overall. Figure 8-1 presents disparity indices for small and diverse businesses for all relevant prime
contracts and subcontracts state agencies awarded during the study period. 4 As shown in Figure 8-1,
small businesses exhibited a disparity index of $0.67 for all relevant contracts and procurements state
agencies awarded during the study period, indicating a disparity where they awarded $0.67 to small
businesses for every $1.00 one might expect state agencies to award to those businesses based on their
availability for state agency work. Microbusinesses exhibited a disparity index of $0.46 for all state
agency work considered together.
Minority-owned businesses considered together exhibited a disparity index of $0.46 for all relevant
contracts and procurements state agencies awarded during the study period. Asian-owned businesses
(disparity index of $0.79), Black-owned businesses (disparity index of $0.16), Hispanic-owned
businesses (disparity index of $0.24), and Native American-owned businesses (disparity index of $0.24)
exhibited substantial disparities for state agency work.
White woman-owned businesses exhibited a substantial disparity (disparity index of $0.30) for all
relevant contracts and procurements state agencies awarded during the study period. SDV-owned
businesses also exhibited a substantial disparity (disparity index of $0.11) for state agency work.
3 For example, see Rothe Development Corp v. U.S. Dept of Defense, 545 F.3d 1023, 1041; Engineering Contractors Association of South
Florida, Inc. v. Metropolitan Dade County, 122 F.3d at 914, 923 (11th Circuit 1997); and Concrete Works of Colo., Inc. v. City and County of
Denver, 36 F.3d 1513, 1524 (10th Cir. 1994).
4 BBC examined study results for state agencies separately from results for HEIs. We present disparity analysis results for all
Commonwealth work (state agencies and HEIs considered together) in Appendix D.
FINAL REPORT CHAPTER 8, PAGE 2
Figure 8-1.
Overall disparity analysis results for state agency work
$2.00
$1.80
$1.60
$1.40
$1.20
Disparity index
$1.00
$0.79
$0.80 $0.67
$0.60 $0.46 $0.46
Substantial
$0.40 $0.30
$0.24 $0.24
$0.16
$0.20 $0.11
$0.00
Note: For more detail see Figure D-1 in Appendix D.
BBC also measured overall disparities of small and diverse businesses for tier 2 and tier 3 HEI contracts
and procurements. 5 Tier 2 HEIs have a memorandum of understanding with the Commonwealth that
allows them contracting and procurement autonomy in two of the following three areas: procurement,
capital outlay construction, and technology. In contrast, tier 3 HEIs have complete autonomy in their
contracting and procurement. As shown in Figure 8-2, overall disparity indices of different business
groups for tier 2 HEI work are as follows:
Small businesses exhibited a substantial disparity with a disparity index of $0.77.
Microbusinesses exhibited a substantial disparity with a disparity index of $0.32.
Minority-owned businesses considered together exhibited a substantial disparity with a disparity
index of $0.43 for all tier 2 HEI work. There were some differences in disparities when considering
each individual minority-owned business group separately:
Asian-owned businesses (disparity index of $0.20), Hispanic-owned businesses (disparity
index of $0.18), and Native American-owned businesses (disparity index of $0.65) exhibited
substantial disparities for tier 2 HEI work.
5 Tier 2 HEIs are Christopher Newport University, Longwood University, Norfolk State University, Old Dominion University, Radford
University, University of Mary Washington, Virginia Community College System, Virginia Military Institute, and Virginia State University.
Tier 3 HEIs are the University of Virginia, Virginia Polytechnic Institute and State University, Virginia Commonwealth University, James
Madison University, George Mason University, and the College of William & Mary.
FINAL REPORT CHAPTER 8, PAGE 3
Black-owned businesses exhibited a disparity, though not a substantial disparity, for tier 2 HEI
work (disparity index of $0.87).
White woman-owned businesses exhibited a substantial disparity with a disparity index of $0.65.
SDV-owned businesses exhibited a substantial disparity with a disparity index of $0.19.
The overall disparity indices of different business groups for tier 3 HEI work are as follows:
Small businesses exhibited a disparity, though not a substantial disparity (disparity index of $0.85).
Microbusinesses exhibited a substantial disparity (disparity index of $0.53).
Minority-owned businesses considered together exhibited a disparity index of $0.17 for all tier 3
HEI work. Each individual minority-owned business group exhibited substantial disparities for tier
3 HEI work, though there were some differences in disparities when considering each individual
minority-owned business group separately:
Asian-owned businesses exhibited a disparity index of $0.15.
Black-owned businesses exhibited a disparity index of $0.20.
Hispanic-owned businesses exhibited a disparity index of $0.18.
Native American-owned businesses exhibited a disparity index of $0.12.
White woman-owned businesses exhibited a substantial disparity with a disparity index of $0.49.
SDV-owned businesses exhibited a substantial disparity with a disparity index of $0.09.
Figure 8-2.
Overall disparity analysis results for HEI work
$2.00
Tier 2 HEIs Tier 3 HEIs
$1.80
$1.60
$1.40
$1.20
Disparity index
$1.00
$0.85
$0.80 $0.65 $0.65
$0.87
$0.77 $0.53
$0.60
$0.43
Substantial
$0.40 $0.32 $0.49
$0.17 $0.20 $0.20 $0.18 $0.19
$0.12
$0.20
$0.00 $0.15 $0.09
Note: For more detail see Figures D-30 and D-37 in Appendix D.
FINAL REPORT CHAPTER 8, PAGE 4
2. Industry. BBC examined disparity analysis results separately for the construction, professional
services, and non-professional services and goods work state agencies awarded during the study period
to determine whether outcomes for small and diverse businesses differed by industry. As shown in
Figure 8-3, small businesses exhibited substantial disparities for state agency professional services
(disparity index of $0.60) and non-professional services and goods work (disparity index of $0.64).
Microbusinesses exhibited substantial disparities for state agency professional services (disparity index
of $0.36) and non-professional services and goods work (disparity index of $0.37).
Disparity indices for other business groups differed by industry:
Minority-owned businesses considered together exhibited substantial disparities for state agency
construction (disparity index of $0.13), professional services (disparity index of $0.52), and non-
professional services and goods work (disparity index of $0.55). Disparity indices for individual
minority-owned business groups varied by industry:
All minority-owned business groups exhibited substantial disparities for state agency
construction work (Asian-owned businesses: disparity index of $0.09; Black-owned
businesses: disparity index of $0.11; Hispanic-owned businesses: disparity index of $0.15;
Native American-owned businesses: disparity index of $0.22).
Black-owned businesses (disparity index of $0.06), Hispanic-owned businesses (disparity
index of $0.22), and Native American-owned businesses (disparity index of $0.33) exhibited
substantial disparities for professional services work. Asian-owned businesses exhibited a
disparity for professional services work (disparity index of $0.84), but that disparity was not
substantial.
Black-owned businesses (disparity index of $0.41), Hispanic-owned businesses (disparity
index of $0.48), and Native American-owned businesses (disparity index of $0.12) exhibited
substantial disparities for non-professional services and goods work. In contrast, Asian-owned
businesses did not exhibit a disparity for non-professional services and goods work (disparity
index of $1.03)
White woman-owned businesses exhibited substantial disparities for state agency construction
(disparity index of $0.25), professional services (disparity index of $0.16), and non-professional
services and goods work (disparity index of $0.54).
SDV-owned businesses exhibited substantial disparities for state agency construction (disparity
index of $0.02), professional services (disparity index of $0.12), and non-professional services and
goods work (disparity index of $0.08).
FINAL REPORT CHAPTER 8, PAGE 5
Figure 8-3.
Disparity analysis results by industry
$2.00
Construction Prof. Svcs. Non-prof. svcs. and goods
$1.80
$1.60
$1.40
Disparity index
$1.20
$1.03
$1.00
$0.88 $0.87
$0.80
$0.64 $0.84
$0.55 $0.54
$0.60 $0.48
Substantial
$0.37 $0.41
$0.60
$0.40 $0.52 $0.33
$0.22 $0.25
$0.36 $0.13 $0.11 $0.22 $0.12
$0.20 $0.09
$0.15 $0.12 $0.16 $0.08
$0.00
$0.06 $0.02
Note: For more detail see Figures D-11, D-12, and D-13 in Appendix D.
3. Contract role. Many diverse businesses are small businesses, and thus often work as
subcontractors. Prime contracts are usually bigger in size than subcontracts, and project size is typically
inversely related to the participation and availability of small and diverse businesses for organization
work (i.e., the larger the project, the less the participation and availability of small and diverse
businesses). For these reasons, it is instructive to examine disparity results separately for state agency
prime contracts and subcontracts. As shown in Figure 8-4, small businesses exhibited a substantial
disparity for state agency prime contracts (disparity index of $0.61) but not for its subcontracts
(disparity index of $0.87). Microbusinesses exhibited substantial disparities for state agency prime
contracts (disparity index of $0.34) but not for its subcontracts (disparity index of $0.89).
Disparity indices for other business groups differed by contract role:
Minority-owned businesses considered together exhibited substantial disparities for state agency
prime contracts (disparity index of $0.47) and subcontracts (disparity index of $0.42). Disparity
indices for individual minority-owned business groups differed by contract role:
Asian-owned businesses (disparity index of $0.77), Black-owned businesses (disparity index
of $0.13), Hispanic-owned businesses (disparity index of $0.31), and Native American-owned
businesses (disparity index of $0.32) exhibited substantial disparities for state agency prime
contracts.
FINAL REPORT CHAPTER 8, PAGE 6
Black-owned businesses (disparity index of $0.25), Hispanic-owned businesses (disparity
index of $0.08), and Native American-owned businesses (disparity index of $0.01) exhibited
substantial disparities for state agency subcontracts. Asian-owned businesses exhibited a
disparity for subcontracts (disparity index of $0.91), but that disparity was not substantial.
White woman-owned businesses exhibited substantial disparities for state agency prime contracts
(disparity index of $0.30) and subcontracts (disparity index of $0.34).
SDV-owned businesses exhibited substantial disparities for state agency prime contracts (disparity
index of $0.11) and subcontracts (disparity index of $0.11).
Figure 8-4.
Disparity analysis results by contract role
$2.00
Prime Sub
$1.80
$1.60
$1.40
Disparity index
$1.20
$0.91
$1.00 $0.89
$0.87
$0.80
$0.61
$0.77
$0.60 $0.47
Substantial
$0.34 $0.31 $0.32 $0.34
$0.40 $0.25
$0.42
$0.20 $0.11
$0.08 $0.30
$0.01
$0.00 $0.13
$0.11
Note: For more detail see Figures D-14 and D-15 in Appendix D.
4. Prime contract size. BBC examined the participation of small and diverse businesses separately for
three different size categories of prime contracts state agencies awarded during the study period:
Large prime contracts, which are contracts worth more than $2 million for construction, more than
$4.7 million for professional services, or more than $1 million for non-professional services and
goods;
Small prime contracts, which are contracts worth less than $2 million but more than $400,000 for
construction, less than $4.7 million but more than $400,000 for professional services, or less than
$1 million but more than $200,000 for non-professional services and goods; and
Micro prime contracts, which are contracts worth $400,000 or less for construction, $400,000 or
less for professional services, or $200,000 or less for non-professional services and goods.
FINAL REPORT CHAPTER 8, PAGE 7
As shown in Figure 8-4, small businesses exhibited substantial disparities on state agency large
(disparity index of $0.61), small (disparity index of $0.60), and micro prime contracts (disparity index of
$0.62). Microbusinesses also exhibited substantial disparities on state agency large (disparity index of
$0.36), small (disparity index of $0.29), and micro prime contracts (disparity index of $0.33).
Disparity results for other business groups differed by prime contract size:
Minority-owned businesses considered together exhibited substantial disparities on state agency
large (disparity index of $0.50), small (disparity index of $0.33), and micro prime contracts
(disparity index of $0.50). Disparity indices for individual minority-owned business groups differed
by prime contract size:
Black-owned businesses (disparity index of $0.06), Hispanic-owned businesses (disparity
index of $0.31), and Native American-owned businesses (disparity index of $0.23) exhibited
substantial disparities for large prime contracts. Asian-owned businesses exhibited a disparity
for large prime contracts (disparity index of $0.80), but that disparity was not substantial.
Asian-owned businesses (disparity index of $0.55), Black-owned businesses (disparity index
of $0.14), Hispanic-owned businesses (disparity index of $0.29), and Native American-owned
businesses (disparity index of $0.30) exhibited substantial disparities for small prime
contracts.
Black-owned businesses (disparity index of $0.35), Hispanic-owned businesses (disparity
index of $0.35), and Native American-owned businesses (disparity index of $0.53) exhibited
substantial disparities for micro prime contracts. Asian-owned businesses exhibited a
disparity for micro prime contracts (disparity index of $0.80), but that disparity was not
substantial.
White woman-owned businesses exhibited substantial disparities on state agency large (disparity
index of $0.21), small (disparity index of $0.43), and micro prime contracts (disparity index of
$0.59).
SDV-owned businesses exhibited substantial disparities on state agency large (disparity index of
$0.08), small (disparity index of $0.20), and micro prime contracts (disparity index of $0.27).
FINAL REPORT CHAPTER 8, PAGE 8
Figure 8-5.
Disparity analysis results by prime contract size
$2.00
Large Small Micro
$1.80
$1.60
$1.40
$1.20
Disparity index
$1.00
$0.80
$0.80 $0.80
$0.62 $0.59
$0.50 $0.53
$0.60 $0.61
Substantial
$0.60 $0.36 $0.50 $0.35 $0.35
$0.40 $0.55 $0.30 $0.27
$0.33 $0.31 $0.43
$0.33 $0.14
$0.20 $0.29 $0.29
$0.23 $0.08
$0.21
$0.00 $0.06 $0.20
Note: For more detail see Figures D-16, D-17, and D-18 in Appendix D.
6. Comparisons to the 2020 Commonwealth of Virginia Disparity Study. BBC last
conducted a disparity study for the Commonwealth in 2020. It is instructive to compare disparity
indices for minority- and woman-owned businesses in state agency work between the 2020 and 2025
disparity studies to assess whether outcomes are improving for those businesses in state agency work
over time. Figure 8-6 presents overall disparity indices for minority- and woman-owned business
groups for all relevant state agency projects considered together from the 2020 disparity study and
the 2025 disparity study. 6
a. Methodological considerations. Since the 2020 disparity study was conducted, BBC made two
relevant changes in methodology:
The utilization analyses in the 2025 study focused only on businesses that had a location in the
relevant geographic market area (RGMA). In the 2020 study, BBC included businesses outside of
the RGMA as part of the utilization analysis.
As part of the 2025 study, BBC used Markov Chain Monte Carlo (MCMC) simulations to improve the
accuracy of the availability analysis to better account for random error or potential for unintended
bias (see Chapter 6 for more details on MCMC analyses). The availability estimates reported in
6 BBC did not include disparity study results for small businesses, microbusinesses, or SDV-owned businesses as part of the 2020
disparity study.
FINAL REPORT CHAPTER 8, PAGE 9
Chapter 6 are the availability estimates we observed adjusted for results from the MCMC process.
The 2020 disparity study did not include an MCMC analysis as part of the availability analysis.
To more accurately assess changes in disparity results for minority- and woman-owned businesses
since 2020, BBC presents 2025 disparity results in Figure 8-6 based on availability estimates that have
not undergone the MCMC analysis and utilization results that include businesses both within and
outside the RGMA.
b. Results. As shown in Figure 8-6, minority-owned businesses exhibited smaller disparities in 2025
(disparity index of $0.44) than in 2020 (disparity index of $0.37). Disparity analysis results differed by
individual minority-owned business group and study year:
Asian-owned businesses exhibited a smaller disparity in 2025 (disparity index of $0.62) than in
2020 (disparity index of $0.17).
Black-owned businesses exhibited a larger disparity in 2025 (disparity index of $0.20) than in 2020
(disparity index of $0.49).
Hispanic-owned businesses exhibited a larger disparity in 2025 (disparity index of $0.31) than in
2020 (disparity index of $0.62).
Native American-owned businesses exhibited a smaller disparity in 2025 (disparity index of $0.31)
than in 2020 (disparity index of $0.05).
White woman-owned businesses exhibited a smaller disparity in 2025 (disparity index of $0.39) than in
2020 (disparity index of $0.50).
FINAL REPORT CHAPTER 8, PAGE 10
Figure 8-6.
Overall disparity indices from 2020 and 2025 disparity studies
Minority Asian Black Hispanic Native American White woman
$2.00
2025 2020
$1.80
$1.60
$1.40
$1.20
Disparity index
$1.00
$0.80
$0.62 $0.62
$0.60 $0.49 $0.50
$0.44
Substantial
$0.40 $0.31 $0.31
$0.17 $0.20
$0.37 $0.39
$0.20 $0.05
$0.00
FINAL REPORT CHAPTER 8, PAGE 11
CHAPTER 9.
Business Programs
Chapter 9 provides an overview of the business programs Commonwealth of Virginia state agencies and
higher education institutions (HEIs) (collectively referred to as the Commonwealth) use to encourage the
participation of small businesses and microbusinesses as well as minority-, woman-, and service
disabled veteran (SDV)-owned businesses (collectively referred to as small and diverse businesses) in
Commonwealth contracting and procurement. BBC Research & Consulting (BBC) reviewed the
Commonwealth’s program measures in two parts:
A. Program overview; and
B. Program measures.
A. Program Overview
The Commonwealth’s Department of Small Business and Supplier Diversity (SBSD) implements the
Small, Women-owned, and Minority-owned Business (SWaM) Program to encourage the participation of
small businesses and microbusinesses, as well as minority-, woman-, and SDV-owned businesses in
Commonwealth contracting. The following types of certification are available for eligible businesses as
part of the SWaM Program: 1
Small business certification for businesses that, together with affiliates, have 250 or fewer
employees, or average annual gross receipts of $10 million or less over the previous three years;
Microbusiness certification for businesses that, together with affiliates, have 25 or fewer
employees, or average annual gross receipts of $3 million or less over the previous three years;
Minority-owned Business Enterprise certification for businesses that are at least 51 percent owned
and controlled by one or more minorities who are United States citizens or legal resident aliens;
Woman-owned Business Enterprise certification for businesses that are at least 51 percent owned
and controlled by one or more women who are United States citizens or legal resident aliens; or
SDV-owned business certification for businesses that are at least 51 percent owned and controlled
by one or more SDVs who are certified as such by the Virginia Department of Veteran Services.
The SWaM Program is comprised entirely of race- and gender-neutral measures. Race- and gender-
neutral measures are designed to increase the participation of certain groups of businesses in
Commonwealth contracts and procurements, regardless of the race or gender of the owners. In contrast,
race- and gender-based measures are designed to specifically encourage the participation of minority-
and woman-owned businesses, respectively, in an organization’s contracting (e.g., using minority- or
1 In 2025, the Commonwealth added a category of certification for military families. To be eligible for this certification category, a
business must be at least 51 percent owned and controlled by service members, veterans, or dependents of service members or veterans.
Because this certification category was not active during the study period, it was not included as part of the disparity study.
FINAL REPORT CHAPTER 9, PAGE 1
woman-owned business participation goals in awarding individual projects). The Commonwealth does
not currently use race- or gender-based measures as part of its implementation of the SWaM Program.
B. Program Measures
The Commonwealth uses various race- and gender-neutral measures to encourage the participation of
small and diverse businesses in its contracting and procurement. Those measures include:
Overall aspirational SWaM goal;
SWaM expenditure dashboard;
Subcontractor plans;
Small and microbusiness set asides;
Access to capital;
Business development programs;
Partnerships; and
Outreach efforts.
1. Overall aspirational SWaM goal. The Governor sets an overall aspirational goal for the
participation of SWaM-certified small businesses in Commonwealth contracts and procurements. The
current overall aspirational goal was set in 2014 at 42 percent. For capital outlay construction work, the
Commonwealth has also established a 50 percent subcontracting goal for SWaM-certified small
businesses. Each state agency and HEI is expected to use various race- and gender-neutral measures to
help the Commonwealth meet the overall aspirational goal each year and is required to submit annual
SWaM Procurement Plans to SBSD detailing the strategies they will use to increase the participation of
SWaM-certified small businesses in their contracting and procurement.
2. SWaM expenditure dashboard. SBSD maintains a SWaM Expenditure Dashboard as a centralized
transparency and management tool to track and analyze how Commonwealth contracting and
procurement supports SWaM-certified businesses. The dashboard aggregates spend data from state
agencies and HEIs to show SWaM utilization by agency, category, fiscal year, and business type, and to
measure progress toward the Commonwealth’s 42 percent aspirational SWaM goal. Agencies use the
dashboard to monitor performance, identify gaps, and inform their annual SWaM plans, while
policymakers and the public use it to promote accountability, data-driven decision-making, and
continuous improvement in inclusive contracting and procurement.
3. Subcontractor plans. To increase SWaM business participation in Commonwealth contracts and
procurements, the Commonwealth requires that prime contractors submit subcontracting plans as part
of their bids, quotes, or proposals for all contracts and procurements worth more than $100,000. The
subcontractor plans indicate which subcontractors prime contractors plan on using as part of the work,
and which of those subcontractors are certified as SWaM businesses. Commonwealth agencies review
subcontractor plans during the contract and procurement award process.
4. Small and microbusiness set asides. To further encourage the participation of small businesses
and microbusinesses in Commonwealth work, the Commonwealth sets aside small purchases—
FINAL REPORT CHAPTER 9, PAGE 2
construction and non-professional services and goods contracts and procurements valued up to
$100,000 and professional services contracts valued up to $80,000—for preferential award to certified
small businesses and microbusinesses. The organization also sets aside contracts and procurements
valued up to $10,000 for preferential award to certified microbusinesses. Any business may bid on these
set-aside contracts, and award of these contracts to certified small businesses and microbusinesses is
contingent upon the price being fair and reasonable, and not exceeding 5 percent of the lowest
responsive and responsible non-certified bidder.
5. Access to capital. The Virginia Small Business Financing Authority (VSBFA) offers loans that are
available to certified SWaM businesses. The loans can be indirect, for which VSBFA provides collateral or
otherwise guarantees loans that banks offer small businesses. Alternatively, the loans can be direct
when banks are not willing to take on particular loans. For example, microbusinesses can borrow up to
$25,000 at relatively low interest rates, childcare facilities can obtain financing, and companies with
highly specialized collateral, such as breweries, can qualify for loans. There are also grant programs,
including the Small Business Investment Grant Fund that guarantees a 25 percent return on investment
for those who invest in small businesses, primarily to family and friends of the owner.
6. Business development programs. SBSD provides workshops, technical assistance, and
networking events to SWaM-certified and other businesses in Virginia.
a. Workshops. SBSD offers several workshops and webinars throughout the year, including SWaM Labs,
which are held monthly and illustrate the benefits of certification to small businesses in addition to
assisting business owners in submitting SWaM certification applications, as well as other SWaM
certification application assistance workshops and certification information sessions. SBSD also hosts
workshops and webinars on a variety of other topics, including Contract Basics 101 workshops,
Introduction to State Government Contracting workshops, and Big Opportunities – Bold Partnerships
workshops, which focus on marketing to HEIs. In addition, SBSD hosts specialized workshops in
different regions of the state if there is a need among businesses in that region for help developing
unique skills or information.
b. Technical assistance. The Commonwealth offers one-on-one business counseling to small business
owners. Those sessions are focused on developing businesses’ growth plans, but SBSD also shares other
resources to help businesses find more contracting opportunities in Virginia. SBSD also offers the
Scaling4Growth Program, which is a six-month master’s in business administration course for SWaM-
certified business owners. There are strict requirements for enrolling, and graduates receive assistance
and mentorship for three years after the program.
c. Networking. SBSD hosts a variety of events to help vendors form relationships with Commonwealth
agencies and prime contractors, including an annual Construction Contractors Conference, a SWaM Tech
Summit, and various business partnership networking events. The Virginia Association of State College
and University Purchasing Professionals (VASCUPP) hosts an annual networking, educational, and
professional development event called “SWaMfest.” In addition, most VASCUPP institutions hold SWaM
vendor fairs and work with prime contractors to host pre-construction SWaM events.
d. Business One Stop. SBSD operates a Business One Stop platform, which is a centralized online
resource platform designed to help aspiring entrepreneurs and business owners plan, launch, register,
and grow their businesses in the state. The platform provides a one-stop gateway to key information,
FINAL REPORT CHAPTER 9, PAGE 3
resources, and links, including business registration tools, guidance on required permits and licenses,
connections to state and federal agencies, and access to business counseling and development support,
so that users can more easily navigate the process of starting and operating a business in Virginia. Its
purpose is to simplify and organize essential steps for business formation and expansion in a single
place, making it easier for new and existing businesses to find the information and assistance they need.
e. Virginia Handbook for Success. SBSD, along with VSBFA and the Virginia Innovation Partnership
Corporation, developed the Virginia Handbook for Success, which is a comprehensive guide designed to
help small businesses, startups, entrepreneurs, and innovators in the state access the full range of
resources available to support planning, launching, growing, and scaling their businesses. The handbook
compiles hundreds of programs, funding opportunities, support services, and step-by-step guidance
tailored to different business stages, industries, and demographic groups and is periodically updated to
reflect new and evolving opportunities across the Commonwealth.
7. Partnerships. SBSD partners with various organizations to promote contracting and procurement
opportunities to SWaM businesses. Some, like the Small Business Development Centers and the
Procurement Technical Assistance Center, provide resources to small businesses. Others promote SBSD
events to their members, including the Hispanic, Asian, and African American Chambers of Commerce.
SBSD also works with the Federal Reserve to promote the Small Business Credit Survey in exchange for
specialized reports about Virginia businesses.
8. Outreach efforts. SBSD advertises its events through various channels. Partners send information
about SBSD events to their networks, SBSD emails certified businesses through Constant Contact, and
SBSD makes frequent updates to its events page.
FINAL REPORT CHAPTER 9, PAGE 4
CHAPTER 10.
Analysis of the Business Community
BBC Research & Consulting (BBC) collected detailed information about businesses that are potentially
available for the contracts and procurements Commonwealth of Virginia state agencies award and about
the businesses that performed work for the organization during the study period. That information may
be valuable to the Commonwealth in tailoring its implementation of the Small, Women-owned, and
Minority‐owned Business (SWaM) Program to the specific characteristics of businesses operating in the
relevant geographic market area (RGMA). 1 Moreover, developing an extensive understanding of the
characteristics of the local business community beyond the race and gender of business owners will help
the Commonwealth strengthen the race- and gender-neutral inclusion measures it uses and help it better
meet the needs of economically disadvantaged businesses—including many businesses owned by
minorities, women, and service-disabled veterans (SDVs)—in the marketplace.
A. Available Businesses
BBC conducted surveys with hundreds of local businesses to understand the different types of
businesses potentially available for state agency contracts, as part of which we collected extensive
information on the characteristics of each business. We used that information to provide the
Commonwealth with a better understanding of the characteristics of the businesses in the marketplace
that are ready, willing, and able to compete for and perform work on the contracts it awards.
1. General characteristics. Figure 10-1 presents descriptive characteristics of all businesses BBC
considered potentially available for state agency contracts. We present the following information for all
available businesses considered together as well as separately for non minority-/non woman-owned
businesses and for minority- and woman-owned businesses:
Percentage of businesses that are minority- or woman-owned;
Median annual revenue;
Median business age;
Median bid capacity (i.e., largest contracts businesses report being able to perform);
Percentage of businesses interested in prime contracting work;
Percentage of businesses interested in subcontracting work; and
Percentage of businesses that participated in state agency work.
1 BBC identified the RGMA as the state of Virginia based on the locations of the businesses to which the Commonwealth awarded the vast
majority of its contracting dollars during the study period. See Chapter 5 for more information about how we determined the RMGA.
FINAL REPORT CHAPTER 10, PAGE 1
As shown in Figure 10-1:
Overall, a larger percentage of businesses potentially available for state agency contracts are non
minority-/non woman-owned (62.9%) compared to minority- or woman-owned (37.1%).
Non minority-/non woman-owned businesses generally earn more in annual revenue
(median = $1.1 million) than minority- and woman-owned businesses do (median = $500,000) and
that difference is statistically significant (t = 5.65; p < 0.01).
Non minority-/non woman-owned businesses are generally older (median = 24 years old) than
minority- and woman-owned businesses (median = 15 years old).
Non minority-/non woman-owned businesses can perform contracts of the same size (median =
$750,000) that minority- and woman-owned businesses can perform (median = $750,000).
The majority of available businesses, regardless of the race or gender of the owner(s), are
interested in prime contract work (non-minority/non-woman = 73.0%; minority and woman =
71.8%). Similarly, the vast majority of available businesses, regardless of the race or gender of the
owners, are interested in subcontract work (non-minority/non-woman = 86.3%; minority and
woman = 90.1%).
Non minority-/non woman-owned businesses available for state agency contracts participated in
Commonwealth work at a higher rate (24.6%) than did minority- and woman-owned businesses
(16.8%), and that difference is statistically significant (χ2 = 17.32; p < 0.01).
Figure 10-1.
General characteristics of potentially available businesses
Business Group
Non minority-owned/ Minority-owned/
Characteristic All Non woman-owned woman-owned
Ownership — 62.9% 37.1%
Revenue (median) $831K $1.1M $500K
Age (median) 20 24 15
Capacity (median) $750K $750K $750K
Prime contractor (%) 72.6% 73.0% 71.8%
Subcontractor (%) 87.7% 86.3% 90.1%
Worked with the Commonwealth 21.7% 24.6% 16.8%
Notes: n = 1,255 for race/gender; n = 1,156 for capacity; n = 911 for prime contract interest; n = 1,101 for subcontract interest; n = 1176 for age; n = 1047 for
revenue.
Numbers rounded to nearest one-tenth of one percent and thus may not sum exactly to 100 percent.
2. Business size. An important aspect of most contracting inclusion programs is to support socially
and economically disadvantaged businesses as part of organizations’ contracting processes. A common
indicator of economic disadvantage is business revenue, on which BBC collected information from
businesses potentially available for state agency work. Furthermore, among available businesses,
FINAL REPORT CHAPTER 10, PAGE 2
minority- and woman-owned businesses tend to earn less in annual revenues than non minority-/non
woman-owned businesses do, as presented in the General Characteristics section above. We explored
annual revenues among businesses potentially available for state agency work further by examining the
distributions of available businesses based on their annual revenues. We analyzed that information for
all available businesses together and separately for minority- and woman-owned businesses.
a. All businesses. Figure 10-2 presents the distribution of the 1,020 available businesses for which BBC
had annual revenue data. 2 The dashed lines represent the points at which 80 percent and 50 percent of
businesses reported revenues of that amount or less. As shown in Figure 10-2, 80 percent of all the
businesses BBC identified as available for state agency work reported annual revenues of $4 million or
less, and 50 percent reported revenues of $831,000 or less.
Figure 10-2.
Distribution of potentially available owned businesses based on their reported raw
revenues
More than $40 M 2%
$35 M -$40 M 0%
$30 M - $35 M 0%
$25 M - $30 M 1%
$20 M - $25 M 1%
$18 M - $20 M 1%
Annual revenue (millions)
$16 M - $18 M 0%
$14 M - $16 M 1%
$12 M - $14 M 0%
$10 M - $12 M 1%
$9 M - $10 M 2%
$8 M - $9 M 0%
$7 M - $8 M 2%
$6 M - $7 M 1%
$5 M - $6 M 2% ~80% of businesses
$4 M - $5 M 5% ($4 M revenue or less)
$3 M - $4 M 4%
$2 M - $3 M 7% ~50% of businesses
$1 M - $2 M 14% ($831 K revenue or less)
$0.5 M - $1 M 11%
Up to $0.5 M 44%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
% businesses
Notes: n = 1,020.
Numbers rounded to nearest whole percent and thus may not sum exactly to 100 percent.
b. Minority- and woman-owned businesses. BBC separately examined the distribution of the 355
available minority- and woman-owned businesses for which BBC obtained annual revenue data. As
shown in Figure 10-3, available minority- and woman-owned businesses generally showed smaller
annual revenues than all available businesses considered together. Approximately 80 percent of
minority- and woman-owned businesses available for state agency work reported annual revenues of
$2.5 million or less (compared to $4 million or less for all businesses), and approximately 50 percent of
them reported annual revenues of $500,000 or less (compared to $831,000 or less for all businesses).
Moreover, a larger percentage of minority- and woman-owned businesses reported annual revenues of
2 BBC obtained business revenue data through availability surveys, revenue modeling, certification information from the
Commonwealth’s SWaM business directory, and other publicly available resources.
FINAL REPORT CHAPTER 10, PAGE 3
$500,000 or less (54.9%)—the smallest revenue category—than did all businesses considered together
(43.5%), but that difference is not statistically significant (t = 1.16; p < 0.24).
Figure 10-3.
Distribution of potentially available minority- and woman-owned businesses
based on their reported raw revenues
More than $40 M 2%
$35 M -$40 M 0%
$30 M - $35 M 0%
$25 M - $30 M 0%
$20 M - $25 M 0%
$18 M - $20 M 1%
Annual revenue (millions)
$16 M - $18 M 0%
$14 M - $16 M 1%
$12 M - $14 M 0%
$10 M - $12 M 1%
$9 M - $10 M 1%
$8 M - $9 M 0%
$7 M - $8 M 1%
$6 M - $7 M 1%
$5 M - $6 M 2%
$4 M - $5 M 3%
$3 M - $4 M ~80% of businesses
3% ($2.5 M revenue or less)
$2 M - $3 M 4%
$1 M - $2 M 12% ~50% of businesses ($500 K
$0.5 M - $1 M 11% revenue or less)
Up to $0.5 M 55%
0% 10% 20% 30% 40% 50% 60%
% businesses
Notes: n = 355.
Numbers rounded to nearest whole percent and thus may not sum exactly to 100 percent.
3. Business age. Businesses can vary considerably in age, and it is likely that younger businesses need
more support to compete for or perform work on government contracts than older businesses. Among
available businesses, minority- and woman-owned businesses tend to be younger than
non minority-/non woman-owned businesses, as presented in the General Characteristics section above.
To further explore the age of businesses potentially available for state agency contracts, BBC examined
the distribution of available businesses based on how many years they reported being in business. We
analyzed that information for all available businesses considered together and separately for available
minority- and woman-owned businesses.
a. All businesses. Figure 10-4 presents the distribution of the 1,173 businesses for which BBC had
business age information that we gathered as part of availability surveys or from publicly available
sources. As shown in Figure 10-4, approximately 80 percent of businesses available for state agency
work reported an age of 39 years or younger, and approximately 50 percent of them reported an age of
20 years or younger.
b. Minority- and woman-owned businesses. Figure 10-5 presents the distribution of the 375 minority-
and woman-owned businesses for which BBC had business age information. Minority- and woman-
owned businesses are generally younger than all businesses considered together. Approximately 80
percent of minority- and woman-owned businesses available for state agency work reported an age of
29 years or younger (compared to 39 years or younger for all businesses), and 50 percent of them
FINAL REPORT CHAPTER 10, PAGE 4
reported an age of 15 years or younger (compared to 20 years or less for all businesses). Moreover, a
substantially larger percentage of minority- and woman-owned businesses reported an age of 5 years or
younger (16.2%)—the youngest age category—than did all businesses considered together (10.1%),
and that difference is statistically significant (χ2 = 17.51; p < 0.01).
Figure 10-4.
Distribution of potentially available businesses based on their reported ages
Older than 50 yrs. 10.5%
46 - 50 yrs. 3.1%
41 - 45 yrs. 4.6% ~80% of businesses
(39 years or younger)
36 - 40 yrs. 6.0%
Business age (years)
31 - 35 yrs. 6.5%
26 - 30 yrs. 8.6%
21 - 25 yrs. 10.4% ~50% of businesses
(20 years or younger)
16 - 20 yrs. 10.9%
11 - 15 yrs. 14.1%
6 - 10 yrs. 14.9%
Up to 5 yrs. 10.1%
0% 2% 4% 6% 8% 10% 12% 14% 16%
% businesses
Notes: n = 1,173.
Numbers rounded to nearest whole percent and thus may not sum exactly to 100 percent.
Figure 10-5.
Distribution of potentially available minority- and woman-owned businesses based
on their reported ages
Older than 50 yrs. 2.9%
46 - 50 yrs. 1.1%
41 - 45 yrs. 2.4%
36 - 40 yrs. 4.0%
Business age (years)
31 - 35 yrs. 4.0% ~80% of businesses
(29 years or younger)
26 - 30 yrs. 8.8%
21 - 25 yrs. 10.4%
16 - 20 yrs. 10.4% ~50% of businesses
(15 years or younger)
11 - 15 yrs.
17.0%
6 - 10 yrs. 22.6%
Up to 5 yrs. 16.2%
0% 5% 10% 15% 20% 25%
% businesses
Notes: n = 375.
Numbers rounded to nearest whole percent and thus may not sum exactly to 100 percent.
FINAL REPORT CHAPTER 10, PAGE 5
4. Business capacity. As part of availability surveys, potentially available businesses reported the
largest prime contract, subcontract, or other piece of work for which they are able to compete or are
able to perform (i.e., capacity). BBC observed a correlation of 0.55 between annual revenue and capacity,
indicating that businesses with greater revenues tend to report greater capacities (t =20.57, p < 0.05).
However, among available businesses, minority- and woman-owned businesses can perform contracts
that tend to be the same size as the contracts non minority-/non woman-owned businesses can perform,
as presented in the General Characteristics section above. We examined the distributions of the
businesses available for state agency contracts based on their capacities.
a. All businesses. Figure 10-6 presents the distribution of business capacity among the 1,156 businesses
that provided that information as part of availability surveys. As shown in Figure 10-6, approximately 80
percent of businesses potentially available for state agency work reported that they could compete for
or perform contracts worth $5 million or less, and approximately 50 percent of them reported that they
could compete for or perform contracts worth $750,000 or less.
Figure 10-6.
Distribution of potentially available businesses based on their reported capacities
More than $100 M 1.6%
$75 M - $100 M 0.7%
$50 M - $75 M 0.7%
$40 M - $50 M 0.8%
$30 M - $40 M 1.0%
Business capacity (millions)
$25 M - $30 M 0.5%
$20 M - $25 M 0.6%
$15 M - $20 M 1.4%
$12 M - $15 M 2.7%
$9 M - $12 M 4.3%
$7 M - $9 M 3.3% ~80% of businesses
$5 M - $7 M ($5 M or less)
1.4%
$4 M - $5 M 4.2%
$3 M - $4 M 5.4%
$2 M - $3 M 2.9%
$1 M - $2 M 8.7% ~50% of businesses
15.0% ($750 K or less)
$0.5 M - $1 M
Up to $0.5 M 45.1%
0.0% 10.0% 20.0% 30.0% 40.0% 50.0%
% businesses
Notes: n = 1,156.
Numbers rounded to nearest one-tenth of one percent and thus may not sum exactly to 100 percent.
b. Minority- and woman-owned businesses. Figure 10-7 presents the distribution of the 439 minority-
and woman-owned businesses that reported their capacity for state agency contracts. As shown in
Figure 10-7, minority- and woman-owned businesses potentially available for state agency work
generally report the same median capacity as all available businesses considered together.
Approximately 80 percent of available minority- and woman-owned businesses reported capacities of
$4 million or less (compared to $5 million or less for all available businesses), and approximately 50
percent of them reported capacities of $750,000 or less (compared to $750,000 or less for all available
businesses).
FINAL REPORT CHAPTER 10, PAGE 6
Figure 10-7.
Distribution of potentially available minority- and woman-owned businesses based
on their reported capacities
More than $100 M 2.7%
$75 M - $100 M 0.8%
$50 M - $75 M 0.3%
$40 M - $50 M 0.5%
$30 M - $40 M 0.5%
Business capacity (millions)
$25 M - $30 M 0.3%
$20 M - $25 M 1.6%
$15 M - $20 M 1.3%
$12 M - $15 M 1.9%
$9 M - $12 M 4.0%
$7 M - $9 M 1.9%
$5 M - $7 M 0.3%
~80% of businesses
$4 M - $5 M 3.0% ($4 M or less)
$3 M - $4 M 5.4%
$2 M - $3 M 3.5%
$1 M - $2 M 7.3% ~50% of businesses
16.7% ($750 K or less)
$0.5 M - $1 M
Up to $0.5 M 48.1%
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%
% businesses
Notes: n = 439.
Numbers rounded to nearest one-tenth of one percent and thus may not sum exactly to 100 percent.
B. Utilized Businesses
BBC also assessed characteristics of the 3,765 businesses that participated in the 243,091 contracts
state agencies awarded during the study period. Figure 10-8 presents descriptive characteristics of the
businesses to which state agencies awarded work during the study period. We present the following
information for all businesses that participated in state agency work considered together as well as
separately for non minority-/non woman-owned businesses and for minority- and woman-owned
businesses:
Percentage of businesses that are minority- or woman-owned;
Percentage of contracts awarded;
Volume of contract dollars awarded;
Average volume of contract dollars awarded to each business;
Median annual revenue; and
Percentage of businesses located in the RGMA.
FINAL REPORT CHAPTER 10, PAGE 7
Figure 10-8.
Characteristics of businesses to which state agencies awarded contracts during the study period
Business Group
Non minority-owned/ Minority-owned/
Characteristic All Non woman-owned Woman-owned
Ownership — 80.2% 19.8%
Contracts awarded (%) — 64.9% 35.1%
Contract dollars awarded (%) — 86.7% 13.3%
Dollars per business (avg.) $4.6M $4.8M $3.4M
Revenue (median) $2.2M $2.3M $1.8M
Location in Virginia 82.5% 62.7% 19.8%
Notes: n = 3,765 businesses; n = 243,091 contracts worth $17.15 billion.
Numbers rounded to nearest one-tenth of one percent and thus may not sum exactly to 100 percent.
As shown in Figure 10-8:
Of the 3,765 businesses utilized during the study period, 80.2 percent of businesses were non
minority-/ non woman-owned businesses and 19.8 percent were minority- and woman-owned
businesses.
During the study period, state agencies awarded 64.9 percent of its contracts to non minority-/non
woman-owned businesses and 35.1 percent to minority- and woman-owned businesses.
State agencies awarded 86.7 percent of the dollars associated with its contracts to non
minority-/non woman-owned businesses and 13.3 percent to minority- and woman-owned
businesses.
On average, state agencies awarded $3.4 million in contract dollars to each minority- and woman-
owned business that participated in its work during the study period compared to 4.8 million to
each non minority-/non woman-owned business, but that difference was not statistically
significant (t = 0.87; p < 0.39). 3
On average, non minority-/non woman-owned businesses that participated in state agency
contracts exhibited greater annual revenues (median = $2.3 million) than minority- and woman-
owned businesses that participated in state agency contracts ($1.8 million), and that difference was
statistically significant (t = 2.53; p < 0.01). 4
Of the 3,765 businesses utilized during the study period, 82.5 percent were located in Virginia. Of
the businesses that received state agency contracts, 62.7 percent were non minority-/non woman-
owned businesses located in Virginia and 19.8 percent were minority- and woman-owned
businesses located in Virginia.
3 For average contract award amount, BBC transformed each raw data point by its natural log before conducting two-tailed t-tests.
4 For revenue, BBC transformed each raw data point by its natural log before conducting two-tailed t-tests.
FINAL REPORT CHAPTER 10, PAGE 8
1. Business concentration. During the study period, state agencies awarded 241,364 contracts and
procurements in construction, professional services, and non-professional services and goods—totaling
$3.2 billion—to 3,626 different businesses. A common finding in disparity study research is that
government organizations tend to award a disproportionate percentage of their contracts and contract
dollars to relatively few businesses. BBC conducted a concentration analysis of the contracts and
contract dollars state agencies awarded during the study period to assess whether they were awarded
to a relatively large number of businesses or whether they were heavily concentrated among a relatively
small number of businesses.
BBC began the analysis by identifying all contracts state agencies awarded during the study period that
were worth less than $1 million. We reasoned that there may only be certain vendors that have the
capacity to win and perform contracts worth $1 million or more, and most of those businesses are
non minority-/non woman-owned businesses. Thus, by considering relatively large contracts in the
analysis, we might have observed relatively high levels of business concentration, particularly for non
minority-/non woman-owned businesses, when business concentration may in fact be much less for
more typically sized state agency contracts.5 After limiting the dataset to contracts worth less than $1
million, we ordered all businesses in descending order based on how many contracts and contract
dollars state agencies awarded to them. We then assessed how many different businesses accounted for
80 percent and 50 percent of the total contracts and contract dollars state agencies awarded.
a. Contracts. Figure 10-9 presents a cumulative distribution of the 241,364 contracts worth less than
$1 million state agencies awarded to 3,626 different businesses during the study period. The elements of
Figure 10-9 represent the following information:
The horizontal axis presents the percentage of the different businesses to which state agencies
awarded contracts during the study period.
The vertical axis presents the percentage of contracts state agencies awarded to different
businesses.
The curve presents the cumulative percentage of different businesses that accounted for the
contracts state agencies awarded during the study period after BBC ordered businesses from the
one that was awarded the largest number of contracts during the study period to the one that was
awarded the least number of contracts.
The horizontal dashed lines indicate the number of contracts that represent 80 percent and 50
percent of the contracts state agencies awarded during the study period.
The vertical dashed lines indicate the percentage of businesses that accounted for 80 percent and
50 percent of the contracts state agencies awarded during the study period.
As shown in Figure 10-9, during the study period, state agencies awarded approximately 80 percent of
their contracts worth less than $1 million (193,100 contracts) to just 7.6 percent of businesses (275
businesses). Furthermore, it awarded approximately 50 percent of those contracts (121,596 contracts)
to just 1.3 percent of businesses (47 businesses).
5 Compared to when we limited the analysis to contracts worth less than $1 million, including all contracts in the analysis did in fact
indicate greater levels of business concentration regardless of whether we based the analysis on contracts or contract dollars.
FINAL REPORT CHAPTER 10, PAGE 9
Figure 10-9.
Cumulative distribution of businesses based on the number of contracts worth
less than $1 million state agencies awarded to them
100%
90%
80% contracts
80%
70%
% contracts
60%
50% contracts
50%
40% 1.3%
businesses
30%
7.6%
20% businesses
10%
0%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
% businesses
Note: n = 241,364 contracts.
BBC conducted the same analysis separately for the 85,136 contracts worth less than $1 million state
agencies awarded to 725 minority- and woman-owned businesses during the study period. Figure 10-10
presents those results. As with all businesses considered together, the concentration analysis indicated
that the vast majority of the contracts worth less than $1 million that state agencies awarded to
minority- and woman-owned businesses were awarded to relatively few businesses. The organization
awarded approximately 80 percent of them (68,197 contracts) to just 3.9 percent of minority- and
woman-owned businesses (28 businesses), and approximately 50 percent of them (44,667 contracts) to
just 1.2 percent of minority- and woman-owned businesses (nine businesses).
Figure 10-10.
Cumulative distribution of minority- and woman-owned businesses based on the
number of contracts worth less than $1 million state agencies awarded to them
100%
90%
80% contracts
80%
70%
% contracts
60%
50% 50% contracts
40% 1.2%
businesses
30%
20% 3.9%
businesses
10%
0%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
% businesses
Note: n = 85,136 contracts.
FINAL REPORT CHAPTER 10, PAGE 10
b. Contract dollars. Because contract sizes can vary so widely, BBC also assessed business concentration
based on the contract dollars state agencies awarded during the study period. As with the contract-
based concentration analysis, BBC limited the dollars-based analysis on contracts state agencies
awarded during the study period that were worth less than $1 million, which totaled $3.2 billion. Figure
10-11 presents a cumulative distribution of the percentage of contract dollars state agencies awarded to
all businesses during the study period. As shown in Figure 10-11, during the study period, state agencies
awarded approximately 80 percent of those contract dollars ($2.6 billion) to just 14.5 percent of
businesses (527 businesses). Furthermore, the organization awarded approximately 50 percent of those
contract dollars ($1.6 billion) to just 3.4 percent of businesses (125 businesses).
Figure 10-11.
Cumulative distribution of businesses based on the dollars associated
with contracts worth less than $1 million state agencies awarded to them
100%
90%
80% contract dollars
80%
70%
% contract dollars
60%
50% contract dollars
50%
40%
30% 3.4% 14.5%
businesses businesses
20%
10%
0%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
% businesses
Note: n = 241,364 contracts.
BBC conducted the same analysis separately for the minority- and woman-owned businesses to which
state agencies awarded contract dollars on contracts worth $1 million or less during the study period,
totaling $615.7 million. Figure 10-12 presents those results. As with all businesses considered together,
the analysis indicated that the majority of the total contract dollars state agencies awarded to minority-
and woman-owned businesses on contracts worth less than $1 million were awarded to relatively few
businesses. Of the contract dollars state agencies awarded to minority- and woman-owned businesses, it
awarded approximately 80 percent of those contract dollars ($493 million) to just 12.1 percent of those
businesses (88 businesses). Furthermore, it awarded approximately 50 percent ($309.8 million) of
those contract dollars to just 2.5 percent of those businesses (18 businesses).
FINAL REPORT CHAPTER 10, PAGE 11
Figure 10-12.
Cumulative distribution of minority- and woman-owned businesses based on
the dollars associated with contracts worth less than $1 million state
agencies awarded to them
100%
90%
80% contract dollars
80%
70%
% contract dollars
60%
50% contract dollars
50%
40%
2.5%
businesses
30%
12.1%
20% businesses
10%
0%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
% businesses
Note: n = 85,136 contracts.
FINAL REPORT CHAPTER 10, PAGE 12
CHAPTER 11.
Implications and Recommendations
The 2025 Commonwealth of Virginia Disparity Study provides substantial information state agencies
and higher education institutions (HEIs) (collectively referred to as the Commonwealth) should use as it
considers efforts to encourage the participation of small businesses and microbusinesses, as well as
minority-, woman-, and service-disabled veteran (SDV)-owned businesses (collectively referred to as
small and diverse businesses) in its contracts and procurements. Based on our analysis of Commonwealth
policies and programs, qualitative information we collected from stakeholders, disparity study results,
and best practices in the industry, BBC Research & Consulting (BBC) presents implications of key
disparity study results and recommendations for specific contracting policies and programs the
Commonwealth could consider refining or developing to help increase the participation of those
businesses in its work.
A. Key Results and Implications
BBC analyzed contract and procurement dollars the Commonwealth awarded between July 1, 2019 and
June 30, 2024 (study period) to calculate the participation (or, utilization) of small and diverse
businesses in its work; estimate the availability of those businesses for that work; and assess whether
any disparities exist between those measures. 1, 2 We also conducted research on outcomes for
minorities, women, and SDVs and the businesses they own in the Virginia marketplace to assess whether
any barriers exist in the marketplace that make it more difficult for those businesses to perform
Commonwealth work. That information will help the organization assess whether those businesses
experience barriers as part of its contracting processes and what types of measures it could use to help
address those barriers as part of its contracting processes and its implementation of the Small, Women-
owned, and Minority-owned Business (SWaM) Program.
1. Disparities between participation and availability. The crux of the disparity study was to
assess whether any disparities exist between the participation and availability of small businesses and
microbusinesses, as well as minority-, woman-, and SDV-owned businesses located in the relevant
geographic market area (RGMA) for Commonwealth work. 3 A substantial disparity between participation
and availability—that is, a disparity where participation is 80 percent or less of availability—for a
particular business group is interpreted by courts as an inference of discrimination against that group in
the marketplace and often serves as evidence that the organization could consider using race- or
gender-based measures to address corresponding barriers for that group. As discussed in Chapter 8 of
this report, all relevant small and diverse business groups showed substantial disparities for various
1 BBC analyzed $27.1 billion of relevant contracts and procurements the Commonwealth awarded during the study period.
2 BBC uses the term “woman-owned business” to refer specifically to White woman-owned businesses. To avoid double counting, results
for businesses owned by minority women are included with other businesses owned by minorities according to their corresponding race
groups.
3 The RGMA for the 2025 Commonwealth of Virginia Disparity Study included the state of Virginia, based on the locations of the
businesses that participated in Commonwealth work during the study period. Limiting study analyses to the RGMA ensures that study
results are tailored specifically to the geographical region that best represents the Commonwealth’s contracting activity. See Chapter 5
for more information on how BBC determined the RGMA.
FINAL REPORT CHAPTER 11, PAGE 1
project sets BBC examined as part of the disparity study. Thus, disparity analysis results indicate
inferences of discrimination for all the business groups we examined as part of the study.
An often observed characteristic of income and wealth data—which are very similar in nature to data on
contract and procurement dollars—is that the underlying distributions are heavily skewed in the
positive direction, usually caused by a small number of extreme values, or statistical outliers. 4, 5 The
presence of skewed distributions and statistical outliers can have substantial effects on measures of
inequity, poverty, and disparities, sometimes masking evidence of disparities or inequities that truly
exist for the rest of the population. 6, 7 For that reason, as standard practice, researchers identify extreme
values—that is, statistical outliers—when working with such data and use well-established procedures
to account for them. 8, 9, 10, 11
In accordance with best practices in social science, BBC assessed whether any small or diverse
businesses to which the Commonwealth awarded work during the study period represented statistical
outliers based on the contract dollars awarded to them during the study period and what impact any
such outliers had on disparity analysis results. That assessment indicated that two Asian-owned
businesses met the criterion of being a statistical outlier. After accounting for the dollars the
Commonwealth awarded to that firm during the study period, disparity analysis results did not change
appreciably. Generally, the same groups exhibited substantial disparities for the same contract sets even
after accounting for the statistical outliers. Thus, the results presented throughout the report are
unadjusted for the statistical outliers we identified.
2. Barriers in the marketplace. Barriers in the marketplace likely affect the ability of minorities and
women to start businesses in relevant industries and operate them successfully. Any difficulties they
face in starting and operating businesses in the region may reduce their availability for Commonwealth
work and their ability to successfully compete for and perform that work. The United States Supreme
Court and other federal courts have held that analyses of conditions in an RGMA for minority- and
woman-owned businesses are instructive in determining whether organizations’ use of race- and
gender-based programs as part of their contracting processes are appropriate and justified. They have
held that evidence of marketplace barriers for minorities, women, and minority- and woman-owned
businesses helps to establish a compelling government interest for organizations to take remedial action
4 https://thedocs.worldbank.org/en/doc/248311593193853901-0050022020/render/lecture12final.pdf
5 Alvarez, E. and Garcia-Fernandez, R.M., et al. 2014. “The effect of outliers on the economic and social survey on income and living
conditions.” International Scholarly and Scientific Research & Innovation, 8(10): 3276–3280.
6 Cowell, F.A., and Flachaire, E. (2007) “Income distribution and inequality measurement: The problem of extreme values. Journal of
Econometrics, 141(2): 1044-1072.
7 Hlasny, V. and Verme, P. (2018). “Top incomes and inequality measurement: A comparative analysis of correction methods using the EU
SILC data.” Econometrics, 6(30).
8 Cowell, F.A. and Victoria Feser, M.P. 2002. “Welfare ranking in the presence of contaminated data,” Econometrica, 70:
1221-1233.
9 Gravelle, H. and Sutton, M. 2006. “Income, relative income, and self-reported health in Britain 1979-2000,” Center for Health Economics
Research Paper, 10.
10 Grubbs, F.E. (1969). “Procedures for detecting outlying observations in samples,” Technometrics, 11(1): 1-21.
11 Blaine, Bruce E. (2018). "Winsorizing." The SAGE Encyclopedia of Educational Research, Measurement, and Evaluation,
1817-1818.
FINAL REPORT CHAPTER 11, PAGE 2
to address those barriers and can help organizations narrowly tailor the use of such measures to the
business groups for which evidence of barriers exist.
BBC’s analyses of marketplace conditions in Virginia indicate that minorities, women, minority- and
woman-owned businesses face various barriers in the region in terms of acquiring human capital,
accruing financial capital, owning businesses, and operating successful businesses. In many cases, there
is evidence that those barriers exist even after accounting for various other factors such as age, income,
education, and familial status. Those results may help the Commonwealth in establishing a compelling
government interest in using race- or gender-based measures and narrowly tailor the use of those
measures.
B. Guidance
The disparity study provides substantial information the Commonwealth should examine as it considers
potential refinements to its implementation of the SWaM Program and other efforts to further
encourage the participation of small and diverse businesses in its contracts and procurements. BBC
presents several recommendations specific to the Commonwealth’s contracting and procurement
processes for the organization’s consideration.
1. Certification. The Commonwealth’s Department of Small Business and Supplier Diversity (SBSD)
certifies small businesses and microbusinesses, as well as minority-, woman-, and SDV-owned
businesses, as part of its SWaM Program. Results from the disparity study show that the participation of
SWaM-eligible small businesses—that is, businesses in Virginia that BBC determined meet the
qualifications to be SWaM-certified small businesses—in Commonwealth work during the study period
was 64.3 percent, which exceeds the Commonwealth’s overall 42 percent aspirational goal for the
participation of small businesses. 12 However, the participation of small businesses that were actually
certified as such was much lower, at 37.8 percent. 13 While this result indicates that the Commonwealth is
effective in encouraging the participation of small businesses in its work, it may also suggest that
businesses are unaware of the SWaM Program, that certification is a barrier to some businesses that
would qualify, or perhaps that businesses may not see benefits to obtaining SWaM certification. The
Commonwealth could consider additional measures to ensure that its certification processes are
12 BBC assessed results for small and diverse business groups regardless of certification status based on whether a business’ size or
ownership characteristics aligned with the corresponding certification criteria for that group. To estimate a business' ability to qualify as
a small business or microbusiness, BBC used a combination of primary and secondary data collection as well as data modeling. As part of
BBC's business surveys, business representatives were asked to report business size in terms of revenue and number of employees, and
to disclose any affiliates, parent companies, or subsidiaries. For non-certified utilized businesses with which BBC did not conduct a
business survey, we relied on business size and company structure information from Dun & Bradstreet (D&B). BBC used a predictive
regression model to correct for gaps and errors in D&B's business size information. For businesses that have affiliates, parent companies,
or subsidiaries, BBC used business size for the entire corporate structure, in terms of revenue and number of employees, to determine
business eligibility as a potential small business or microbusiness, rather than on the structure of ownership interests.
13 The Commonwealth tracks the participation of small and diverse businesses in its contracting and procurement through its SWaM
expenditure dashboard. The percentage of certified small business participation in Commonwealth contracts and procurements reported
as part of the disparity study does not align with the percentage reported by the SWaM expenditure dashboard for various reasons. The
Commonwealth has established a hierarchy for reporting participation by SWaM-certified businesses, and does not count any single
business in multiple categories (i.e., if a business is certified as a small business and a minority-owned business, the Commonwealth
would report that participation as minority-owned business participation; in contrast, BBC would report that participation as both small
business and minority-owned business participation). In addition, there are various differences in BBC and the Commonwealth’s
determination of discretionary spending. See Chapter 5 for information about the types of contracts and procurements that were not
considered in-scope as part of the disparity study and the volumes of dollars included in each of those categories.
FINAL REPORT CHAPTER 11, PAGE 3
accessible, efficient, and aligned with the Commonwealth’s broader inclusion objectives. In particular,
the Commonwealth could consider whether SWaM certification requirements accurately reflect the
realities and capacities of small businesses operating in the Virginia marketplace and consider how it
might adjust them to be tailored to local businesses.
a. Education and awareness. One possible explanation for the difference between SWaM-eligible small
business participation and SWaM-certified small business participation is that businesses are unaware
of the SWaM Program altogether, or that they are unaware of the benefits the program provides to
certified businesses. SBSD currently offers several types of workshops and events related to education
and awareness around SWaM certification, including SWaM Labs, which are held monthly and illustrate
the benefits of certification to small businesses in addition to assisting business owners in submitting
SWaM certification applications, as well as other SWaM certification application assistance workshops
and certification information sessions. To reach even more businesses across the state, the
Commonwealth could consider dedicating additional resources to marketing and communication
around the SWaM Program. The Commonwealth could consider more partnerships with state and local
trade organizations and other public organizations and offering events more frequently and in a larger
range of geographical areas across the state. The Commonwealth might also consider tailoring more
events to specific industries or business groups to further maximize their value and provide
opportunities to foster more extensive connections among participants. The Commonwealth could also
consider making continued use of online procurement fairs, webinars, conference calls, and other tools
to provide outreach and technical assistance.
This section contains several recommendations the Commonwealth could consider to further support
small and diverse businesses in its marketplace, including mechanisms to directly encourage the
participation of SWaM-certified businesses in Commonwealth work. If the Commonwealth chooses to
implement any of these measures, it could advertise the introduction of those measures and the value
those measures provide to certified businesses to the business community in Virginia to further
encourage SWaM-eligible businesses to pursue certification.
b. Small business criteria. Currently, to be certified as a small business as part of the Commonwealth’s
SWaM Program, a business must, together with affiliates, have 250 or fewer employees or $10 million or
less in annual receipts. The “or” condition included as part of the Commonwealth’s small business
certification criteria allows for a wide array of businesses to qualify for the certification. In fact, 95.7
percent of businesses that were potentially available for Commonwealth work met this criteria, and 91.4
percent of businesses that participated in Commonwealth work met this criteria. 14 The Commonwealth
could consider re-evaluating its certification criteria to ensure that only businesses that are truly small
meet the agency’s definition and thus can benefit from program measures reserved for small businesses.
For example, the Commonwealth could consider replacing the “or” condition in its certification criteria
14 BBC assessed results for small and diverse business groups regardless of certification status based on whether a business’ size or
ownership characteristics aligned with the corresponding certification criteria for that group. To estimate a business' ability to qualify as
a small business or microbusiness, BBC used a combination of primary and secondary data collection as well as data modeling. As part of
BBC's business surveys, business representatives were asked to report business size in terms of revenue and number of employees, and
to disclose any affiliates, parent companies, or subsidiaries. For non-certified utilized businesses with which BBC did not conduct a
business survey, we relied on business size and company structure information from Dun & Bradstreet (D&B). BBC used a predictive
regression model to correct for gaps and errors in D&B's business size information. For businesses that have affiliates, parent companies,
or subsidiaries, BBC used business size for the entire corporate structure, in terms of revenue and number of employees, to determine
business eligibility as a potential small business or microbusiness, rather than on the structure of ownership interests.
FINAL REPORT CHAPTER 11, PAGE 4
with an “and” condition (i.e., to be certified as a small business as part of the Commonwealth’s SWaM
Program, a business must, together with affiliates, have 250 or fewer employees and $10 million or less
in annual receipts).
If the Commonwealth adjusts certification criteria, it could consider allowing currently certified
businesses to remain certified until their certifications expire. Once those businesses are required to
recertify, those businesses would then need to meet the updated requirements. In addition, if the
Commonwealth chooses to introduce updated aspirational goals for the participation of small
businesses and also chooses to adjust the certification criteria for small businesses, it should assess the
availability of small businesses using the adjusted criteria when setting an updated aspirational small
business goal.
2. Small business support. The Commonwealth already uses a variety of race- and gender-neutral
program measures to encourage the participation of all small businesses in its contracts and
procurements. To address the disparities small businesses and microbusinesses experience in its work,
the Commonwealth could also explore additional program measures targeted toward small businesses
and microbusinesses, with measures tailored to each size tier. We provide recommendations for
additional program measures it might consider to encourage the participation of small businesses and
microbusinesses, many of which are minority-, woman-, and SDV-owned businesses, in its work.
a. Refine set-aside program. As part of the SWaM Program, the Commonwealth sets aside small
purchases—construction and non-professional services and goods contracts and procurements valued
at up to $100,000 and professional services contracts valued at up to $80,000—for preferential award to
certified small businesses and microbusinesses. The organization also sets aside contracts and
procurements valued up to $10,000 for preferential award to certified microbusinesses. However, any
business may bid on these set-aside contracts, and award of these contracts to certified small businesses
and microbusinesses is contingent upon the price being fair and reasonable, and not exceeding 5 percent
of the lowest responsive and responsible non-certified bidder. To ensure that small business set-asides
are effectively encouraging the participation of small businesses and microbusinesses, the
Commonwealth could consider limiting bidding on eligible contracts to certified small businesses and
microbusinesses, regardless of whether larger businesses are able to submit lower bids.
In addition, the Commonwealth could reassess its small and microbusiness set-aside thresholds and, in
doing so, could consider the bid capacities and annual revenues of the businesses that are available for
Commonwealth work (see Chapter 10 for more details). For example, the Commonwealth could set
aside contracts as follows:
Set aside construction and professional services contracts up to $100,000 and non-professional
services and goods contracts up to $50,000 for microbusinesses; and
Set aside construction and professional services contracts worth more than $100,000 but less than
$500,000 for small businesses, and non-professional services and goods contracts worth more than
$50,000 but less than $250,000 for small businesses.
If the Commonwealth chooses to raise the size thresholds of the contracts it sets aside, it does not need
to designate every contract under those thresholds as set asides. Rather, it can assess the availability of
certified small businesses and microbusinesses on a contract-by-contract basis and select certain
FINAL REPORT CHAPTER 11, PAGE 5
contracts for the program. The considerations outlined above are one example of how the
Commonwealth could consider adjusting the set-aside program parameters. Doing so will allow the
Commonwealth to better address economic disadvantages that small businesses and microbusinesses
face in the marketplace by better tailoring its efforts to those businesses that need the most support.
b. Small business contracting goals. In addition to the implementation of MBE and woman-owned
business enterprise (WBE) contracting goals, the Commonwealth could consider setting contracting
goals for small business participation on the individual contracts and procurements it awards. In
contrast to MBE and WBE goals, which are race- and gender-based measures, small business
subcontracting goals would apply to all small businesses, regardless of their ownership status, and
would not need to meet the requirements of the strict scrutiny standard of constitutional review. To use
small business contract goals, the Commonwealth would set a goal that a percentage of work on a
contract, as measured in contract dollars, be performed by certified small businesses. For example, for a
contract greater than $100,000, the Commonwealth could set a goal that 25 percent of the work on that
contract be performed by certified small businesses. Bidders would have to either be certified
themselves as small businesses or would have to commit scopes of work to subcontractors certified as
small businesses that collectively account for 25 percent of the total bid amount. If a bidder fails to meet
the goal through work commitments, it would have to submit good faith efforts (GFE) documentation
describing the efforts it took to achieve 25 percent small business participation as part of its bid and
why it failed to do so.
3. Business development. Some study participants described barriers that small and diverse
businesses face in learning about and performing Commonwealth work and indicated a need for
additional business development offerings to address these barriers. The Commonwealth could consider
dedicating additional resources to business development opportunities specifically tailored to helping
small and diverse businesses learn about opportunities with the Commonwealth and build their
capacities to perform work for the organization. Such efforts could include expanding networking and
outreach, technical assistance offerings, and a mentor-protégé program.
a. Networking and outreach. In our qualitative data collection, study participants described how
important networking and relationship-building events can be for business success. Some state agencies
and HEIs operate outreach events designed to support small and diverse businesses in building
relationships and to inform them of procurement policies. For example, some HEIs host “How To Do
Business” sessions for businesses to learn about upcoming work opportunities with the organizations.
In addition, SBSD hosts a variety of networking events to help vendors form relationships with
Commonwealth agencies and prime contractors. Yet, some study participants highlighted a need for
more information about these programs, or for more targeted networking and outreach events tailored
to the businesses that need the most support. The Commonwealth could consider expanding its
outreach to new businesses, including the advertisement of the technical assistance programs it offers,
and continue to host networking events. Additionally, the Commonwealth could expand its relationships
with partners across the state—such as non-profit organizations, trade associations, community lenders,
and business development groups—to ensure that more members of the business community are able
to access and participate in its programs. Expanding networking and outreach opportunities with the
Commonwealth could help build further trust between the organization and small and diverse
businesses, and could ensure that, as the organization considers additional contracting inclusion
FINAL REPORT CHAPTER 11, PAGE 6
measures, interested businesses have the foundational knowledge and relationships they need to be
able to participate in these programs.
b. Technical assistance. SBSD currently conducts various trainings and technical assistance programs,
such as virtual and in-person one-on-one business counseling, as well as more specialized technical
assistance offerings (for more information, see Chapter 9). As part of the qualitative evidence gathering
process, business owners expressed a desire for additional technical assistance support, including
business start-up support, business administration assistance, and bid and proposal support.
i. Business incubators. Virginia already has a number of organizations that support entrepreneurs and
startups, including the Virginia Small Business Development Center, the Virginia Accelerator Network,
the Virginia Innovation Partnership Authority, and various regional incubators. However, these efforts
are not coordinated statewide, and access to services varies by region. The Commonwealth could
strengthen and formalize its startup support ecosystem by directing the Virginia Innovation Partnership
Authority to lead a coordinated, statewide business incubator network. Under this approach, the
Commonwealth would align and support regional incubators, universities, and private sector partners
under shared goals and performance measures, while allowing programs to continue operating locally. A
statewide network would provide clear, tiered support for businesses at different stages of growth and
create stronger connections between technical assistance, mentorship, and existing state-supported
capital programs, improving access and consistency for entrepreneurs across Virginia.
ii. Business administration assistance. The Commonwealth offers various business administration
assistance programming but could consider expanding that programming to additional topics and
geographical regions to reach more businesses across the state. For example, the Commonwealth could
consider additional programs focused on bonding, bookkeeping, business plan development and
refinement, financial literacy, and other topics. It could host those programs on its own or in conjunction
with HEIs or other local partners throughout the region.
iii. Bid and proposal support. Business owners who provided qualitative feedback as part of the study
expressed that they find the bid and proposal submission process to be burdensome and difficult to
navigate for small businesses. Commonwealth agencies and HEIs could consider offering hands-on bid
and proposal assistance for small businesses and microbusinesses to help them navigate organization
requirements and understand how to prepare successful bids and proposals.
In addition, business owners expressed frustration related to the lack of feedback on the outcome of
submitted bids and proposals, including feedback on why bids or proposals were unsuccessful. The
Commonwealth could consider implementing a process to automatically notify bidders or proposers
when an award is made, and as part of such, offer an opportunity for unsuccessful bidders or proposers
to connect with a Commonwealth representative to receive feedback on their submission. Doing so may
help small and diverse businesses gain a better understanding of ways they can improve future bids or
proposals.
c. Mentor Protégé Program (MPP). As part of legislation enacted in the 2022 General Assembly Session,
SBSD established and administered a pilot mentorship program. After completion of the pilot program,
SBSD received direction from the General Assembly to not continue or establish that program unless
directed to do so in legislation. The Commonwealth could consider developing an established, ongoing
MPP to introduce new businesses to established businesses, prime contractors, and Commonwealth
FINAL REPORT CHAPTER 11, PAGE 7
decisionmakers; provide guidance to growing businesses; and increase the capacities of these
businesses to perform Commonwealth work as prime contractors or prime consultants themselves.
Such a program could include:
Mentorship from businesses that successfully compete for and perform Commonwealth contracts
in the same industries as protégés;
An emphasis on teaching protégés how to navigate Commonwealth processes to work as prime
contractors;
Compensation for the time and resources required for mentors to participate in the program;
Incentives for mentors to include their protégés on project teams for future opportunities, such as
bid discounts or set-asides; and
Key performance indicators (KPIs) to ensure that mentors are making genuine efforts to support
the growth of protégés and that protégés are benefiting from their relationships with mentors.
Several organizations operate incentivized MPPs, which help to ensure mentor-protégé relationships
are mutually beneficial, that could serve as models for the Commonwealth to consider. For example:
The Michigan Department of Transportation (MDOT) operates an MPP for small consulting
businesses. Key elements of this program include:
Set-aside contracts: The agency sets aside select contracts each year for exclusive competition
among mentor-protégé pairings. As part of their bids or proposals for those contract
opportunities, project teams must submit mentorship plans that are assessed as part of bid and
proposal evaluation processes.
Non-exclusivity: Mentors cannot require their proteges to bid exclusively with them on set-aside
contracting opportunities. Mentors can team with multiple protégés, and protégés can team
with multiple mentors.
Project cost reimbursement: Time required to execute mentorship plans can be billed to MDOT.
The Colorado Department of Transportation (CDOT) operates an MPP for small construction and
consulting businesses. Key elements of the program include:
Relationship building: The agency supports emerging businesses in developing relationships
with prime contractors or consultants that successfully perform CDOT work.
Financial compensation: Mentors receive annual stipends for their participation in the program.
Project team incentives: Consultant teams receive an extra evaluation point for including
protégés (past or present) on their teams and two points if prime consultants are graduates of
the MPP and include protégés on their project teams.
4. Procurement policies. The Commonwealth could consider refining its contract and procurement
policies in ways that make Commonwealth work more accessible to a greater number of businesses,
including small and diverse businesses.
a. Unbundle large contracts. As presented in Chapter 10, only 50 percent of the businesses potentially
available for state agency work indicated that they have the capacity to compete for or perform
contracts valued at more than $750,000, and only 20 percent indicated that they could compete for or
FINAL REPORT CHAPTER 11, PAGE 8
perform contracts valued at more than $5 million. However, BBC found that more than half of the
project dollars the Commonwealth awarded during the study period were associated with projects
valued at $20 million or greater. To further encourage the participation of small and diverse businesses
in Commonwealth work, the organization could consider making additional efforts to unbundle
relatively large prime contracts into smaller contract elements and also encourage prime contractors to
unbundle relatively large subcontract opportunities into smaller elements. The Commonwealth could
provide ongoing training and specific guidance to procurement staff and contract managers to help them
identify opportunities to unbundle contracts into smaller, more accessible pieces, including:
Reviewing multi-phase or large projects to assess whether any portions could be unbundled into
smaller opportunities;
Assessing whether multi-year contracts for certain services, such as janitorial services, could be
unbundled into shorter-termed contracts or could be awarded as task-order contracts; and
Assessing whether supportive services contracts could be unbundled by certain geographical areas
or other factors.
Such initiatives would likely increase opportunities for small and diverse businesses. Additionally,
breaking up or right-sizing large prime contracts into multiple projects could benefit businesses that
typically perform work as subcontractors, giving them more opportunities to perform work as prime
contractors while easing some of the burdens associated with prime contract work, such as financing,
bonding, insurance, and workforce development requirements.
b. De-concentrate awards. One of the fundamental objectives of a contracting inclusion program is to
diversify the pool of businesses to which an organization is awarding work. However, BBC found that
the vast majority of the contracts and procurements—as well as the associated dollars—the
Commonwealth awarded during the study period were awarded to a relatively small number of
businesses. The Commonwealth could consider exploring different ways to engage with businesses that
have not participated in its work in the past. Some of those efforts could include:
Continuing to work with local organizations to engage directly with businesses that have not
previously participated in Commonwealth work and providing those businesses with information
about the advantages and the process for doing so;
Setting aside contract opportunities for exclusive competition among businesses that have not
previously participated in Commonwealth work; and
Expanding the use of the multiple award contracts—at the prime contract or subcontract level—to
multiple businesses where there is a rotation schedule so all the businesses receive comparable
amounts of work over the life of the contract.
Being new to the Commonwealth’s contracting processes should not replace being qualified to perform
work on the contracts and procurements it awards. The Commonwealth should still strongly emphasize
and assess businesses’ qualifications as part of contract awards, but it could consider taking steps to
identify qualified businesses that may not have worked with the organization in the past.
5. Monitoring and data collection. The Commonwealth currently maintains comprehensive data on
the participation of certified SWaM businesses in Commonwealth work, which it reports as part of its
FINAL REPORT CHAPTER 11, PAGE 9
SWaM Expenditure Dashboard. The Commonwealth should continue to collect this information, as well
as consider how it can monitor the success of its contracting inclusion methods in greater depth and
detail. We present several recommendations surrounding monitoring and data collection for the
Commonwealth to consider.
a. Subcontractor data collection. The Commonwealth currently requires state agencies and HEIs to
collect data on the SWaM-certified subcontractors that participate in the projects they award. While
some state agencies and HEIs go further to collect comprehensive subcontract data on all subcontractors
that participate in the projects they award, regardless of certification status, this practice is not required
and is not consistent across Commonwealth agencies. Gathering data on all subcontractors, regardless of
SWaM certification status, would improve the Commonwealth’s monitoring of the participation of small
and diverse businesses in its work and would help the Commonwealth identify future subcontracting
opportunities for those businesses as part of its projects. The Commonwealth could consider enforcing
the collection of comprehensive subcontract data on all the projects it awards at the time of bid,
including:
Subcontractor names, addresses, phone numbers, and email addresses;
Subcontractor work types or roles on projects; and
Dollar amounts committed to subcontractors.
For each bid and proposal opportunity, the Commonwealth could require bidders and proposers to
report whether they plan to work with subcontractors on the project, and if they are planning to do so,
provide the above information about each subcontractor, regardless of certification status, as part of
their bid and proposal submissions. In addition to collecting subcontract data at the time of bid, the
Commonwealth could consider collecting subcontract payment data for all subcontractors, regardless of
certification status, with each invoice prime contractors submit. Doing so would help to ensure that the
prime contractors are actually working with the subcontractors with which they indicated they would
work at the time of bid.
b. SWaM Program compliance. Achieving the Commonwealth’s SWaM participation goals requires
consistent accountability across both state organizations and private contractors. The Commonwealth
could consider strengthening its compliance mechanisms for state agencies and HEIs, as well as for
prime contractors, to ensure that stated commitments translate into measurable and transparent
outcomes.
i. Agency compliance. As part of SWaM Program compliance, state agencies and HEIs must submit annual
SWaM Procurement Plans to SBSD detailing the strategies they will use to encourage the participation of
SWaM-certified small businesses in their contracting and procurement. Despite this practice, some state
agencies and HEIs consistently fail to meet their goals or make meaningful efforts to do so. The
Commonwealth could consider various measures to increase buy-in from state agencies and HEIs to
work toward the common goal of encouraging the participation of small and diverse businesses in
Commonwealth work. For example, the State of Indiana established a Governor’s Commission on
Supplier Diversity to explore opportunities and implement different measures to encourage the
participation of small and diverse businesses in the state’s procurement practices. The Commission
meets quarterly, comprises various organization and business representatives, and provides oversight
of the state’s supplier diversity initiatives. The Commonwealth could consider establishing a similar
FINAL REPORT CHAPTER 11, PAGE 10
commission, comprising state agency representatives, HEI representatives, and business owners. The
commission could establish a cadence for regular meetings to discuss issues related to meeting the
Commonwealth’s supplier diversity objectives, including each agency’s strategy for achieving the overall
aspirational goal, barriers they face in achieving the goal, and possible strategies they could implement
to improve goal attainment.
In addition, HEIs are required to report information on SWaM contractor spend to SBSD for inclusion in
the Commonwealth’s SWaM Expenditure Dashboard, which the organization uses as a centralized
transparency and management tool to track and analyze how Commonwealth contracting and
procurement supports SWaM-certified businesses. However, some HEIs report an overall figure for total
spend to SBSD in lieu of detailed transactional spend. While HEIs have varying degrees of autonomy in
their procurement practices, the same autonomy should not apply to their reporting practices. The
Commonwealth could consider establishing a policy to require that HEIs adapt their reporting processes
to report spend on a transactional level to improve the Commonwealth’s ability to accurately report
SWaM spend at the state level and increase transparency in the Commonwealth’s spend.
ii. Prime contractor compliance. The Commonwealth could also develop a framework for assessing prime
contractor compliance with subcontracting plans throughout the life of a contract. The Commonwealth
requires that prime contractors submit subcontracting plans as part of their bids, quotes, or proposals
for all contracts and procurements worth more than $100,000. Prime contractors are required to submit
monthly subcontractor participation reports through the Commonwealth’s eVA subcontractor payment
reporting tool, and, if participation varies from the subcontractor plan, must provide written
explanation explaining the reasons why a variance exists. However, in practice, many prime contractors
do not submit this information and do not face penalties for not having done so. Ultimately, this results
in agencies reporting possibly inaccurate information to SBSD on SWaM spend as part of their reporting
processes. In addition, as part of the qualitative evidence gathering process, some businesses shared
that they have been listed as part of a prime’s subcontracting plan, but then never actually receive that
work after the bid is successful.
The Commonwealth could institute a more stringent policy to ensure that state agencies regularly
monitor the participation of the subcontractors that the prime contractor included in its bid or proposal
at the time of award and ensure that they receive the work the prime contractor committed to them. If
there is a shortfall in committed subcontractor participation on the contract, the prime contractor
should be required to provide satisfactory reasons why that was the case, and if it fails to do so, the
organizations should be prepared to invoke financial or other consequences (e.g., withholding final
payment)—and actually do so.
c. KPIs. The primary metric most organizations use to assess the effectiveness of their contracting
inclusion efforts is to monitor and report the volume and percentage of contract and procurement
dollars they spend with small and diverse businesses relative to all the contract dollars they award.
Considering the sheer amount of dollars organizations tend to award each year, it would likely require
them to award substantial volumes of work to small and diverse businesses to meaningfully increase the
overall percentage of dollars they award to those businesses in aggregate. Although doing so is
important, focusing exclusively on the volume and percentage of dollars an organization awards to small
and diverse businesses may incentivize organizations to repeatedly award work to the small and diverse
businesses that are already relatively successful or encourage them to pursue large projects they might
FINAL REPORT CHAPTER 11, PAGE 11
not be ready to perform. In addition, focusing exclusively on the volume and percentage of dollars an
organization awards to small and diverse businesses can obscure some of the value that contracting
inclusion programs provide. For example, the contract dollars the Commonwealth awards to
microbusinesses may not have a substantial impact on the overall percentage of dollars awarded to
SWaM businesses in general. However, the dollars spent with those businesses would likely have an
immense impact on their success and development.
In addition to the overall volume and percentage of dollars the Commonwealth awards to small and
diverse businesses, the organization might consider tracking other KPIs that better reflect all the value
that the SWaM Program provides. Doing so might also encourage internal staff to support more
businesses in the marketplace that need it most. Examples of such metrics include:
The number of distinct small and diverse businesses to which the Commonwealth awards work;
The number of contracts and procurements the Commonwealth awards to small and diverse
businesses;
The volume of work the Commonwealth awards to businesses that have never worked with the
Commonwealth in the past;
The number of distinct businesses to which the Commonwealth awards work which have never
worked with the Commonwealth in the past;
Various characteristics of the small and diverse businesses to which the Commonwealth awards
work, including business size, location, age, and average contract size; and
Success stories of individual businesses that the SWaM Program has helped.
6. Race- and gender-based measures. The Commonwealth currently only uses race- and gender-
neutral program measures as part of its implementation of the SWaM Program, which are designed to
encourage small business participation in Commonwealth work, regardless of the race/ethnicity or
gender of business owners. However, disparity study results as well as qualitative evidence collected as
part of the disparity study indicate that the Commonwealth could consider whether race- and gender-
based measures would help address the disparities that minority- and woman-owned businesses in
particular face as part of the organization’s contracting and procurement processes. If the
Commonwealth decides to implement race- or gender-based measures, then it must ensure that its use
of those measures meets the requirements of the strict scrutiny standard of constitutional review,
including showing a compelling governmental interest for their use and ensuring that their use is
narrowly tailored (see Chapter 2 for more information). Additionally, prior to using such measures, the
Commonwealth must consider whether it has maximized its use of race- and gender-neutral measures,
including fully leveraging existing race- and gender-neutral measures and considering whether
additional measures might be sufficient to address disparities without the use of race or gender
classifications.
One way the Commonwealth could increase the participation of minority- and woman-owned
businesses in its contracting is through the use of narrowly tailored MBE and WBE subcontracting goals.
To do so, the Commonwealth would set MBE and WBE participation goals on individual projects based
on the availability of minority-owned businesses and woman-owned businesses for the types of work
involved in each project, and, as a condition of award, bidders would have to meet those goals by making
FINAL REPORT CHAPTER 11, PAGE 12
subcontracting commitments with MBEs and WBEs as part of their bids, quotes, or proposals or by
demonstrating they made GFEs to do so. 15 Examples of GFEs could include emailing certified MBE and
WBE subcontractors to notify them about the bid opportunity, advertising subcontract opportunities
online, and hosting meetings for subcontractors where they answer questions about the bid
opportunity. The Commonwealth could evaluate GFEs using a points system where each effort or
engagement with an MBE or WBE counts for points, and prime contractors must receive a certain
number of points for their GFEs to be considered sufficient.
7. Overall aspirational goals. Currently, the Commonwealth has an overall aspirational goal for the
participation of SWaM-certified small businesses in Commonwealth contracts and procurements. This
goal, originally set in 2014, is set at 42 percent of discretionary spend. For capital outlay construction
work, the Commonwealth has also established a 50 percent subcontracting goal for SWaM-certified
small businesses. As part of its implementation of the SWaM Program, the Commonwealth could update
its overall aspirational goal for the participation of small businesses and establish separate annual
overall aspirational goals for the participation of microbusinesses, as well as minority-, woman-, and
SDV-owned businesses in its contracting. The Commonwealth could follow a common two-step process
to develop overall aspirational goals for the participation of small businesses and microbusinesses, as
well as minority-, woman-, and SDV-owned businesses in its contracts and procurements, which would
consist of establishing base figures for each business group and considering adjustments to those base
figure based on information about local marketplace conditions and other factors that might impact the
ability of those businesses to compete for and perform work on its contracts.
a. Base figures. To determine its base figures, the Commonwealth could consider the availability of
SWaM-eligible businesses—that is, businesses in Virginia that meet the qualifications to be SWaM-
certified small businesses; microbusinesses; or minority-, woman-, or SDV-owned businesses—for
Commonwealth work (regardless of whether they are already certified as SWaM businesses).
b. Goal adjustments. To determine whether adjustments to the base figures are warranted to account
for any characteristics of the marketplace that might affect the ability of small businesses and
microbusinesses, as well as minority-owned, woman-owned, and SDV-owned businesses to compete for
or participate in Commonwealth work, the Commonwealth could consider the following factors:
Past participation of small businesses, microbusinesses, MBEs, WBEs, and SDV-owned businesses
in its work;
Information on barriers related to employment, business ownership, education, training,
and unions;
Information on barriers related to financing, bonding, and insurance; and
Other relevant information.
If the Commonwealth decides to adjust the base figures, it would have to decide which factors to
consider and the direction and magnitude of any adjustments. For example, one factor the
Commonwealth could consider for an adjustment to the overall aspirational goals is the past
15 If bidders are MBEs or WBEs themselves, then the Commonwealth could consider allowing them to count their own portions of their
bids toward meeting contracting goals.
FINAL REPORT CHAPTER 11, PAGE 13
participation of certified businesses in its work, especially given the difference between the
participation of certified SWaM businesses and SWaM-eligible businesses. The participation of SWaM-
certified businesses in Commonwealth work during the study period was much lower than the
respective availability of SWaM-eligible businesses for that work. Given those differences, the
Commonwealth could consider adjusting each business goal using the average of the availability of those
business groups that are SWaM-eligible businesses and their participation in Commonwealth work
during the study period. This adjustment is one option the Commonwealth could consider – if the
Commonwealth chooses to pursue alternative adjustment options, it would have to decide which factors
to consider and the direction and magnitude of any adjustments.
FINAL REPORT CHAPTER 11, PAGE 14
APPENDIX A.
Definitions of Terms
Appendix A defines terms useful to understanding the 2025 Commonwealth of Virginia Disparity Study
report.
Business
A business is a for-profit enterprise, including sole proprietorships, corporations, professional
corporations, limited liability companies, limited partnerships, limited liability partnerships, and any
other business structures. The definition includes the headquarters of the entity as well as all its other
locations, if applicable.
Commonwealth of Virginia (Commonwealth)
The Commonwealth comprises various agencies, departments, higher education institutions, and offices
to oversee the functions and management of Virginia. It also operates the Small, Women-owned, and
Minority‐owned Business Program, including the associated certification process.
Compelling Governmental Interest
As part of the strict scrutiny standard of constitutional review, a government agency must demonstrate
a compelling governmental interest in remedying any identified discrimination in order to implement
race-based measures. That is, an agency that uses race-based measures as part of a contracting program
has the initial burden of showing evidence of barriers or discrimination—including statistical and
anecdotal evidence—that supports the need for such measures. The agency must assess such
discrimination within its own relevant geographic market area.
Construction
Construction refers to the construction, alteration, or repair (including dredging, excavating, and
painting) of buildings, structures, or other real property. “Buildings, structures, or other real property”
includes bridges, dams, plants, highways, parkways, streets, subways, tunnels, sewers, mains, power
lines, cemeteries, pumping stations, railways, airport facilities, terminals, docks, piers, wharves, ways,
lighthouses, buoys, jetties, breakwaters, levees, canals, channels, and other structures.
Consultant
A consultant is a business that performs professional services work.
Contract
A contract is a legally binding relationship between the seller of goods or services and a buyer. The
study team sometimes uses the term contract interchangeably with procurement or project.
Contract Element
A contract element is either a prime contract or subcontract.
FINAL REPORT APPENDIX A, PAGE 1
Contract Goals
Contract goals are often a race- or gender-based effort whereby organizations set percentage goals for
the participation of minority- or woman-owned businesses in individual contracts or procurements they
award. (Certain contract goals may be race- and gender-neutral in nature, such as goals for the
participation of small businesses, microbusinesses, or service-disabled veteran-owned businesses.) As a
condition of award, prime contractors have to meet contract goals as part of their bids, quotes, or
proposals by making participation commitments with eligible, certified minority- or woman-owned
businesses, or, if they fail to do so, by demonstrating they made genuine and sufficient good faith efforts
to do so. The use of contract goals as they apply to minority- and woman-owned businesses must meet
the strict scrutiny and intermediate scrutiny standards of constitutional review, respectively.
Contractor
A contractor is a business that performs construction work.
Control
Control means exercising management and executive authority of a business.
Custom Census Availability Analysis
A custom census availability analysis is one in which researchers attempt surveys with potentially
available businesses working in the relevant geographic market area to collect information about key
business characteristics. Researchers then take survey information about potentially available
businesses and match them to the characteristics of contracts and procurements an organization
actually awarded during the study period to assess the percentage of dollars one might expect the
organization to award to specific groups of businesses. A custom census availability approach is
accepted in the industry as the preferred method for conducting availability analyses, because it takes
myriad factors into account, including businesses’ primary lines of work and their capacities to perform
work on an organization’s contracts and procurements.
Department of Small Business and Supplier Diversity (SBSD)
SBSD is the Commonwealth of Virginia agency responsible for the administration of the Small, Women-
owned, and Minority‐owned Business Program.
Disparity
A disparity is an appreciable difference between an actual outcome and some benchmark where the
actual outcome is less than the benchmark. In this report, the term disparity refers specifically to a
difference between the participation of a specific group of businesses in an organization’s contracting
and procurement and the estimated availability of the group for that work.
Disparity Analysis
A disparity analysis examines whether there are any differences between the participation of a specific
group of businesses in an organization’s work and the estimated availability of the group for that work.
FINAL REPORT APPENDIX A, PAGE 2
Disparity Index
A disparity index is computed by dividing the percentage of contract and procurement dollars an
organization awarded to a specific group of businesses (participation or utilization) by the dollars one
would expect the organization to award to those businesses based on their availability for that work. A
disparity index is expressed as a dollar amount that represents how many dollars (or cents) the
organization awarded to the group of businesses relative to every dollar of the organization’s work for
which those businesses are available.
Dun & Bradstreet (D&B)
D&B is the leading global provider of lists of business establishments and other business information for
specific industries within specific geographical areas (for details, see www.dnb.com).
Good Faith Efforts (GFEs)
GFEs are genuine and meaningful steps bidders take to meet a contract goal, even if they were
unsuccessful in doing so. Bidders may submit a waiver detailing their GFEs in lieu of meeting program
requirements, and the organization reviews those efforts when evaluating the bid. Failure to
demonstrate sufficient GFEs may render a bidder’s bid non-responsive.
Higher Education Institution (HEI)
HEIs are state-supported colleges and universities established under Title 23, Chapter 1 of the Virginia
State Statute. For the purposes of this study, HEIs refer to those universities with tier 2 or tier 3
procurement authority established through the Virginia Association of State College and University
Purchasing Professionals. (See tier 2 purchasing authority and tier 3 purchasing authority.)
Industry
An industry is a broad classification of businesses providing related goods or services (e.g., construction
or professional services).
Inference of Discrimination
An inference of discrimination is the conclusion that businesses whose owners identify with particular
race/ethnic or gender groups suffer from barriers or discrimination in the marketplace based on
sufficient quantitative or qualitative evidence. When inferences of discrimination exist, government
organizations sometimes use race- or gender-based measures to address the barriers affecting those
businesses. Courts have generally considered substantial disparities between the participation and
availability of a particular group of businesses for an organization’s contracts and procurements as an
inference of discrimination that supports the use of race-based contracting measures.
FINAL REPORT APPENDIX A, PAGE 3
Intermediate Scrutiny
Intermediate scrutiny is the legal standard government organizations’ use of gender-based measures
must meet in order to be considered constitutional. It is more rigorous than the rational basis standard,
which applies to business measures unrelated to race/ethnicity or gender, but less rigorous than the
strict scrutiny standard, which applies to business measures related to race/ethnicity. In order for
programs to meet intermediate scrutiny, they must serve important government objectives, and they
must be substantially related to achieving those objectives.
Marketplace Conditions
Marketplace conditions refer to various factors that potentially affect outcomes for certain workers and
businesses operating in that marketplace (e.g., minorities, women, service-disabled veterans, and the
businesses they own). The study team assessed conditions in the Virginia marketplace in four primary
areas: human capital, financial capital, business ownership, and business success.
Microbusiness
A microbusiness is a business that, together with affiliates, has 25 or fewer employees and annual gross
receipts of $3 million or less averaged over the previous three years. Businesses do not have to be
certified by the Commonwealth of Virginia’s Department of Small Business and Supplier Diversity or any
other organization to be considered microbusinesses.
Minority
A minority is an individual who identifies with one of the following racial groups: Asian, Black, Hispanic,
Native American, or other non-White racial groups.
Minority-owned Business
A minority-owned business is a business with at least 51 percent ownership and control by individuals
who identify with one of the following racial groups: Asian, Black, Hispanic, Native American, or other
non-White racial groups. The study team considered businesses owned by minority men or minority
women as minority-owned businesses. A business does not have to be certified as such by the
Commonwealth of Virginia’s Department of Small Business and Supplier Diversity or any other
organization to be considered a minority-owned business.
Narrow Tailoring
As part of the strict scrutiny standard of constitutional review, a government organization must
demonstrate its use of race-based measures is narrowly tailored. There are several factors a court
considers when determining whether the use of such measures is narrowly tailored, including:
The necessity of such measures and the efficacy of alternative, race-neutral measures;
The degree to which the use of such measures is limited to those groups that suffer barriers or
discrimination in the local marketplace;
The degree to which the use of such measures is flexible and limited in duration, including the
availability of waivers and sunset provisions;
FINAL REPORT APPENDIX A, PAGE 4
The relationship of any numerical goals to the relevant business marketplace; and
The impact of such measures on the rights of third parties.
Non-professional Services and Goods
A non-professional services and goods business engages in providing goods, supplies, or services that
typically do not require a specific educational background, license, or high degree of expertise and
training to perform. Examples of goods and services industries include cleaning and janitorial services
and supplies; office equipment and supplies; printing, copying, and mailing services; safety equipment;
security systems; security guard services; uniforms and apparel; automobiles; and vehicle repair
services.
Passive Participation
Passive participation in discrimination refers to government organizations perpetuating discrimination
in their contract and procurement processes simply by operating in marketplaces where such barriers
exist and unintentionally perpetuating them as part of their contracting processes.
Participation
See utilization.
Prime Consultant
Prime consultants are businesses that perform professional services work directly for end users, such as
the Commonwealth of Virginia.
Prime Contract
Prime contracts are contracts between prime contractors or prime consultants and end users, such as
the Commonwealth of Virginia.
Prime Contractor
Prime contractors are construction businesses or goods and services vendors that perform work
directly for end users, such as the Commonwealth of Virginia.
Procurement
See contract.
Professional Services
Professional services refers to professional, scientific, or technical services that require a high degree of
expertise and training. Frequently—but not always—individuals who perform professional services are
required to have a license or specific educational background. Examples of professional services include
legal counsel; accounting, bookkeeping, and payroll services; computer services; consulting services;
research services; advertising services; photographic services; and other professional, scientific, and
technical services.
FINAL REPORT APPENDIX A, PAGE 5
Project
Projects refer to construction, professional services, or non-professional services and goods endeavors
the Commonwealth of Virginia bids out. Projects could include one or more prime contracts and
corresponding subcontracts.
Qualitative Information
Qualitative information includes personal accounts of experiences—including any incidents of
discrimination—and perceptions related to the marketplace that individual interviewees, public
meeting participants, focus group participants, and other stakeholders shared with the study team.
Race- and Gender-based Measures
Race- and gender-based measures are contracting measures designed to increase the participation of
minority- and woman-owned businesses, specifically, in government work. Businesses owned by
individuals who identify with particular race groups might be eligible for such measures, whereas others
would not. Similarly, businesses owned by individuals who identify as women might be eligible for such
measures, whereas businesses owned by individuals who identify as men would not. An example of
race- and gender-based measures is an organization’s use of minority- or woman-owned business
contract goals in awarding individual contracts or procurements.
Race- and Gender-neutral Measures
Race- and gender-neutral measures are measures designed to address potential barriers for businesses
regardless of the race or gender of the owners. Race- and gender-neutral measures may include
assistance in overcoming bonding and financing obstacles, simplifying bidding procedures, providing
technical assistance, and establishing programs to assist start-ups.
Rational Basis
Government organizations that operate contracting inclusion programs that rely solely on race- and
gender-neutral measures to encourage the participation of businesses in their work must show a
rational basis for their programs. Showing a rational basis requires organizations to demonstrate their
contracting programs are rationally related to legitimate government interests. It is the lowest threshold
for evaluating the legality of government contracting programs.
Relevant Geographic Market Area (RGMA)
The RGMA is the geographic area in which the businesses to which organizations award most of their
contracting dollars are located. Case law related to contracting inclusion programs and disparity studies
requires analyses to focus on the RGMA. The RGMA for the disparity study is the state of Virginia.
Service-Disabled Veteran (SDV)
An SDV is a veteran who: 1) served on active duty in the United States military ground, naval, or air
service; 2) was discharged or released under conditions other than dishonorable; and 3) has a service-
connected disability rating fixed by the United States Department of Veterans Affairs.
FINAL REPORT APPENDIX A, PAGE 6
Service-Disabled Veteran (SDV)‐owned Business
An SDV‐owned business is a business owned by SDVs. A business does not have to be certified as such by
the Commonwealth of Virginia’s Department of Small Business and Supplier Diversity or any other
organization to be considered an SDV-owned business.
Small Business
A small business is a business that, together with affiliates, has 250 or fewer employees or annual gross
receipts of $10 million or less averaged over the previous three years. Businesses do not have to be
certified by the Commonwealth of Virginia’s Department of Small Business and Supplier Diversity or any
other organization to be considered small businesses.
Small, Women-owned, and Minority‐owned Business (SWaM)-certified Business
A SWaM-certified business is a business that is certified as a small business, microbusiness, minority-
owned business, woman-owned business, or service-disabled veteran-owned business by the
Commonwealth of Virginia’s (the Commonwealth’s) Department of Small Business and Supplier
Diversity or a successor department of the Commonwealth.
Small, Women-owned, and Minority‐owned Business (SWaM)-eligible Business
A SWaM-eligible business is a business in Virginia that meets the qualifications to be a SWaM-certified
small business, microbusinesses, or minority-, woman-, or SDV-owned business, regardless of whether it
is certified as such. To estimate a business' ability to qualify as a small business or microbusiness, BBC
Research & Consulting (BBC) used a combination of primary and secondary data collection as well as
data modeling. As part of BBC's business surveys, business representatives were asked to report
business size in terms of revenue and number of employees, and to disclose any affiliates, parent
companies, or subsidiaries. For non-certified utilized businesses with which BBC did not conduct a
business survey, we relied on business size and company structure information from Dun & Bradstreet
(D&B). BBC used a predictive regression model to correct for gaps and errors in D&B's business size
information. For businesses that have affiliates, parent companies, or subsidiaries, BBC used business
size for the entire corporate structure, in terms of revenue and number of employees, to determine
business eligibility as a potential small business or microbusiness, rather than on the structure of
ownership interests.
Small, Women-owned, and Minority‐owned Business (SWaM) Program
The SWaM Program includes myriad race- and gender-neutral efforts the Commonwealth of Virginia
uses to encourage the participation of small businesses and microbusinesses as well as minority-,
woman-, and service-disabled veteran-owned businesses in its contracting and procurement.
Statistically Significant Difference
A statistically significant difference is a quantitative difference for which there is a 0.95 or 0.90
probability that chance can be correctly rejected as an explanation for the difference (that is, there is a
0.05 or 0.10 probability, respectively, that chance could correctly account for the difference).
FINAL REPORT APPENDIX A, PAGE 7
Strict Scrutiny
Strict scrutiny is the legal standard a government agency’s use of race-based measures must meet to be
considered constitutional. Strict scrutiny is the highest threshold for evaluating the legality of measures
that might impinge on the rights of others, short of prohibiting them altogether. Under the strict scrutiny
standard, an organization must:
Have a compelling governmental interest in remedying past identified discrimination or its present
effects; and
Establish that the use of any such measures is narrowly tailored to achieve the goal of remedying
the identified discrimination.
An organization’s use of race-based measures must meet both the compelling governmental interest and
the narrow tailoring components of the strict scrutiny standard for it to be considered constitutional.
Study Period
The study period is the time period on which the study team focused for the utilization, availability, and
disparity analyses. The study period for the disparity study was July 1, 2019 through June 30, 2024. The
Commonwealth of Virginia had to have awarded contracts or procurements during the study period for
them to be included in our analyses.
Subcontract
Subcontracts are contracts between prime contractors or prime consultants and other businesses
providing goods or services to the prime contractors or prime consultants as part of larger projects.
Subcontracting Participation Plan
A subcontracting participation plan is a plan bidders and offerors must include as part of their bids,
quotes, or proposals for Commonwealth of Virginia projects worth more than $100,000. These plans
detail the participation of small businesses, microbusinesses, minority-owned businesses, woman-
owned businesses, and service-disabled veteran-owned businesses as subcontractors on their teams.
Subcontractor
Subcontractors are businesses that provide goods or services to prime contractors as part of larger
projects.
Subindustry
Subindustries are specific classifications for businesses providing related goods or services within
particular industries (e.g., highway and street construction is a subindustry of construction).
Substantial Disparity
Substantial disparities are disparities of $0.80 or less, indicating that the actual participation of a specific
business group in agency work is 80 percent or less of the group’s estimated availability. Substantial
disparities are considered inferences of discrimination in the relevant geographic market area against
particular business groups. Government organizations sometimes use substantial disparities as
FINAL REPORT APPENDIX A, PAGE 8
justification for the use of race- or gender-based measures to address barriers affecting certain groups
of minority- or woman-owned businesses.
Tier 2 Purchasing Authority
Higher education institutions that are members of the Virginia Association of State College and
University Purchasing Professionals with tier 2 purchasing authority include Christopher Newport
University, Norfolk State University, Old Dominion University, Radford University, Longwood University,
the University of Mary Washington, Virginia Military Institute, Virginia State University, and the Virginia
Community College System. Tier 2 institutions have a memorandum of understanding with the
Commonwealth of Virginia that allows them contracting and procurement autonomy in two of the
following three areas: procurement, capital outlay construction, and technology.
Tier 3 Purchasing Authority
Higher education institutions that are members of the Virginia Association of State College and
University Purchasing Professionals with tier 3 purchasing authority include the University of Virginia,
Virginia Polytechnic Institute and State University, Virginia Commonwealth University, James Madison
University, George Mason University, and the College of William and Mary. Tier 3 institutions have
complete autonomy in their contracting and procurement.
Utilization
Utilization refers to the percentage of total dollars associated with a particular set of contracts or
procurements the Commonwealth of Virginia awarded to a specific group of businesses during the study
period. The study team uses the term utilization synonymously with participation.
Vendor
Vendors are businesses that supply goods either to prime contractors or prime consultants or to end
users, such as the Commonwealth of Virginia.
Virginia Association of State College and University Purchasing Professionals
(VASCUPP)
VASCUPP was established in 1992 under the objective of identifying opportunities for cooperative
procurements and cost savings for higher education institutions in Virginia. VASCUPP members have
tier 2 or tier 3 delegated purchasing authority.
Woman-owned Business
Woman-owned businesses are businesses owned by White women. Businesses do not have to be
certified by the Commonwealth of Virginia’s Department of Small Business and Supplier Diversity or any
other organization to be considered woman-owned businesses. (The study team considered businesses
owned by women of color as minority-owned businesses.)
FINAL REPORT APPENDIX A, PAGE 9
APPENDIX B.
Legal Analysis and Framework
A. Introduction
In this appendix, Holland & Knight LLP discusses recent cases involving local and state government
minority-, women-, and disadvantaged-owned business enterprise (MBE/WBE/DBE) programs, and
social and economic disadvantaged business programs, which are instructive to the study and
MBE/WBE/DBE programs. The appendix provides a summary of the legal framework for the disparity
study as applicable to the Commonwealth of Virginia.
The appendix reviews the landmark United States Supreme Court decision in City of Richmond v. J.A.
Croson (Croson). 1 Croson sets forth the strict scrutiny constitutional analysis applicable in the legal
framework for conducting a disparity study. This section also notes the United States Supreme Court
decision in Adarand Constructors, Inc. v. Peña, (Adarand I), which applied the strict scrutiny analysis set
forth in Croson to federal programs that provide federal assistance to a recipient of federal funds. 2 The
Supreme Court’s decisions in Adarand I and Croson and subsequent cases and authorities provide the
basis for the legal analysis in connection with the study.
The legal framework analyzes, discusses, and includes significant recent court decisions that have
followed, interpreted, and applied Croson and Adarand I to the present and that are applicable to this
disparity study, the Federal DBE Program and its implementation by state and local governments and
recipients of federal funds, MBE/WBE/DBE programs, and the strict scrutiny analysis. The
Commonwealth of Virginia is in the United States Court of Appeals for the Fourth Circuit. In particular,
this analysis discusses and references Fourth Circuit Court of Appeals decisions, which followed the
Croson decision and applied the strict scrutiny standard, that are instructive to the study, including the
decisions in H.B. Rowe Co., Inc. v. W. Lyndo Tippett, North Carolina Department of Transportation
(NCDOT), et al. (H.B. Rowe) and district court decisions in the Fourth Circuit regarding MBE/WBE/DBE
programs. 3
In addition, the analysis includes and references recent federal cases from other jurisdictions that have
considered the validity of the Federal DBE Program and its implementation by state departments of
transportation (DOTs) and local or state government agencies and the validity of local and state DBE
programs, focusing on the application by those courts of the strict scrutiny standard and disparity
studies, including: Mid-America Milling Company LLC and Bagshaw Trucking Inc. v. United States
Department of Transportation (USDOT), et. al. (MAMCO); Associated General Contractors of America
(AGC), San Diego Chapter, Inc. v. California Department of Transportation (Caltrans), et al.; Western States
Paving Co. v. Washington State DOT; Orion Insurance Group, Ralph G. Taylor v. Washington Minority &
Women’s Business Enterprise, USDOT, et al.; Mountain West Holding Co. v. Montana, Montana DOT, et al.;
M.K. Weeden Construction v. Montana, Montana DOT, et al; Sherbrooke Turf, Inc. v. Minnesota DOT and
Gross Seed v. Nebraska Department of Roads (Sherbrooke Turf); Geyer Signal, Inc. v. Minnesota DOT;
1 City of Richmond v. J.A. Croson, 488 U.S. 469 (1989).
2 Adarand Constructors, Inc. v. Pena, 515 U.S. 200 (1995).
3 615 F.3d 233 (4th Cir. 2010).
FINAL REPORT APPENDIX B, PAGE 1
Adarand Constructors, Inc. v. Slater (Adarand VII); United States v. Taylor; Geod Corporation v. New Jersey
Transit Corporation; South Florida Chapter of the AGC. v. Broward County Florida; Midwest Fence Corp. v.
USDOT, Federal Highway Administration (FHWA), Illinois DOT, Illinois State Toll Highway Authority
(Midwest Fence), et al.; Dunnet Bay Construction Co. v. Illinois DOT (Dunnet Bay); and Northern
Contracting, Inc. v. Illinois DOT. 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18
The appendix also discusses recent cases regarding the Federal DBE Program, notes instructive
guidance regarding the Federal Airport Concessions Disadvantaged Business Enterprise (ACDBE)
Program, and provides an analysis of the implementation of the Federal DBE and ACDBE Programs by
local and state governments. 19, 20 The Federal DBE Program was continued and reauthorized by the
2015 Fixing America’s Surface Transportation Act (FAST Act). 21 In October 2018, Congress passed the
Federal Aviation Administration (FAA) Reauthorization Act. 22 In November 2021, Congress passed the
Infrastructure Investment and Jobs Act of 2021, which reauthorized the Federal DBE Program based on
findings of continuing discrimination and related barriers posing significant obstacles for
4 Mid-America Milling Company LLC (MAMCO) and Bagshaw Trucking Inc. v. U.S. Department of Transportation, et. al. 2024 WL 4267183
(Sept. 23, 2024); U.S. District Court for the Eastern District of Kentucky, Frankfort Division; Case No: 3:23 -cv-00072-GFVT.
5 Associated General Contractors of America, San Diego Chapter, Inc. v. California Department of Transportation, et al., 713 F.3d 1187, (9th
Cir. 2013)
6 Western States Paving Co. v. Washington State DOT, 407 F.3d 983 (9th Cir. 2005)
7 Orion Insurance Group, Ralph G. Taylor v. Washington Minority & Women’s Business Enterprise, U.S. DOT, et al.
8 Mountain West Holding Co. v. Montana, Montana DOT, et al.
9 M.K. Weeden Construction v. Montana, Montana DOT, et al.
10 Sherbrooke Turf, Inc. v. Minnesota DOT and Gross Seed v. Nebraska Department of Roads, 345 F.3d 964 (8th Cir. 2003), cert. denied, 541
U.S. 1041 (2004).
11 Geyer Signal, Inc. v. Minnesota DOT, 2014 W.L. 1309092 (D. Minn. 2014).
12 Adarand Constructors, Inc. v. Slater, Colorado DOT, 228 F.3d 1147 (10th Cir. 2000) (Adarand VII).
13 232 F.Supp. 3d 741 (W.D. Penn. 2017)
14 Geod Corp. v. New Jersey Transit Corp., 766 F. Supp.2d. 642 (D. N.J. 2010); Geod Corporation v. New Jersey Transit Corporation, et seq. 678
F.Supp.2d 276, 2009 WL 2595607 (D.N.J. August 20, 2009
15 South Florida Chapter of the A.G.C. v. Broward County, Florida, 544 F. Supp.2d 1336 (S.D. Fla. 2008).
16 Midwest Fence Corp. v. U.S. DOT, Illinois DOT, et al., 840 F.3d 932, 2016 WL 6543514 (7th Cir. 2016), cert. denied, 2017 WL 497345
(2017).
17 Dunnet Bay Construction Co. v. Borggren, Illinois DOT, et al., 799 F.3d 676, 2015 WL 4934560 (7th Cir. 2015), cert. denied, 2016 WL
193809 (2016); DunnetBay Construction Co. v. Illinois DOT, et. al. 2014 WL 552213 (C. D. Ill. 2014), affirmed by Dunnet Bay, 2015 WL
4934560 (7th Cir. August 19, 2015).
18 Northern Contracting, Inc. v. Illinois DOT, 473 F.3d 715 (7th Cir. 2007).
19 49 CFR Part 26(Participation by Disadvantaged Business Enterprises in Department of Transportation Financial Assistance Programs
(Federal DBE Program). See the Transportation Equity Act for the 21st Century (TEA-21) as amended and reauthorized (MAP-21,
SAFETEA, and SAFETEA-LU), and the United States Department of Transportation (USDOT or DOT) regulations promulgated to
implement TEA-21 the Federal regulations known as Moving Ahead for Progress in the 21st Century Act (MAP-21), Pub L. 112-141, H.R.
4348, § 1101(b), July 6, 2012, 126 Stat 405.; preceded by Pub L. 109-59, Title I, § 1101(b), August 10, 2005, 119 Stat. 1156; preceded by
Pub L. 105-178, Title I, § 1101(b), June 9, 1998, 112 Stat. 107.
20 49 CFR Part 23 (Participation of Disadvantaged Business Enterprises in Airport Concessions).
21 Pub. L. 114-94, H.R. 22, § 1101(b), December 4, 2015, 129 Stat. 1312.
22 Pub L. 115-254, H.R. 302 § 157, October 5, 2018, 132 Stat 3186.
FINAL REPORT APPENDIX B, PAGE 2
MBE/WBE/DBEs, and in May 2024, Congress passed legislation that reauthorized the FAA’s ACDBE
Program. 23, 24
The analysis references, discusses, and analyzes recent court decisions that involved challenges to
MBE/WBE/DBE programs and social and economic disadvantaged business programs in other
jurisdictions, which are instructive to the study.
The analyses of these and other recent cases discussed below, including the Fourth Circuit decisions, are
instructive to the disparity study because they are decisions by courts setting forth the legal framework
applied to MBE/WBE/DBE programs, the Federal DBE Program and its implementation by local and
state governments receiving USDOT funds, disparity studies, social and economic disadvantaged
business programs, and construing the validity of government programs involving MBE/WBE/DBEs and
socially and economically disadvantaged businesses. They also are pertinent in terms of an analysis and
consideration and, if legally appropriate under the strict scrutiny standard, preparation of narrowly
tailored local or state government MBE/WBE/DBE programs.
The appendix notes in Section C.4. below significant pending and very recent cases instructive and
informative to the study and MBE/WBE/DBE and socially and economically disadvantaged business
type programs. We can provide more detail on these cases if requested.
For example, in a significant and instructive pending case listed in C.4 below, on May 28, 2025, the
Plaintiffs and federal Defendants (USDOT) in MAMCO filed a Joint Motion for Entry of a proposed
Consent Order to end the case. The proposed Consent Order provides in part that the Defendants have
determined the race- and sex- based presumptions in the Federal DBE Program are unconstitutional and
requests the court hold that the Federal DBE Program that uses DBE contract goals based on race- and
sex-based presumptions is unconstitutional. See, Section C.4. below discussing MAMCO. The court
granted intervention by a group of Intervenor DBEs in support of the Federal DBE Program and in
opposition of the proposed Consent Order and granted certain Motions by Amici Curiae to file briefs in
opposition to and in support of the proposed Consent Order.
In addition, the appendix points out in Sections C.5., C.6., C.7., C.8., C.9, and C.10. references to January
2025 Executive Orders issued by the President, a February 2025 Attorney General Memorandum, and
Title VI Complaints against the State of New York MWBE program and Wisconsin Department of
Administration (DOA) for Supplier Diversity Program, which have been filed recently with the United
States Department of Justice (USDOJ) requesting investigations, a July 29, 2025 USDOJ Memorandum to
all federal agencies regarding “the application of federal antidiscrimination laws to programs or
initiatives that may involve discriminatory practices, including those labeled as Diversity, Equity, and
Inclusion (DEI) programs,” a September 5, 2025 Indiana DOT Request for Waiver of Race and Gender
Conscious Requirements of the Federal DBE Program signed by 16 states attorneys general, and the
Interim Final Rule published by USDOT on October 3, 2025, which is effective immediately.
23 Pub. L. 117-58, H.R. 3684, §11101(e), November 15, 2021, 135 Stat 443-449.
24 Pub. L. 117-58, H.R. 3684, §11101(e), November 15, 2021, 135 Stat 443-449; Pub L. 118-63, §730 (a), May 16, 2024, 138 Stat 1272.
FINAL REPORT APPENDIX B, PAGE 3
B. United States Supreme Court Cases
1. City of Richmond v. J.A. Croson Co. (Croson), 488 U.S. 469 (1989). In Croson, the United
States Supreme Court struck down the City of Richmond’s “set-aside” program as unconstitutional
because it did not satisfy the strict scrutiny analysis applied to “race-based” governmental programs. 25
J.A. Croson Co. (Croson) challenged the City of Richmond’s minority contracting preference plan, which
required prime contractors to subcontract at least 30 percent of the dollar amount of contracts to one or
more MBEs. In enacting the plan, the City cited past discrimination and an intent to increase minority
business participation in construction projects as motivating factors.
The Supreme Court held the City of Richmond’s “set-aside” action plan violated the Equal Protection
Clause of the Fourteenth Amendment. The Court applied the “strict scrutiny” standard, generally
applicable to any race-based classification, which requires a governmental entity to have a “compelling
governmental interest” in remedying past identified discrimination and that any program adopted by a
local or state government must be “narrowly tailored” to achieve the goal of remedying the identified
discrimination.
The Court determined that the plan neither served a “compelling governmental interest” nor offered a
“narrowly tailored” remedy to past discrimination. The Court found no “compelling governmental
interest” because the City had not provided “a strong basis in evidence for its conclusion that [race-
based] remedial action was necessary.” 26 The Court held the City presented no direct evidence of any
race discrimination on its part in awarding construction contracts or any evidence that the City’s prime
contractors had discriminated against minority-owned subcontractors. 27 The Court also found there
were only generalized allegations of societal and industry discrimination coupled with positive
legislative motives. The Court concluded that this was insufficient evidence to demonstrate a compelling
interest in awarding public contracts on the basis of race.
Similarly, the Court held the City failed to demonstrate that the plan was “narrowly tailored” for several
reasons, including because there did not appear to have been any consideration of race-neutral means to
increase minority business participation in city contracting, and because of the over inclusiveness of
certain minorities in the “preference” program (for example, Aleuts) without any evidence they suffered
discrimination in Richmond. 28
The Court stated that reliance on the disparity between the number of prime contracts awarded to
minority firms and the minority population of the City of Richmond was misplaced. There is no doubt,
the Court held, that “[w]here gross statistical disparities can be shown, they alone in a proper case may
constitute prima facie proof of a pattern or practice of discrimination” under Title VII. 29 But it is equally
clear that “[w]hen special qualifications are required to fill particular jobs, comparisons to the general
25 488 U.S. 469 (1989).
26 488 U.S. at 500, 510.
27 488 U.S. at 480, 505.
28 488 U.S. at 507-510.
29 488 U.S. at 501, quoting Hazelwood School Dist. v. United States, 433 U.S. 299, 307–308, 97 S.Ct. 2736, 2741.
FINAL REPORT APPENDIX B, PAGE 4
population (rather than to the smaller group of individuals who possess the necessary qualifications)
may have little probative value.” 30
The Court concluded that where special qualifications are necessary, the relevant statistical pool for
purposes of demonstrating discriminatory exclusion must be the number of minorities qualified to
undertake the particular task. The Court noted that “the city does not even know how many MBEs in the
relevant market are qualified to undertake prime or subcontracting work in public construction
projects.” 31 “Nor does the city know what percentage of total city construction dollars minority firms
now receive as subcontractors on prime contracts let by the city.” 32
The Supreme Court stated that it did not intend its decision to preclude a state or local government from
“taking action to rectify the effects of identified discrimination within its jurisdiction.”33 The Court held
that “[w]here there is a significant statistical disparity between the number of qualified minority
contractors willing and able to perform a particular service and the number of such contractors actually
engaged by the locality or the locality’s prime contractors, an inference of discriminatory exclusion
could arise.” 34
The Court said: “If the City of Richmond had evidence before it that nonminority contractors were
systematically excluding minority businesses from subcontracting opportunities it could take action to
end the discriminatory exclusion.” 35 “Under such circumstances, the city could act to dismantle the
closed business system by taking appropriate measures against those who discriminate on the basis of
race or other illegitimate criteria.” “In the extreme case, some form of narrowly tailored racial
preference might be necessary to break down patterns of deliberate exclusion.” 36
The Court further found “if the City could show that it had essentially become a ‘passive participant’ in a
system of racial exclusion practiced by elements of the local construction industry, we think it clear that
the City could take affirmative steps to dismantle such a system. It is beyond dispute that any public
entity, state or federal, has a compelling interest in assuring that public dollars, drawn from the tax
contributions of all citizens, do not serve to finance the evil of private prejudice.”37
2. Adarand Constructors, Inc. v. Peña (Adarand I), 515 U.S. 200 (1995). In Adarand I, the
United Stats Supreme Court extended the holding in Croson and ruled that all federal government
programs that use racial or ethnic criteria as factors in procurement decisions must pass a test of strict
scrutiny in order to survive constitutional muster.
The cases interpreting Croson and Adarand I are the most recent and significant decisions by federal
courts setting forth the legal framework for disparity studies as well as the predicate to satisfy the
30 488 U.S. at 501 quoting Hazelwood, 433 U.S. at 308, n. 13, 97 S.Ct., at 2742, n. 13.
31 488 U.S. at 502.
32 Id.
33 488 U.S. at 509.
34 Id.
35 488 U.S. at 509.
36 Id.
37 488 U.S. at 492.
FINAL REPORT APPENDIX B, PAGE 5
constitutional strict scrutiny standard of review, which applies to the implementation of the Federal
DBE Program and ACDBE Program by recipients of federal funds.
3. Students for Fair Admissions, Inc. v. President and Fellows of Harvard College (SFFA),
143 S. Ct. 2141 (June 29, 2023). In Students for Fair Admissions, Inc. v. President and Fellows of
Harvard College, the Supreme Court held unconstitutional under the Equal Protection Clause of the
Fourteenth Amendment the admissions systems used by Harvard College and the University of North
Carolina. The Majority decision of the Court referenced, cited, and applied the Supreme Court decisions
in Croson and Adarand, including the strict scrutiny standard, to the university admissions systems in
these cases. The Majority decision in the SFFA case did not specifically rule on or address the
constitutionality of MBE/WBE/DBE contracting programs by local or state governments or the
implementation of the Federal DBE or ACDBE Programs by local or state governments, airports, transit
or transportation authorities, or other government agencies.
This decision focused on university admissions and diversity as the basis for a race-conscious type
program. It did not involve a federal, local, or state government contracting program. Recent cases,
including as noted in Section C.4. below, have referenced and cited the SFFA decision in connection with
challenges to federal, local, or state government contracting programs.
It is noteworthy that subsequent to the Supreme Court decision in SFFA v. Harvard et al., Attorneys
General from 13 states sent a letter, dated July 13, 2023, to “Fortune 100 CEOs” in which, among other
statements, they urged businesses, to “immediately cease any unlawful race-based quotas or
preferences your company has adopted for its employment and contracting practices.” The Virginia
Attorney General was not among the state Attorneys General signing the July 13, 2023 letter.
On July 19, 2023, Attorneys General from 20 states sent a letter to “Fortune 100 CEOs” in which they
responded to and opposed the statements in the July 13, 2023 letter sent by the Attorneys General from
the 13 states. This letter provides that the “SFFA does not directly address or govern the behavior or the
initiatives of private sector businesses.” In addition, the letter provides that “SFFA acknowledges that
our society has a compelling interest in ‘remediating specific, identified instances of past discrimination
that violated the Constitution or a statute.’ SFFA, slip op. at 15.” The Virginia Attorney General was not
among the state Attorneys General signing the July 19, 2023 letter.
C. The Legal Framework Applied to State and Local Government MBE/WBE/DBE
Programs and Their Implementation of the Federal DBE and ACDBE Programs
The following provides an analysis for the legal framework focusing on recent key cases regarding state
and local government MBE/WBE/DBE programs. The recent decisions involving these state and local
government MBE/WBE/DBE programs, the Federal DBE Program and its implementation by state and
local governments, and socially and economically disadvantaged business programs are instructive
because they concern the strict scrutiny analysis, the legal framework in this area, challenges to the
validity of MBE/WBE/DBE programs, and an analysis of disparity studies, and implementation of the
Federal DBE and ACDBE Programs by local and state government recipients of federal financial
assistance (USDOT funds) based on 49 Code of Federal Regulations (CFR) Part 26 and 49 CFR Part 23.
The analysis also discusses the application of intermediate scrutiny and rational basis standards as
applied to gender discrimination and socially and economically disadvantaged business type programs.
FINAL REPORT APPENDIX B, PAGE 6
The Congressional Acts noted above are informative as they are based on recent Congressional findings
as to discrimination regarding MBE/WBE/DBEs, including relating to the Federal DBE Program, which
set forth Congressional findings as to discrimination against MBE/WBE/DBEs, including from disparity
studies and other evidence. Congress passed legislation in November 2021 (HR 3684 - 117th Congress,
Section 11101, Infrastructure Investment and Jobs Act of 2021) that reauthorized the Federal DBE
Program and its implementation by local and state governments based on evidence and findings of
continuing discrimination and related barriers posing significant obstacles for MBE/WBE/DBEs.
USDOJ in January 2022 issued a report that updated its 1996 report, titled “The Compelling Interest to
Remedy the Effects of Discrimination in Federal Contracting: A Survey of Recent Evidence,” which
“summarizes recent evidence required to justify the use of race- and sex-conscious provisions in federal
contracting programs.” The “Notice of Report on Lawful Uses of Race or Sex in Federal Contracting
Programs” is published in the Federal Register, Vol. 87 at page 4955, January 31, 2022. This “updated
report regarding the legal and evidentiary frameworks that justify the continued use of race or sex, in
appropriate circumstances, by federal agencies to remedy the current and lingering effects of past
discrimination in federal contracting programs” is available on the Department of Justice’s website at:
https://www.justice.gov/crt/page/file/1463921/download.
The federal government determined that there is a compelling governmental interest for race- and
gender-based programs at the national level, and that the program is narrowly tailored because of the
federal regulations, including the flexibility in implementation provided to individual federal aid
recipients by the regulations. State and local governments are not required to implement race- and
gender-based measures where they are not necessary to achieve DBE goals and those goals may be
achieved by race- and gender-neutral measures.38
Although, as referenced above, several federal courts of appeal have upheld the constitutionality of the
Federal DBE Program, it is noteworthy that a federal district court in MAMCO, which is noted below in
Section C.4. (viii), has recently considered a challenge to the Federal DBE Program. 39 Plaintiffs sought a
preliminary and permanent injunction, and a declaratory judgment, that the Federal DBE Program,
including Sections 11101(e)(2) and (3) of the Infrastructure Act and corresponding federal regulations,
is unconstitutional because it violates the Equal Protection Clause of the United States Constitution.
Plaintiffs’ Motion for Preliminary Injunction was granted that enjoined enforcement of the Federal DBE
Program as applied to the Plaintiffs in each state they bid or operate in. The court enjoined the USDOT
from mandating the use of race- and gender-based rebuttable presumptions for certain groups
regarding its contracts impacted by DBE goals. Currently the case is pending with the most recent filings
including a Joint Motion for Entry of a Consent Order proposed by the USDOT and the Plaintiffs
requesting the court hold the Federal DBE Program unconstitutional in its requirement for
presumptions of groups being eligible as DBEs, and an Intervention by Intervenor DBEs that are
supporting the Federal DBE Program, See, Section C.4. (viii), below.
38 49 CFR § 26.51; see 49 CFR § 23.25.
39 2024 WL 4635430 (E.D. Ky. Oct. 31, 2024); 2024 WL 4267183 (Sept. 23, 2024), U.S. District Court for the Eastern District of Kentucky,
Frankfort Division; Case No: 3:23 -cv-00072-GFV
FINAL REPORT APPENDIX B, PAGE 7
1. Strict scrutiny analysis. A race- and ethnicity-based program implemented by a state or local
government is subject to the strict scrutiny constitutional analysis. 40 The strict scrutiny analysis
comprises two prongs:
The program must serve an established compelling governmental interest; and
The program must be narrowly tailored to achieve that compelling government interest.41
a. The compelling governmental interest requirement. The first prong of the strict scrutiny analysis
requires a governmental entity to have a “compelling governmental interest” in remedying past
identified discrimination in order to implement a race- and ethnicity-based program. 42 State and local
governments cannot rely on national statistics of discrimination in an industry to draw conclusions
about the prevailing market conditions in their own regions. 43 Rather, state and local governments must
measure discrimination in their state or local market. However, that is not necessarily confined by the
jurisdiction’s boundaries. 44
The federal courts have held that, with respect to the Federal DBE Program, recipients of federal funds,
such as state and local governments, do not need to independently satisfy this prong because Congress
has satisfied the compelling interest test of the strict scrutiny analysis. 45 The federal courts also have
held that Congress had ample evidence of discrimination in the transportation contracting industry to
justify the Federal DBE Program (TEA-21), and the federal regulations implementing the program (49
CFR Part 26). 46
40 Croson, 448 U.S. at 492-493; Adarand Constructors, Inc. v. Pena (Adarand I), 515 U.S. 200, 227 (1995); see, e.g., Fisher v. University of
Texas, 133 S.Ct. 2411 (2013); Midwest Fence v. Illinois DOT, 840 F.3d 932, 935, 948-954 (7th Cir. 2016); AGC, SDC v. Caltrans, 713 F.3d
1187, 1195-1200 (9th Cir. 2013); H.B. Rowe Co., Inc. v. NCDOT, 615 F.3d 233, 241-242 (4th Cir. 2010); Northern Contracting, 473 F.3d at
721; Western States Paving, 407 F.3d at 991; Sherbrooke Turf, 345 F.3d at 969; Adarand VII, 228 F.3d at 1176 (10th Cir. 2000); W.H. Scott
Constr. Co. v. City of Jackson, Mississippi, 199 F.3d 206 (5th Cir. 1999); Eng’g Contractors Ass’n of South Florida, Inc. v. Metro. Dade County,
122 F.3d 895 (11th Cir. 1997); Contractors Ass’n of E. Pa. v. City of Philadelphia (“CAEP II”), 91 F.3d 586 (3d. Cir. 1996); Contractors Ass’n
of E. Pa. v. City of Philadelphia (“CAEP I”), 6 F.3d 990 (3d. Cir. 1993).
41 Adarand I, 515 U.S. 200, 227 (1995); Midwest Fence v. Illinois DOT, 840 F.3d 932, 935, 948-954 (7th Cir. 2016); AGC, SDC v. Caltrans, 713
F.3d 1187, 1195-1200 (9th Cir. 2013); H. B. Rowe Co., Inc. v. NCDOT, 615 F.3d 233, 241-242 (4th Cir. 2010); Northern Contracting, 473 F.3d
at 721; Western States Paving, 407 F.3d at 991 (9th Cir. 2005); Sherbrooke Turf, 345 F.3d at 969; Adarand VII, 228 F.3d at 1176 (10th Cir.
2000); Associated Gen. Contractors of Ohio, Inc. v. Drabik (“Drabik II”), 214 F.3d 730 (6th Cir. 2000); W.H. Scott Constr. Co. v. City of Jackson,
Mississippi, 199 F.3d 206 (5th Cir. 1999); Eng’g Contractors Ass’n of South Florida, Inc. v. Metro. Dade County, 122 F.3d 895 (11th Cir.
1997); Contractors Ass’n of E. Pa. v. City of Philadelphia (“CAEP II”), 91 F.3d 586 (3d. Cir. 1996); Contractors Ass’n of E. Pa. v. City of
Philadelphia (“CAEP I”), 6 F.3d 990 (3d. Cir. 1993).
42 Id.
43 Id.; see, e.g., Concrete Works, Inc. v. City and County of Denver (“Concrete Works I”), 36 F.3d 1513, 1520 (10th Cir. 1994).
44 See, e.g., Concrete Works I, 36 F.3d at 1520.
45 N. Contracting, 473 F.3d at 721; Western States Paving, 407 F.3d at 991; Sherbrooke Turf, 345 F.3d at 969; Adarand VII, 228 F.3d at
1176; See Midwest Fence, 840 F.3d 932, 2016 WL 6543514 (7th Cir. 2016), and affirming, 84 F. Supp. 3d 705, 2015 WL 1396376.
46 Id. But, see, Mid-America Milling Company LLC (MAMCO) and Bagshaw Trucking Inc. v. U.S. DOT, 2024 WL 4267183 (E.D. Ky. Sept. 23,
2024)(Holding USDOT evidence insufficient to support Federal DBE Program). In the case of Rothe Dev. Corp. v. U.S. Dept. of Defense, 545
F.3d 1023 (Fed. Cir. 2008), the Federal Circuit Court of Appeals pointed out it had questioned in its earlier decision whether the evidence
of discrimination before Congress was in fact so “outdated” so as to provide an insufficient basis in evidence for the Department of
Defense (DOD) program (i.e., whether a compelling interest was satisfied). 413 F.3d 1327 (Fed. Cir. 2005). The Court after its 2005
decision remanded the case to the district court to rule on this issue. Rothe considered the validity of race- and gender-conscious DOD
regulations. The decisions in N. Contracting, Sherbrooke Turf, Adarand VII, and Western States Paving held the evidence of discrimination
nationwide in transportation contracting was sufficient to find the Federal DBE Program on its face was constitutional. On remand, the
FINAL REPORT APPENDIX B, PAGE 8
It is instructive to review the type of evidence utilized by Congress and considered by the courts to
support the Federal DBE Program and its implementation by local and state governments and agencies,
which is similar to evidence considered by cases ruling on the validity of MBE/WBE/DBE programs. The
federal courts found Congress “spent decades compiling evidence of race discrimination in government
highway contracting, of barriers to the formation of minority-owned construction businesses, and of
barriers to entry.” 47 The evidence found to satisfy the compelling interest standard included numerous
congressional investigations and hearings, and outside studies of statistical and anecdotal evidence (e.g.,
disparity studies). 48
As noted above, a federal district court in Kentucky in MAMCO (see section C.4. (viii) below), granted
Plaintiffs’ Motion for Preliminary Injunction that enjoined enforcement of the Federal DBE Program as
applied to the Plaintiffs in each state they bid or operate in. The court enjoined USDOT from mandating
the use of race- and gender-based rebuttable presumptions for certain groups. The court considered in
part the evidence presented by the federal defendants, including certain evidence presented to
Congress, in connection with determining if the strict scrutiny standard was satisfied by the Federal DBE
Program. The Plaintiffs and USDOT have filed a Joint Motion for Entry of a Consent Order that includes
holding unconstitutional the Federal DBE Program’s use of race- and sex-based rebuttable presumptions
for certain groups. The United States Magistrate Judge has entered an Order granting intervention by
Intervenor DBEs to support the Federal DBE Program (see section C.4. (viii) below). This case is
pending, at the time of this report, and the Preliminary Injunction remains in place.
The evidentiary basis on which Congress relied to support its finding of discrimination, which multiple
federal Courts of Appeal and district courts have considered and found, among other evidence, sufficient
to satisfy the strict scrutiny standard (see, pages 2-3 above and citations below) includes:
Barriers to minority business formation. Congress found that discrimination by prime
contractors, unions, and lenders has woefully impeded the formation of qualified minority
business enterprises in the subcontracting market nationwide, noting the existence of
“good ol’ boy” networks, from which minority firms have traditionally been excluded, and
district court in Rothe on August 10, 2007 issued its order denying plaintiff Rothe’s Motion for Summary Judgment and granting
Defendant United States’s Cross-Motion for Summary Judgment, holding the 2006 Reauthorization of the 1207 DOD Program
constitutional. Rothe Dev . Corp. v. U.S. Dept. of Defense, 499 F.Supp.2d 775 (W.D. Tex. 2007). The district court found the data contained in
the Appendix (The Compelling Interest, 61 Fed. Reg. 26050 (1996)), the Urban Institute Report, and the Benchmark Study – relied upon
in part by the courts in Sherbrooke Turf, Adarand VII, and Western States Paving in upholding the constitutionality of the Federal DBE
Program – was “stale” as applied to and for purposes of the 2006 Reauthorization of the 1207 DOD Program. This district court finding
was not appealed or considered by the Federal Circuit Court of Appeals. 545 F.3d 1023, 1037. The Federal Circuit Court of Appeals
reversed the district court decision in part and held invalid the DOD Section 1207 program as enacted in 2006. 545 F.3d 1023, 1050. See
also the 2012 district court decision in DynaLantic Corp. v. U.S. Department of Defense, et al., 885 F.Supp.2d 237, (D.D.C.). In the 2016
decision in Rothe Development, Inc. v. U.S. Dept of Defense and U.S. S.B.A., 836 F.3d 57 (D.C. Cir. Sept. 9, 2016), the United States Court of
Appeals, District of Columbia Circuit, upheld the constitutionality of the Section 8(a) Program on its face, finding the Section 8(a) statute
was race-neutral. The Court of Appeals affirmed on other grounds the district court decision that had upheld the constitutionality of the
Section 8(a) Program. The district court had found the federal government’s evidence of discrimination provided a sufficient basis for the
Section 8(a) Program. 107 F.Supp. 3d 183, 2015 WL 3536271 (D. D.C. June 5, 2015). But, see, Ultima Services Corp. v. U.S. Department of
Agriculture, U.S. Small Business Administration, et. al., 2023 WL 4633481 (E.D. Tenn. July 19, 2023)(Holding unconstitutional the
rebuttable presumption of groups included in the Section 8(a) program).
47Sherbrooke Turf, 345 F.3d at 970, (citing Adarand VII,228 F.3d at 1167 – 76 (10th Cir. 2000); Western States Paving, 407 F.3d at 992-93.
48 See, e.g., Adarand VII, 228 F.3d at 1167– 76 (10th Cir. 2000); see also Western States Paving, 407 F.3d at 992 (Congress “explicitly relied
upon” the Department of Justice study that “documented the discriminatory hurdles that minorities must overcome to secure federally
funded contracts”); Geyer Signal, Inc., 2014 WL 1309092.
FINAL REPORT APPENDIX B, PAGE 9
the race-based denial of access to capital, which affects the formation of minority
subcontracting enterprise. 49
Barriers to competition for existing minority enterprises. Congress found evidence
showing systematic exclusion and discrimination by prime contractors, private sector
customers, business networks, suppliers, and bonding companies, precluding minority
enterprises from opportunities to bid. When minority firms are permitted to bid on
subcontracts, prime contractors often resist working with them. Congress found evidence
of the same prime contractor using a minority business enterprise on a government
contract not using that minority business enterprise on a private contract, despite being
satisfied with that subcontractor’s work. Congress found that informal, racially
exclusionary business networks dominate the subcontracting construction industry. 50
Local disparity studies. Congress found that local studies throughout the country tend to
show a disparity between utilization and availability of minority-owned firms, raising an
inference of discrimination. 51
Results of removing affirmative action programs. Congress found evidence that when
race-conscious public contracting programs are struck down or discontinued, minority
business participation in the relevant market drops sharply or even disappears, which
courts have found strongly supports the government’s claim that there are significant
barriers to minority competition, raising the specter of discrimination. 52
Infrastructure Investment and Jobs Act of 2021, FAA Reauthorization Act of 2018,
FAST Act, and the Moving Ahead for Progress in the 21st Century Act (MAP-21). In
November 2021, October 2018, December 2015 and in July 2012, Congress passed the
Infrastructure Investment and Jobs Act of 2021, the FAA Reauthorization Act, FAST Act, and
MAP-21, respectively, which made “Findings” that “discrimination and related barriers
continue to pose significant obstacles for minority- and women-owned businesses seeking
to do business in “federally-assisted surface transportation markets,” in airport-related
markets, and that the continuing barriers “merit the continuation” of the Federal DBE
Program and the Federal ACDBE Program. 53 Congress also found in the Infrastructure
Investment and Jobs Act of 2021, the FAA Reauthorization Act of 2018, the FAST Act, and
MAP-21 that it received and reviewed testimony and documentation of race and gender
discrimination, which “provide a strong basis that there is a compelling need for the
continuation of the” Federal ACDBE Program and the Federal DBE Program. 54
49 Adarand VII, 228 F.3d. at 1168-70 (10th Cir. 2000); Western States Paving, 407 F.3d at 992; see Geyer Signal, Inc., 2014 WL 1309092;
DynaLantic, 885 F.Supp.2d 237.
50 Adarand VII, at 1170-72 (10th Cir. 2000); see DynaLantic, 885 F.Supp.2d 237.
51 Id. at 1172-74 (10th Cir. 2000); see DynaLantic, 885 F.Supp.2d 237; Geyer Signal, Inc., 2014 WL 1309092.
52 Adarand VII, 228 F.3d at 1174-75 (10th Cir. 2000); see, H. B. Rowe, 615 F.3d 233, 247-258 (4th Cir. 2010); Sherbrooke Turf, 345 F.3d at
973-4.
53 Pub. L. 117-58, H.R. 3684 § 11101(e), November 15, 2021; Pub L. 115-254, H.R. 302 § 157, October 5, 2018, 132 Stat 3186; Pub L. 114-
94, H.R. 22, §1101(b), December 4, 2015, 129 Stat 1312; Pub L. 112-141, H.R. 4348, § 1101(b), July 6, 2012, 126 Stat 405.
54 Id. at Pub. L. 117-58, H.R. 3684 § 11101(e), November 15, 2021; Pub L. 115-254, H.R. 302 § 157, October 5, 2018, 132 Stat 3186; Pub L.
114-94. H.R. 22, § 1101(b)(1) (2015).
FINAL REPORT APPENDIX B, PAGE 10
i. Burden of proof to establish the strict scrutiny standard. Under the strict scrutiny analysis, and to the
extent a state or local governmental entity has implemented a race- and gender-conscious program, the
governmental entity has the initial burden of showing a strong basis in evidence (including statistical
and anecdotal evidence) to support its remedial action. 55 If the government makes its initial showing,
the burden shifts to the challenger to rebut that showing. 56 The challenger bears the ultimate burden of
showing that the governmental entity’s evidence “did not support an inference of prior
discrimination.” 57
In applying the strict scrutiny analysis, the courts hold that the burden is on the government to show
both a compelling interest and narrow tailoring. 58 It is well established that “remedying the effects of
past or present racial discrimination” is a compelling interest.59 In addition, the government must also
demonstrate “a strong basis in evidence for its conclusion that remedial action [is] necessary.” 60
Since the decision by the Supreme Court in Croson, “numerous courts have recognized that disparity
studies provide probative evidence of discrimination.” 61 “An inference of discrimination may be made
with empirical evidence that demonstrates ‘a significant statistical disparity between a number of
qualified minority contractors … and the number of such contractors actually engaged by the locality or
55 See AGC, SDC v. Caltrans, 713 F.3rd at 1195; H. B. Rowe Co., Inc. v. NCDOT, 615 F.3d 233, 241-242, 247-258 (4th Cir. 2010); Rothe
Development Corp. v. Department of Defense, 545 F.3d 1023, 1036 (Fed. Cir. 2008); N. Contracting, Inc. Illinois, 473 F.3d at 715, 721 (7th
Cir. 2007) (Federal DBE Program); Western States Paving Co. v. Washington State DOT, 407 F.3d 983, 990-991 (9th Cir. 2005) (Federal
DBE Program); Sherbrooke Turf, Inc. v. Minnesota DOT, 345 F.3d 964, 969 (8th Cir. 2003) (Federal DBE Program); Adarand Constructors
Inc. v. Slater (“Adarand VII”), 228 F.3d 1147, 1166 (10th Cir. 2000) (Federal DBE Program); Eng’g Contractors Ass’n, 122 F.3d at 916;
Monterey Mechanical Co. v. Wilson, 125 F.3d 702, 713 (9th Cir. 1997); Contractors Ass’n of E. Pa. v. City of Philadelphia (CAEP II), 91 F.3d
586, 596-598 (3d. Cir. 1996); Contractors Ass’n of E. Pa. v. City of Philadelphia (CAEP I), 6 F.3d 996, 1005-1007 (3d. Cir. 1993); Geyer
Signal, Inc., 2014 WL 1309092; DynaLantic, 885 F.Supp.2d 237, 2012 WL 3356813; Hershell Gill Consulting Engineers, Inc. v. Miami Dade
County, 333 F. Supp.2d 1305, 1316 (S.D. Fla. 2004).
56 Adarand VII, 228 F.3d at 1166; Contractors Ass’n of E. Pa. v. City of Philadelphia (CAEP II), 91 F.3d 586, 596-598 (3d. Cir. 1996);
Contractors Ass’n of E. Pa. v. City of Philadelphia (CAEP I), 6 F.3d 996, 1005-1007 (3d. Cir. 1993); Eng’g Contractors Ass’n, 122 F.3d at 916;
Geyer Signal, Inc., 2014 WL 1309092.
57 See, e.g., Adarand VII, 228 F.3d at 1166; Contractors Ass’n of E. Pa. v. City of Philadelphia (“CAEP II”), 91 F.3d 586, 596-598 (3d. Cir.
1996); Contractors Ass’n of E. Pa. v. City of Philadelphia (CAEP I),6 F.3d 996, 1005-1007 (3d. Cir. 1993); Eng’g Contractors Ass’n, 122 F.3d
at 916; see also Sherbrooke Turf, 345 F.3d at 971; N. Contracting, 473 F.3d at 721; Geyer Signal, Inc., 2014 WL 1309092.
58 Id.; Midwest Fence, 840 F.3d 932, 935, 948-954 (7th Cir. 2016); H. B. Rowe Co., Inc. v. NCDOT, 615 F.3d 233, 241-242 (4th Cir. 2010);
Western States Paving, 407 F.3d at 990; See also Majeske v. City of Chicago, 218 F.3d 816, 820 (7th Cir. 2000); Geyer Signal, Inc., 2014 WL
1309092.
59 Shaw v. V. Hunt, 517 U.S. 899, 909 (1996); City of Richmond v. J. A. Croson Co., 488 U.S. 469, 492 (1989); see, e.g., Midwest Fence, 840
F.3d 932, 935, 948-954 (7th Cir. 2016); Contractors Ass’n of E. Pa. v. City of Philadelphia (CAEP II), 91 F.3d 586, 596-598 (3d. Cir. 1996);
Contractors Ass’n of E. Pa. v. City of Philadelphia (“CAEP I”), 6 F.3d 996, 1005-1007 (3d. Cir. 1993).
60 Croson, 488 U.S. at 500; see, e.g., Midwest Fence, 840 F.3d 932, 935, 948-954 (7th Cir. 2016); H. B. Rowe Co., Inc. v. NCDOT, 615 F.3d 233,
241-242; Sherbrooke Turf, 345 F.3d at 971-972; Contractors Ass’n of E. Pa. v. City of Philadelphia (CAEP II), 91 F.3d 586, 596-598 (3d. Cir.
1996); Contractors Ass’n of E. Pa. v. City of Philadelphia (CAEP I), 6 F.3d 996, 1005-1007 (3d. Cir. 1993); Geyer Signal, Inc., 2014 WL
1309092.
61 Midwest Fence, 2015 W.L. 1396376 at *7 (N.D. Ill. 2015), affirmed, 840 F.3d 932, 2016 WL 6543514 (7th Cir. 2016); see, e.g., Midwest
Fence, 840 F.3d 932, 935, 948-954 (7th Cir. 2016); AGC, SDC v. Caltrans, 713 F.3rd at 1195-1200; H. B. Rowe Co., Inc. v. NCDOT, 615 F.3d
233, 241-242 (4th Cir. 2010); Concrete Works of Colo. Inc. v. City and County of Denver, 36 F.3d 1513, 1522 (10th Cir. 1994), Geyer Signal,
2014 WL 1309092 (D. Minn, 2014); see also, Contractors Ass’n of E. Pa. v. City of Philadelphia (“CAEP II”), 91 F.3d 586, 596-598 (3d. Cir.
1996); Contractors Ass’n of E. Pa. v. City of Philadelphia (CAEP I), 6 F.3d 996, 1005-1007 (3d. Cir. 1993).
FINAL REPORT APPENDIX B, PAGE 11
the locality’s prime contractors.’” 62 Anecdotal evidence may be used in combination with statistical
evidence to establish a compelling governmental interest.63
In addition to providing “hard proof” to support its compelling interest, the government must also show
that the challenged program is narrowly tailored. 64 Once the governmental entity has shown acceptable
proof of a compelling interest and remedying past discrimination and illustrated that its plan is
narrowly tailored to achieve this goal, the party challenging the affirmative action plan bears the
ultimate burden of proving that the plan is unconstitutional. 65 Therefore, notwithstanding the burden of
initial production rests with the government, the ultimate burden remains with the party challenging
the application of a DBE or MBE/WBE Program to demonstrate the unconstitutionality of an affirmative-
action type program. 66
To successfully rebut the government’s evidence, the courts hold that a challenger must introduce
“credible, particularized evidence” of its own that rebuts the government’s showing of a strong basis in
evidence for the necessity of remedial action. 67 This rebuttal can be accomplished by providing a neutral
explanation for the disparity between MBE/WBE/DBE utilization and availability, showing that the
government’s data is flawed, demonstrating that the observed disparities are statistically insignificant,
or presenting contrasting statistical data. 68 Conjecture and unsupported criticisms of the government’s
62 See e.g., H. B. Rowe v. NCDOT, 615 F.3d 233, 241-242 (4th Cir. 2010); Midwest Fence, 2015 W.L. 1396376 at *7, quoting Concrete Works;
36 F.3d 1513, 1522 (quoting Croson, 488 U.S. at 509), affirmed, 840 F.3d 932, 2016 WL 6543514 (7th Cir. 2016); see also, Sherbrooke
Turf, 345 F.3d 233, 241-242 (8th Cir. 2003); Contractors Ass’n of E. Pa. v. City of Philadelphia (CAEP II), 91 F.3d 586, 596-598 (3d. Cir.
1996); Contractors Ass’n of E. Pa. v. City of Philadelphia (“CAEP I”), 6 F.3d 996, 1005-1007 (3d. Cir. 1993).
63 Croson, 488 U.S. at 509; see, e.g., AGC, SDC v. Caltrans, 713 R.3d at 1196; H. B. Rowe v. NCDOT, 615 F.3d 233, 241-242 (4th Cir. 2010);
Midwest Fence, 84 F.Supp. 3d 705, 2015 WL 1396376 at *7, affirmed, 840 F.3d 932, 2016 WL 6543514 (7th Cir. 2016); Contractors Ass’n
of E. Pa. v. City of Philadelphia (CAEP II), 91 F.3d 586, 596-598 (3d. Cir. 1996); Contractors Ass’n of E. Pa. v. City of Philadelphia (CAEP I), 6
F.3d 996, 1005-1007 (3d. Cir. 1993).
64 Adarand Constructors, Inc. v. Pena, (“Adarand III”), 515 U.S. 200 at 235 (1995); see, e.g., Midwest Fence, 840 F.3d 932, 952-954 (7th Cir.
2016); Majeske v. City of Chicago, 218 F.3d at 820; Contractors Ass’n of E. Pa. v. City of Philadelphia (CAEP II), 91 F.3d 586, 596-598 (3d.
Cir. 1996); Contractors Ass’n of E. Pa. v. City of Philadelphia (CAEP I), 6 F.3d 996, 1005-1007 (3d. Cir. 1993).
65 Majeske, 218 F.3d at 820; see, e.g. Wygant v. Jackson Bd. Of Educ., 476 U.S. 267, 277-78; Midwest Fence, 840 F.3d 932, 952-954 (7th Cir.
2016); Midwest Fence, 2015 WL 1396376 *7, affirmed, 840 F.3d 932, 2016 WL 6543514 (7th Cir. 2016); Geyer Signal, Inc., 2014 WL
1309092; Contractors Ass’n of E. Pa. v. City of Philadelphia (CAEP II), 91 F.3d 586, 596-598; 603; (3d. Cir. 1996); Contractors Ass’n of E. Pa.
v. City of Philadelphia (CAEP I), 6 F.3d 996, 1002-1007 (3d. Cir. 1993).
66 Id.; Adarand VII, 228 F.3d at 1166 (10th Cir. 2000).
67 See, e.g., H.B. Rowe v. NCDOT, 615 F.3d 233, at 241-242(4th Cir. 2010); Concrete Works, 321 F.3d 950, 959 (quoting Adarand
Constructors, Inc. vs. Slater, 228 F.3d 1147, 1175 (10th Cir. 2000)); Contractors Ass’n of E. Pa. v. City of Philadelphia, 91 F.3d 586, 596-598,
603 (3d Cir. 1996); Contractors Ass’n of E. Pa. v. City of Philadelphia, 6 F.3d 996, 1002-1007 (3d Cir. 1993); Midwest Fence, 84 F.Supp. 3d
705, 2015 W.L. 1396376 at *7, affirmed, 840 F.3d 932, 2016 WL 6543514 (7th Cir. 2016); see also, Sherbrooke Turf, 345 F.3d at 971-974;
Geyer Signal, Inc., 2014 WL 1309092.
68 See, e.g., H.B. Rowe v. NCDOT, 615 F.3d 233, at 241-242(4th Cir. 2010); Concrete Works, 321 F.3d 950, 959 (quoting Adarand
Constructors, Inc. vs. Slater, 228 F.3d 1147, 1175 (10th Cir. 2000)); Contractors Ass’n of E. Pa. v. City of Philadelphia (CAEP II), 91 F.3d 586,
596-598; 603; (3d. Cir. 1996); Contractors Ass’n of E. Pa. v. City of Philadelphia (“CAEP I”), 6 F.3d 996, 1002-1007 (3d. Cir. 1993); Midwest
Fence, 84 F.Supp. 3d 705, 2015 W.L. 1396376 at *7, affirmed, 840 F.3d 932, 2016 WL 6543514 (7th Cir. 2016); see also, Sherbrooke Turf,
345 F.3d at 971-974; Geyer Signal, Inc., 2014 WL 1309092; see, generally, Engineering Contractors, 122 F.3d at 916; Coral Construction,
Co. v. King County, 941 F.2d 910, 921 (9th Cir. 1991).
FINAL REPORT APPENDIX B, PAGE 12
methodology are insufficient. 69 The courts have held that mere speculation the government’s evidence is
insufficient or methodologically flawed does not suffice to rebut a government’s showing.70
The courts have stated that “it is insufficient to show that ‘data was susceptible to multiple
interpretations,’ instead, plaintiffs must ‘present affirmative evidence that no remedial action was
necessary because minority-owned small businesses enjoy non-discriminatory access to and
participation in highway contracts.’” 71 The courts hold that in assessing the evidence offered in support
of a finding of discrimination, it considers “both direct and circumstantial evidence, including post-
enactment evidence introduced by defendants as well as the evidence in the legislative history itself.”72
The courts have noted that “there is no ‘precise mathematical formula to assess the quantum of evidence
that rises to the Croson ‘strong basis in evidence’ benchmark.’” 73 The courts hold that a state need not
conclusively prove the existence of past or present racial discrimination to establish a strong basis in
evidence for concluding that remedial action is necessary. 74 Instead, the Supreme Court stated that a
government may meet its burden by relying on “a significant statistical disparity” between the
availability of qualified, willing, and able minority subcontractors and the utilization of such
subcontractors by the governmental entity or its prime contractors. 75 It has been further held by the
courts that the statistical evidence be “corroborated by significant anecdotal evidence of racial
discrimination” or bolstered by anecdotal evidence supporting an inference of discrimination. 76
The courts have stated the strict scrutiny standard is applicable to justify a race-conscious measure, and
that it is a substantial burden but not automatically “fatal in fact.” 77 In so acting, a governmental entity
69 Id.; H. B. Rowe, 615 F.3d at 242; see also, Midwest Fence, 840 F.3d 932, 952-954 (7th Cir. 2016); Sherbrooke Turf, 345 F.3d at 971-974;
Contractors Ass’n of E. Pa. v. City of Philadelphia, 91 F.3d 586, 596-598, 603 (3d Cir. 1996); Contractors Ass’n of E. Pa. v. City of Philadelphia,
6 F.3d 996, 1002-1007 (3d Cir. 1993); Kossman Contracting Co., Inc. v. City of Houston, 2016 WL 1104363 (S.D. Tex. 2016); Geyer Signal,
2014 WL 1309092.
70 H.B. Rowe, 615 F.3d at 242; see Midwest Fence, 840 F.3d 932, 952-954 (7th Cir. 2016); Concrete Works, 321 F.3d at 991; see also,
Sherbrooke Turf, 345 F.3d at 971-974; Geyer Signal, Inc., 2014 WL 1309092; Kossman Contracting Co., Inc. v. City of Houston, 2016 WL
1104363 (S.D. Tex. 2016).
71 Geyer Signal, Inc., 2014 WL 1309092, quoting Sherbrooke Turf, 345 F.3d at 970.
72 Id, quoting Adarand Constructors, Inc., 228 F.3d at 1166; see, e.g., Contractors Ass’n of E. Pa. v. City of Philadelphia, 91 F.3d 586, 597 (3d
Cir. 1996).
73 H.B. Rowe, 615 F.3d at 241, quoting Rothe Dev. Corp. v. Dep’t of Def., 545 F.3d 1023, 1049 (Fed. Cir. 2008) (quoting W.H. Scott Constr. Co.
v. City of Jackson, 199 F.3d 206, 218 n. 11 (5th Cir. 1999)); W.H. Scott Constr. Co. v. City of Jackson, Mississippi, 199 F.3d 206, 217-218 (5th
Cir. 1999); see, Contractors Ass’n of E. Pa. v. City of Philadelphia, 91 F.3d 586, 596-598, 603 (3d Cir. 1996); Contractors Ass’n of E. Pa. v. City
of Philadelphia, 6 F.3d 996, 1002-1007 (3d Cir. 1993).
74 H.B. Rowe Co., 615 F.3d at 241; see, e.g., Midwest Fence, 840 F.3d 932, 952-954 (7th Cir. 2016); Concrete Works, 321 F.3d at 958 (10th
Cir. 2003); , Contractors Ass’n of E. Pa. v. City of Philadelphia, 91 F.3d 586, 596-598, 603 (3d Cir. 1996); Contractors Ass’n of E. Pa. v. City of
Philadelphia, 6 F.3d 996, 1002-1007 (3d Cir. 1993).
75 Croson, 488 U.S. 509, see, e.g., Midwest Fence, 840 F.3d 932, 952-954 (7th Cir. 2016); H.B. Rowe, 615 F.3d at 241; Contractors Ass’n of E.
Pa. v. City of Philadelphia, 91 F.3d 586, 596-598, 603 (3d Cir. 1996); Contractors Ass’n of E. Pa. v. City of Philadelphia, 6 F.3d 996, 1002-
1007 (3d Cir. 1993).
76 H.B. Rowe, 615 F.3d at 241, quoting Maryland Troopers Association, Inc. v. Evans, 993 F.2d 1072, 1077 (4th Cir. 1993); see, e.g., Midwest
Fence, 840 F.3d 932, 952-954 (7th Cir. 2016); AGC, San Diego v. Caltrans, 713 F.3d at 1196; see also, Contractors Ass’n of E. Pa. v. City of
Philadelphia, 91 F.3d 586, 596-598, 603 (3d Cir. 1996); Contractors Ass’n of E. Pa. v. City of Philadelphia, 6 F.3d 996, 1002-1007 (3d Cir.
1993); Kossman Contracting Co., Inc. v. City of Houston, 2016 WL 1104363 (S.D. Tex. 2016).
77 See, e.g., Concrete Works of Colorado v. City and County of Denver, 321 F.3d at 957-959 (10th Cir. 2003); Adarand VII, 228 F.3d 1147 (10th
Cir. 2000); see, e.g., H. B. Rowe, 615 F.3d at 241; 615 F.3d 233 at 241.
FINAL REPORT APPENDIX B, PAGE 13
must demonstrate it had a compelling interest in “remedying the effects of past or present racial
discrimination.” 78
Thus, courts have held that to justify a race-conscious measure, a government must identify that
discrimination, public or private, with some specificity, and must have a strong basis in evidence for its
conclusion that remedial action is necessary. 79
ii. Statistical evidence. Statistical evidence of discrimination is a primary method used to determine
whether or not a strong basis in evidence exists to develop, adopt and support a remedial program (i.e.,
to prove a compelling governmental interest), or in the case of a state or local government recipient
complying with the Federal DBE Program, to prove narrow tailoring of program implementation at the
state or local government recipient level.80 “Where gross statistical disparities can be shown, they alone
in a proper case may constitute prima facie proof of a pattern or practice of discrimination.”81
One form of statistical evidence is the comparison of a government’s utilization of MBE/WBEs compared
to the relative availability of qualified, willing and able MBE/WBEs.82 The federal courts have held that a
significant statistical disparity between the utilization and availability of minority- and women-owned
firms may raise an inference of discriminatory exclusion.83 However, a small statistical disparity,
standing alone, may be insufficient to establish discrimination. 84
Other considerations regarding statistical evidence include:
78 See, e.g., Concrete Works of Colorado v. City and County of Denver, 321 F.3d at 957-959 (10th Cir. 2003); Adarand VII, 228 F.3d 1147 (10th
Cir. 2000); see, e.g., H. B. Rowe; quoting Shaw v. Hunt, 517 U.S. 899, 909 (1996).
79 See, e.g., Concrete Works of Colorado v. City and County of Denver, 321 F.3d at 957-959 (10th Cir. 2003); Adarand VII, 228 F.3d 1147 (10th
Cir. 2000); H. B. Rowe; 615 F.3d 233 at 241 quoting, Croson, 488 U.S. at 504 and Wygant v. Jackson Board of Education, 476 U.S. 267, 277
(1986)(plurality opinion); see, Contractors Ass’n of E. Pa. v. City of Philadelphia, 91 F.3d 586, 596-605 (3d Cir. 1996); Contractors Ass’n of
E. Pa. v. City of Philadelphia, 6 F.3d 990, 999, 1002, 1005-1008 (3d Cir. 1993).
80 See, e.g., Croson, 488 U.S. at 509; Midwest Fence, 840 F.3d 932, 935, 948-954 (7th Cir. 2016); AGC, SDC v. Caltrans, 713 F.3d at 1195-
1196; N. Contracting, 473 F.3d at 718-19, 723-24; Western States Paving, 407 F.3d at 991; Sherbrooke Turf, 345 F.3d at 973-974; Adarand
VII, 228 F.3d at 1166; W.H. Scott Constr. Co. v. City of Jackson, Mississippi, 199 F.3d 206, 217-218 (5th Cir. 1999); Contractors Ass’n of E. Pa.
v. City of Philadelphia, 91 F.3d 586, 596-605 (3d Cir. 1996); Contractors Ass’n of E. Pa. v. City of Philadelphia, 6 F.3d 990, 999, 1002, 1005-
1008 (3d Cir. 1993); see also, Concrete Works, 321 F.3d 950, 959 (10th Cir. 2003); Kossman Contracting Co., Inc. v. City of Houston, 2016
WL 1104363 (S.D. Tex. 2016); Geyer Signal, 2014 WL 1309092.
81 Croson, 488 U.S. at 501, quoting Hazelwood School Dist. v. United States, 433 U.S. 299, 307-08 (1977); see Midwest Fence, 840 F.3d 932,
948-954 (7th Cir. 2016); AGC, SDC v. Caltrans, 713 F.3d at 1196-1197; N. Contracting, 473 F.3d at 718-19, 723-24; Western States Paving,
407 F.3d at 991; Sherbrooke Turf, 345 F.3d at 973-974; Adarand VII, 228 F.3d at 1166; W.H. Scott Constr. Co. v. City of Jackson, Mississippi,
199 F.3d 206, 217-218 (5th Cir. 1999).
82 Croson, 448 U.S. at 509; see Midwest Fence, 840 F.3d 932, 935, 948-954 (7th Cir. 2016); AGC, SDC v. Caltrans, 713 F.3d at 1191-1197; H.
B. Rowe v. NCDOT, 615 F.3d 233, 241-244 (4th Cir. 2010); Rothe, 545 F.3d at 1041-1042; Concrete Works of Colo., Inc. v. City and County of
Denver (“Concrete Works II”), 321 F.3d 950, 959 (10th Cir. 2003); Drabik II, 214 F.3d 730, 734-736; W.H. Scott Constr. Co. v. City of Jackson,
Mississippi, 199 F.3d 206, 217-218 (5th Cir. 1999); Contractors Ass’n of E. Pa. v. City of Philadelphia, 91 F.3d 586, 596-605 (3d Cir. 1996);
Contractors Ass’n of E. Pa. v. City of Philadelphia, 6 F.3d 990, 999, 1002, 1005-1008 (3d Cir. 1993); see also, Kossman Contracting Co., Inc. v.
City of Houston, 2016 WL 1104363 (S.D. Tex. 2016).
83 See, e.g., Croson, 488 U.S. at 509; Midwest Fence, 840 F.3d 932, 935, 948-954 (7th Cir. 2016); AGC, SDC v. Caltrans, 713 F.3d at 1191-
1197; H. B. Rowe v. NCDOT, 615 F.3d 233, 241-244 (4th Cir. 2010); Rothe, 545 F.3d at 1041; Concrete Works II, 321 F.3d at 970; W.H. Scott
Constr. Co. v. City of Jackson, Mississippi, 199 F.3d 206, 217-218 (5th Cir. 1999); Contractors Ass’n of E. Pa. v. City of Philadelphia, 91 F.3d
586, 596-605 (3d Cir. 1996); Contractors Ass’n of E. Pa. v. City of Philadelphia, 6 F.3d 990, 999, 1002, 1005-1008 (3d. Cir. 1993); see also
Western States Paving, 407 F.3d at 1001; Kossman Contracting, 2016 WL 1104363 (S.D. Tex. 2016).
84 Western States Paving, 407 F.3d at 1001.
FINAL REPORT APPENDIX B, PAGE 14
Availability analysis. A disparity index requires an availability analysis. MBE/WBE and DBE /ACDBE
availability measures the relative number of MBE/WBEs/DBEs and ACDBEs among all firms ready,
willing and able to perform a certain type of work within a particular geographic market area. 85 There is
authority that measures of availability may be approached with different levels of specificity and the
practicality of various approaches must be considered. 86 “An analysis is not devoid of probative value
simply because it may theoretically be possible to adopt a more refined approach.” 87
Utilization analysis. Courts have accepted measuring utilization based on the proportion of an agency’s
contract dollars going to MBE/WBEs and DBEs. 88
Disparity index. An important component of statistical evidence is the “disparity index.” 89 A disparity
index is defined as the ratio of the percent utilization to the percent availability times 100. A disparity
index below 80 has been accepted as evidence of adverse impact. This has been referred to as “The Rule
of Thumb” or “The 80 percent Rule.” 90
Two standard deviation test. The standard deviation figure describes the probability that the
measured disparity is the result of mere chance. Some courts have held that a statistical disparity
corresponding to a standard deviation of less than two is not considered statistically significant. 91
In terms of statistical evidence, the courts, including the Ninth Circuit, have held that a state “need not
conclusively prove the existence of past or present racial discrimination to establish a strong basis in
85 See, e.g., Croson, 448 U.S. at 509; 49 CFR § 26.35; AGC, SDC v. Caltrans, 713 F.3d at 1191-1197; Rothe, 545 F.3d at 1041-1042; N.
Contracting, 473 F.3d at 718, 722-23; Western States Paving, 407 F.3d at 995; W.H. Scott Constr. Co. v. City of Jackson, Mississippi, 199 F.3d
206, 217-218 (5th Cir. 1999); Contractors Ass’n of E. Pa. v. City of Philadelphia, 91 F.3d 586, 602-603 (3d. Cir. 1996); see also, Kossman
Contracting Co., Inc. v. City of Houston, 2016 WL 1104363 (S.D. Tex. 2016).
86 Contractors Ass’n of Eastern Pennsylvania, Inc. v. City of Philadelphia (“CAEP II”), 91 F.3d 586, 603 (3d Cir. 1996); see, e.g., AGC, SDC v.
Caltrans, 713 F.3d at 1197, quoting Croson, 488 U.S. at 706 (“degree of specificity required in the findings of discrimination … may vary.”);
H.B. Rowe, v. NCDOT, 615 F.3d 233, 241-244 (4th Cir. 2010); W.H. Scott Constr. Co. v. City of Jackson, Mississippi, 199 F.3d 206, 217-218 (5th
Cir. 1999); see also, Kossman Contracting Co., Inc. v. City of Houston, 2016 WL 1104363 (S.D. Tex. 2016).
87 Contractors Ass’n of Eastern Pennsylvania, Inc. v. City of Philadelphia (“CAEP II”), 91 F.3d 586, 603 (3d Cir. 1996); see, e.g., AGC, SDC v.
Caltrans, 713 F.3d at 1197, quoting Croson, 488 U.S. at 706 (“degree of specificity required in the findings of discrimination … may vary.”);
H.B. Rowe, v. NCDOT, 615 F.3d 233, 241-244 (4th Cir. 2010); W.H. Scott Constr. Co. v. City of Jackson, Mississippi, 199 F.3d 206, 217-218 (5th
Cir. 1999); see also, Kossman Contracting Co., Inc. v. City of Houston, 2016 WL 1104363 (S.D. Tex. 2016).
88 See Midwest Fence, 840 F.3d 932, 949-953 (7th Cir. 2016); AGC, SDC v. Caltrans, 713 F.3d at 1191-1197; H.B. Rowe, v. NCDOT, 615 F.3d
233, 241-244 (4th Cir. 2010); Concrete Works, 321 F.3d at 958, 963-968, 971-972 (10th Cir. 2003); Eng’g Contractors Ass’n, 122 F.3d at
912; N. Contracting, 473 F.3d at 717-720; Sherbrooke Turf, 345 F.3d at 973.
89 Midwest Fence, 840 F.3d 932, 949-953 (7th Cir. 2016); H.B. Rowe, v. NCDOT, 615 F.3d 233, 241-244 (4th Cir. 2010); Concrete Works, 321
F.3d at 958, 963-968, 971-972 (10th Cir. 2003); Eng’g Contractors Ass’n, 122 F.3d at 914; W.H. Scott Constr. Co. v. City of Jackson, 199 F.3d
206, 218 (5th Cir. 1999); Contractors Ass’n of E. Pa. v. City of Philadelphia, 91 F.3d 586, 602-603 (3d. Cir. 1996); Contractors Ass’n of
Eastern Pennsylvania, Inc. v. City of Philadelphia, 6 F.3d 990 at 1005 (3rd Cir. 1993).
90 See, e.g., Ricci v. DeStefano, 557 U.S. 557, 129 S.Ct. 2658, 2678 (2009); Midwest Fence, 840 F.3d 932, 950 (7th Cir. 2016); H.B. Rowe, v.
NCDOT, 615 F.3d 233, 241-244 (4th Cir. 2010); AGC, SDC v. Caltrans, 713 F.3d at 1191; Rothe, 545 F.3d at 1041; Eng’g Contractors Ass’n,
122 F.3d at 914, 923; Concrete Works I, 36 F.3d at 1524.
91 See, e.g., H.B. Rowe, v. NCDOT, 615 F.3d 233, 241-244 (4th Cir. 2010); Eng’g Contractors Ass’n, 122 F.3d at 914, 917, 923. The Eleventh
Circuit found that a disparity greater than two or three standard deviations has been held to be statistically significant and may create a
presumption of discriminatory conduct; Peightal v. Metropolitan Eng’g Contractors Ass’n, 26 F.3d 1545, 1556 (11th Cir. 1994). The
Seventh Circuit Court of Appeals in Kadas v. MCI Systemhouse Corp., 255 F.3d 359 (7th Cir. 2001), raised questions as to the use of the
standard deviation test alone as a controlling factor in determining the admissibility of statistical evidence to show discrimination.
Rather, the Court concluded it is for the judge to say, on the basis of the statistical evidence, whether a particular significance level, in the
context of a particular study in a particular case, is too low to make the study worth the consideration of judge or jury. 255 F.3d at 363.
FINAL REPORT APPENDIX B, PAGE 15
evidence,” but rather it may rely on “a significant statistical disparity” between the availability of
qualified, willing, and able minority subcontractors and the utilization of such subcontractors by the
governmental entity or its prime contractors. 92
Marketplace discrimination and data. The Tenth Circuit in Concrete Works of Colorado, Inc. v. City and
County of Denver (Concrete Works) held the district court erroneously rejected the evidence the local
government presented on marketplace discrimination. 93 The court rejected the district court’s
“erroneous” legal conclusion that a municipality may only remedy its own discrimination. The court
stated this conclusion is contrary to the holdings in its 1994 decision in Concrete Works II and the
plurality opinion in Croson. 94 The court held it previously recognized in this case that “a municipality has
a compelling interest in taking affirmative steps to remedy both public and private discrimination
specifically identified in its area.” 95 In Concrete Works II, the court stated that “we do not read Croson as
requiring the municipality to identify an exact linkage between its award of public contracts and private
discrimination.” 96
The court stated that the local government could meet its burden of demonstrating its compelling
interest with evidence of private discrimination in the local construction industry coupled with evidence
that it has become a passive participant in that discrimination. 97 Thus, the local government was not
required to demonstrate that it is “guilty of prohibited discrimination” to meet its initial burden.98
Additionally, the court had previously concluded that the local government’s statistical studies, which
compared utilization of MBE/WBEs to availability, supported the inference that “local prime
contractors” are engaged in racial and gender discrimination. 99 Thus, the court held the local
government’s disparity studies should not have been discounted because they failed to specifically
identify those individuals or firms responsible for the discrimination. 100
The court held the district court, inter alia, erroneously concluded that the disparity studies upon which
the local government relied were significantly flawed because they measured discrimination in the
overall local government metropolitan statistical area (MSA) construction industry, not discrimination
by the municipality itself. 101 The court found that the district court’s conclusion was directly contrary to
92 H. B. Rowe, 615 F.3d 233 at 241, citing Croson, 488 U.S. at 509 (plurality opinion), and citing Concrete Works, 321 F.3d at 958; see, e.g.;
Croson, 488 U.S. at 509; Midwest Fence, 840 F.3d 932, 935, 948-954 (7th Cir. 2016); AGC, SDC v. Caltrans, 713 F.3d at 1191-1197; H.B.
Rowe v. NCDOT, 615 F.3d 233, 241-244 (4th Cir. 2010); Rothe, 545 F.3d at 1041; Concrete Works II, 321 F.3d at 970; W.H. Scott Constr. Co.
v. City of Jackson, Mississippi, 199 F.3d 206, 217-218 (5th Cir. 1999); Contractors Ass’n of E. Pa. v. City of Philadelphia, 91 F.3d 586, 596-
605; Concrete Works, 36 F.3d at 1529 (10th Cir. 1994); Contractors Ass’n of E. Pa. v. City of Philadelphia, 6 F.3d 990, 999, 1002, 1005-1008
(3d. Cir. 1993); see also Western States Paving, 407 F.3d at 1001; Kossman Contracting, 2016 WL 1104363 (S.D. Tex. 2016).
93 Id. at 973.
94 Id.
95 Id., quoting Concrete Works II, 36 F.3d at 1529 (emphasis added).
96 Concrete Works, 321 F.3d 950, 973 (10th Cir. 2003), quoting Concrete Works II, 36 F.3d at 1529 (10th Cir. 1994).
97 Id. at 973.
98 Id.
99 Id. at 974, quoting Concrete Works II, 36 F.3d at 1529.
100 Id.
101 Id. at 974.
FINAL REPORT APPENDIX B, PAGE 16
the holding in Adarand VII that evidence of both public and private discrimination in the construction
industry is relevant. 102
In Adarand VII, the Tenth Circuit noted it concluded that evidence of marketplace discrimination can be
used to support a compelling interest in remedying past or present discrimination through the use of
affirmative action legislation. 103 “[W]e may consider public and private discrimination not only in the
specific area of government procurement contracts but also in the construction industry generally; thus
any findings Congress has made as to the entire construction industry are relevant.” 104 Further, the court
pointed out that it earlier rejected the argument that marketplace data are irrelevant, and remanded the
case to the district court to determine whether the local government could link its public spending to
“the Denver MSA evidence of industry-wide discrimination.” 105 The court stated that evidence
explaining “the Denver government’s role in contributing to the underutilization of MBEs and WBEs in
the private construction market in the Denver MSA” was relevant to the local government’s burden of
producing strong evidence. 106
Consistent with the court’s mandate in Concrete Works II, the local government attempted to show at
trial that it “indirectly contributed to private discrimination by awarding public contracts to firms that in
turn discriminated against MBE and/or WBE subcontractors in other private portions of their
business.” 107 The Tenth Circuit ruled that the local government can demonstrate that it is a “‘passive
participant’ in a system of racial exclusion practiced by elements of the local construction industry” by
compiling evidence of marketplace discrimination and then linking its spending practices to the private
discrimination. 108
The court in Concrete Works rejected the argument that the lending discrimination studies and business
formation studies presented by the local government were irrelevant. In Adarand VII, the Tenth Circuit
concluded that evidence of discriminatory barriers to the formation of businesses by minorities and
women and fair competition between MBE/WBEs and majority-owned construction firms shows a
“strong link” between a government’s “disbursements of public funds for construction contracts and the
channeling of those funds due to private discrimination.” 109
The court found that evidence that private discrimination resulted in barriers to business formation is
relevant because it demonstrates that MBE/WBEs are precluded at the outset from competing for public
construction contracts. The court also found that evidence of barriers to fair competition is relevant
because it again demonstrates that existing MBE/WBEs are precluded from competing for public
contracts. Thus, like the studies measuring disparities in the utilization of MBE/WBEs in the local
government MSA construction industry, studies showing that discriminatory barriers to business
102 Id., citing Adarand VII, 228 F.3d at 1166-67.
103 Concrete Works, 321 F.3d at 976, citing Adarand VII, 228 F.3d at 1166-67.
104 Id. (emphasis added).
105 Id., quoting Concrete Works II, 36 F.3d at 1529.
106 Id., quoting Concrete Works II, 36 F.3d at 1530 (emphasis added).
107 Id.
108 Concrete Works, 321 F.3d at 976, quoting Croson, 488 U.S. at 492.
109 Id. at 977, quoting Adarand VII, 228 F.3d at 1167-68.
FINAL REPORT APPENDIX B, PAGE 17
formation exist in the local government construction industry are relevant to the municipality’s showing
that it indirectly participates in industry discrimination. 110
The local government also introduced evidence of discriminatory barriers to competition faced by
MBE/WBEs in the form of business formation studies. The court held that the district court’s conclusion
that the business formation studies could not be used to justify the ordinances conflicts with its holding
in Adarand VII. “[T]he existence of evidence indicating that the number of [MBEs] would be significantly
(but unquantifiable) higher but for such barriers is nevertheless relevant to the assessment of whether a
disparity is sufficiently significant to give rise to an inference of discriminatory exclusion.111
In sum, the Tenth Circuit held the district court erred when it refused to consider or give sufficient
weight to the lending discrimination study, the business formation studies, and the studies measuring
marketplace discrimination. That evidence was legally relevant to the local government’s burden of
demonstrating a strong basis in evidence to support its conclusion that remedial legislation was
necessary. 112
Anecdotal evidence. Anecdotal evidence includes personal accounts of incidents, including of
discrimination, told from the witness’ perspective. Anecdotal evidence of discrimination, standing alone,
generally is insufficient to show a systematic pattern of discrimination. 113 But personal accounts of
actual discrimination may complement empirical evidence and play an important role in bolstering
statistical evidence. 114 It has been held that anecdotal evidence of a local or state government’s
institutional practices that exacerbate discriminatory market conditions are often particularly
probative, and that the combination of anecdotal and statistical evidence is “potent.” 115
Examples of anecdotal evidence may include:
Testimony of MBE/WBE or DBE owners regarding whether they face difficulties or
barriers;
Descriptions of instances in which MBE/WBE or DBE owners believe they were treated
unfairly or were discriminated against based on their race, ethnicity, or gender or believe
they were treated fairly without regard to race, ethnicity, or gender;
Statements regarding whether firms solicit, or fail to solicit, bids or price quotes from
MBE/WBEs or DBEs on non-goal projects; and
110 Id. at 977.
111 Id. at 979, quoting Adarand VII, 228 F.3d at 1174.
112 Id. at 979-80.
113 See, e.g., AGC, SDC v. Caltrans, 713 F.3d at 1192, 1196-1198; Eng’g Contractors Ass’n, 122 F.3d at 924-25; Contractors Ass’n of E. Pa. v.
City of Philadelphia, 6 F.3d 990, 1002-1003 (3d. Cir. 1993); Coral Constr. Co. v. King County, 941 F.2d 910, 919 (9th Cir. 1991); O’Donnel
Constr. Co. v. District of Columbia, 963 F.2d 420, 427 (D.C. Cir. 1992).
114 See, e.g., Midwest Fence, 840 F.3d 932, 953 (7th Cir. 2016); AGC, SDC v. Caltrans, 713 F.3d at 1192, 1196-1198; H. B. Rowe, 615 F.3d
233, 248-249; Concrete Works, 321 F.3d 950, 989-990 (10th Cir. 2003); Eng’g Contractors Ass’n, 122 F.3d at 925-26; Concrete Works, 36
F.3d at 1520 (10th Cir. 1994); Contractors Ass’n, 6 F.3d at 1003; Coral Constr. Co. v. King County, 941 F.2d 910, 919 (9th Cir. 1991); see
also, Kossman Contracting Co., Inc. v. City of Houston, 2016 WL 1104363 (S.D. Tex. 2016).
115 Concrete Works I, 36 F.3d at 1520; Contractors Ass’n of E. Pa. v. City of Philadelphia, 6 F.3d 990, 1002-1003 (3d Cir. 1993); Coral
Construction Co. v. King County, 941 F.2d 910, 919 (9th Cir. 1991).
FINAL REPORT APPENDIX B, PAGE 18
Statements regarding whether there are instances of discrimination in bidding on specific
contracts and in the financing and insurance markets. 116
Courts have accepted and recognize that anecdotal evidence is the witness’ narrative of incidents told
from his or her perspective, including the witness’ thoughts, feelings, and perceptions, and thus
anecdotal evidence need not be verified. 117
b. The narrow tailoring requirement. The second prong of the strict scrutiny analysis requires that a
race- or ethnicity-based program or legislation implemented to remedy past identified discrimination in
the relevant market be “narrowly tailored” to reach that objective.
The narrow tailoring requirement has several components and the courts, including the Ninth Circuit
Court of Appeals, analyze several criteria or factors in determining whether a program or legislation
satisfies this requirement including:
The necessity for the relief and the efficacy of alternative race-, ethnicity-, and gender-
neutral remedies;
The flexibility and duration of the relief, including the availability of waiver provisions;
The relationship of numerical goals to the relevant labor market; and
The impact of a race-, ethnicity-, or gender-conscious remedy on the rights of third
parties. 118
To satisfy the narrowly tailored prong of the strict scrutiny analysis in the context of the Federal DBE
Program, which is instructive to the study, the federal courts that have evaluated state and local DBE
programs and their implementation of the Federal DBE Program, held the following factors are
pertinent:
Evidence of discrimination or its effects in the state transportation contracting industry;
Flexibility and duration of a race- or ethnicity-conscious remedy;
Relationship of any numerical DBE goals to the relevant market;
116 See, e.g., AGC, SDC v. Caltrans, 713 F.3d at 1197; H. B. Rowe, 615 F.3d 233, 241-242; 249-251; Northern Contracting, 2005 WL 2230195,
at 13-15 (N.D. Ill. 2005), affirmed, 473 F.3d 715 (7th Cir. 2007); see also, Contractors Ass’n of E. Pa. v. City of Philadelphia, 6 F.3d 990,
1002-1003 (3d Cir. 1993); Concrete Works, 321 F.3d at 989; Adarand VII, 228 F.3d at 1166-76. For additional examples of anecdotal
evidence, see Eng’g Contractors Ass’n, 122 F.3d at 924; Concrete Works, 36 F.3d at 1520; Cone Corp. v. Hillsborough County, 908 F.2d 908,
915 (11th Cir. 1990); DynaLantic, 885 F.Supp.2d 237; Florida A.G.C. Council, Inc. v. State of Florida, 303 F. Supp.2d 1307, 1325 (N.D. Fla.
2004).
117 See, e.g., AGC, SDC v. Caltrans, 713 F.3d at 1197; H. B. Rowe, 615 F.3d 233, 241-242, 248-249; Concrete Works II, 321 F.3d at 989; Eng’g
Contractors Ass’n, 122 F.3d at 924-26; Cone Corp., 908 F.2d at 915; Northern Contracting, Inc. v. Illinois, 2005 WL 2230195 at *21, N. 32
(N.D. Ill. Sept. 8, 2005), aff’d 473 F.3d 715 (7th Cir. 2007).
118 See, e.g., Midwest Fence, 840 F.3d 932, 942, 953-954 (7th Cir. 2016); AGC, SDC v. Caltrans, 713 F.3d at 1198-1199; H. B. Rowe, 615 F.3d
233, 252-255; Rothe, 545 F.3d at 1036; Western States Paving, 407 F3d at 993-995; Sherbrooke Turf, 345 F.3d at 971; Adarand VII, 228
F.3d at 1181(10th Cir. 2000); W.H. Scott Constr. Co. v. City of Jackson, Mississippi, 199 F.3d 206 (5th Cir. 1999); Eng’g Contractors Ass’n, 122
F.3d at 927 (internal quotations and citations omitted); Contractors Ass’n of E. Pa. v. City of Philadelphia, 91 F.3d 586, 605-610 (3d. Cir.
1996); Contractors Ass’n of E. Pa. v. City of Philadelphia, 6 F.3d 990, 1008-1009 (3d. Cir. 1993); see also, Geyer Signal, Inc., 2014 WL
1309092.
FINAL REPORT APPENDIX B, PAGE 19
Effectiveness of alternative race- and ethnicity-neutral remedies;
Impact of a race- or ethnicity-conscious remedy on third parties; and
Application of any race- or ethnicity-conscious program to only those minority groups who
have actually suffered discrimination. 119
The Eleventh Circuit described the “the essence of the ‘narrowly tailored’ inquiry [as] the notion that
explicitly racial preferences … must only be a ‘last resort’ option.” 120 Courts have found that “[w]hile
narrow tailoring does not require exhaustion of every conceivable race-neutral alternative, it does
require serious, good faith consideration of whether such alternatives could serve the governmental
interest at stake.” 121
Similarly, the Sixth Circuit Court of Appeals in Associated Gen. Contractors v. Drabik (Drabik II), stated:
“Adarand teaches that a court called upon to address the question of narrow tailoring must ask, “for
example, whether there was ‘any consideration of the use of race-neutral means to increase minority
business participation’ in government contracting … or whether the program was appropriately limited
such that it ‘will not last longer than the discriminatory effects it is designed to eliminate.’” 122
The Supreme Court in Parents Involved in Community Schools v. Seattle School District also found that
race- and ethnicity-based measures should be employed as a last resort.123 The majority opinion stated:
“Narrow tailoring requires ‘serious, good faith consideration of workable race-neutral alternatives,’ and
yet in Seattle several alternative assignment plans—many of which would not have used express racial
classifications—were rejected with little or no consideration.” 124 The Court found that the District failed
to show it seriously considered race-neutral measures.
The “narrowly tailored” analysis is instructive in terms of developing any potential legislation or
programs that involve MBE/WBE/DBEs or in connection with determining appropriate remedial
measures to achieve legislative objectives.
Implementation of the Federal DBE Program: Narrow tailoring. The second prong of the strict
scrutiny analysis requires the implementation of the Federal DBE Program by state and local
government recipients of federal funds be “narrowly tailored” to remedy identified discrimination in the
119 See, e.g., Midwest Fence, 840 F.3d 932, 942, 953-954 (7th Cir. 2016); AGC, SDC v. Caltrans, 713 F.3d at 1198-1199; H. B. Rowe, 615 F.3d
233, 243-245, 252-255; Western States Paving, 407 F.3d at 998; Sherbrooke Turf, 345 F.3d at 971; Adarand VII, 228 F.3d at 1181;
Kornhass Construction, Inc. v. State of Oklahoma, Department of Central Services, 140 F.Supp.2d at 1247-1248; see also Geyer Signal, Inc.,
2014 WL 1309092.
120 Eng’g Contractors Ass’n, 122 F.3d at 926 (internal citations omitted); see also Virdi v. DeKalb County School District, 135 Fed. Appx. 262,
264, 2005 WL 138942 (11th Cir. 2005) (unpublished opinion); Webster v. Fulton County, 51 F. Supp.2d 1354, 1380 (N.D. Ga. 1999), aff’d
per curiam 218 F.3d 1267 (11th Cir. 2000).
121 See Grutter v. Bollinger, 539 U.S. 306, 339 (2003); Richmond v. J.A. Croson Co., 488 U.S. 469, 509-10 (1989); H. B. Rowe, 615 F.3d 233,
252-255; Western States Paving, 407 F.3d at 993; Sherbrooke Turf, 345 F.3d at 972; see also Adarand I, 515 U.S. at 237-38.
122 Associated Gen. Contractors of Ohio, Inc. v. Drabik (“Drabik II”), 214 F.3d 730, 738 (6th Cir. 2000).
123 551 U.S. 701, 734-37, 127 S.Ct. 2738, 2760-61 (2007).
124 551 U.S. 701, 734-37, 127 S.Ct. at 2760-61; see also Fisher v. University of Texas, 133 S.Ct. 2411 (2013); Grutter v. Bollinger, 539 U.S.
305 (2003).
FINAL REPORT APPENDIX B, PAGE 20
particular state or local government recipient’s contracting and procurement market. 125 The cases
considering challenges to a state government’s implementation of the Federal DBE Program are
instructive to the study, as stated above, in connection with establishing a compelling governmental
interest and narrow tailoring, which are the two prongs of the strict scrutiny standard.
In Northern Contracting (2007) the Seventh Circuit Court of Appeals cited its earlier precedent in
Milwaukee County Pavers v. Fielder to hold “that a state is insulated from [a narrow tailoring]
constitutional attack, absent a showing that the state exceeded its federal authority. The Illinois DOT
(IDOT) here is acting as an instrument of federal policy, and Northern Contracting, Inc. (NCI) cannot
collaterally attack the federal regulations through a challenge to IDOT’s program.” 126 The Seventh
Circuit distinguished both the Ninth Circuit Court of Appeals decision in Western States Paving and the
Eighth Circuit Court of Appeals decision in Sherbrooke Turf, relating to an as-applied narrow tailoring
analysis.
The Seventh Circuit held that IDOT’s application of a federally mandated program is limited to the
question of whether the state exceeded its grant of federal authority under the Federal DBE Program. 127
The Seventh Circuit analyzed IDOT’s compliance with the federal regulations regarding the calculation
of the availability of DBEs, the adjustment of its goal based on local market conditions, and its use of
race-neutral methods set forth in the federal regulations. 128 The court held NCI failed to demonstrate
that IDOT did not satisfy compliance with the federal regulations (49 CFR Part 26). 129 Accordingly, the
Seventh Circuit affirmed the district court’s decision upholding the validity of IDOT’s DBE program. 130
The 2015 and 2016 Seventh Circuit decisions in Dunnet Bay and Midwest Fence followed the ruling in
Northern Contracting that a state DOT implementing the Federal DBE Program is insulated from a
constitutional challenge absent a showing that the state exceeded its federal authority. 131 The court held
the Illinois DOT DBE Program implementing the Federal DBE Program was valid, finding there was not
sufficient evidence to show the Illinois DOT exceeded its authority under the federal regulations.132
The court found Dunnet Bay had not established sufficient evidence that IDOT’s implementation of the
Federal DBE Program constituted unlawful discrimination. 133 In addition, the court in Midwest Fence
upheld the constitutionality of the Federal DBE Program, and upheld the Illinois DOT DBE Program and
125 AGC, SDC v. Caltrans, 713 F.3d at 1197-1199 (9th Cir. 2013); Western States Paving, 407 F3d at 995-998; Sherbrooke Turf, 345 F.3d at
970-71; see, e.g., Midwest Fence, 840 F.3d 932, 949-953.
126 473 F.3d at 722.
127 Id. at 722.
128 Id. at 723-24.
129 Id.
130 Id.; See, e.g., Midwest Fence, 840 F.3d 932 (7th Cir. 2016); Midwest Fence, 84 F. Supp. 3d 705, 2015 WL 1396376 (N.D. Ill. 2015),
affirmed, 840 F.3d 932 (7th Cir. 2016); Geod Corp. v. New Jersey Transit Corp., et al., 746 F.Supp 2d 642 (D.N.J. 2010); South Florida Chapter
of the A.G.C. v. Broward County, Florida, 544 F.Supp.2d 1336 (S.D. Fla. 2008).
131 Midwest Fence, 840 F.3d 932 (7th Cir. 2016); Dunnet Bay Construction Company v. Borggren, Illinois DOT, et al., 799 F. 3d 676, 2015 WL
4934560 at **18-22 (7th Cir. 2015).
132 Dunnet Bay, 799 F.3d 676, 2015 WL 4934560 at **18-22.
133 Id.
FINAL REPORT APPENDIX B, PAGE 21
Illinois State Tollway Highway Authority DBE Program that did not involve federal funds under the
Federal DBE Program. 134
It is noteworthy that there appears to be a split in approach regarding implementation of the Federal
DBE Program by state and local governments between the Ninth Circuit regarding the legal standard,
burden and analysis in connection with a state government implementing the Federal DBE Program, and
the Seventh Circuit Court of Appeals in Midwest Fence Corp. v. U.S. DOT, FHWA, Illinois DOT, Illinois State
Toll Highway Authority, et al., 135 and in Dunnet Bay Construction Co. v. Borggren, Illinois DOT, et
al. 136,which upheld the implementation of the Federal DBE Program by the Illinois DOT (IDOT). 137
The court in Dunnet Bay held the Plaintiff lacked standing to challenge the IDOT DBE Program, and that
even if it had standing, any other federal claims were foreclosed by the Northern Contracting v. Illinois
DOT, et al. decision because there was no evidence IDOT exceeded its authority under federal law. 138 The
Seventh Circuit in Midwest Fence also held the Federal DBE Program is facially constitutional, and
upheld the implementation of that federal Program by IDOT in its DBE Program following the Northern
Contracting decision. The Seventh Circuit agreed with the Eighth, Ninth, and Tenth Circuits that the
Federal DBE Program is narrowly tailored on its face, and thus survives strict scrutiny.139
Race-, ethnicity-, and gender-neutral measures. To the extent a “strong basis in evidence” exists
concerning discrimination in a local or state government’s relevant contracting and procurement
market, the courts analyze several criteria or factors to determine whether a state’s implementation of a
race- or ethnicity-conscious program is necessary and thus narrowly tailored to achieve remedying
identified discrimination. One of the key factors discussed above is consideration of race-, ethnicity-, and
gender-neutral measures.
The courts require that a local or state government seriously consider race-, ethnicity-, and gender-
neutral efforts to remedy identified discrimination. 140 And the courts have held unconstitutional those
race- and ethnicity-conscious programs implemented without consideration of race- and ethnicity-
neutral alternatives to increase minority business participation in state and local contracting. 141
134 840 F.3d 932 (7th Cir. 2016).
135 840 F.3d 932, 2016 WL 6543514 (7th Cir. 2016).
136 840 F.3d 932, 2016 WL 6543514 (7th Cir. 2016).
137 799 F. 3d 676, 2015 WL 4934560 (7th Cir. 2015).
138 Id.
139 840 F.3d 932, 2016 WL 6543514 (7th Cir. 2016)
140 See, e.g., Midwest Fence, 840 F.3d 932, 937-938, 953-954 (7th Cir. 2016); AGC, SDC v. Caltrans, 713 F.3d at 1199; H. B. Rowe, 615 F.3d
233, 252-255; Western States Paving, 407 F.3d at 993; Sherbrooke Turf, 345 F.3d at 972; Adarand VII, 228 F.3d at 1179 (10th Cir. 2000);
Eng’g Contractors Ass’n, 122 F.3d at 927; Contractors Ass’n of E. Pa. v. City of Philadelphia (CAEP II), 91 F.3d at 608-609 (3d. Cir. 1996);
Contractors Ass’n (CAEP I), 6 F.3d at 1008-1009 (3d. Cir. 1993); Coral Constr., 941 F.2d at 923.
141 See, Croson, 488 U.S. at 507; Drabik I, 214 F.3d at 738 (citations and internal quotations omitted); see also, Eng’g Contractors Ass’n,
122 F.3d at 927; Virdi, 135 Fed. Appx. At 268; Contractors Ass’n of E. Pa. v. City of Philadelphia (CAEP II), 91 F.3d at 608-609 (3d. Cir.
1996); Contractors Ass’n(CAEP (I), 6 F.3d at 1008-1009 (3d. Cir. 1993).
FINAL REPORT APPENDIX B, PAGE 22
The Court in Croson followed by decisions from federal courts of appeal found that local and state
governments have at their disposal a “whole array of race-neutral devices to increase the accessibility of
city contracting opportunities to small entrepreneurs of all races.” 142
Examples of race-, ethnicity-, and gender-neutral alternatives include, but are not limited to, the
following:
Providing assistance in overcoming bonding and financing obstacles;
Relaxation of bonding requirements;
Providing technical, managerial, and financial assistance;
Establishing programs to assist start-up firms;
Simplification of bidding procedures;
Training and financial aid for all disadvantaged entrepreneurs;
Non-discrimination provisions in contracts and in state law;
Mentor-protégé programs and mentoring;
Efforts to address prompt payments to smaller businesses;
Small contract solicitations to make contracts more accessible to smaller businesses;
Expansion of advertisement of business opportunities;
Outreach programs and efforts;
“How to do business” seminars;
Sponsoring networking sessions throughout the state to acquaint small firms with large
firms;
Creation and distribution of MBE/WBE and DBE directories; and
Streamlining and improving the accessibility of contracts to increase small business
participation. 143
The courts have held that while the narrow tailoring analysis does not require a governmental entity to
exhaust every possible race-, ethnicity-, and gender-neutral alternative, it does “require serious, good
faith consideration of workable race-neutral alternatives. 144
Additional factors considered under narrow tailoring. In addition to the required consideration of
the necessity for the relief and the efficacy of alternative remedies (race- and ethnicity-neutral efforts),
142 Croson, 488 U.S. at 509-510.
143 See, e.g., Croson, 488 U.S. at 509-510; H. B. Rowe, 615 F.3d 233, 252-255; N. Contracting, 473 F.3d at 724; Adarand VII, 228 F.3d
1179(10th Cir. 2000); 49 CFR § 26.51(b); see also, Eng’g Contractors Ass’n, 122 F.3d at 927-29; Contractors Ass’n of E. Pa. v. City of
Philadelphia, 91 F.3d at 608-609 (3d. Cir. 1996); Contractors Ass’n of E. Pa. v. City of Philadelphia, 6 F.3d at 1008-1009 (3d. Cir. 1993).
144 Parents Involved in Community Schools v. Seattle School District, 551 U.S. 701, 732-47, 127 S.Ct 2738, 2760-61 (2007); AGC, SDC v.
Caltrans, 713 F.3d at 1199, citing Grutter v. Bollinger, 539 U.S. 306, 339 (2003); H. B. Rowe, 615 F.3d 233, 252-255; Western States Paving,
407 F.3d at 993; Sherbrooke Turf, 345 F.3d at 972; Eng’g Contractors Ass’n, 122 F.3d at 927.
FINAL REPORT APPENDIX B, PAGE 23
the courts require evaluation of additional factors as listed above. 145 For example, to be considered
narrowly tailored, courts have held that an MBE/WBE- or DBE-type program should include: (1) built-in
flexibility; (2) good faith efforts provisions; (3) waiver provisions; (4) a rational basis for goals; (5)
graduation provisions; (6) remedies only for groups for which there were findings of discrimination; (7)
sunset provisions; and (8) limitation in its geographical scope to the boundaries of the enacting
jurisdiction. 146, 147, 148, 149, 150, 151, 152, 153
Several federal court decisions have upheld the Federal DBE Program and its implementation by state
DOTs and recipients of federal funds, including satisfying the narrow tailoring factors. 154
These decisions regarding state DOTs, transit and transportation authorities, and recipients of federal
financial assistance implementing the Federal DBE Program and MBE/WBE/DBE cases throughout the
country are instructive to the legal framework and analysis and the study.
It should be noted that, as pointed out above and in Section C viii below, the MAMCO case, pending in
district court in Kentucky, granted a preliminary injunction holding the Federal DBE Program’s
145 See Midwest Fence, 840 F.3d 932, 937-939, 947-954 (7th Cir. 2016); H. B. Rowe, 615 F.3d 233, 252-255; Sherbrooke Turf, 345 F.3d at
971-972; Eng’g Contractors Ass’n, 122 F.3d at 927; Contractors Ass’n of E. Pa. v. City of Philadelphia, 91 F.3d at 608-609 (3d. Cir. 1996);
Contractors Ass’n of E. Pa. v. City of Philadelphia, 6 F.3d at 1008-1009 (3d. Cir. 1993).
146 Midwest Fence, 840 F.3d 932, 937-939, 947-954 (7th Cir. 2016); H. B. Rowe, 615 F.3d 233, 253; Sherbrooke Turf, 345 F.3d at 971-972;
CAEP I, 6 F.3d at 1009; Associated Gen. Contractors of Ca., Inc. v. Coalition for Economic Equality (“AGC of Ca.”), 950 F.2d 1401, 1417 (9th
Cir. 1991); Coral Constr. Co. v. King County, 941 F.2d 910, 923 (9th Cir. 1991); Cone Corp. v. Hillsborough County, 908 F.2d 908, 917 (11th
Cir. 1990).
147 Midwest Fence, 840 F.3d 932, 937-939, 947-954 (7th Cir. 2016); H. B. Rowe, 615 F.3d 233, 253; Sherbrooke Turf, 345 F.3d at 971-972;
CAEP I, 6 F.3d at 1019; Cone Corp., 908 F.2d at 917.
148 Midwest Fence, 840 F.3d 932, 937-939, 947-954 (7th Cir. 2016); H. B. Rowe, 615 F.3d 233, 253; AGC of Ca., 950 F.2d at 1417; Cone
Corp., 908 F.2d at 917; Contractors Ass’n of E. Pa. v. City of Philadelphia, 91 F.3d at 606-608 (3d. Cir. 1996); Contractors Ass’n of E. Pa. v.
City of Philadelphia, 6 F.3d at 1008-1009 (3d. Cir. 1993).
149 Id; Sherbrooke Turf, 345 F.3d at 971-973; Contractors Ass’n of E. Pa. v. City of Philadelphia, 91 F.3d at 606-608 (3d. Cir. 1996);
Contractors Ass’n of E. Pa. v. City of Philadelphia, 6 F.3d at 1008-1009 (3d. Cir. 1993).
150 Id.
151 See, e.g., AGC, SDC v. Caltrans, 713 F.3d at 1198-1199; H. B. Rowe, 615 F.3d 233, 253-255; Western States Paving, 407 F.3d at 998; AGC
of Ca., 950 F.2d at 1417; Contractors Ass’n of E. Pa. v. City of Philadelphia, 91 F.3d at 593-594, 605-609 (3d. Cir. 1996); Contractors Ass’n
(CAEP I), 6 F.3d at 1009, 1012 (3d. Cir. 1993); Kossman Contracting Co., Inc., v. City of Houston, 2016 WL 1104363 (W.D. Tex. 2016);
Sherbrooke Turf, 2001 WL 150284 (unpublished opinion), aff’d 345 F.3d 964.
152 See, e.g., H. B. Rowe, 615 F.3d 233, 254; Sherbrooke Turf, 345 F.3d at 971-972; Peightal, 26 F.3d at 1559; . see also, Kossman Contracting
Co., Inc. v. City of Houston, 2016 WL 1104363 (W.D. Tex. 2016).
153 Coral Constr., 941 F.2d at 925.
154 H. B. Rowe Co., Inc. v. NCDOT, 615 F.3d 233, 242 (4th Cir. 2010); see, e.g., Midwest Fence Corp. v. U.S. DOT, Illinois DOT, et al., 840 F.3d
932, 2016 WL 6543514 (7th Cir. 2016), cert. denied, 2017 WL 497345 (2017); Dunnet Bay Construction Co. v. Borggren, Illinois DOT, et al.,
799 F.3d 676, 2015 WL 4934560 (7th Cir. 2015), cert. denied, 2016 WL 193809 (2016); Associated General Contractors of America, San
Diego Chapter, Inc. v. California Department of Transportation, et al., 713 F.3d 1187, (9th Cir. 2013); Western States Paving Co. v.
Washington State DOT, 407 F.3d 983 (9th Cir. 2005), cert. denied, 546 U.S. 1170 (2006); Mountain West Holding Co., Inc. v. The State of
Montana, Montana DOT, et al., 2017 WL 2179120 Memorandum Opinion (Not for Publication) (9th Cir. May 16, 2017); Northern
Contracting, Inc. v. Illinois DOT, 473 F.3d 715 (7th Cir. 2007); Sherbrooke Turf, Inc. v. Minnesota DOT and Gross Seed v. Nebraska
Department of Roads, 345 F.3d 964 8th Cir. 2003), cert. denied, 541 U.S. 1041 (2004); Adarand Constructors, Inc. v. Slater, Colorado DOT,
228 F.3d 1147 (10th Cir. 2000) (“Adarand VII”); Dunnet Bay Construction Co. v. Illinois DOT, et. al. 2014 WL 552213 (C. D. Ill. 2014),
affirmed by Dunnet Bay, 2015 WL 4934560 (7th Cir. 2015); Geyer Signal, Inc. v. Minnesota DOT, 2014 W.L. 1309092 (D. Minn. 2014); M. K.
Weeden Construction v State of Montana, Montana DOT, 2013 WL 4774517 (D. Mont. 2013); Geod Corp. v. New Jersey Transit Corp., 766 F.
Supp.2d. 642 (D. N.J. 2010); South Florida Chapter of the A.G.C. v. Broward County, Florida, 544 F. Supp.2d 1336 (S.D. Fla. 2008).
FINAL REPORT APPENDIX B, PAGE 24
requirement of race and gender based presumptions unconstitutional, and the Interim Final Rule
published by USDOT on October 3, 2025, which is effective immediately, amended and eliminated the
race and gender based presumptions from the federal regulations. See, Section C viii below.
2. Intermediate scrutiny analysis. Certain Federal Courts of Appeal, including the Fourth Circuit
Court of Appeals, apply intermediate scrutiny to gender-conscious programs. 155 The courts, including
the Fourth Circuit, have applied “intermediate scrutiny” to classifications based on gender.156
Restrictions subject to intermediate scrutiny are permissible so long as they are substantially related to
serve an important governmental interest. 157
The courts have interpreted this intermediate scrutiny standard to require that gender-based
classifications be:
1. Supported by both “sufficient probative” evidence or “exceedingly persuasive justification” in
support of the stated rationale for the program; and
2. Substantially related to the achievement of that underlying objective. 158
Under the traditional intermediate scrutiny standard, the court reviews a gender-conscious program by
analyzing whether the state actor has established a sufficient factual predicate for the claim that woman-
owned businesses have suffered discrimination, and whether the gender-conscious remedy is an
155 AGC, SDC v. Caltrans, 713 F.3d at 1195; Western States Paving, 407 F.3d at 990 n. 6; Concrete Works, 321 F.3d 950, 960 (10th Cir. 2003);
Concrete Works, 36 F.3d 1513, 1519 (10th Cir. 1994); Associated Utility Contractors of Maryland, Inc. v. The Mayor and City Council of
Baltimore, et al., 83 F. Supp. 2d 613, 619-620 (2000); See generally, Coral Constr. Co., 941 F.2d at 931-932 (9th Cir. 1991); Equal. Found. v.
City of Cincinnati, 128 F.3d 289 (6th Cir. 1997); Eng’g Contractors Ass’n, 122 F.3d at 905, 908, 910; Ensley Branch N.A.A.C.P. v. Seibels, 31
F.3d 1548 (11th Cir. 1994); Contractors Ass’n of E. Pa. v. City of Philadelphia, 6 F.3d at 1009-1011 (3d Cir. 1993); see also U.S. v. Virginia,
518 U.S. 515, 532 and n. 6 (1996)(“exceedingly persuasive justification.”); Geyer Signal, 2014 WL 1309092.
156 H. B. Rowe Co., Inc. v. NCDOT, 615 F.3d 233, 242 (4th Cir. 2010); Associated Utility Contractors of Maryland, Inc. v. The Mayor and City
Council of Baltimore, et al., 83 F. Supp. 2d 613, 619-620 (2000); see, e.g., AGC, SDC v. Caltrans, 713 F.3d at 1195; Western States Paving, 407
F.3d at 990 n. 6; H. B. Rowe Co., Inc. v. NCDOT, 615 F.3d 233, 242 (4th Cir. 2010); Concrete Works, 321 F.3d 950, 960 (10th Cir. 2003);
Concrete Works, 36 F.3d 1513, 1519 (10th Cir. 1994); see, generally, Associated Utility Contractors of Maryland, Inc. v. The Mayor and City
Council of Baltimore, et al., 83 F. Supp. 2d 613, 619-620 (2000); see also, Contractors Ass’n of E. Pa. v. City of Philadelphia, 6 F.3d at 1009-
1011 (3d Cir. 1993); Cunningham v. Beavers, 858 F.2d 269, 273 (5th Cir. 1988), cert. denied, 489 U.S. 1067 (1989) (citing Craig v. Boren,
429 U.S. 190 (1976), and Lalli v. Lalli, 439 U.S. 259(1978)); Contractors Association of Eastern Pennsylvania, Inc., et. al. v. City of
Philadelphia, et. al., 91 F. 3d 586 (3d Cir. 1996); United States v. Taylor, 232 F.Supp. 3d 741 (W.D. Penn. 2017)).
157 See, e.g., AGC, SDC v. Caltrans, 713 F.3d at 1195; Western States Paving, 407 F.3d at 990 n. 6; H. B. Rowe Co., Inc. v. NCDOT, 615 F.3d 233,
242 (4th Cir. 2010); Concrete Works, 321 F.3d 950, 960 (10th Cir. 2003); Concrete Works, 36 F.3d 1513, 1519 (10th Cir. 1994); Associated
Utility Contractors of Maryland, Inc. v. The Mayor and City Council of Baltimore, et al., 83 F. Supp. 2d 613, 619-620 (2000); see, also Serv.
Emp. Int’l Union, Local 5 v. City of Hous., 595 F.3d 588, 596 (5th Cir. 2010); Contractors Ass’n of E. Pa. v. City of Philadelphia, 6 F.3d at 1009-
1011 (3d Cir. 1993); . ); see also, Contractors Association of Eastern Pennsylvania, Inc., et. al. v. City of Philadelphia, et. al., 91 F. 3d 586 (3d
Cir. 1996 United States v. Taylor, 232 F.Supp. 3d 741 (W.D. Penn. 2017)
158 AGC, SDC v. Caltrans, 713 F.3d at 1195; H. B. Rowe Co., Inc. v. NCDOT, 615 F.3d 233, 242 (4th Cir. 2010); Western States Paving, 407 F.3d
at 990 n. 6; Coral Constr. Co., 941 F.2d at 931-932 (9th Cir. 1991); Concrete Works, 321 F.3d 950, 960 (10th Cir. 2003); Concrete Works, 36
F.3d 1513, 1519 (10th Cir. 1994); see, e.g., Equal. Found. v. City of Cincinnati, 128 F.3d 289 (6th Cir. 1997); Eng’g Contractors Ass’n, 122
F.3d at 905, 908, 910; Ensley Branch N.A.A.C.P. v. Seibels, 31 F.3d 1548 (11th Cir. 1994); Contractors Ass’n of E. Pa. v. City of Philadelphia, 6
F.3d at 1009-1011 (3d Cir. 1993); Associated Utility Contractors of Maryland, Inc. v. The Mayor and City Council of Baltimore, et al., 83 F.
Supp. 2d 613, 619-620 (2000); see also U.S. v. Virginia, 518 U.S. 515, 532 and n. 6 (1996)(“exceedingly persuasive justification.”);
Contractors Association of Eastern Pennsylvania, Inc., et. al. v. City of Philadelphia, et. al., 91 F. 3d 586 (3d Cir. 1996); United States v. Taylor,
232 F.Supp. 3d 741 (W.D. Penn. 2017)
FINAL REPORT APPENDIX B, PAGE 25
appropriate response to such discrimination. This standard requires the state actor to present
“sufficient probative” evidence in support of its stated rationale for the program. 159
Intermediate scrutiny, as interpreted by federal circuit courts of appeal, requires a direct, substantial
relationship between the objective of the gender preference and the means chosen to accomplish the
objective. 160 The measure of evidence required to satisfy intermediate scrutiny is less than that
necessary to satisfy strict scrutiny. Unlike strict scrutiny, it has been held that the intermediate scrutiny
standard does not require a showing of government involvement, active or passive, in the discrimination
it seeks to remedy. 161
The Fourth Circuit in H.B. Rowe found that the disparity analysis demonstrated women-owned
businesses won far more than their expected share of subcontracting dollars during the study period.162
Therefore, the court concluded that prime contractors substantially overutilized women subcontractors
on public road construction projects. 163 The court held the public-sector evidence did not evince the
“exceedingly persuasive justification” the Supreme Court requires. 164
The Fourth Circuit cites with approval the guidance from the Eleventh Circuit that has held “[w]hen a
gender-conscious affirmative action program rests on sufficient evidentiary foundation, the government
is not required to implement the program only as a last resort … . Additionally, under intermediate
scrutiny, a gender-conscious program need not closely tie its numerical goals to the proportion of
qualified women in the market.”165
The Seventh Circuit Court of Appeals, however, in Builders Ass’n of Greater Chicago v. County of Cook,
Chicago, did not hold there is a different level of scrutiny for gender discrimination or gender-based
programs in connection with a challenge to the MBE program involved in that case. 166 The Court in
Builders Ass’n rejected the distinction applied by the Eleventh Circuit in Engineering Contractors. 167
The Tenth Circuit in Concrete Works stated as follows in connection with the type of evidence involving
the participation of woman-owned business enterprises:
“We do not have the benefit of relevant authority with which to compare Denver’s disparity indices for
WBEs. See Contractors Ass’n, 6 F.3d at 1009–11 (reviewing case law and noting that “it is unclear
whether statistical evidence as well as anecdotal evidence is required to establish the discrimination
necessary to satisfy intermediate scrutiny, and if so, how much statistical evidence is necessary”).
159 Id.
160 See, e.g., AGC, SDC v. Caltrans, 713 F.3d at 1195; H. B. Rowe, Inc. v. NCDOT, 615 F.3d 233, 242 (4th Cir. 2010); Western States Paving, 407
F.3d at 990 n. 6; Coral Constr. Co., 941 F.2d at 931-932 (9th Cir. 1991); Equal. Found. v. City of Cincinnati, 128 F.3d 289 (6th Cir. 1997);
Eng’g Contractors Ass’n, 122 F.3d at 905, 908, 910; Ensley Branch N.A.A.C.P. v. Seibels, 31 F.3d 1548 (11th Cir. 1994); Assoc. Utility
Contractors of Maryland, Inc. v. The Mayor and City Council of Baltimore, et al., 83 F.Supp 2d 613, 619-620 (2000); see, also, U.S. v. Virginia,
518 U.S. 515, 532 and n. 6 (1996)(“exceedingly persuasive justification.”)
161 Coral Constr. Co., 941 F.2d at 931-932; see Eng’g Contractors Ass’n, 122 F.3d at 910.
162 615 F.3d 233 at 254.
163 Id.
164 Id. at 255.
165 615 F.3d 233, 242; 122 F.3d at 929 (internal citations omitted).
166 Builders Ass’n of Greater Chicago v. County of Cook, Chicago , 256 F.3d 642, 644-45 (7th Cir. 2001).
167 256 F.3d 642, 644-45 (7th Cir. 2001).
FINAL REPORT APPENDIX B, PAGE 26
Nevertheless, Denver’s data indicates significant WBE underutilization such that the Ordinance’s gender
classification arises from “reasoned analysis rather than through the mechanical application of
traditional, often inaccurate, assumptions.” Mississippi Univ. of Women, 458 U.S. at 726, 102 S.Ct. at
3337 (striking down, under the intermediate scrutiny standard, a state statute that excluded males from
enrolling in a state-supported professional nursing school).”
The Supreme Court has stated that an affirmative action program survives intermediate scrutiny if the
proponent can show it was “a product of analysis rather than a stereotyped reaction based on habit.” 168
The Third Circuit found this standard required the City of Philadelphia to present probative evidence in
support of its stated rationale for the gender preference, discrimination against women-owned
contractors. 169 The Court in Contractors Ass’n of E. Pa. (CAEP I) held the City had not produced enough
evidence of discrimination, noting that in its brief, the City relied on statistics in the City Council Finance
Committee Report and one affidavit from a woman engaged in the catering business, but the Court found
this evidence only reflected the participation of women in City contracting generally, rather than in the
construction industry, which was the only cognizable issue in that case. 170
The Third Circuit in CAEP I held the evidence offered by the City of Philadelphia regarding women-
owned construction businesses was insufficient to create an issue of fact. The study in CAEP I contained
no disparity index for women-owned construction businesses in City contracting, such as that presented
for minority-owned businesses. 171 Given the absence of probative statistical evidence, the City,
according to the Court, must rely solely on anecdotal evidence to establish gender discrimination
necessary to support the Ordinance. 172 But the record contained only one three-page affidavit alleging
gender discrimination in the construction industry. 173 The only other testimony on this subject, the
Court found in CAEP I, consisted of a single, conclusory sentence of one witness who appeared at a City
Council hearing. 174 This evidence, the Court held, was not enough to create a triable issue of fact
regarding gender discrimination under the intermediate scrutiny standard.
Therefore, the Court in CAEP I affirmed the grant of summary judgment invalidating the gender
preference for construction contracts. 175 The Third Circuit noted that it saw no impediment to the City
re-enacting the gender preference if it could provide probative evidence of discrimination.176
3. Rational basis analysis. Where a challenge to the constitutionality of a statute or a regulation does
not involve a fundamental right or a suspect class, the appropriate level of scrutiny to apply is the
rational basis standard. 177 When applying rational basis review under the Equal Protection Clause of the
168 Contractors Ass’n of E. Pa. (CAEP I), 6 F.3d at 1010 (3d. Cir. 1993).
169 Contractors Ass’n of E. Pa. (CAEP I), 6 F.3d at 1010 (3d. Cir. 1993).
170 Contractors Ass’n of E. Pa. (CAEP I), 6 F.3d at 1011 (3d. Cir. 1993).
171 Contractors Ass’n of E. Pa. (CAEP I), 6 F.3d at 1011 (3d. Cir. 1993).
172 Id.
173 Id.
174 Id.
175 Id.
176 Id.
177 See, e.g., Heller v. Doe, 509 U.S. 312, 320 (1993); Crawford v. Antonio B. Won Pat International Airport Authority, 917 F.3d 1081, 1096
(9th Cir. 2019); Hettinga v. United States, 677 F.3d 471, 478 (D.C. Cir 2012); H. B. Rowe, Inc. v. NCDOT, 615 F.3d 233 at 254; (4th Cir. 2010);
FINAL REPORT APPENDIX B, PAGE 27
Fourteenth Amendment of the United States Constitution, a court is required to inquire whether the
challenged classification has a legitimate purpose and whether it was reasonable for the legislature to
believe that use of the challenged classification would promote that purpose. 178
Courts, including in Virginia and the Fourth Circuit Court of Appeals, in applying the rational basis test
generally find that a challenged law is upheld “as long as there could be some rational basis for enacting
[it],” that is, that “the law in question is rationally related to a legitimate government purpose.” 179 So
long as a government legislature had a reasonable basis for adopting the classification, the law would
pass constitutional muster. 180
“[T]he burden is on the one attacking the legislative arrangement to negative every conceivable basis
which might support it, whether or not the basis has a foundation in the record.” 181 Moreover, “courts
are compelled under rational-basis review to accept a legislature’s generalizations even when there is an
Price-Cornelison v. Brooks, 524 F.3d 1103, 1110 (10th Cir. 1996); White v. Colorado, 157 F.3d 1226, (10th Cir. 1998); Cunningham v. Beavers
858 F.2d 269, 273 (5th Cir. 1988); see also Lundeen v. Canadian Pac. R. Co., 532 F.3d 682, 689 (8th Cir. 2008) (stating that federal courts
review legislation regulating economic and business affairs under a ‘highly deferential rational basis’ standard of review.”); Contractors
Association of Eastern Pennsylvania, Inc., et. al. v. City of Philadelphia, et. al., 91 F. 3d 586 (3d Cir. 1996); Contractors Association of Eastern
Pennsylvania, Inc, et. al. v. City of Philadelphia, 6 F. 3d 990 (3d Cir. 1993); United States v. Taylor, 232 F.Supp. 3d 741 (W.D. Penn. 2017) ;
see, e.g., Gray v. Commonwealth of Virginia, 247 Va. 290, 306-309, 645 S.E. 2d 448, 458-460 (Va. 2007); Carter v. Carter, 232 Va. 166, 171–
72, 349 S.E.2d 95, 98 (Va. 1986).
178 See, Heller v. Doe, 509 U.S. 312, 320 (1993); Crawford v. Antonio B. Won Pat International Airport Authority, 917 F.3d 1081, 1096 (9th
Cir. 2019); Gallinger v. Becerra, 898 F.3d 1012, 1016-1018 (9th Cir. 2018); Hettinga v. United States, 677 F.3d 471, 478 (D.C. Cir 2012); U.S.
v. Brucker, 646 F.3d 1012, 1017 (7th Cir. 2010); Smith v. City of Chicago, 457 F.3d 643, 652 (7th Cir. 2006); Cunningham v. Beavers, 858
F.2d 269, 273 (5th Cir. 1988); see also Lundeen v. Canadian Pac. R. Co., 532 F.3d 682, 689 (8th Cir. 2008) (stating that federal courts
review legislation regulating economic and business affairs under a ‘highly deferential rational basis’ standard of review.”); H. B. Rowe,
Inc. v. NCDOT, 615 F.3d 233 at 254; Contractors Ass’n of E. Pa., 6 F.3d at 1011 (3d Cir. 1993); Contractors Association of Eastern
Pennsylvania, Inc., et. al. v. City of Philadelphia, et. al., 91 F. 3d 586 (3d Cir. 1996); Contractors Association of Eastern Pennsylvania, Inc, et.
al. v. City of Philadelphia, 6 F. 3d 990 (3d Cir. 1993); United States v. Taylor, 232 F.Supp. 3d 741 (W.D. Penn. 2017); see, Gray v.
Commonwealth of Virginia, 247 Va. 290, 306-309, 645 S.E. 2d 448, 458-460 (Va. 2007); Carter v. Carter, 232 Va. 166, 171–72, 349 S.E.2d
95, 98 (Va. 1986).
179 See, e.g., Gray v. Commonwealth of Virginia, 247 Va. 290, 306-309, 645 S.E. 2d 448, 458-460 (Va. 2007), citing Kadrmas v. Dickinson
Public Schools, 487 U.S. 450, 457-58 (1998); Carter v. Carter, 232 Va. 166, 171–72, 349 S.E.2d 95, 98 (1986); Crawford v. Antonio B. Won
Pat International Airport Authority, 917 F.3d 1081, 1095-1096 (9th Cir. 2019); Gallinger v. Becerra, 898 F.3d 1012, 1016-1018 (9th Cir.
2018); U.S. v. Brucker, 646 F.3d 1012, 1017 (7th Cir. 2010); Smith v. City of Chicago, 457 F.3d 643, 652 (7th Cir. 2006); Price-Cornelison v.
Brooks, 524 F.3d 1103, 1110 (10th Cir. 1996); White v. Colorado, 157 F.3d 1226, (10th Cir. 1998)see also City of Cleburne v. Cleburne Living
Ctr., Inc., 473 U.S. 432, 440, (1985) (citations omitted); Heller v. Doe, 509 U.S. 312, 318-321 (1993) (Under rational basis standard, a
legislative classification is accorded a strong presumption of validity); Contractors Association of Eastern Pennsylvania, Inc., et. al. v. City of
Philadelphia, et. al., 91 F. 3d 586 (3d Cir. 1996); Contractors Association of Eastern Pennsylvania, Inc, et. al. v. City of Philadelphia, 6 F. 3d
990 (3d Cir. 1993); United States v. Taylor, 232 F.Supp. 3d 741 (W.D. Penn. 2017).
180 Id.; Crawford v. Antonio B. Won Pat International Airport Authority, 917 F.3d 1081, 1095-1096 (9th Cir. 2019); Gallinger v. Becerra, 898
F.3d 1012, 1016-1018 (9th Cir. 2018); Wilkins v. Gaddy, 734 F.3d 344, 347 (4th Cir. 2013), (citing FCC v. Beach Commc’ns, Inc., 508 U.S.
307, 315 (1993)); U.S. v. Brucker, 646 F.3d 1012, 1017 (7th Cir. 2010); Smith v. City of Chicago, 457 F.3d 643, 652 (7th Cir. 2006); see e.g.
Contractors Association of Eastern Pennsylvania, Inc., et. al. v. City of Philadelphia, et. al., 91 F. 3d 586 (3d Cir. 1996); Contractors
Association of Eastern Pennsylvania, Inc, et. al. v. City of Philadelphia, 6 F. 3d 990 (3d Cir. 1993); United States v. Taylor, 232 F.Supp. 3d 741
(W.D. Penn. 2017); see, Gray v. Commonwealth of Virginia, 247 Va. 290, 306-309, 645 S.E. 2d 448, 458-460 (Va. 2007); Finn v. Virginia
Retirement SVS, 259 Va. 144, 155, 524 S.E. 2d 125, 131 (Va. 2000); Carter v. Carter, 232 Va. 166, 171–72, 349 S.E.2d 95, 98 (Va. 1986).
181 Crawford v. Antonio B. Won Pat International Airport Authority, 917 F.3d 1081, 1095-1096 (9th Cir. 2019); Gallinger v. Becerra, 898
F.3d 1012, 1016-1018 (9th Cir. 2018); United States v. Timms, 664 F.3d 436, 448-49 (4th Cir. 2012), cert. denied, 133 S. Ct. 189 (2012)
(citing Heller v. Doe, 509 U.S. 312, 320-21 (1993)) (quotation marks and citation omitted); U.S. v. Brucker, 646 F.3d 1012, 1017 (7th Cir.
2010); Smith v. City of Chicago, 457 F.3d 643, 652 (7th Cir. 2006); see e.g., Contractors Association of Eastern Pennsylvania, Inc., et. al. v. City
of Philadelphia, et. al., 91 F. 3d 586 (3d Cir. 1996); Contractors Association of Eastern Pennsylvania, Inc, et. al. v. City of Philadelphia, 6 F. 3d
990 (3d Cir. 1993); United States v. Taylor, 232 F.Supp. 3d 741 (W.D. Penn. 2017; Gray v. Commonwealth of Virginia, 247 Va. 290, 306-309,
645 S.E. 2d 448, 458-460 (Va. 2007); Carter v. Carter, 232 Va. 166, 171–72, 349 S.E.2d 95, 98 (Va. 1986).
FINAL REPORT APPENDIX B, PAGE 28
imperfect fit between means and ends. A classification does not fail rational-basis review because it is
not made with mathematical nicety or because in practice it results in some inequality.” 182
Under a rational basis review standard, a legislative classification will be upheld “if there is a rational
relationship between the disparity of treatment and some legitimate governmental purpose.”183 Because
all legislation classifies its objects, differential treatment is justified by “any reasonably conceivable state
of facts.” 184
Under the federal standard of review, a court will presume the “legislation is valid and will sustain it if
the classification drawn by the statute is rationally related to a legitimate [government] interest.” 185
An informative example of the application of the rational basis standard is the Third Circuit in the CAEP I
ruling regarding the City’s 2 percent preference for businesses owned by “handicapped” persons. 186 The
district court struck down this preference under the rational basis test, based on the belief, according to
the Third Circuit, that Croson required some evidence of discrimination against business enterprises
owned by “handicapped” persons, and therefore that the City could not rely on testimony of
discrimination against “handicapped” individuals. 187 The Court in CAEP I stated, however, that a
classification will pass the rational basis test if it is “rationally related to a legitimate government
purpose.” 188
The Third Circuit noted that the Supreme Court affirmed the permissiveness of this test in Heller v. Doe,
indicating that “a [statutory] classification” subject to rational basis review “is accorded a strong
presumption of validity,” and that “a state ... has no obligation to produce evidence to sustain the
rationality of [the] classification.” 189 Moreover, “the burden is on the one attacking the legislative
182 Heller v. Doe, 509 U.S. 312, 321 (1993); Crawford v. Antonio B. Won Pat International Airport Authority, 917 F.3d 1081, 1095-1096 (9th
Cir. 2019); Gallinger v. Becerra, 898 F.3d 1012, 1016-1018 (9th Cir. 2018); U.S. v. Brucker, 646 F.3d 1012, 1017 (7th Cir. 2010); Smith v. City
of Chicago, 457 F.3d 643, 652 (7th Cir. 2006); see e.g. Contractors Association of Eastern Pennsylvania, Inc., et. al. v. City of Philadelphia, et.
al., 91 F. 3d 586 (3d Cir. 1996); Contractors Association of Eastern Pennsylvania, Inc, et. al. v. City of Philadelphia, 6 F. 3d 990 (3d Cir.
1993); United States v. Taylor, 232 F.Supp. 3d 741 (W.D. Penn. 2017).
183 Heller v. Doe, 509 U.S. 312, 320 (1993); see, e.g., Crawford v. Antonio B. Won Pat International Airport Authority, 917 F.3d 1081, 1095-
1096 (9th Cir. 2019); Gallinger v. Becerra, 898 F.3d 1012, 1016-1018 (9th Cir. 2018); Hettinga v. United States, 677 F.3d 471, 478 (D.C. Cir
2012); U.S. v. Brucker, 646 F.3d 1012, 1017 (7th Cir. 2010); Smith v. City of Chicago, 457 F.3d 643, 652 (7th Cir. 2006); see e.g., Contractors
Association of Eastern Pennsylvania, Inc., et. al. v. City of Philadelphia, et. al., 91 F. 3d 586 (3d Cir. 1996); Contractors Association of Eastern
Pennsylvania, Inc, et. al. v. City of Philadelphia, 6 F. 3d 990 (3d Cir. 1993); United States v. Taylor, 232 F.Supp. 3d 741 (W.D. Penn. 2017).
184 Id; see, Gray v. Commonwealth of Virginia, 274 Va. at 308, 645 S.E. 2d at 459; Carter v. Carter, 232 Va. 166, 171–72, 349 S.E.2d 95, 98
(Va. 1986).
185 Heller v. Doe, 509 U.S. 312, 320 (1993); Chance Mgmt., Inc. v. S. Dakota, 97 F.3d 1107, 1114 (8th Cir. 1996); Crawford v. Antonio B. Won
Pat International Airport Authority, 917 F.3d 1081, 1095-1096 (9th Cir. 2019); Gallinger v. Becerra, 898 F.3d 1012, 1016-1018 (9th Cir.
2018); U.S. v. Brucker, 646 F.3d 1012, 1017 (7th Cir. 2010); Smith v. City of Chicago, 457 F.3d 643, 652 (7th Cir. 2006); see also Lawrence v.
Texas, 539 U.S. 558, 580, 123 S. Ct. 2472, 156 L. Ed. 2d 508 (2003) (“Under our rational basis standard of review, legislation is presumed
to be valid and will be sustained if the classification drawn by the statute is rationally related to a legitimate state interest . . . . Laws such
as economic or tax legislation that are scrutinized under rational basis review normally pass constitutional muster.” (internal citations
and quotations omitted)) (O’Connor, J., concurring); Gallagher v. City of Clayton, 699 F.3d 1013, 1019 (8th Cir. 2012) (“Under rational
basis review, the classification must only be rationally related to a legitimate government interest.”).
186 6 F.3d Id. at 1011 (3d. Cir. 1993).
187 Contractors Ass’n of E. Pa. (CAEP I), 6 F.3d at 1011 (3d. Cir. 1993)., citing 735 F.Supp. at 1308.
188 Id., citing, Cleburne, 473 U.S. at 440.
189 6 F.3d at 1011, citing, 509 U.S. 312–43 (1993)
FINAL REPORT APPENDIX B, PAGE 29
arrangement to negative every conceivable basis which might support it, whether or not the basis has a
foundation in the record.” 190
The City of Philadelphia in CAEP I stated it sought to minimize discrimination against businesses owned
by “handicapped” persons and encourage them to seek City contracts. The Court in CAEP I agreed with
the district court that these were legitimate goals, but unlike the district court, the Third Circuit held
that the 2 percent preference was rationally related to this goal. 191
A federal court decision, which is instructive to the study, involved a challenge to and the application of a
small business goal in a pre-bid process for a federal procurement. Firstline Transportation Security, Inc.
v. United States (Firstline) is instructive and analogous to some of the issues in a small business program.
The case is informative as to the use, estimation, and determination of goals (small business goals,
including veteran preference goals) in a procurement under the Federal Acquisition Regulations
(FAR). 192
Firstline involved a solicitation that established a small business subcontracting goal requirement. In
Firstline, the Transportation Security Administration (TSA) issued a solicitation for security screening
services at the Kansas City Airport. The solicitation stated that the: “Government anticipates an overall
Small Business goal of 40 percent,” and that “[w]ithin that goal, the government anticipates further small
business goals of: Small, Disadvantaged business[:] 14.5%; Woman Owned[:] 5 percent: HUBZone[:] 3
percent; Service Disabled, Veteran Owned[:] 3 percent.” 193
The court applied the rational basis test in construing the challenge to the establishment by the TSA of a
40 percent small business participation goal as unlawful and irrational. 194 The court stated it “cannot
say that the agency’s approach is clearly unlawful, or that the approach lacks a rational basis.”195
The court found that “an agency may rationally establish aspirational small business subcontracting
goals for prospective offerors … .” Consequently, the court held one rational method by which the
government may attempt to maximize small business participation (including veteran preference goals)
is to establish a rough subcontracting goal for a given contract, and then allow potential contractors to
compete in designing innovate ways to structure and maximize small business subcontracting within
their proposals. 196 The court, in an exercise of judicial restraint, found the “40 percent goal is a rational
expression of the Government’s policy of affording small business concerns … the maximum practicable
opportunity to participate as subcontractors … .” 197
i. Veterans preferences. The Commonwealth of Virginia considers the utilization of service-disabled
veteran (SDV)-owned businesses in its contracting and procurement programs. The rational basis
190 Id. at 1011; see, e.g., United States v. Timms, 664 F.3d 436, 448-49 (4th Cir. 2012), cert. denied, 133 S. Ct. 189 (2012) (citing Heller v.
Doe, 509 U.S. 312, 320-21 (1993) (quotation marks and citation omitted).
191 6 F.3d at 1011.
192 2012 WL 5939228 (Fed. Cl. 2012).
193 Id.
194 Id.
195 Id.
196 Id.
197 Id.
FINAL REPORT APPENDIX B, PAGE 30
standard has been applied by courts to preferences, bonuses, or benefits based on the status as a veteran
in connection with legislation by state governments.
For example, in Hooper v. Bernalillo County Assessor (Hooper), the Supreme Court in an instructive case
addressed the constitutionality of a veterans preference statute. 198 In Hooper, a New Mexico statute
exempted from the state’s property tax the taxable value of property of veterans who served on active
duty during the Vietnam War, but limited the exemption to veterans who were New Mexico residents
before 1976. 199 The Court considered whether the New Mexico statute that grants a tax exemption
limited to those Vietnam veterans who resided in the state before 1976, violated the Equal Protection
Clause of the Fourteenth Amendment. 200 The Court held that the New Mexico statute’s residence
requirement violates the guarantees of the Equal Protection Clause, applying a rational basis standard
analysis. 201
The Court in Hooper noted that when a state distributes benefits unequally, the distinctions it makes are
subject to scrutiny under the Equal Protection Clause of the Fourteenth Amendment. Generally, a law
will survive that scrutiny if the distinction rationally furthers a legitimate state purpose. 202 The
distinction New Mexico made between veterans who established residence before 1976 and those
veterans who arrived in the State thereafter, the Court found, bears no rational relationship to one of the
State’s objectives: encouraging Vietnam veterans to move to New Mexico. Id. at 619. The legislature set
this eligibility date long after the triggering event occurred. 203
The Court found that one component of the second purpose rationale of the statute—rewarding
veterans who resided in the State before 1976, for their military service—to support the statute’s
distinction between resident veterans was legitimate; the Court observed that “[o]ur country has a
longstanding policy of compensating veterans for their past contributions by providing them with
numerous advantages.” 204 The various preferences for veterans are grounded in a “[d]esire to
compensate in some measure for the disruption of a way of life ... and to express gratitude ... .” 205
Consistent with this policy, the State may award certain benefits to all its bona fide veterans, because it
is then making neither an invidious nor irrational distinction among its residents. 206 Resident veterans,
as a group, may well deserve preferential treatment, and such differential treatment vis-à-vis non-
veterans does not offend the Equal Protection Clause.207
Even assuming that the State may legitimately grant benefits on the basis of a coincidence between
military service and past residence, the Court said the New Mexico statute’s distinction between
198 Hooper v. Bernalillo County Assessor, 472 U.S. 612 (1985).
199 Hooper v. Bernalillo County Assessor, 472 U.S. 612 (1985)
200 Id. at 614.
201 Id. at 624.
202 Id. at 618.
203 Id.
204 Id. at 620 (internal citations omitted).
205 Id., quoting, Russell v. Hodges, 470 F.2d 212, 218 (CA2 1972).
206 Id.
207 Id.
FINAL REPORT APPENDIX B, PAGE 31
resident veterans was not rationally related to the State’s asserted legislative goal. 208 The statute was
not written to require any connection between the veteran’s prior residence and military service. Id. The
veteran who resided in New Mexico as an infant long ago would immediately qualify for the exemption
upon settling in the State at any time in the future, regardless of where he resided before, during, or
after military service. 209
The Court found the New Mexico statute creates two tiers of resident Vietnam veterans, identifying
resident veterans who settled in the state after 1976 as in a sense “second-class citizens.” 210 This
discrimination on the basis of residence was not supported by any identifiable state interest; the statute
is not written to benefit only those residents who suffered dislocation within the State’s borders by
reason of military service. 211 The Court stated it has made clear that the Constitution will not tolerate a
state benefit program that “creates fixed, permanent distinctions ... between ... classes of concededly
bona fide residents, based on how long they have been in the State.” Id. The Court held that neither the
Equal Protection Clause, nor the Court’s precedents, permit the State to prefer established resident
veterans over newcomers in the retroactive apportionment of an economic benefit. 212
The Court held that the New Mexico veterans’ tax exemption statute violated the guarantees of the Equal
Protection Clause of the Fourteenth Amendment, ruling the statute did not satisfy the rational basis
standard analysis.
In another instructive case regarding a civil rights action where a plaintiff challenged the
constitutionality of giving a preference to veterans in civil service examinations, a district court held that
provisions of the Pennsylvania Veterans' Preference Act granting a 10-point bonus to the score of any
veteran receiving a passing grade on a state civil service examination were not violative of equal
protection. 213 The court also held the bonus preference did not discriminate against women by reason of
“acute” disproportion between men and women in the armed forces, and even if provisions did
discriminate against women, the court said they may be justified as a recognition that experience,
discipline, and loyalty that veterans gain in military service is conducive to better performance of public
duties. 214 The court denied the request for declaratory and injunctive relief.215
The court in Feinerman v. Jones, in considering the analysis to apply to a veteran preference, stated that
an essential element of any analysis involving the equal protection clause requires a determination of
the appropriate standard to be used by which to gauge the constitutionality of a given statute. The Court
stated the traditional equal protection standard looks to the reasonableness of the classification in light
of its possible intended purposes. 216 The classification must bear some rational relationship to a
legitimate end and will be set aside as violative of the Equal Protection clause only if based on reasons
208 Id. at 622.
209 Id.
210 Id. at 623.
211 Id.
212 Id.
213 Feinerman v. Jones, 356 F.Supp. 252 (1973) ( M.D. Penn. 1973).
214 Id.
215 Id.
216 Id., citing, Shapiro v. Thompson, 394 U.S. 618(1969).
FINAL REPORT APPENDIX B, PAGE 32
totally unrelated to that goal. 217 Under this test, the Court said, the party challenging the
constitutionality of a statute has the burden of proving that the statute denies him equal protection, and
it will not be set aside if it is reasonably related to some permissible legislative or administrative
purpose. 218
Since the abstract right to be fairly considered for public employment, according to the court, did not
involve a “fundamental right” or “fundamental interest,” the “rational basis” test must be applied to test
the validity of the Veterans' Preference Act. 219 The plaintiff has the burden of overcoming the
presumption of constitutionality and of proving that veterans' preference is arbitrary and not
reasonably related to some permissible legislative or administrative purpose. 220
The Veterans' Preference Act, which awards a 10-point bonus to all veterans who have scored a passing
grade on civil service tests, the court found, was typical of the many state and federal statutory
provisions giving veterans' preference in public employment. Plaintiff contended that such a bonus for
veterans was unconstitutional in that it denied equal protection of the law by creating two classes,
veterans and non-veterans, extending to the former benefits which it denied to others. 221
The court found that there are three underlying justifications in most of these cases upholding the
various Veterans' Preference Acts: (1) As a recognition that the experience, discipline, and loyalty which
veterans gain in military service is conducive to the better performance of public duties; (2) As a reward
for those veterans who, either involuntarily or through enlistment, have served their country in time of
war; and (3) As an aid in the rehabilitation and relocation of the veteran whose normal lifestyle has been
disrupted by military service. 222
In adopting the Veterans' Preference Act, the court found the state legislature expressly recognized the
first two reasons set out above as justifying giving preference to veterans. Section 2 of the Act provides
that credit will be given to a veteran on appointment “for the discipline and experience represented by
his military training and for the loyalty and public spirit demonstrated by his service for the
preservation of his country.” 223 Similarly, in a case challenging the validity of granting a bonus to
veterans under a prior veterans' preference provision, the court stated its purpose in this manner: “As a
basis for appointment it is not unreasonable to select war veterans from candidates for office and to give
them a certain credit in recognition of the discipline, experience and service represented by their
military activity. No one should deny that these advantages are conducive to the better performance of
public duties, where discipline, loyalty, and public spirit are likewise essential.”224
The court sustained the validity of granting a 15-point bonus to veterans taking appointment
examinations, so long as the applicants initially received a passing grade. At the same time, however, the
court struck down a provision of the statute granting 15 percent credit to all veterans taking the
217 Id. citing, McDonald v. Board of Election Commissioners, 394 U.S. 802 (1969).
218 Id. citing, McGowan v. Maryland, 366 U.S. 420 (1961).
219 Id. at 258.
220 Id. at 259.
221 Id. at 259.
222 Id. at 259 citing, Koelfgen v. Jackson, 355 F.Supp. 243 (D.Minn. 1972).
223 Id.
224 Id. at 259 quoting, Commonwealth ex rel. Graham v. Schmid, 333 Pa. 568, at 573, 3 A.2d 701, at 704 (1938).
FINAL REPORT APPENDIX B, PAGE 33
examinations, regardless of whether they achieved a passing grade.225
4. Pending cases (at the time of this report) and informative recent decisions. There are
recent court decisions and pending cases in the federal courts at the time of this report involving
challenges to MBE/WBE/DBE Programs and federal programs with minority- and woman-owned
business and social and economic disadvantaged business programs that may potentially impact and are
informative and instructive to the study, including the following:
a. Christian Bruckner et al. v. Joseph R. Biden Jr. et al., United States District Court for the Middle
District of Florida, Case No. 8:22-cv-01582. filed July 13, 2022. Dismissed, 2023 WL 2744026 (March 31,
2023). This was a challenge to the Federal DBE Program. Federal Defendants’ Motion to Dismiss was
Granted and Plaintiffs’ Motion for Preliminary Injunction Denied on March 31, 2023. Judgment entered
on April 3, 2023. Case did not reach merits.
b. Antonio Vitolo, et al. v. Isabella Guzman, Administrator of the Small Business Administration (SBA)
993 F.3d 353, 2021 WL 2172181 (6th Cir. May 27, 2021). The President signed the American Rescue
Plan Act of 2021 (ARPA). H.R. 1319, 117th Cong. (2021). As part of ARPA, Congress appropriated $28.6
billion to a Restaurant Revitalization Fund (RRF) and tasked the Administrator of the SBA with
disbursing funds to restaurants and other eligible entities that suffered COVID-19 pandemic-related
revenue losses. Under the ARPA, the Administrator prioritized awarding grants to eligible entities that
are small business concerns owned and controlled by women, veterans, or socially and economically
disadvantaged small business concerns.
The Court stated that the government has a compelling interest in remedying past discrimination only
when three criteria are met: First, the policy must target a specific episode of past discrimination. It
cannot rest on a “generalized assertion that there has been past discrimination in an entire industry.”
Second, there must be evidence of intentional discrimination in the past. Third, the government must
have had a hand in the past discrimination it now seeks to remedy. The Court said that if the
government “show[s] that it had essentially become a ‘passive participant’ in a system of racial exclusion
practiced by elements of [a] local ... industry,” then the government can act to undo the discrimination.
Even if the government had shown a compelling state interest in remedying some specific episode of
discrimination, the court held the discriminatory disbursement of RRF was not narrowly tailored to
further that interest.
c. Greer’s Ranch Café v. Guzman, 2021 WL 2092995 (N.D. Tex. 5/18/21), United States District Court
for the Northern District of Texas. Similar to Vitolo, above, Greer sought monetary relief under the $28.6
billion RRF created by ARPA and administered by the SBA. The court held that Plaintiffs were likely to
succeed on the merits of their claim that Defendants’ use of race-based and sex-based preferences in the
administration of the RRF violated the Equal Protection Clause of the Constitution. The court granted
Plaintiffs’ motion for a temporary restraining order (TRO), and enjoined Defendants to process
Plaintiffs’ application for an RRF grant.
d. Faust v. Vilsack, 2021 WL 2409729, United States District Court, E.D. Wisconsin (June 10, 2021). The
court granted Plaintiffs’ motion for a TRO holding the federal government’s use of racial classifications
in awarding funds under the United States Department of Agriculture (USDA) loan-forgiveness program
225 Id.
FINAL REPORT APPENDIX B, PAGE 34
was unconstitutional. The court held, “Defendants have not established that the loan forgiveness
program … is narrowly tailored and furthers compelling government interests.”
e. Wynn v. Vilsack, 2021 WL 2580678, (M.D. Fla. June 23, 2021), Case No. 3:21-cv-514-MMH-JRK,
United States District Court for the Middle District of Florida. This is virtually the same case as the
Faust v. Vilsack, 2021 WL 2409729 (June 10, 2021) case in the district court in Wisconsin. The court
granted the Plaintiffs’ Motion for Preliminary Injunction holding the federal Defendants (the United
States Secretary of Agriculture) enjoined from issuing any payments, loan assistance, or debt relief
pursuant to Section 1005(a)(2) of ARPA. The court held the government did not satisfy the strict
scrutiny standard as it did not establish a compelling government interest or that the program was
narrowly tailored.
f. Ultima Services Corp. v. USDA, SBA, et. al., 2023 WL 4633481 (July 19, 2023), United States District
Court for the Eastern District of Tennessee, 2:20-cv-00041-DCLC-CRW. The court declared that
Defendants' use of the rebuttable presumption of social disadvantage to certain minority groups to
qualify them for inclusion in the federal Section 8(a) Program violated Ultima's Fifth Amendment right
to equal protection of the law. The court ordered that Defendants were enjoined from using the
rebuttable presumption of social disadvantage in administering the SBA's 8(a) Program, holding the
federal defendants did not satisfy the strict scrutiny standard as they did not establish a compelling
government interest for their use of the rebuttable presumption and that presumption was not narrowly
tailored to serve the asserted interest.
g. Nuziard, et al. v. the Minority Business Development Agency (MBDA), et al., 721 F. Supp. 3d 431
(N.D. Tex. 2004), appeal dismissed, 2024 WL 5279784 (5th Cir. 2024); 2023 WL 3869323 (June 5, 2023),
United States District Court for the Northern District of Texas, Fort Worth Division, Case No. 4:23-cv-
00278. On November 15, 2021, President Biden signed the Infrastructure Investment and Jobs Act
(Infrastructure Act), creating the newest federal agency: the MBDA. Plaintiffs alleged this agency is
dedicated to helping only certain businesses based on race or ethnicity. The court granted the Plaintiffs’
Motion for Preliminary Injunction in June 2023, and Motion for summary Judgment in March 2024,
holding the MBDA statute is unconstitutional, finding the federal defendants did not produce sufficient
evidence of a compelling government interest, that the MBDA’s racial presumption is not narrowly
tailored, and thus the MBDA did not satisfy the strict scrutiny standard.
h. Mid-America Milling Company LLC (MAMCO) and Bagshaw Trucking Inc. v. U.S. Department of
Transportation, et. al., 2024 WL 4635430 (E.D. Ky. Oct. 31, 2024); 2024 WL 4267183 (Sept. 23, 2024),
United States District Court for the Eastern District of Kentucky, Frankfort Division; Case No: 3:23 -cv-
00072-GFV. Plaintiffs filed this suit challenging the Federal DBE Program. Plaintiffs sought a preliminary
and permanent injunction, and a declaratory judgment, that the Federal DBE Program, including
Sections 11101(e)(2) and (3) of the Infrastructure Act and corresponding federal regulations, is
unconstitutional because it violates the Equal Protection Clause of the United States Constitution.
Plaintiffs’ Motion for Preliminary Injunction was granted that enjoined enforcement of the Federal DBE
Program as applied to the Plaintiffs in each state they bid or operate in. The court enjoined USDOT from
mandating the use of race- and gender-based rebuttable presumptions for certain groups regarding its
contracts impacted by DBE goals. The parties filed a joint motion to stay the case for 90 days as USDOJ is
considering its position whether or not to defend the Federal DBE Program in light of the Executive
Orders issued by the President on January 21, 2025 prohibiting DEI, affirmative action and preference
FINAL REPORT APPENDIX B, PAGE 35
programs based on race or gender. A motion to intervene was filed by certain groups seeking to join the
case and support and defend the Federal DBE Program. Plaintiffs opposed the motion. The motion to
intervene (referred to as Intervenor DBEs) was granted by the United States Magistrate Judge on May
21, 2025.
On May 28, 2025, Plaintiffs and Defendants filed a motion for entry of a proposed consent order as a
final order and judgment in the case. The proposed consent order states that the parties are aware of the
order filed by the Magistrate Judge granting the Intervenor DBEs’ motion to intervene as Defendants in
this case, and that Plaintiffs and USDOT make no representation as to the position of the Intervenor-
Defendants.
The proposed consent order provides in part that the Defendants have determined the Federal DBE
Program’s use of race-and sex- based presumptions is unconstitutional. The proposed consent order
requests the court hold that Defendants may not approve any federal, state, or local USDOT-funded
projects with DBE contract goals where any DBE in that jurisdiction was determined to be eligible based
on a race-or sex-based presumption.
In June 2025, 21 states filed a Motion for Leave to file a brief Amici Curiae in support of the Joint Motion
for Entry of the proposed Consent Order. Also, two non-DBE contractors filed a response to the Joint
Motion for Entry of Consent Order by seeking intervention to have the consent order and a permanent
injunction apply equally to them. In addition, in June 2025, a multistate coalition of 22 state attorneys
general filed an Amicus Curiae brief opposing the proposed consent order. And, in June 2025, a group of
Local Governments, Local Government Agencies, and Local Government Officials filed a Motion for Leave
to File a Brief as Amici Curiae in Support of Intervenors’ Opposition to Joint Motion for Entry of consent
order.
The court in July 2025 denied the motion by the two non-DBE contractors to intervene and granted
certain motions to file briefs as Amici Curiae. The attorney general of Virginia is not among the attorneys
general of the states that filed the motions in support of or in opposition to the proposed consent order.
The case is pending at the time of this report.
i. Landscape Consultants of Texas, Inc. et. al. v. City of Houston, Texas, et. al., United States District
Court for the Southern District of Texas, Houston Division; Civil Action No. 4:23-cv-3516. Challenge to
the Houston MBE Program. Pending.
j. Mechanical Contractors Assoc. of Memphis, Inc. v. Shelby County, Tennessee, et al., United States
District Court for the Western District of Tennessee, Case No. 2:24 -cv- 02420 -JTF, Complaint filed
November 6, 2024. Challenge to the County MBE Program. Pending.
k. Aerospace Solutions, LLC v. Abott in his official capacity as Governor of the state of Texas, et al.,
United States District Court for the Western District of Texas, Civ. Action No. 1:24-cv-1383, Complaint
filed November 13, 2024. Challenge to the Texas HUB Program. Pending.
l. Landscape Consultants of Texas Inc. v. Harris County Texas et al., United States District Court for the
Southern District of Texas, Houston Division; Civil Action No. 4:25cv479. Complaint filed February 5,
2025. Challenge to the County MBE Program. Pending.
FINAL REPORT APPENDIX B, PAGE 36
m. Holman v. Vilsack, 117 F.4th 906 (6th Cir. 2024), petition for certiorari docketed, May 7, 2025. A
White farmer brought action against the USDA Secretary seeking a declaration that the provision of
ARPA providing emergency assistance in the COVID-19 pandemic's wake in the form of debt relief for
“socially disadvantaged” farmers and ranchers who were Black, American Indian/Alaskan Native,
Hispanic, Asian, and Hawaiian/Pacific Islander, violated the Fifth Amendment's equal protection
guarantee. A United States District Court in Tennessee, 2021 WL 2877915, granted the farmer's motion
for a preliminary injunction enjoining the government from implementing the provision. Subsequently,
the provision was repealed and the parties stipulated to the case's dismissal. The Plaintiff moved for
attorney fees and costs as a prevailing party under the Equal Access to Justice Act (EAJA). The District
Court denied the motion, and Plaintiff appealed to the Sixth Circuit.
The Sixth Circuit Court of Appeals, in a 2-to-1 decision, held that the government's litigation position
was substantially justified, precluding EAJA award, despite granting the preliminary injunction.
Instructive is the court’s analysis of the government's position regarding satisfying the strict scrutiny
standard to remedy past discrimination as “substantially justified,” and applying the Croson and Vitolo
cases.
Plaintiff/appellant has filed for writ of certiorari to the U.S. Supreme Court, which was docketed on May
7, 2025.
____________________________________________________________________________________________________
This list of pending cases and informative recent decisions is not exhaustive, but in addition to the cases
cited previously and discussed infra may potentially have an impact on the study and implementation of
MBE/WBE/DBE programs, related legislation, implementation of the Federal DBE Program by state and
local governments and public authorities and agencies, and other types of programs impacting
participation of MBE/WBE/DBEs.
For example, there are other recent cases similar to Faust v. Vilsack, 21-cv.-548 (E.D. Wis.) and Wynn v.
Vilsack, 3:21-cv-514 (M.D. Fla.) cited and discussed above, including a class action filed in Miller v.
Vilsack, 2021 WL 11115194, 4:21-cv-595 (N.D. Tex. 2021), and separate lawsuits seeking to enjoin USDA
officials from implementing a loan-forgiveness program for farmers and ranchers under Section 1005 of
ARPA by asserting eligibility to participate in program based solely on racial classifications violated
equal protection. Carpenter v. Vilsack, 21-cv-103-F (D. Wyo.); Holman v. Vilsack, 1:21-cv-1085 (W.D.
Tenn.); Kent v. Vilsack, 3:21-cv-540 (S.D. Ill.); McKinney v. Vilsack, 2:21-cv-212 (E.D. Tex.); Joyner v.
Vilsack, 1:21-cv-1089 (W.D. Tenn.); Dunlap v. Vilsack, 2:21-cv-942 (D. Or.); Rogers v. Vilsack, 1:21-cv-
1779 (D. Colo.); Tiegs v. Vilsack, 3:21-cv-147 (D.N.D.); Nuest v. Vilsack, 21-cv-1572 (D. Minn.).
Many of these cases had granted the federal Defendants Motions to Stay pending resolution of the class
action challenge to Section 1005 of the American Rescue Plan Act of 2021 in the Miller v. Vilsack, 4:21-
cv-595 (N.D. Tex.) class action litigation. As a result of the federal government's later repeal of ARPA
Section 1005 and the subsequent Dismissal of the related Class Action in Miller v. Vilsack, the parties in
many of these cases filed Stipulations of Dismissal, and the cases in September 2022 have been
dismissed by the Courts.
5. January 2025 Executive Orders (EOs). At the time of this report, the President has issued
multiple Executive Orders involving the prohibition and elimination of DEI programs and preferences
FINAL REPORT APPENDIX B, PAGE 37
and affirmative action programs concerning federal contractors and subcontractors in connection with
federally funded projects. These EOs include a January 21, 2025 EO No. 14173, eliminating EO No.11246.
EO No. 11246 required federal contractors to take affirmative action to ensure applicants and
employees are treated without regard to their race, color, religion, sex, sexual orientation, gender
identity, or national origin.
On January 21, 2025, the president issued EO No. 14173 entitled “Ending Illegal Discrimination and
Restoring Merit-Based Opportunity.” The EO instructs federal agencies to take administrative and legal
action against DEI programs, which it defines as systems of race- and sex-based preferences. The EO is
directed at both public- and private-sector conduct. The EO "instructs the Office of Federal Contract
Compliance Programs to immediately cease: "(A) Promoting 'diversity;' (B) Holding Federal contractors
and subcontractors responsible for taking 'affirmative action;' and (C) Allowing or encouraging Federal
contractors and subcontractors to engage in workforce balancing based on race, color, sex, sexual
preference, religion or national origin." It also instructs the Attorney General to submit a report
containing recommendations for "enforcing Federal civil-rights laws and taking other appropriate
measures to encourage the private sector to end illegal discrimination and preferences, including
[diversity equity and inclusion]." That report is due on May 21, 2025.
On January 20, 2025, the President issued the EO titled "Ending Radical and Wasteful Government DEI
Programs and Preferencing" that terminates "all discriminatory programs, including illegal DEI” and
"diversity, equity, inclusion, and accessibility" (DEIA) mandates, policies, programs, preferences, and
activities in the Federal Government … ." and terminates all "equity action plans," " equity" actions,
initiatives, or programs, equity-related grants or contracts; and all DEI or DEIA performance
requirements for employees, contractors, or grantees.
Certain of these EOs and their application are being challenged in court in cases pending at the time of
this report. It is not clear if these EOs specifically may impact local and state government programs that
implement contracting goals and do not involve federal funds or financial assistance.
6. February 5, 2025 Attorney General Memorandum. On February 5, 2025, the United States
Attorney General issued a Memorandum titled “ Ending Illegal DEI And DEIA Discrimination and
Preferences”. The Memorandum provides: “To fulfill the Nation's promise of equality for all Americans,
the Department of Justice's Civil Rights Division will investigate, eliminate, and penalize illegal DEI and
DEIA preferences, mandates, policies, programs, and activities in the private sector and in educational
institutions that receive federal funds.”
This Attorney General Memorandum “is intended to encompass programs, initiatives, or policies that
discriminate, exclude, or divide individuals based on race or sex.”
The Attorney General Memorandum provides that by March 1, 2025, “consistent with Executive Order
14173, the Civil Rights Division and the Office of Legal Policy shall jointly submit a report to the
Associate Attorney General containing recommendations for enforcing federal civil-rights laws and
taking other appropriate measures to encourage the private sector to end illegal discrimination and
preferences, including policies relating to DEI and DEIA”
FINAL REPORT APPENDIX B, PAGE 38
It is not clear at the time of this report whether this Memorandum and any report issued by the Attorney
General will impact or potentially apply to certain local and state government programs that use
contracting goals for contractors and do not involve federal funds or financial assistance.
Thus, this Appendix report does not address these EOs and the Attorney General Memorandum. There
have been challenges in court to these EO, for which cases are pending.
A federal district court in the District of Maryland has entered a nationwide preliminary injunction
against the EOs that target DEI type programs. See, Nat'l Ass'n of Diversity Officers in Higher Education v.
Trump, 2025 WL 573764 (D. Md. Feb. 21, 2025). This order was based on finding EO 14173 void for
vagueness and violates the First Amendment.
In addition, there is a February 13, 2025 letter from 16 state Attorneys General regarding: “Multi-State
Guidance Concerning Diversity, Equity, Inclusion, and Accessibility Employment Initiatives.” The letter
provides guidance supporting “the continued viability and important role of diversity, equity, inclusion,
and accessibility efforts (sometimes referred to as ‘DEI’ or ‘DEIA’ initiatives) in creating and maintaining
legally compliant and thriving workplaces.” The letter appears to be in response to the recent EOs. The
Attorney General of the State of Minnesota is one of the signatories to the February 13, 2025 letter.
7. Title VI Complaints against the State of New York MWBE Program and Wisconsin
Department of Administration (DOA) for Supplier Diversity Program. Title VI Complaints have
been filed with USDOJ by Contractors for Equal Opportunity, a nationwide association of companies
alleged to have been negatively impacted by race discrimination in government contracting programs. A
separate civil rights complaint under Title VI of the Civil Rights Act of 1964 was filed against both the
New York Department of Economic Development (DED) and the Wisconsin DOA for their alleged
respective discriminatory Minority and Women-Owned Business Enterprise Program (MWBE Program)
and Supplier Diversity Program. DED and DOA are recipients of federal funds, and therefore, the
Complaints allege, are subject to the nondiscrimination provisions of Title VI. The complaints state they
are being filed with USDOJ because DED and DOA receive federal grants from multiple federal agencies.
The complaints ask USDOJ to open an investigation into a state-based supplier and procurement
program they allege discriminates against small businesses based on race. The complaints allege that
many states operate similar programs, which are similar to the Federal DBE Program. If that federal
program is unconstitutional, then the complaints allege, these state-based counterparts are similarly
unconstitutional. The complaints request that USDOJ investigate these programs and determine that
they are operating in violation of Title VI. Each state agency operating such a program, the complaints
allege, receives federal funds and is therefore bound by Title VI and subject to USDOJ’s jurisdiction.
The complaints allege that DED and DOA cannot offer any justification to defend their MWBE and
Supplier Diversity type programs, which illegally discriminate by enforcing a percentage goal utilization
rate for minority- and women-owned businesses in state procurement and contracting. The complaints
allege that under SFFA (which was a Title VI case), programs like these must pass several independent
tests, which DED and DOA cannot satisfy.
First, the complaints allege that DED’s and DOA’s programs are illegal because they do not remedy
“specific, identified instances of past discrimination that violated the Constitution or a statute.” Second,
the complaints allege, DED or DOA cannot “articulate a meaningful connection between the means they
FINAL REPORT APPENDIX B, PAGE 39
employ and the goals they pursue.” For example, DED and DOA, the complaints allege, employ the same
type of “overbroad” and “imprecise” racial categories employed by Harvard and North Carolina.
Third, the complaints allege, DED’s and DOA’s programs use race as a “negative.” White business owners
cannot bid on equal footing with minority-owned firms, which the complaints allege have a preference
and exclusive access to resources based on race.
Fourth, the complaints allege DED’s and DOA’s programs further “stereotypes that treat individuals as
the product of their race, evaluating their thoughts and efforts—their very worth as citizens—according
to a criterion barred to the Government by history and the Constitution.” Fifth, DED’s and DOA’s
programs allegedly have no “logical end point. Under SFFA, the complaints allege, a race-based
government program must meet all five of these requirements to comply with Title VI, and DED and
DOA cannot meet any of these requirements.
Based on this evidence, the complaints ask that USDOJ open a formal investigation and find that DED’s
and DOA’s MWBE and Supplier Diversity Programs violate Title VI. The complaints assert that corrective
action should include, at a minimum, a requirement that the program be open to all businesses
regardless of race, or that the programs should be terminated immediately so that all procurement and
contracting decisions at DED and DOA are race-neutral.
8. July 29, 2025 USDOJ Memorandum For All Federal Agencies. The USDOJ
Memorandum, dated July 29, 2025 (the DOJ Guidance), provides guidance to all federal agencies
regarding “the application of federal antidiscrimination laws to programs or initiatives that may involve
discriminatory practices, including those labeled as Diversity, Equity, and Inclusion (‘DEI’) programs.”
The DOJ Guidance provides in its Introduction: Entities receiving federal funds, like all other entities
subject to federal antidiscrimination laws, must ensure that their programs and activities comply with
federal law and do not discriminate on the basis of race, color, national origin, sex, religion, or other
protected characteristics-no matter the program's labels, objectives, or intentions. In furtherance of that
requirement, this guidance identifies "Best Practices" as non-binding suggestions to help entities comply
with federal antidiscrimination laws and avoid legal pitfalls; these are not mandatory requirements but
rather practical recommendations to minimize the risk of violations.
The following provides some key provisions of the USDOJ Memorandum.
a. Executive summary. This guidance emphasizes the significant legal risks of initiatives that involve
discrimination based on protected characteristics and provides non-binding best practices to help
entities avoid the risk of violations. Key points include:
i. Prohibition on protected characteristics as criteria: Using race, sex, or other protected characteristics
for employment, program participation, resource allocation, or other similar activities, opportunities, or
benefits, is unlawful, except in rare cases where such discrimination satisfies the relevant level of
judicial scrutiny.
b. Key federal antidiscrimination provisions and law. Federal antidiscrimination laws prohibit
discrimination on the basis of protected characteristics, including race, color, religion, sex, and national
origin. The USDOJ Memorandum provides that the United States Supreme Court has consistently held
FINAL REPORT APPENDIX B, PAGE 40
that policies or practices based upon protected characteristics are subject to rigorous judicial scrutiny.
Race-based classifications are subject to strict scrutiny, requiring a compelling governmental interest
and narrowly tailored means to achieve that interest. Sex-based classifications, the USDOJ Memorandum
provides are subject to heightened scrutiny, requiring an exceedingly persuasive justification and
substantial relation to an important governmental objective.
c. Unlawful discriminatory policies and practices. The following is a non-exhaustive list of unlawful
practices that USDOJ provides could result in revocation of grant funding. Federal funding recipients
may also be liable for discrimination if they knowingly fund the unlawful practices of contractors,
grantees, and other third parties.
i. Granting preferential treatment based on protected characteristics: What constitutes unlawful
preferential treatment? Preferential treatment occurs when a federally funded entity provides
opportunities, benefits, or advantages to individuals or groups based on protected characteristics in a
way that disadvantages other qualified persons, including such practices portrayed as "preferential" to
certain groups. Such practices violate federal law unless they meet very narrow exceptions.
ii. Prohibited use of proxies for protected characteristics: Examples of potentially unlawful proxies:
"Overcoming obstacles" narratives or diversity statements: A federally funded program requires
applicants to describe obstacles they have overcome" or submit a "diversity statement" in a manner that
advantages those who discuss experiences intrinsically tied to protected characteristics, using the
narrative as a proxy for advantaging that protected characteristic in providing benefits.
iii. Segregation based on protected characteristics: What constitutes unlawful segregation?
Segregation based on protected characteristics occurs when a federally funded entity organizes
programs, activities, or resources—such as training sessions—in a way that separates or restricts access
based on race, sex, or other protected characteristics. Such practices generally violate federal law by
creating unequal treatment or reinforcing stereotypes, regardless of the stated goal (e.g., promoting
inclusion or addressing historical inequities). Exceptions are narrow and include only cases where
federal law expressly permits race-based remedies for specific, documented acts of past discrimination
by the institution itself or in specialized contexts such as correctional facilities where courts have
recognized compelling institutional interests.
iv. What constitutes unlawful use of protected characteristics? Unlawful use of protected
characteristics occurs when a federally funded entity or program considers race, sex, or any other
protected trait as a basis for selecting candidates for employment (e.g., hiring, promotions), contracts
(e.g., vendor agreements),
v. Examples of unlawful practices: Sex-based selection for contracts: A federally funded state agency
implements a DEI policy that prioritizes awarding contracts to women-owned businesses, automatically
advancing female vendors or minority-owned businesses over equally or more qualified businesses
without preferred group status. This includes any contract selection process that uses sex or race as a
tiebreaker or primary criterion, such as policies favoring "minority- or women-owned" businesses
without satisfying the appropriate level of judicial scrutiny.
vi. Recommendations on best practices:
FINAL REPORT APPENDIX B, PAGE 41
Focus on skills and qualifications: Base selection decisions on specific, measurable skills and
qualifications directly related to job performance or program participation. For example, rather than
asking about "cultural competence," assess specific skills such as language proficiency or relevant
educational credentials. Criteria like socioeconomic status, … must not be used if selected to prioritize
individuals based on racial, sex based, or other protected characteristics.
Include nondiscrimination clauses in contracts to third parties and monitor compliance:
Incorporate explicit nondiscrimination clauses in grant agreements, contracts, or partnership
agreements, requiring third parties to comply with federal law, and specify that federal funds cannot be
used for programs that discriminate based on protected characteristics. Monitor third parties that
receive federal funds to ensure ongoing compliance, including reviewing program materials, participant
feedback, and outcomes to identify potential discriminatory practices. Terminate funding for
noncompliant programs.
d. Conclusion. The USDOJ Guidance provides that the recommended best practices in this guidance
are: “non-binding suggestions to help entities comply with federal antidiscrimination laws” and
“practical recommendations to minimize the risk of violations.”
9. Indiana DOT (INDOT) Request for Waiver of Race and Gender Conscious Requirements
of the Federal DBE Program: September 5, 2025, Signed by 16 other state Attorneys
General. The State of Indiana Attorney General has sent a letter to USDOT in support of a Request for
Waiver of Race and Gender Conscious Requirements of the Federal DBE Program submitted by INDOT.
INDOT seeks a waiver of its obligation to apply INDOT’s race and gender presumption in how it awards
contracts in the Department’s highway, transit, and airport financial assistance programs. The letter is
signed by 16 other state Attorneys General. The Attorney General of Virginia did not sign the letter. The
letter provides that “the waiver is needed to provide temporary relief for INDOT from unconstitutional
requirements contained in the Department’s regulations. In addition, the letter says: “If and when other
state departments of transportation file similar requests for waiver with the Department, it should, for
the same reason, grant such requests as well.”
The letter asserts that: “In administering the program, state departments of transportation like INDOT
are forced, by the Department’s regulations, to apply a presumption that any small business owned by a
woman or a member of certain minority groups is socially and economically disadvantaged and
therefore eligible for funds set aside as part of the program. Businesses owned by men or non-minorities
do not benefit from any such presumption and are therefore at a disadvantage when competing for
funds reserved for DBEs.” The letter states that this is race and gender discrimination.
Therefore, the letter concludes that USDOT should “alleviate the constitutional harm its regulations are
inflicting on INDOT and contractors in Indiana and across the United States. It can do so by granting
INDOT—and other state departments of transportation that may submit requests in the future—
waivers from the regulations that impose the presumption.”
The letter claims that the DBE race and gender presumption is unconstitutional, citing SFFA. The letter
states that: While “remediating past instances of discrimination may in some instances serve as a
compelling interest that withstands strict scrutiny, that is true only where there is a clear ‘showing of
prior discrimination by the governmental unit involved’ that the racial classification is meant to address.
Wygant v. Jackson Bd. of Educ., 476 U.S. 267, 274 (1986).” Citing Supreme Court cases, the letter asserts
FINAL REPORT APPENDIX B, PAGE 42
that the discrimination to be remedied must be specifically identified—“[a] generalized assertion of past
discrimination in a particular industry or region is not adequate,” and it must be the result of “past
intentional discrimination.” Further, the letter argues quoting Croson, 488 U.S. 469, 497 (1989), a
“statistical disparity” alone, except perhaps in very rare cases, will generally not “demonstrat[e] the kind
of prior discrimination in hiring or promotion that would justify race-based relief.”
The letter notes that it will not “rehearse here all of the reasons why the racial and gender presumption
of the DBE program fails to satisfy this test. Those reasons are set out persuasively by the Court in
MAMCO, 2024 WL 4267183 (E.D. Ky. Sept. 23, 2024).” USDOT, the letter points out, “has acknowledged
the presumption’s illegality in a motion for a proposed consent order filed in that case. See Mid-Am.
Milling Co., LLC v. United States Dep’t of Transportation, 3:23-cv-00072, Dkt. 82, Joint Motion (May 28,
2025).”
The letter provides that: “We write to ask the Department to exercise its administrative authority to
grant waivers to the requirements of the DBE program to relieve INDOT of the unlawful requirements of
49 CFR § 26.67 and associated provisions of the DBE regulations.” The letter references EO No. 14151,
entitled “Ending Radical and Wasteful Government DEI Programs and Preferencing,” and EO No. 14173,
entitled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity.” The letter also
references that USDOT’s “DBE regulations expressly empower the Department to provide that relief, at
least temporarily while litigation over the presumption proceeds. In relevant part, the regulations
provide that states may apply for, and the Department may grant, a ‘waiver of any provision of Subpart
B or C of this part including, but not limited to, any provisions regarding administrative requirements,
overall goals, contract goals or good faith efforts.’ 49 CFR § 26.15(b).”
The letter also points out that “courts that have previously (and incorrectly) upheld the race and gender
presumption against equal protection challenges have specifically noted that the waiver provision of 49
CFR § 26.15 gives the Department flexibility to prevent, at least to some degree, the race and gender
presumption from leading to constitutional violations. See Sherbrooke Turf, 345 F.3d 964, 972 (8th Cir.
2003) (concluding that the DBE program’s racial components were narrowly tailored for purposes of
strict scrutiny in part because “DOT may grant an exemption or waiver from any or all requirements of
the program”). Through grant of a waiver, standards within the DBE program, the letter states, “can be
relaxed if uncompromising enforcement would yield negative consequences.” Quoting Midwest Fence,
840 F.3d 932, 943 (7th Cir. 2016).
The letter references other reasons but concludes that “paramount among the reasons to grant the
waiver—and a reason that on its own is sufficient—is the fact that, without the waiver, INDOT will
continue to be subjected to the Department’s unconstitutional and unjustifiable requirements that
INDOT select contractors based on race and gender.”
10. The October 3, 2025 USDOT Interim Final Rule (IFR), September 30, 2025 Guidance,
and USDOT Official FAQs. On October 3, 2025, USDOT issued a new IFR and made it effective
immediately.
The IFR notes that “in light of DOT’s and DOJ’s determination that the DBE program’s race- and sex-
based presumptions are unconstitutional, DOT is issuing this IFR to remove the presumptions from the
DBE program regulations set forth in 49 CFR Part 26.” The IFR and USDOT Guidance to the IFR provide
that “because the ACDBE presumptions are functionally identical and suffer the same constitutional
FINAL REPORT APPENDIX B, PAGE 43
infirmity, this IFR also removes the presumptions from the ACDBE regulations set forth in 49 CFR Part
23.” The IFR and Guidance state that “while also eliminating the effects of the unconstitutional
presumptions and reliance in whole or in part on claims of disadvantage based on race or sex, this IFR
requires each Unified Certification Program (UCP) to reevaluate any currently certified DBE or ACDBE,
to recertify any DBE or ACDBE that meets the new certification standards, and to decertify any DBE or
ACDBE that does not meet the new certification standards.” The IFR includes certain requirements that
apply during the pendency of this reevaluation process.
The Guidance and IFR provide:
“The Interim Final Rule removes race- and sex-based presumptions from the definitions of “socially and
economically disadvantaged individual,” and instead provides that the owner of a DBE or ACDBE
applicant must demonstrate on a case-by-case basis that the individual meets the criteria described in
49 CFR § 26.67.”
The IFR changes the definition of “socially and economically disadvantaged individual” in § 26.5 to
remove the race- and sex-based presumptions “that DOT and DOJ and have found to violate the Fifth
Amendment. Under the revised rule, any individual seeking to demonstrate that he or she is a “socially
and economically disadvantaged individual” will be required to make the same individualized showing
of disadvantage, regardless of the individual’s race or sex.”
The Guidance specifies “Section 26.67 provides, in turn, that an owner must:
(1) Demonstrate that the owner is socially and economically disadvantaged based on his or her own
experiences and circumstances that occurred within American society, and without regard to race
or sex;
(2) submit to the certifier a personal narrative establishing the existence of disadvantage by a
preponderance of the evidence based on individualized proof regarding specific instances of
economic hardship, systemic barriers, and denied opportunities that impeded the owner’s progress
or success in education, employment, or business, including obtaining financing on terms available
to similarly situated, non-disadvantaged persons;
(3) state how and to what extent the impediments caused the owner economic harm, including a full
description of type and magnitude, and establish the owner is economically disadvantaged in fact
relative to similarly situated non-disadvantaged individuals;
(4) state how and to what extent the impediments caused the owner economic harm, including a full
description of type and magnitude; and
(5) attach to the Personal Narrative a current personal net worth statement and any other financial
information the owner considers relevant.”
The Guidance provides under the IFR, that each UCP established pursuant to 49 CFR § 26.81 must
immediately begin to apply these new certification standards. The IFR “requires each UCP to reevaluate
all current DBEs and ACDBEs, to recertify any DBE or ACDBE that meets the new certification standards,
and to decertify any DBE or ACDBE that does not meet the new certification standards. The
decertification procedures of 49 CFR § 26.87 do not apply to any decertification decisions under this
process.”
FINAL REPORT APPENDIX B, PAGE 44
The Guidance points out that the IFR provides “that until a UCP completes the reevaluation process
outlined above, each recipient covered by that UCP may not: (1) include DBE contract goals or
concession-specific ACDBE goals; or (2) count any participation toward overall DBE or ACDBE goals.
These requirements will ensure that existing DBEs and ACDBEs do not continue to receive any benefits
as a result of their certification under the old standards.” And, the IFR “provides that until a UCP
completes the reevaluation process, no recipient covered by that UCP shall be subject to the compliance
provisions of 49 CFR § 23.57 or 49 CFR § 26.47. Recipients will also not be required to update their
overall goals during this process.”
The comment period for the IFR ended on November 3, 2025.
USDOT issued on October 24, 2025, its Official Frequently Asked Questions (FAQs) on USDOT’s DBE
Program and ACDBE Program Implementation Modifications IFR. These FAQs are posted on the USDOT
website, and respond to questions and responses regarding the IFR, including: timing of the required
changes by recipients; contracting questions; prohibitions of terminations of DBEs during the
reevaluation period; how does the IFR affect projects that are currently authorized/advertised and
projects/contracts already awarded that have DBE goals; recipients should issue amendments to project
advertisements to remove a DBE goal; certification reevaluation process and requirements; goal setting
and counting requirements; new certification applications; and related matters.
_______________________________________________________________________________________________________________
This Appendix report does not address further the EOs, the Attorney General Memorandum, or USDOJ
investigations referenced above, which are in flux at this time. There have been challenges to the EOs,
which are pending. For example, a federal district court in the District of Maryland has entered a
nationwide preliminary injunction against the EOs that target DEI type programs. See, Nat’l Ass’n of
Diversity Officers in Higher Education v. Trump, 2025 WL 573764 (D. Md. Feb. 21, 2025). This order is
based on finding EO No. 14173 is void for vagueness and violates the First Amendment.
In addition, it is noteworthy that there is a February 13, 2025 letter from 16 states' Attorneys General
regarding: “Multi-State Guidance Concerning Diversity, Equity, Inclusion, and Accessibility Employment
Initiatives.” The letter provides guidance supporting “the continued viability and important role of
diversity, equity, inclusion, and accessibility efforts (sometimes referred to as “DEI” or “DEIA”
initiatives) in creating and maintaining legally compliant and thriving workplaces.” The letter appears to
be in response to the recent EOs. The Attorney General of Virginia is not one of the signatories to the
February 13, 2025 letter.
_______________________________________________________________________________________________________________
Ongoing review. The above represents a summary of the legal framework pertinent to the study and
implementation of DBE/MBE/WBE programs, or race-, ethnicity-, or gender-neutral programs, and the
implementation of the Federal DBE and ACDBE Programs by state and local government recipients of
federal funds, including public agencies, commissions, and authorities. Because this is a dynamic area of
the law, the framework is subject to ongoing review as the law continues to evolve. The following
provides more detailed summaries of key recent decisions.
FINAL REPORT APPENDIX B, PAGE 45
D. Recent Decisions Involving State or Local Government MBE/WBE/DBE
Programs in the Fourth Circuit Court of Appeals
1. H.B. Rowe Co., Inc. v. W. Lyndo Tippett, NCDOT, et al., 615 F.3d 233 (4th Cir. 2010). The
State of North Carolina enacted statutory legislation that required prime contractors to engage in good
faith efforts to satisfy participation goals for minority and women subcontractors on state-funded
projects. (See facts as detailed in the decision of the United States District Court for the Eastern District
of North Carolina discussed below.) The plaintiff, a prime contractor, brought this action after being
denied a contract because of its failure to demonstrate good faith efforts to meet the participation goals
set on a particular contract that it was seeking an award to perform work with NCDOT. Plaintiff asserted
that the participation goals violated the Equal Protection Clause and sought injunctive relief and money
damages.
After a bench trial, the district court held the challenged statutory scheme constitutional both on its face
and as applied, and the plaintiff prime contractor appealed. 615 F.3d 233 at 236. The Court of Appeals
held that the State did not meet its burden of proof in all respects to uphold the validity of the state
legislation. But, the Court agreed with the district court that the State produced a strong basis in
evidence justifying the statutory scheme on its face, and as applied to African American and Native
American subcontractors, and that the State demonstrated that the legislative scheme is narrowly
tailored to serve its compelling interest in remedying discrimination against these racial groups. The
Court thus affirmed the decision of the district court in part, reversed it in part, and remanded for
further proceedings consistent with the opinion. Id.
The Court found that the North Carolina statutory scheme “largely mirrored the federal Disadvantaged
Business Enterprise (DBE) program, with which every state must comply in awarding highway
construction contracts that utilize federal funds.” 615 F.3d 233 at 236. The Court also noted that federal
courts of appeal “have uniformly upheld the Federal DBE Program against equal-protection challenges.”
Id., at footnote 1, citing, Adarand Constructors, Inc. v. Slater, 228 F.3d 1147 (10th Cir. 2000).
In 2004, the State retained a consultant to prepare and issue a third study of subcontractors employed
in North Carolina’s highway construction industry. The study, according to the Court, marshaled
evidence to conclude that disparities in the utilization of minority subcontractors persisted. 615 F.3d
233 at 238. The Court pointed out that in response to the study, the North Carolina General Assembly
substantially amended state legislation section 136-28.4, and the new law went into effect in 2006. The
new statute modified the previous statutory scheme, according to the Court in five important respects.
Id.
First, the amended statute expressly conditions implementation of any participation goals on the
findings of the 2004 study. Second, the amended statute eliminates the 5 and 10 percent annual goals
that were set in the predecessor statute. 615 F.3d 233 at 238-239. Instead, as amended, the statute
requires the NCDOT to “establish annual aspirational goals, not mandatory goals, … for the overall
participation in contracts by disadvantaged minority-owned and women-owned businesses … [that]
shall not be applied rigidly on specific contracts or projects.” Id. at 239, quoting, N.C. Gen.Stat. § 136-
28.4(b)(2010). The statute further mandates that the NCDOT set “contract-specific goals or project-
specific goals … for each disadvantaged minority-owned and women-owned business category that has
demonstrated significant disparity in contract utilization” based on availability, as determined by the
study. Id.
FINAL REPORT APPENDIX B, PAGE 46
Third, the amended statute narrowed the definition of “minority” to encompass only those groups that
have suffered discrimination. Id. at 239. The amended statute replaced a list of defined minorities to any
certain groups by defining “minority” as “only those racial or ethnicity classifications identified by [the
study] … that have been subjected to discrimination in the relevant marketplace and that have been
adversely affected in their ability to obtain contracts with the Department.” Id. at 239 quoting section
136-28.4(c)(2)(2010).
Fourth, the amended statute required the NCDOT to reevaluate the Program over time and respond to
changing conditions. 615 F.3d 233 at 239. Accordingly, the NCDOT must conduct a study similar to the
2004 study at least every five years. Id. § 136-28.4(b). Finally, the amended statute contained a sunset
provision that was set to expire on August 31, 2009, but the General Assembly subsequently extended
the sunset provision to August 31, 2010. Id. Section 136-28.4(e) (2010).
The Court also noted that the statute required only good faith efforts by the prime contractors to utilize
subcontractors, and that the good faith requirement, the Court found, proved permissive in practice:
prime contractors satisfied the requirement in 98.5 percent of cases, failing to do so in only 13 of 878
attempts. 615 F.3d 233 at 239.
a. Strict scrutiny. The Court stated the strict scrutiny standard was applicable to justify a race-conscious
measure, and that it is a substantial burden but not automatically “fatal in fact.” 615 F.3d 233 at 241. The
Court pointed out that “[t]he unhappy persistence of both the practice and the lingering effects of racial
discrimination against minority groups in this country is an unfortunate reality, and government is not
disqualified from acting in response to it.” Id. at 241 quoting Alexander v. Estepp, 95 F.3d 312, 315 (4th
Cir. 1996). In so acting, a governmental entity must demonstrate it had a compelling interest in
“remedying the effects of past or present racial discrimination.” Id., quoting Shaw v. Hunt, 517 U.S. 899,
909 (1996).
Thus, the Court found that to justify a race-conscious measure, a state must identify that discrimination,
public or private, with some specificity, and must have a strong basis in evidence for its conclusion that
remedial action is necessary. 615 F.3d 233 at 241 quoting, Croson, 488 U.S. at 504 and Wygant v. Jackson
Board of Education, 476 U.S. 267, 277 (1986)(plurality opinion).
The Court significantly noted that: “There is no ‘precise mathematical formula to assess the quantum of
evidence that rises to the Croson ‘strong basis in evidence’ benchmark.’” 615 F.3d 233 at 241, quoting
Rothe Dev. Corp. v. Department of Defense, 545 F.3d 1023, 1049 (Fed.Cir. 2008). The Court stated that the
sufficiency of the State’s evidence of discrimination “must be evaluated on a case-by-case basis.” Id. at
241. (internal quotation marks omitted).
The Court held that a state “need not conclusively prove the existence of past or present racial
discrimination to establish a strong basis in evidence for concluding that remedial action is necessary.
615 F.3d 233 at 241, citing Concrete Works, 321 F.3d at 958. “Instead, a state may meet its burden by
relying on “a significant statistical disparity” between the availability of qualified, willing, and able
minority subcontractors and the utilization of such subcontractors by the governmental entity or its
prime contractors. Id. at 241, citing Croson, 488 U.S. at 509 (plurality opinion). The Court stated that we
“further require that such evidence be ‘corroborated by significant anecdotal evidence of racial
discrimination.’” Id. at 241, quoting Maryland Troopers Association, Inc. v. Evans, 993 F.2d 1072, 1077
(Fourth Cir. 1993).
FINAL REPORT APPENDIX B, PAGE 47
The Court pointed out that those challenging race-based remedial measures must “introduce credible,
particularized evidence to rebut” the state’s showing of a strong basis in evidence for the necessity for
remedial action. Id. at 241-242, citing Concrete Works, 321 F.3d at 959. Challengers may offer a neutral
explanation for the state’s evidence, present contrasting statistical data, or demonstrate that the
evidence is flawed, insignificant, or not actionable. Id. at 242 (citations omitted). However, the Court
stated “that mere speculation that the state’s evidence is insufficient or methodologically flawed does
not suffice to rebut a state’s showing. Id. at 242, citing Concrete Works, 321 F.3d at 991.
The Court held that to satisfy strict scrutiny, the state’s statutory scheme must also be “narrowly
tailored” to serve the state’s compelling interest in not financing private discrimination with public
funds. 615 F.3d 233 at 242, citing Alexander, 95 F.3d at 315 (citing Adarand, 515 U.S. at 227).
b. Intermediate scrutiny. The Court held that courts apply “intermediate scrutiny” to statutes that
classify on the basis of gender. Id. at 242. The Court found that a defender of a statute that classifies on
the basis of gender meets this intermediate scrutiny burden “by showing at least that the classification
serves important governmental objectives and that the discriminatory means employed are
substantially related to the achievement of those objectives.” Id., quoting Mississippi University for
Women v. Hogan, 458 U.S. 718, 724 (1982). The Court noted that intermediate scrutiny requires less of a
showing than does “the most exacting” strict scrutiny standard of review. Id. at 242. The Court found
that its “sister circuits” provide guidance in formulating a governing evidentiary standard for
intermediate scrutiny. These courts agree that such a measure “can rest safely on something less than
the ‘strong basis in evidence’ required to bear the weight of a race- or ethnicity-conscious program.” Id.
at 242, quoting Engineering Contractors, 122 F.3d at 909 (other citations omitted).
In defining what constitutes “something less” than a ‘strong basis in evidence,’ the courts, … also agree
that the party defending the statute must ‘present [ ] sufficient probative evidence in support of its
stated rationale for enacting a gender preference, i.e.,…the evidence [must be] sufficient to show that the
preference rests on evidence-informed analysis rather than on stereotypical generalizations.” 615 F.3d
233 at 242 quoting Engineering Contractors, 122 F.3d at 910 and Concrete Works, 321 F.3d at 959. The
gender-based measures must be based on “reasoned analysis rather than on the mechanical application
of traditional, often inaccurate, assumptions.” Id. at 242 quoting Hogan, 458 U.S. at 726.
c. Plaintiff’s burden. The Court found that when a plaintiff alleges that a statute violates the Equal
Protection Clause as applied and on its face, the plaintiff bears a heavy burden. In its facial challenge, the
Court held that a plaintiff “has a very heavy burden to carry, and must show that [a statutory scheme]
cannot operate constitutionally under any circumstance.” Id. at 243, quoting West Virginia v. U.S.
Department of Health & Human Services, 289 F.3d 281, 292 (4th Cir. 2002).
d. Statistical evidence. The Court examined the State’s statistical evidence of discrimination in public-
sector subcontracting, including its disparity evidence and regression analysis. The Court noted that the
statistical analysis analyzed the difference or disparity between the amount of subcontracting dollars
minority- and women-owned businesses actually won in a market and the amount of subcontracting
dollars they would be expected to win given their presence in that market. 615 F.3d 233 at 243. The
Court found that the study grounded its analysis in the “disparity index,” which measures the
participation of a given racial, ethnic, or gender group engaged in subcontracting. Id. In calculating a
disparity index, the study divided the percentage of total subcontracting dollars that a particular group
FINAL REPORT APPENDIX B, PAGE 48
won by the percent that group represents in the available labor pool, and multiplied the result by 100.
Id. The closer the resulting index is to 100, the greater that group’s participation. Id.
The Court held that after Croson, a number of our sister circuits have recognized the utility of the
disparity index in determining statistical disparities in the utilization of minority- and women-owned
businesses. Id. at 243-244 (Citations to multiple federal circuit court decisions omitted.) The Court also
found that generally “courts consider a disparity index lower than 80 as an indication of discrimination.”
Id. at 244. Accordingly, the study considered only a disparity index lower than 80 as warranting further
investigation. Id.
The Court pointed out that after calculating the disparity index for each relevant racial or gender group,
the consultant tested for the statistical significance of the results by conducting standard deviation
analysis through the use of t-tests. The Court noted that standard deviation analysis “describes the
probability that the measured disparity is the result of mere chance.” 615 F.3d 233 at 244, quoting Eng’g
Contractors, 122 F.3d at 914. The consultant considered the finding of two standard deviations to
demonstrate “with 95 percent certainty that disparity, as represented by either overutilization or
underutilization, is actually present.” Id., citing Eng’g Contractors, 122 F.3d at 914.
The study analyzed the participation of minority and women subcontractors in construction contracts
awarded and managed from the central NCDOT office in Raleigh, North Carolina. 615 F.3d 233 at 244. To
determine utilization of minority and women subcontractors, the consultant developed a master list of
contracts mainly from State-maintained electronic databases and hard copy files; then selected from
that list a statistically valid sample of contracts, and calculated the percentage of subcontracting dollars
awarded to minority- and women-owned businesses during the five-year period ending in June 2003.
(The study was published in 2004.) Id. at 244.
The Court found that the use of data for centrally-awarded contracts was sufficient for its analysis. It
was noted that data from construction contracts awarded and managed from the NCDOT divisions
across the state and from preconstruction contracts, which involve work from engineering firms and
architectural firms on the design of highways, was incomplete and not accurate. 615 F.3d 233 at 244,
n.6. These data were not relied upon in forming the opinions relating to the study. Id. at 244, n.6.
To estimate availability, which the Court defined as the percentage of a particular group in the relevant
market area, the consultant created a vendor list comprising: (1) subcontractors approved by the
department to perform subcontract work on state-funded projects, (2) subcontractors that performed
such work during the study period, and (3) contractors qualified to perform prime construction work on
state-funded contracts. 615 F.3d 233 at 244. The Court noted that prime construction work on state-
funded contracts was included based on the testimony by the consultant that prime contractors are
qualified to perform subcontracting work and often do perform such work. Id. at 245. The Court also
noted that the consultant submitted its master list to the NCDOT for verification. Id. at 245.
Based on the utilization and availability figures, the study prepared the disparity analysis comparing the
utilization based on the percentage of subcontracting dollars over the five-year period, determining the
availability in numbers of firms and their percentage of the labor pool, a disparity index which is the
percentage of utilization in dollars divided by the percentage of availability multiplied by 100, and a T
Value. 615 F.3d 233 at 245.
FINAL REPORT APPENDIX B, PAGE 49
The Court concluded that the figures demonstrated prime contractors underutilized all of the minority
subcontractor classifications on state-funded construction contracts during the study period. 615 F.3d
233 245. The disparity index for each group was less than 80 and, thus, the Court found warranted
further investigation. Id. The t-test results, however, demonstrated marked underutilization only of
African American and Native American subcontractors. Id. For African Americans, the t-value fell outside
of two standard deviations from the mean and, therefore, was statistically significant at a 95 percent
confidence level. Id. The Court found there was at least a 95 percent probability that prime contractors’
underutilization of African American subcontractors was not the result of mere chance. Id.
For Native American subcontractors, the t-value of 1.41 was significant at a confidence level of
approximately 85 percent. 615 F.3d 233 at 245. The t-values for Hispanic American and Asian American
subcontractors, demonstrated significance at a confidence level of approximately 60 percent. The
disparity index for women subcontractors found that they were overutilized during the study period.
The overutilization was statistically significant at a 95 percent confidence level. Id.
To corroborate the disparity study, the consultant conducted a regression analysis studying the
influence of certain company and business characteristics – with a particular focus on owner race and
gender – on a firm’s gross revenues. 615 F.3d 233 at 246. The consultant obtained the data from a
telephone survey of firms that conducted or attempted to conduct business with the NCDOT. The survey
pool consisted of a random sample of such firms. Id.
The consultant used the firms’ gross revenues as the dependent variable in the regression analysis to
test the effect of other variables, including company age and number of full-time employees, and the
owners’ years of experience, level of education, race, ethnicity, and gender. 615 F.3d 233 at 246. The
analysis revealed that minority and women ownership universally had a negative effect on revenue, and
African American ownership of a firm had the largest negative effect on that firm’s gross revenue of all
the independent variables included in the regression model. Id. These findings led to the conclusion that
for African Americans the disparity in firm revenue was not due to capacity-related or managerial
characteristics alone. Id.
The Court rejected the arguments by the plaintiffs attacking the availability estimates. The Court
rejected the plaintiff’s expert, Dr. George LaNoue, who testified that bidder data—reflecting the number
of subcontractors that actually bid on Department subcontracts – estimates availability better than
“vendor data.” 615 F.3d 233 at 246. Dr. LaNoue conceded, however, that the State does not compile
bidder data and that bidder data actually reflects skewed availability in the context of a goals program
that urges prime contractors to solicit bids from minority and women subcontractors. Id. The Court
found that the plaintiff’s expert did not demonstrate that the vendor data used in the study was
unreliable, or that the bidder data would have yielded less support for the conclusions reached. In sum,
the Court held that the plaintiffs challenge to the availability estimate failed because it could not
demonstrate that the 2004 study’s availability estimate was inadequate. Id. at 246. The Court cited
Concrete Works, 321 F.3d at 991 for the proposition that a challenger cannot meet its burden of proof
through conjecture and unsupported criticisms of the state’s evidence,” and that the plaintiff Rowe
presented no viable alternative for determining availability. Id. at 246-247, citing Concrete Works, 321
F.3d 991 and Sherbrooke Turf, 345 F.3d 964, 973 (Eighth Cir. 2003).
The Court also rejected the plaintiff’s argument that minority subcontractors participated in state-
funded projects at a level consistent with their availability in the relevant labor pool, based on the state’s
FINAL REPORT APPENDIX B, PAGE 50
response that evidence as to the number of minority subcontractors working with state-funded projects
does not effectively rebut the evidence of discrimination in terms of subcontracting dollars. 615 F.3d
233 at 247. The State pointed to evidence indicating that prime contractors used minority businesses for
low-value work in order to comply with the goals, and that African American ownership had a
significant negative impact on firm revenue unrelated to firm capacity or experience. Id. The Court
concluded plaintiff did not offer any contrary evidence. Id.
The Court found that the State bolstered its position by presenting evidence that minority
subcontractors have the capacity to perform higher-value work. 615 F.3d 233 at 247. The study
concluded, based on a sample of subcontracts and reports of annual firm revenue, that exclusion of
minority subcontractors from contracts under $500,000 was not a function of capacity. Id. at 247.
Further, the State showed that over 90 percent of the NCDOT’s subcontracts were valued at $500,000 or
less, and that capacity constraints do not operate with the same force on subcontracts as they may on
prime contracts because subcontracts tend to be relatively small. Id. at 247. The Court pointed out that
the Court in Rothe II, 545 F.3d at 1042-45, faulted disparity analyses of total construction dollars,
including prime contracts, for failing to account for the relative capacity of firms in that case. Id. at 247.
The Court pointed out that in addition to the statistical evidence, the State also presented evidence
demonstrating that from 1991 to 1993, during the Program’s suspension, prime contractors awarded
substantially fewer subcontracting dollars to minority and women subcontractors on state-funded
projects. The Court rejected the plaintiff’s argument that evidence of a decline in utilization does not
raise an inference of discrimination. 615 F.3d 233 at 247-248. The Court held that the very significant
decline in utilization of minority and women-subcontractors – nearly 38 percent – “surely provides a
basis for a fact finder to infer that discrimination played some role in prime contractors’ reduced
utilization of these groups during the suspension.” Id. at 248, citing Adarand v. Slater, 228 F.3d at 1174
(finding that evidence of declining minority utilization after a program has been discontinued “strongly
supports the government’s claim that there are significant barriers to minority competition in the public
subcontracting market, raising the specter of racial discrimination.”) The Court found such an inference
is particularly compelling for minority-owned businesses because, even during the study period, prime
contractors continue to underutilize them on state-funded road projects. Id. at 248.
e. Anecdotal evidence. The State additionally relied on three sources of anecdotal evidence contained in
the study: a telephone survey, personal interviews, and focus groups. The Court found the anecdotal
evidence showed an informal “good old boy” network of white contractors that discriminated against
minority subcontractors. 615 F.3d 233 at 248. The Court noted that three-quarters of African American
respondents to the telephone survey agreed that an informal network of prime and subcontractors
existed in the State, as did the majority of other minorities, that more than half of African American
respondents believed the network excluded their companies from bidding or awarding a contract as did
many of the other minorities. Id. at 248. The Court found that nearly half of nonminority male
respondents corroborated the existence of an informal network, however, only 17 percent of them
believed that the network excluded their companies from bidding or winning contracts. Id.
Anecdotal evidence also showed a large majority of African American respondents reported that double
standards in qualifications and performance made it more difficult for them to win bids and contracts,
that prime contractors view minority firms as being less competent than nonminority firms, and that
nonminority firms change their bids when not required to hire minority firms. 615 F.3d 233 at 248. In
FINAL REPORT APPENDIX B, PAGE 51
addition, the anecdotal evidence showed African American and Native American respondents believed
that prime contractors sometimes dropped minority subcontractors after winning contracts. Id. at 248.
The Court found that interview and focus-group responses echoed and underscored these reports. Id.
The anecdotal evidence indicated that prime contractors already know who they will use on the contract
before they solicit bids: that the “good old boy network” affects business because prime contractors just
pick up the phone and call their buddies, which excludes others from that market completely; that prime
contractors prefer to use other less qualified minority-owned firms to avoid subcontracting with African
American-owned firms; and that prime contractors use their preferred subcontractor regardless of the
bid price. 615 F.3d 233 at 248-249. Several minority subcontractors reported that prime contractors do
not treat minority firms fairly, pointing to instances in which prime contractors solicited quotes the day
before bids were due, did not respond to bids from minority subcontractors, refused to negotiate prices
with them, or gave minority subcontractors insufficient information regarding the project. Id. at 249.
The Court rejected the plaintiffs’ contention that the anecdotal data was flawed because the study did
not verify the anecdotal data and that the consultant oversampled minority subcontractors in collecting
the data. The Court stated that the plaintiffs offered no rationale as to why a fact finder could not rely on
the State’s “unverified” anecdotal data, and pointed out that a fact finder could very well conclude that
anecdotal evidence need not- and indeed cannot-be verified because it “is nothing more than a witness’
narrative of an incident told from the witness’ perspective and including the witness’ perceptions.” 615
F.3d 233 at 249, quoting Concrete Works, 321 F.3d at 989.
The Court held that anecdotal evidence simply supplements statistical evidence of discrimination. Id. at
249. The Court rejected plaintiffs’ argument that the study oversampled representatives from minority
groups, and found that surveying more non-minority men would not have advanced the inquiry. Id. at
249. It was noted that the samples of the minority groups were randomly selected. Id. The Court found
the state had compelling anecdotal evidence that minority subcontractors face race-based obstacles to
successful bidding. Id. at 249.
f. Strong basis in evidence that the minority participation goals were necessary to remedy
discrimination. The Court held that the State presented a “strong basis in evidence” for its conclusion
that minority participation goals were necessary to remedy discrimination against African American and
Native American subcontractors.” 615 F.3d 233 at 250. Therefore, the Court held that the State satisfied
the strict scrutiny test. The Court found that the State’s data demonstrated that prime contractors
grossly underutilized African American and Native American subcontractors in public sector
subcontracting during the study. Id. at 250. The Court noted that these findings have particular
resonance because, since 1983, North Carolina has encouraged minority participation in state-funded
highway projects, and yet African American and Native American subcontractors continue to be
underutilized on such projects. Id. at 250.
In addition, the Court found the disparity index in the study demonstrated statistically significant
underutilization of African American subcontractors at a 95 percent confidence level, and of Native
American subcontractors at a confidence level of approximately 85 percent. 615 F.3d 233 at 250. The
Court concluded the State bolstered the disparity evidence with regression analysis demonstrating that
African American ownership correlated with a significant, negative impact on firm revenue, and
demonstrated there was a dramatic decline in the utilization of minority subcontractors during the
suspension of the program in the 1990s. Id.
FINAL REPORT APPENDIX B, PAGE 52
Thus, the Court held the State’s evidence showing a gross statistical disparity between the availability of
qualified American and Native American subcontractors and the amount of subcontracting dollars they
win on public sector contracts established the necessary statistical foundation for upholding the
minority participation goals with respect to these groups. 615 F.3d 233 at 250.
The Court then found that the State’s anecdotal evidence of discrimination against these two groups
sufficiently supplemented the State’s statistical showing. Id. The survey in the study exposed an
informal, racially exclusive network that systemically disadvantaged minority subcontractors. Id. at 251.
The Court held that the State could conclude with good reason that such networks exert a chronic and
pernicious influence on the marketplace that calls for remedial action. Id. The Court found the anecdotal
evidence indicated that racial discrimination is a critical factor underlying the gross statistical
disparities presented in the study. Id. at 251. Thus, the Court held that the State presented substantial
statistical evidence of gross disparity, corroborated by “disturbing” anecdotal evidence.
The Court held in circumstances like these, the Supreme Court has made it abundantly clear a state can
remedy a public contracting system that withholds opportunities from minority groups because of their
race. 615 F.3d 233 at 251-252.
g. Narrowly tailored. The Court then addressed whether the North Carolina statutory scheme was
narrowly tailored to achieve the State’s compelling interest in remedying discrimination against African
American and Native American subcontractors in public-sector subcontracting. The following factors
were considered in determining whether the statutory scheme was narrowly tailored.
h, Neutral measures. The Court held that narrowly tailoring requires “serious, good faith consideration
of workable race-neutral alternatives,” but a state need not “exhaust [ ] … every conceivable race-neutral
alternative.” 615 F.3d 233 at 252 quoting Grutter v. Bollinger, 539 U.S. 306, 339 (2003). The Court found
that the study details numerous alternative race-neutral measures aimed at enhancing the development
and competitiveness of small or otherwise disadvantaged businesses in North Carolina. Id. at 252. The
Court pointed out various race-neutral alternatives and measures, including a Small Business Enterprise
Program; waiving institutional barriers of bonding and licensing requirements on certain small business
contracts of $500,000 or less; and the Department contracts for support services to assist disadvantaged
business enterprises with bookkeeping and accounting, taxes, marketing, bidding, negotiation, and other
aspects of entrepreneurial development. Id. at 252.
The Court found that plaintiff identified no viable race-neutral alternatives that North Carolina had
failed to consider and adopt. The Court also found that the State had undertaken most of the race-
neutral alternatives identified by USDOT in its regulations governing the Federal DBE Program. 615 F.3d
233 at 252, citing 49 CFR § 26.51(b). The Court concluded that the State gave serious good faith
consideration to race-neutral alternatives prior to adopting the statutory scheme. Id.
The Court concluded that despite these race-neutral efforts, the study demonstrated disparities continue
to exist in the utilization of African American and Native American subcontractors in state-funded
highway construction subcontracting, and that these “persistent disparities indicate the necessity of a
race-conscious remedy.” 615 F.3d 233 at 252.
i. Duration. The Court agreed with the district court that the program was narrowly tailored in that it set
a specific expiration date and required a new disparity study every five years. 615 F.3d 233 at 253. The
FINAL REPORT APPENDIX B, PAGE 53
Court found that the program’s inherent time limit and provisions requiring regular reevaluation ensure
it is carefully designed to endure only until the discriminatory impact has been eliminated. Id. at 253,
citing Adarand Constructors v. Slater, 228 F.3d at 1179 (quoting United States v. Paradise, 480 U.S. 149,
178 (1987)).
j. Program’s goals related to percentage of minority subcontractors. The Court concluded that the State
had demonstrated that the Program’s participation goals are related to the percentage of minority
subcontractors in the relevant markets in the State. 615 F.3d 233 at 253. The Court found that the
NCDOT had taken concrete steps to ensure that these goals accurately reflect the availability of
minority-owned businesses on a project-by-project basis. Id.
k. Flexibility. The Court held that the Program was flexible and thus satisfied this indicator of narrow
tailoring. 615 F.3d 233 at 253. The Program contemplated a waiver of project-specific goals when prime
contractors make good faith efforts to meet those goals, and that the good faith efforts essentially
require only that the prime contractor solicit and consider bids from minorities. Id. The State does not
require or expect the prime contractor to accept any bid from an unqualified bidder, or any bid that is
not the lowest bid. Id. The Court found there was a lenient standard and flexibility of the “good faith”
requirement, and noted the evidence showed only 13 of 878 good faith submissions failed to
demonstrate good faith efforts. Id.
l. Burden on non-MWBE/DBEs. The Court rejected the two arguments presented by plaintiff that the
Program created onerous solicitation and follow-up requirements, finding that there was no need for
additional employees dedicated to the task of running the solicitation program to obtain MBE/WBEs,
and that there was no evidence to support the claim that plaintiff was required to subcontract millions
of dollars of work that it could perform itself for less money. 615 F.3d 233 at 254. The State offered
evidence from the study that prime contractors need not submit subcontract work that they can self-
perform. Id.
m. Overinclusive. The Court found by its own terms the statutory scheme is not overinclusive because it
limited relief to only those racial or ethnicity classifications that have been subjected to discrimination
in the relevant marketplace and that had been adversely affected in their ability to obtain contracts with
the Department. 615 F.3d 233 at 254. The Court concluded that in tailoring the remedy this way, the
legislature did not randomly include racial groups that may never have suffered from discrimination in
the construction industry, but rather, contemplated participation goals only for those groups shown to
have suffered discrimination. Id.
In sum, the Court held that the statutory scheme is narrowly tailored to achieve the State’s compelling
interest in remedying discrimination in public-sector subcontracting against African American and
Native American subcontractors. Id. at 254.
n. Women-owned businesses overutilized. The study’s public-sector disparity analysis demonstrated
that women-owned businesses won far more than their expected share of subcontracting dollars during
the study period. 615 F.3d 233 at 254. In other words, the Court concluded that prime contractors
substantially overutilized women subcontractors on public road construction projects. Id. The Court
found the public-sector evidence did not evince the “exceedingly persuasive justification” the Supreme
Court requires. Id. at 255.
FINAL REPORT APPENDIX B, PAGE 54
The Court noted that the State relied heavily on private-sector data from the study attempting to
demonstrate that prime contractors significantly underutilized women subcontractors in the general
construction industry statewide and in the Asheville, North Carolina area. 615 F.3d 233 at 255.
However, because the study did not provide a t-test analysis on the private-sector disparity figures to
calculate statistical significance, the Court could not determine whether this private underutilization
was “the result of mere chance.” Id. at 255. The Court found troubling the “evidentiary gap” that there
was no evidence indicating the extent to which women-owned businesses competing on public-sector
road projects vied for private-sector subcontracts in the general construction industry. Id. at 255. The
Court also found that the State did not present any anecdotal evidence indicating that women
subcontractors successfully bidding on State contracts faced private-sector discrimination. Id. In
addition, the Court found missing any evidence prime contractors that discriminate against women
subcontractors in the private sector nevertheless win public-sector contracts. Id.
The Court pointed out that it did not suggest that the proponent of a gender-conscious program “must
always tie private discrimination to public action.” 615 F.3d 233 at 255, n. 11. But, the
Court held where, as here, there existed substantial probative evidence of overutilization in the relevant
public sector, a state must present something more than generalized private-sector data unsupported by
compelling anecdotal evidence to justify a gender-conscious program. Id. at 255, n. 11.
Moreover, the Court found the state failed to establish the amount of overlap between general
construction and road construction subcontracting. 615 F.3d 233 at 256. The Court said that the dearth
of evidence as to the correlation between public road construction subcontracting and private general
construction subcontracting severely limits the private data’s probative value in this case. Id.
Thus, the Court held that the State could not overcome the strong evidence of overutilization in the
public sector in terms of gender participation goals, and that the proffered private-sector data failed to
establish discrimination in the particular field in question. 615 F.3d 233 at 256. Further, the anecdotal
evidence, the Court concluded, indicated that most women subcontractors do not experience
discrimination. Id. Thus, the Court held that the State failed to present sufficient evidence to support the
Program’s current inclusion of women subcontractors in setting participation goals. Id.
o. Holding. The Court held that the state legislature had crafted legislation that withstood the
constitutional scrutiny. 615 F.3d 233 at 257. The Court concluded that in light of the statutory scheme’s
flexibility and responsiveness to the realities of the marketplace, and given the State’s strong evidence of
discrimination again African American and Native American subcontractors in public-sector
subcontracting, the State’s application of the statute to these groups is constitutional. Id. at 257.
However, the Court also held that because the State failed to justify its application of the statutory
scheme to women, Asian American, and Hispanic American subcontractors, the Court found those
applications were not constitutional.
Therefore, the Court affirmed the judgment of the district court with regard to the facial validity of the
statute, and with regard to its application to African American and Native American subcontractors. 615
F.3d 233 at 258. The Court reversed the district court’s judgment insofar as it upheld the
constitutionality of the state legislature as applied to women, Asian American and Hispanic American
subcontractors. Id. The Court thus remanded the case to the district court to fashion an appropriate
remedy consistent with the opinion. Id.
FINAL REPORT APPENDIX B, PAGE 55
p. Concurring opinions. It should be pointed out that there were two concurring opinions by the three
Judge panel: one judge concurred in the judgment, and the other judge concurred fully in the majority
opinion and the judgment.
2. H.B. Rowe Corp., Inc. v. W. Lyndo Tippett, NCDOT, et al. (Rowe), 589 F. Supp.2d 587 (E.D.N.C. 2008),
affirmed in part, reversed in part, and remanded, 615 F.3d 233 (4th Cir. 2010). In Rowe, the United
States District Court for the Eastern District of North Carolina, Western Division, heard a challenge to the
State of North Carolina MBE and WBE Program, which is a State of North Carolina “affirmative action”
program administered by NCDOT. The NCDOT MWBE Program challenged in Rowe involves projects
funded solely by the State of North Carolina and not funded by the USDOT. 589 F.Supp.2d 587.
a. Background. In this case plaintiff, a family-owned road construction business, bid on an NCDOT-
initiated state-funded project. NCDOT rejected plaintiff’s bid in favor of the next low bid that had
proposed higher minority participation on the project as part of its bid. According to NCDOT, plaintiff’s
bid was rejected because of plaintiff’s failure to demonstrate “good faith efforts” to obtain pre-
designated levels of minority participation on the project.
As a prime contractor, plaintiff Rowe was obligated under the MWBE Program to either obtain
participation of specified levels of MBE and WBE participation as subcontractors, or to demonstrate
good faith efforts to do so. For this particular project, NCDOT had set MBE and WBE subcontractor
participation goals of 10 percent and 5 percent, respectively. Plaintiff’s bid included 6.6 percent WBE
participation, but no MBE participation. The bid was rejected after a review of plaintiff’s good faith
efforts to obtain MBE participation. The next lowest bidder submitted a bid including 3.3 percent MBE
participation and 9.3 percent WBE participation, and although not obtaining a specified level of MBE
participation, it was determined to have made good faith efforts to do so. (Order of the District Court,
dated March 29, 2007).
NCDOT’s MWBE Program “largely mirrors” the Federal DBE Program, which NCDOT is required to
comply with in awarding construction contracts that utilize Federal funds. (589 F.Supp.2d 587; Order of
the District Court, dated September 28, 2007). Like the Federal DBE Program, under NCDOT’s MWBE
Program, the goals for minority and female participation are aspirational rather than mandatory. Id. An
individual target for MBE participation was set for each project. Id.
Historically, NCDOT had engaged in several disparity studies. The most recent study was done in 2004.
Id. The 2004 study, which followed the study in 1998, concluded that disparities in utilization of MBEs
persist and that a basis remains for continuation of the MWBE Program. The new statute, as revised, was
approved in 2006, which modified the previous MBE statute by eliminating the 10 percent and 5 percent
goals and establishing a fixed expiration date of 2009.
Plaintiff filed its complaint in this case in 2003 against the NCDOT and individuals associated with the
NCDOT, including the Secretary of NCDOT, W. Lyndo Tippett. In its complaint, plaintiff alleged that the
MWBE statute for NCDOT was unconstitutional on its face and as applied. 589 F.Supp.2d 587.
b. March 29, 2007 Order of the District Court. The matter came before the district court initially on
several motions, including the defendants’ Motion to Dismiss or for Partial Summary Judgment,
defendants’ Motion to Dismiss the Claim for Mootness and plaintiff’s Motion for Summary Judgment. The
court in its October 2007 Order granted in part and denied in part defendants’ Motion to Dismiss or for
FINAL REPORT APPENDIX B, PAGE 56
partial summary judgment; denied defendants’ Motion to Dismiss the Claim for Mootness; and
dismissed without prejudice plaintiff’s Motion for Summary Judgment.
The court held the Eleventh Amendment to the United States Constitution bars plaintiff from obtaining
any relief against defendant NCDOT, and from obtaining a retrospective damages award against any of
the individual defendants in their official capacities. The court ruled that plaintiff’s claims for relief
against the NCDOT were barred by the Eleventh Amendment, and the
NCDOT was dismissed from the case as a defendant. Plaintiff’s claims for interest, actual damages,
compensatory damages and punitive damages against the individual defendants sued in their official
capacities also was held barred by the Eleventh Amendment and were dismissed. But, the court held
that plaintiff was entitled to sue for an injunction to prevent state officers from violating a federal law,
and under the Ex Parte Young exception, plaintiff’s claim for declaratory and injunctive relief was
permitted to go forward as against the individual defendants who were acting in an official capacity with
the NCDOT. The court also held that the individual defendants were entitled to qualified immunity, and
therefore dismissed plaintiff’s claim for money damages against the individual defendants in their
individual capacities. Order of the District Court, dated March 29, 2007.
Defendants argued that the recent amendment to the MWBE statute rendered plaintiff’s claim for
declaratory injunctive relief moot. The new MWBE statute adopted in 2006, according to the court, does
away with many of the alleged shortcomings argued by the plaintiff in this lawsuit. The court found the
amended statute has a sunset date in 2009; specific aspirational participation goals by women and
minorities are eliminated; defines “minority” as including only those racial groups which disparity
studies identify as subject to underutilization in state road construction contracts; explicitly references
the findings of the 2004 Disparity Study and requires similar studies to be conducted at least once every
five years; and directs NCDOT to enact regulations targeting discrimination identified in the 2004 and
future studies.
The court held, however, that the 2004 Disparity Study and amended MWBE statute do not remedy the
primary problem which the plaintiff complained of: the use of remedial race- and gender- based
preferences allegedly without valid evidence of past racial and gender discrimination. In that sense, the
court held the amended MWBE statute continued to present a live case or controversy, and accordingly
denied the defendants’ Motion to Dismiss Claim for Mootness as to plaintiff’s suit for prospective
injunctive relief. Order of the District Court, dated March 29, 2007.
The court also held that since there had been no analysis of the MWBE statute apart from the briefs
regarding mootness, plaintiff’s pending Motion for Summary Judgment was dismissed without prejudice.
Order of the District Court, dated March 29, 2007.
c. September 28, 2007 Order of the District Court. On September 28, 2007, the district court issued a
new order in which it denied both the plaintiff’s and the defendants’ Motions for Summary Judgment.
Plaintiff claimed that the 2004 Disparity Study is the sole basis of the MWBE statute, that the study is
flawed, and therefore it does not satisfy the first prong of strict scrutiny review. Plaintiff also argued that
the 2004 study tends to prove non-discrimination in the case of women, and finally, the MWBE Program
fails the second prong of strict scrutiny review in that it is not narrowly tailored.
FINAL REPORT APPENDIX B, PAGE 57
The court found summary judgment was inappropriate for either party and that there are genuine
issues of material fact for trial. The first and foremost issue of material fact, according to the court, was
the adequacy of the 2004 Disparity Study as used to justify the MWBE Program. Therefore, because the
court found there was a genuine issue of material fact regarding the 2004 Study, summary judgment
was denied on this issue.
The court also held there was confusion as to the basis of the MWBE Program, and whether it was based
solely on the 2004 Study or also on the 1993 and 1998 Disparity Studies. Therefore, the court held a
genuine issue of material fact existed on this issue and denied summary judgment. Order of the District
Court, dated September 28, 2007.
d. December 9, 2008 Order of the District Court (589 F.Supp.2d 587). The district court on December 9,
2008, after a bench trial, issued an Order that found as a fact and concluded as a matter of law that
plaintiff failed to satisfy its burden of proof that the North Carolina MWBE Program, enacted by the state
legislature to affect the awarding of contracts and subcontracts in state highway construction, violated
the United States Constitution.
Plaintiff, in its complaint filed against NCDOT alleged that N.C. Gen. St. § 136-28.4 is unconstitutional on
its face and as applied, and NCDOT, while administering the MWBE Program, violated plaintiff’s rights
under the federal law and the United States Constitution. Plaintiff requested a declaratory judgment that
the MWBE program is invalid and sought actual and punitive damages.
As a prime contractor, plaintiff was obligated under the MWBE program to either obtain participation of
specified levels of MBE and WBE subcontractors, or to demonstrate that good faith efforts were made to
do so. Following a review of plaintiff’s good faith efforts to obtain minority participation on the
particular contract that was the subject of plaintiff’s bid, the bid was rejected. Plaintiff’s bid was rejected
in favor of the next lowest bid, which had proposed higher minority participation on the project as part
of its bid. According to NCDOT, plaintiff’s bid was rejected because of plaintiff’s failure to demonstrate
good faith efforts to obtain pre-designated levels of minority participation on the project. 589 F.Supp.2d
587.
e. North Carolina’s MWBE program. The MWBE program was implemented following amendments to
N.C. Gen. Stat. §136-28.4. Pursuant to the directives of the statute, the NCDOT promulgated regulations
governing administration of the MWBE Program. See N.C. Admin. Code tit. 19A, § 2D.1101, et seq. The
regulations had been amended several times and provide that NCDOT shall ensure that MBEs and WBEs
have the maximum opportunity to participate in the performance of contracts financed with non-federal
funds. N.C. Admin. Code Tit. 19A § 2D.1101.
North Carolina’s MWBE Program, which affected only highway bids and contracts funded solely with
state money, according to the district court, largely mirrored the Federal DBE Program, which NCDOT is
required to comply with in awarding construction contracts that utilize federal funds. 589 F.Supp.2d
587. Like the Federal DBE Program, under North Carolina’s MWBE Program, the targets for minority and
female participation were aspirational rather than mandatory, and individual targets for disadvantaged
business participation were set for each individual project. N.C. Admin. Code tit. 19A § 2D.1108. In
determining what level of MBE and WBE participation was appropriate for each project, NCDOT would
take into account “the approximate dollar value of the contract, the geographical location of the
proposed work, a number of the eligible funds in the geographical area, and the anticipated value of the
FINAL REPORT APPENDIX B, PAGE 58
items of work to be included in the contract.” Id. NCDOT would also consider “the annual goals
mandated by Congress and the North Carolina General Assembly.”Id.
A firm could be certified as an MBE or WBE by showing NCDOT that it is “owner controlled by one or
more socially and economically disadvantaged individuals.” N.C. Admin. Code tit. 1980, § 2D.1102.
The district court stated the MWBE Program did not directly discriminate in favor of minority and
women contractors, but rather “encouraged prime contractors to favor MBEs and WBEs in
subcontracting before submitting bids to NCDOT.” 589 F.Supp.2d 587. In determining whether the
lowest bidder is “responsible,” NCDOT would consider whether the bidder obtained the level of certified
MBE and WBE participation previously specified in the NCDOT project proposal. If not, NCDOT would
consider whether the bidder made good faith efforts to solicit MBE and WBE participation. N.C. Admin.
Code tit. 19A§ 2D.1108.
There were multiple studies produced and presented to the North Carolina General Assembly in the
years 1993, 1998, and 2004. The 1998 and 2004 studies concluded that disparities in the utilization of
minority and women contractors persist, and that there remains a basis for continuation of the MWBE
program. The MWBE Program, as amended after the 2004 study, includes provisions that eliminated the
10 percent and 5 percent goals and instead replaced them with contract-specific participation goals
created by NCDOT; established a sunset provision that has the statute expiring on August 31, 2009; and
provides reliance on a disparity study produced in 2004.
The MWBE Program, as it stood at the time of this decision, provides that NCDOT “dictates to prime
contractors the express goal of MBE and WBE subcontractors to be used on a given project. However,
instead of the state hiring the MBE and WBE subcontractors itself, the NCDOT makes the prime
contractor solely responsible for vetting and hiring these subcontractors. If a prime contractor fails to
hire the goal amount, it must submit efforts of ‘good faith’ attempts to do so.” 589 F.Supp.2d 587.
f. Compelling interest. The district court held that NCDOT established a compelling governmental
interest to have the MWBE Program. The court noted that the United States Supreme Court in Croson
made clear that a state legislature has a compelling interest in eradicating and remedying private
discrimination in the private subcontracting inherent in the letting of road construction contracts. 589
F.Supp.2d 587, citing Croson, 488 U.S. at 492. The district court found that the North Carolina Legislature
established it relied upon a strong basis of evidence in concluding that prior race discrimination in
North Carolina’s road construction industry existed so as to require remedial action.
The court held that the 2004 Disparity Study demonstrated the existence of previous discrimination in
the specific industry and locality at issue. The court stated that disparity ratios provided for in the 2004
Disparity Study highlighted the underutilization of MBEs by prime contractors bidding on state-funded
highway projects. In addition, the court found that evidence relied upon by the legislature demonstrated
a dramatic decline in the utilization of MBEs during the program’s suspension in 1991. The court also
found that anecdotal support relied upon by the legislature confirmed and reinforced the general data
demonstrating the underutilization of MBEs. The court held that the NCDOT established that, “based
upon a clear and strong inference raised by this Study, they concluded minority contractors suffer from
the lingering effects of racial discrimination.” 589 F.Supp.2d 587.
FINAL REPORT APPENDIX B, PAGE 59
With regard to WBEs, the court applied a different standard of review. The court held the legislative
scheme as it relates to MWBEs must serve an important governmental interest and must be
substantially related to the achievement of those objectives. The court found that NCDOT established an
important governmental interest. The 2004 Disparity Study provided that the average contracts
awarded WBEs are significantly smaller than those awarded non-WBEs. The court held that NCDOT
established based upon a clear and strong inference raised by the Study, women contractors suffer from
past gender discrimination in the road construction industry.
g. Narrowly tailored. The district court noted that the Fourth Circuit of Appeals lists a number of factors
to consider in analyzing a statute for narrow tailoring: (1) the necessity of the policy and the efficacy of
alternative race neutral policies; (2) the planned duration of the policy; (3) the relationship between the
numerical goal and the percentage of minority group members in the relevant population; (4) the
flexibility of the policy, including the provision of waivers if the goal cannot be met; and (5) the burden
of the policy on innocent third parties. 589 F.Supp.2d 587, quoting Belk v. Charlotte-Mecklenburg Board
of Education, 269 F.3d 305, 344 (4th Cir. 2001).
The district court held that the legislative scheme in N.C. Gen. Stat. § 136-28.4 is narrowly tailored to
remedy private discrimination of minorities and women in the private subcontracting inherent in the
letting of road construction contracts. The district court’s analysis focused on narrowly tailoring factors
(2) and (4) above, namely the duration of the policy and the flexibility of the policy. With respect to the
former, the court held the legislative scheme provides the program be reviewed at least every five years
to revisit the issue of utilization of MWBEs in the road construction industry. N.C. Gen. Stat. §136-
28.4(b). Further, the legislative scheme includes a sunset provision so that the program will expire on
August 31, 2009, unless renewed by an act of the legislature. Id. at § 136-28.4(e). The court held these
provisions ensured the legislative scheme last no longer than necessary.
The court also found that the legislative scheme enacted by the North Carolina legislature provides
flexibility insofar as the participation goals for a given contract or determined on a project-by-project
basis. § 136-28.4(b)(1). Additionally, the court found the legislative scheme in question is not overbroad
because the statute applies only to “those racial or ethnicity classifications identified by a study
conducted in accordance with this section that had been subjected to discrimination in a relevant
marketplace and that had been adversely affected in their ability to obtain contracts with the
Department.” § 136-28.4(c)(2). The court found that plaintiff failed to provide any evidence that
indicates minorities from non-relevant racial groups had been awarded contracts as a result of the
statute.
The court held that the legislative scheme is narrowly tailored to remedy private discrimination of
minorities and women in the private subcontracting inherent in the letting of road construction
contracts, and therefore found that § 136-28.4 is constitutional.
The decision of the district court was appealed to the United States Court of Appeals for the Fourth
Circuit, which affirmed in part and reversed in part the decision of the district court. See 615 F3d 233
(Fourth Cir. 2010), discussed above.
FINAL REPORT APPENDIX B, PAGE 60
3. Associated Utility Contractors of Maryland, Inc. (AUC) v. Mayor and City Council of Baltimore, 218 F.
Supp.2d 749 (D. Md. 2002). This case is instructive because the court found the EO of the Mayor of the
City of Baltimore was precatory in nature (creating no legal obligation or duty) and contained no
enforcement mechanism or penalties for noncompliance and imposed no substantial restrictions; the
Executive Order announced goals that were found to be aspirational only.
The AUC sued the City of Baltimore, challenging its ordinance providing for MWBE participation in city
contracts. Previously, an earlier City of Baltimore MWBE program was declared unconstitutional.
Associated Utility Contractors of Maryland, Inc. v. Mayor and City Council of Baltimore, 83 F. Supp.2d 613
(D. Md. 2000). The City adopted a new ordinance that provided for the establishment of MWBE
participation goals on a contract-by-contract basis, and made several other changes from the previous
MWBE program declared unconstitutional in the earlier case.
In addition, the Mayor of the City of Baltimore issued an EO that announced a goal of awarding 35
percent of all City contracting dollars to MBE/WBEs. The court found this goal of 35 percent
participation was aspirational only and the EO contained no enforcement mechanism or penalties for
noncompliance. The EO also specified many “noncoercive” outreach measures to be taken by the City
agencies relating to increasing participation of MBE/WBEs. These measures were found to be merely
aspirational, and no enforcement mechanism was provided.
The court addressed in this case only a motion to dismiss filed by the City of Baltimore, arguing that the
Associated Utility Contractors had no standing. The court denied the motion to dismiss, holding that the
association had standing to challenge the new MBE/WBE ordinance, although the court noted that it had
significant issues with the AUC having representational standing because of the nature of the MBE/WBE
plan and the fact that the AUC did not have any of its individual members named in the suit. The court
also held that the AUC was entitled to bring an as-applied challenge to the EO of the Mayor, but rejected
it having standing to bring a facial challenge based on a finding that it imposes no requirement, creates
no sanctions, and does not inflict an injury upon any member of the AUC in any concrete way. Therefore,
the EO did not create a “case or controversy” in connection with a facial attack. The court found the
wording of the EO to be precatory and imposing no substantive restrictions.
After this decision, the City of Baltimore and the AUC entered into a settlement agreement and a
dismissal with prejudice of the case. An order was issued by the court on October 22, 2003 dismissing
the case with prejudice.
4. Associated Utility Contractors of Maryland, Inc. v. The Mayor and City Council of Baltimore and
Maryland Minority Contractors Association, Inc. (MMCA), 83 F. Supp.2d 613 (D. Md. 2000). Plaintiff
Associated Utility Contractors of Maryland, Inc. (“AUC”) filed this action to challenge the continued
implementation of the affirmative action program created by Baltimore City Ordinance (“the
Ordinance”). 83 F.Supp.2d 613 (D. Md. 2000).
The Ordinance was enacted in 1990 and authorized the City to establish annually numerical set-aside
goals applicable to a wide range of public contracts, including construction subcontracts. Id.
AUC filed a motion for summary judgment, which the City and intervening defendant MMCA opposed. Id.
at 614. In 1999, the court issued an order granting in part and denying in part the motion for summary
judgment (“the December injunction”). Id. Specifically, as to construction contracts entered into by the
FINAL REPORT APPENDIX B, PAGE 61
City, the court enjoined enforcement of the Ordinance (and, consequently, continued implementation of
the affirmative action program it authorized) in respect to the City’s 1999 numerical set-aside goals for
MWBEs, which had been established at 20 percent and 3 percent, respectively. Id. The court denied the
motion for summary judgment as to the plaintiff’s facial attack on the constitutionality of the Ordinance,
concluding that there existed “a dispute of material fact as to whether the enactment of the Ordinance
was adequately supported by a factual record of unlawful discrimination properly remediable through
race- and gender-based affirmative action.” Id.
The City appealed the entry of the December injunction to the United States Court of Appeals for the
Fourth Circuit. In addition, the City filed a motion for stay of the injunction. Id. In support of the motion
for stay, the City contended that AUC lacked organizational standing to challenge the Ordinance. The
court held the plaintiff satisfied the requirements for organizational standing as to the set-aside goals
established by the City for 1999. Id.
The City also contended that the court erred in failing to forebear from the adjudication of this case and
of the motion for summary judgment until after it had completed an alleged disparity study which, it
contended, would establish a justification for the set-aside goals established for 1999. Id. The court said
this argument, which the court rejected, rested on the notion that a governmental entity might
permissibly adopt an affirmative action plan including set-aside goals and wait until such a plan is
challenged in court before undertaking the necessary studies upon which the constitutionality of the
plan depends. Id.
Therefore, because the City offered no contemporaneous justification for the 1999 set-aside goals it
adopted on the authority of the Ordinance, the court issued an injunction in its 1999 decision and
declined to stay its effectiveness. Id. Since the injunction awarded complete relief to the AUC, and any
effort to adjudicate the issue of whether the City would adopt revised set-aside goals on the authority of
the Ordinance was wholly speculative undertaking, the court dismissed the case without prejudice. Id.
a. Facts and procedural history. In 1986, the City Council enacted in Ordinance 790 the first city-wide
affirmative action set-aside goals, which required, inter alia, that for all City contracts, 20 percent of the
value of subcontracts be awarded to MBEs and 3 percent to WBEs. Id. at 615. As permitted under then-
controlling Supreme Court precedent, the court said Ordinance 790 was justified by a finding that
general societal discrimination had disadvantaged MWBEs. Apparently, no disparity statistics were
offered to justify Ordinance 790. Id.
After the Supreme Court announced its decision in Croson, 488 U.S. 469 (1989), the City convened a Task
Force to study the constitutionality of Ordinance 790. Id. The Task Force held hearings and issued a
Public Comment Draft Report on November 1, 1989. Id. It held additional hearings, reviewed public
comments and issued its final report on April 11, 1990, recommending several amendments to
Ordinance 790. Id. The City Council conducted hearings, and in June 1990, enacted Ordinance 610, the
law under attack in this case. Id.
In enacting Ordinance 610, the City Council found that it was justified as an appropriate remedy of
“[p]ast discrimination in the City’s contracting process by prime contractors against minority and
women’s business enterprises ... .” Id. The City Council also found that “[m]inority and women’s business
enterprises ... have had difficulties in obtaining financing, bonding, credit and insurance;” that “[t]he City
of Baltimore has created a number of different assistance programs to help small businesses with these
FINAL REPORT APPENDIX B, PAGE 62
problems ... [but that t]hese assistance programs have not been effective in either remedying the effects
of past discrimination ... or in preventing ongoing discrimination.” Id.
The operative section of Ordinance 610 relevant to this case mandated a procedure by which set-aside
goals were to be established each year for minority- and women-owned business participation in City
contracts. Id. The Ordinance itself did not establish any goals, but directed the Mayor to consult with the
Chief of Equal Opportunity Compliance and “contract authorities” and to annually specify goals for each
separate category of contracting “such as public works, professional services, concession and purchasing
contracts, as well as any other categories that the Mayor deems appropriate.” Id.
In 1990, upon its enactment of the Ordinance, the City established across-the-board set-aside goals of 20
percent MBE and 3 percent WBE for all City contracts with no variation by market. Id. The court found
the City simply readopted the 20 percent MBE and 3 percent WBE subcontractor participation goals
from the prior law, Ordinance 790, which the Ordinance had specifically repealed. Id. at 616. These same
set-aside goals, the court said, were adopted without change and without factual support in each
succeeding year since 1990. Id.
No annual study ever was undertaken to support the implementation of the affirmative action program
generally or to support the establishment of any annual goals, the court concluded, and the City did not
collect the data which could have permitted such findings. Id. No disparity study existed or was
undertaken until the commencement of this lawsuit. Id. Thus, the court held the City had no reliable
record of the availability of MWBEs for each category of contracting, and thus no way of determining
whether its 20 percent and 3 percent goals were rationally related to extant discrimination (or the
continuing effects thereof) in the letting of public construction contracts. Id.
b. AUC has associational standing. AUC established that it had associational standing to challenge the
set-aside goals adopted by the City in 1999. Id. Specifically, AUC sufficiently established that its members
were “ready and able” to bid for City public works contracts. Id. No more, the court noted, was required.
Id.
The court found that AUC’s members were disadvantaged by the goals in the bidding process, and this
alone was a cognizable injury. Id. For the purposes of an equal protection challenge to affirmative action
set-aside goals, the court stated the Supreme Court has held that the “ ‘injury in fact’ is the inability to
compete on an equal footing in the bidding process ... .” Id. at 617, quoting Northeastern Florida Chapter,
508 U.S. at 666, and citing Adarand Constructors, Inc. v. Pena, 515 U.S. 200, 211 (1995).
The Supreme Court in Northeastern Florida Chapter held that individual standing is established to
challenge a set-aside program when a party demonstrates “that it is able and ready to bid on contracts
and that a discriminatory policy prevents it from doing so on an equal basis.” Id. at 616 quoting,
Northeastern, 508 U.S. at 666. The Supreme Court further held that once a party shows it is “ready and
able” to bid in this context, the party will have sufficiently shown that the set-aside goals are “the ‘cause’
of its injury and that a judicial decree directing the city to discontinue its program would ‘redress’ the
injury,” thus satisfying the remaining requirements for individual standing. Id. quoting Northeastern, at
666 & n. 5.
The court found there was ample evidence that AUC members were “ready and able” to bid on City
public works contracts based on several documents in the record, and that members of AUC would have
FINAL REPORT APPENDIX B, PAGE 63
individual standing in their own right to challenge the constitutionality of the City’s set-aside goals
applicable to construction contracting, satisfying the associational standing test. Id. at 617-18. The court
held AUC had associational standing to challenge the constitutionality of the public works contracts set-
aside provisions established in 1999. Id. at 618.
c. Strict scrutiny analysis. AUC complained that since their initial promulgation in 1990, the City’s set-
aside goals required AUC members to “select or reject certain subcontractors based upon the race,
ethnicity, or gender of such subcontractors” in order to bid successfully on City public works contracts
for work exceeding $25,000 (“City public works contracts”). Id. at 618. AUC claimed, therefore, that the
City’s set-aside goals violated the Fourteenth Amendment’s guarantee of equal protection because they
required prime contractors to engage in discrimination which the government itself cannot perpetrate.
Id.
The court stated that government classifications based upon race and ethnicity are reviewed under
strict scrutiny, citing the Supreme Court in Adarand, 515 U.S. at 227; and that those based upon gender
are reviewed under the less stringent intermediate scrutiny. Id. at 618 , citing United States v. Virginia,
518 U.S. 515, 531 (1996). Id. “[A]ll racial classifications, imposed by whatever federal, state, or local
governmental actor, must be analyzed by a reviewing court under strict scrutiny.” Id. at 619, quoting
Adarand, 515 U.S. at 227. The government classification must be narrowly tailored to achieve a
compelling government interest. Id. citing Croson, 488 U.S. at 493–95. The court then noted that the
Fourth Circuit has explained:
The rationale for this stringent standard of review is plain. Of all the criteria by which men and
women can be judged, the most pernicious is that of race. The injustice of judging human beings
by the color of their skin is so apparent that racial classifications cannot be rationalized by the
casual invocation of benign remedial aims.... While the inequities and indignities visited by past
discrimination are undeniable, the use of race as a reparational device risks perpetuating the
very race-consciousness such a remedy purports to overcome.
Id. at 619, quoting Maryland Troopers Ass’n, Inc. v. Evans, 993 F.2d 1072, 1076 (4th Cir.1993) (citation
omitted).
The court also pointed out that in Croson, a plurality of the Supreme Court concluded that state and local
governments have a compelling interest in remedying identified past and present race discrimination
within their borders. Id. at 619, citing Croson, 488 U.S. at 492. The plurality of the Supreme Court,
according to the court, explained that the Fourteenth Amendment permits race-conscious programs that
seek both to eradicate discrimination by the governmental entity itself, and to prevent the public entity
from acting as a “ ‘passive participant’ in a system of racial exclusion practiced by elements of the local
construction industry” by allowing tax dollars “to finance the evil of private prejudice.” Id. at 619,
quoting Croson, 488 U.S. at 492. Thus, the court found Croson makes clear that the City has a compelling
interest in eradicating and remedying private discrimination in the private subcontracting inherent in the
letting of City construction contracts. Id.
The Fourth Circuit, the court stated, has interpreted Croson to impose a “two step analysis for evaluating
a race-conscious remedy.” Id. at 619 citing Maryland Troopers Ass’n, 993 F.2d at 1076. “First, the
[government] must have a ‘strong basis in evidence for its conclusion that remedial action [is]
necessary....’ ‘Absent searching judicial inquiry into the justification for such race-based measures, there
is simply no way of determining what classifications are ... in fact motivated by illegitimate notions of
FINAL REPORT APPENDIX B, PAGE 64
racial inferiority or simple racial politics.’” Id. at 619, quoting Maryland Troopers Ass’n, 993 F.2d at 1076
(citing Croson ).
The second step in the Croson analysis, according to the court, is to determine whether the government
has adopted programs that “ ‘narrowly tailor’ any preferences based on race to meet their remedial
goal.” Id. at 619. The court found that the Fourth Circuit summarized Supreme Court jurisprudence on
“narrow tailoring” as follows:
The preferences may remain in effect only so long as necessary to remedy the discrimination at
which they are aimed; they may not take on a life of their own. The numerical goals must be
waivable if qualified minority applications are scarce, and such goals must bear a reasonable
relation to minority percentages in the relevant qualified labor pool, not in the population as a
whole. Finally, the preferences may not supplant race-neutral alternatives for remedying the
same discrimination.
Id. at 620, quoting Maryland Troopers Ass’n, 993 F.2d at 1076–77 (citations omitted).
d. Intermediate scrutiny analysis. The court stated the intermediate scrutiny analysis for gender-based
discrimination as follows: “Parties who seek to defend gender-based government action must
demonstrate an ‘exceedingly persuasive justification’ for that action.” Id. at 620, quoting Virginia, 518
U.S. at 531, 116. This burden is a “demanding [one] and it rests entirely on the State.” Id. at 620 quoting
Virginia, 518 U.S. at 533.
Although gender is not “a proscribed classification,” in the way race or ethnicity is, the courts
nevertheless “carefully inspect[ ] official action that closes a door or denies opportunity” on the basis of
gender. Id. at 620, quoting Virginia, 518 U.S. at 532-533. At bottom, the court concluded, a government
wishing to discriminate on the basis of gender must demonstrate that its doing so serves “important
governmental objectives and that the discriminatory means employed are substantially related to the
achievement of those objectives.” Id. at 620, quoting Virginia, 518 U.S. at 533 (citations and quotations
omitted).
As with the standards for race-based measures, the court found no formula exists by which to determine
what evidence will justify every different type of gender-conscious measure. Id. at 620. However, as the
Third Circuit has explained, “[l]ogically, a city must be able to rely on less evidence in enacting a gender
preference than a racial preference because applying Croson’s evidentiary standard to a gender
preference would eviscerate the difference between strict and intermediate scrutiny.” Id. at 620, quoting
Contractors Ass’n, 6 F.3d at 1010.
The court pointed out that the Supreme Court has stated an affirmative action program survives
intermediate scrutiny if the proponent can show it was “a product of analysis rather than a stereotyped
reaction based on habit.” Id. at 620, quoting Metro Broadcasting, Inc. v. F.C.C., 497 U.S. 547, 582–83
(1990)(internal quotations omitted). The Third Circuit, the court said, determined that “this standard
requires the City to present probative evidence in support of its stated rationale for the [10% gender
set-aside] preference, discrimination against women-owned contractors.” Id. at 620, quoting Contractors
Ass’n, 6 F.3d at 1010.
e. Preenactment versus postenactment evidence. In evaluating the first step of the Croson test,
whether the City had a “strong basis in evidence for its conclusion that [race-conscious] remedial action
FINAL REPORT APPENDIX B, PAGE 65
was necessary,” the court held that it must limit its inquiry to evidence which the City actually
considered before enacting the numerical goals. Id. at 620. The court found the Supreme Court has
established the standard that preenactment evidence must provide the “strong basis in evidence” that
race-based remedial action is necessary. Id. at 620-621.
The court noted the Supreme Court in Wygant, the plurality opinion, joined by four justices including
Justice O’Connor, held that a state entity “must ensure that, before it embarks on an affirmative-action
program, it has convincing evidence that remedial action is warranted. That is, it must have sufficient
evidence to justify the conclusion that there has been prior discrimination.” Id. at 621, quoting Wygant,
476 U.S. at 277.
The court stated that because of this controlling precedent, it was compelled to analyze the evidence
before the City when it adopted the 1999 set-aside goals specifying the 20% MBE participation in City
construction subcontracts, and for analogous reasons, the 3% WBE preference must also be justified by
preenactment evidence. Id. at 621.
The court said the Fourth Circuit has not ruled on the issue whether affirmative action measures must
be justified by a strong basis in preenactment evidence. The court found that in the Fourth
Circuit decisions invalidating state affirmative action policies in Podberesky v. Kirwan, 38 F.3d 147 (4th
Cir.1994), and Maryland Troopers Ass’n, Inc. v. Evans, 993 F.2d 1072 (4th Cir.1993), the court apparently
relied without comment upon postenactment evidence when evaluating the policies for Croson “strong
basis in evidence.” Id. at 621, n.6, citing Podberesky, 38 F.3d at 154 (referring to post enactment surveys
of African–American students at College Park campus); Maryland Troopers, 993 F.2d at 1078 (evaluating
statistics about the percentage of black troopers in 1991 when deciding whether there was a statistical
disparity great enough to justify the affirmative action measures in a 1990 consent decree). The court
concluded, however, this issue was apparently not raised in these cases, and both were decided before
the 1996 Supreme Court decision in Shaw v. Hunt, 517 U.S. 899, which clarified that the Wygant plurality
decision was controlling authority on this issue. Id. at 621, n.6.
The court noted that three courts had held, prior to Shaw, that postenactment evidence may be relied
upon to satisfy the Croson “strong basis in evidence” requirement. Concrete Works of Colorado, Inc. v.
Denver, 36 F.3d 1513 (10th Cir.1994), cert. denied, 514 U.S. 1004, 115 S.Ct. 1315, 131 L.Ed.2d 196
(1995); Harrison & Burrowes Bridge Constructors, Inc. v. Cuomo, 981 F.2d 50, 60 (2d Cir.1992); Coral
Construction Co. v. King County, 941 F.2d 910 (9th Cir.1991). Id. In addition, the Eleventh Circuit held in
1997 that “post enactment evidence is admissible to determine whether an affirmative action program”
satisfies Croson. Engineering Contractors Ass’n of South Florida, Inc. v. Metropolitan Dade County, 122
F.3d 895, 911–12 (11th Cir.1997), cert. denied, 523 U.S. 1004 (1998). Because the court believed that
Shaw and Wygant provided controlling authority on the role of post enactment evidence in the “strong
basis in evidence” inquiry, it did not find these cases persuasive. Id. at 621.
f. City did not satisfy strict or intermediate scrutiny: no disparity study was completed or
preenactment evidence established. In this case. the court found that the City considered no evidence
in 1999 before promulgating the construction subcontracting set-aside goals of 20 percent for MBEs and
3 percent for WBEs. Id. at 621. Based on the absence of any record of what evidence the City considered
prior to promulgating the set-aside goals for 1999, the court held there was no dispute of material fact
foreclosing summary judgment in favor of plaintiff. Id. The court thus found that the 20% preference is
FINAL REPORT APPENDIX B, PAGE 66
not supported by a “strong basis in evidence” showing a need for a race-conscious remedial plan in
1999; nor is the 3% preference shown to be “substantially related to achievement” of the important
objective of remedying gender discrimination in 1999, in the construction industry in Baltimore. Id.
The court rejected the City’s assertions throughout the case that the court should uphold the set-aside
goals based upon statistics, which the City was in the process of gathering in a disparity study it had
commissioned. Id. at 622. The court said the City did not provide any legal support for the proposition
that a governmental entity might permissibly adopt an affirmative action plan including set-aside goals
and wait until such a plan is challenged in court before undertaking the necessary studies upon which
the constitutionality of the plan depends. Id. The in-process study was not complete as of the date of this
decision by the court. Id. The court thus stated the study could not have produced data upon which the
City actually relied in establishing the set-aside goals for 1999. Id.
The court noted that if the data the study produced were reliable and complete, the City could have the
statistical basis upon which to make the findings Ordinance 610 required, and which could satisfy the
constitutionally required standards for the promulgation and implementation of narrowly tailored set-
aside race-and gender conscious goals. Id. at 622. Nonetheless, as the record stood when the court
entered the December 1999 injunction and as it stood as of the date of the decision, there were no data
in evidence showing a disparity, let alone a gross disparity, between MWBE availability and utilization in
the subcontracting construction market in Baltimore City. Id. The City possessed no such evidence when
it established the 1999 set-aside goals challenged in the case. Id.
A percentage set-aside measure, like the MWBE goals at issue, the court held could only be justified by
reference to the overall availability of minority- and women-owned businesses in the relevant markets.
Id. In the absence of such figures, the 20% MBE and 3% WBE set aside figures were arbitrary and
unenforceable in light of controlling Supreme Court and Fourth Circuit authority. Id.
g. Holding. The court held that for these reasons it entered the injunction against the City in December
1999 and it remained fully in effect. Id. at 622. Accordingly, the City’s motion for stay of the injunction
order was denied and the action was dismissed without prejudice. Id. at 622.
The court held unconstitutional the City of Baltimore’s “affirmative action” program, which had
construction subcontracting “set-aside” goals of 20 percent for MBEs and 3 percent for WBEs. The court
held there was no data or statistical evidence submitted by the City prior to enactment of the Ordinance.
There was no evidence showing a disparity between MBE/WBE availability and utilization in the
subcontracting construction market in Baltimore. The court enjoined the City Ordinance.
FINAL REPORT APPENDIX B, PAGE 67
APPENDIX C.
Availability Analysis Approach
BBC Research & Consulting (BBC) used a custom census approach to estimate the availability of
businesses located in Virginia for the construction, professional services, and non-professional services
and goods prime contracts and subcontracts Commonwealth of Virginia state agencies and higher
education institutions (collectively referred to as the Commonwealth) award. Appendix C expands on the
information presented in Chapter 6 to further describe:
A. Availability data;
B. Representative businesses;
C. Availability survey instrument; and
D. Survey execution.
A. Availability Data
BBC partnered with Davis Research to conduct telephone and online surveys with thousands of
businesses throughout the relevant geographic market area (RGMA), which we identified as the state of
Virginia. Davis Research surveyed businesses with locations in the RGMA that perform work in fields
closely related to the types of contracts and procurements the Commonwealth awarded between July 1,
2019 and June 30, 2024 (the study period). We began the survey process by determining the work
specializations, or subindustries, relevant to each prime contract and subcontract the Commonwealth
awarded during the study period and identified 8-digit Dun & Bradstreet (D&B) work specialization
codes that best corresponded to those subindustries. We then compiled information about local
businesses D&B listed as having their primary lines of business within those work specializations. Davis
Research attempted to contact each of those businesses multiple times on different days of the week and
at different times of the day to ask them to participate in an availability survey. In total, we attempted to
contact 21,357 local businesses that perform work relevant to Commonwealth contracting and
procurement. We were able to successfully contact 3,609 of those businesses, 1,565 of which completed
surveys.
B. Representative Businesses
The objective of the availability analysis was not to collect information about every business operating
in the RGMA but instead was to collect information from a large, unbiased subset of local businesses that
appropriately represent the entire relevant business population. That approach allowed BBC to estimate
the availability of small and microbusinesses, as well as minority-, woman-, and service-disabled veteran
(SDV)-owned businesses, for Commonwealth work in an accurate, statistically valid manner. 1 In
addition, we did not design the survey effort to contact every local business possibly performing
construction, professional services, or non-professional services and goods work. Instead, we reviewed
the relevant prime contract and subcontract dollars the Commonwealth awarded during the study
1 “Woman-owned businesses” refers to White woman-owned businesses. Information and results for businesses owned by women of
color are included along with those of businesses owned by men of color according to their corresponding race/ethnic groups.
FINAL REPORT APPENDIX C, PAGE 1
period, determined the types of work most relevant to those projects, and limited our survey efforts to
those businesses that perform work aligned with those work types. Figure C-1 lists the 8-digit work
specialization codes within construction, professional services, and non-professional services and goods
most related to the contract and procurement dollars the Commonwealth awarded during the study
period, on which BBC focused as part of the availability analysis. We grouped those specializations into
distinct subindustries, which are shown as headings in Figure C-1.
C. Availability Survey Instrument
BBC created an availability survey instrument to collect extensive information from relevant businesses
located in the RGMA. As an example, the instrument the study team used with construction businesses is
presented at the end of Appendix C. We modified the construction survey instrument slightly for use
with businesses working in the professional services and non-professional services and goods industries
to reflect terms more commonly used in those industries and to collect information specifically relevant
to them. 2 (For example, BBC substituted the words “prime contractor” and “subcontractor” with “prime
consultant” and “subconsultant” when surveying professional services businesses.)
1. Survey structure. The availability survey included 15 sections, and Davis Research attempted to
cover all sections with each business the firm successfully contacted.
a. Identification of purpose. The survey began by identifying the Commonwealth as the survey sponsor
and describing the purpose of the study. (e.g., “The Commonwealth is conducting a disparity study to
assess barriers that businesses might face in the local marketplace. As part of that research, the
Commonwealth wants to understand the availability of different types of businesses for the contracts
and procurements it awards. We are conducting a survey to collect information about businesses
qualified and interested in performing construction-related work for government and other public
agencies, entities, and offices in Virginia.”)
b. Verification of correct business name. The surveyor verified he or she had reached the correct
business. If the business was not correct, surveyors asked if the respondent knew how to contact the
correct business. Davis Research then followed up with the correct business based on the new contact
information if the business representative provided it (see areas “X” and “Y” of the survey).
c. Verification of for-profit business status. The surveyor asked whether the entity was a for-profit
business as opposed to a government or non-profit organization (Question A1). Surveyors continued the
survey only with those entities that responded “yes” to that question.
d. Verification of business age. The surveyor asked in what year the business was originally established
(Question A2).
e. Verification of active business status. The surveyor asked whether the entity was in business and
operational (Question A3). Surveyors continued the survey only with those entities that responded “yes”
to that question.
2 BBC also developed email versions of the survey instruments for businesses that preferred to complete the survey online.
FINAL REPORT APPENDIX C, PAGE 2
Figure C-1.
Subindustries and work types included in the availability analysis
Industry Code Industry Description Industry Code Industry Description
Construction
Concrete work Masonry, stonework, tile setting, and plastering
17710000 Concrete work 17420200 Acoustical and insulation work
17420203 Insulation, buildings
Electrical work 17410000 Masonry and other stonework
17310000 Electrical work 17420100 Plaster and drywall work
17319903 General electrical contractor 17420000 Plastering, drywall, and insulation
Excavation, drilling, wrecking, and demolition Nonresidential building construction
17990900 Building site preparation 15420100 Commercial and office building contractors
17949901 Excavation and grading, building construction 15420101 Commercial and office building, new construction
17940000 Excavation work 15420103 Commercial and office buildings, renovation and repairs
17950000 Wrecking and demolition work 15420403 Hospital construction
15410000 Industrial buildings and warehouses
Highway, street, and bridge construction 15419905 Industrial buildings, new construction, not elsewhere classified
16229901 Bridge construction 15420000 Nonresidential construction, not elsewhere classified
16220000 Bridge, tunnel, and elevated highway construction 15419909 Renovation, remodeling and repairs: industrial buildings
16110202 Concrete construction: roads, highways, sidewalks, etc 15420400 Specialized public building contractors
16119901 General contractor, highway and street construction
16110203 Grading Other special trade contractors
16110101 Guardrail construction, highways 17210300 Industrial painting
16110000 Highway and street construction 17210303 Pavement marking contractor
16119902 Highway and street maintenance
16110204 Highway and street paving contractor Plumbing and HVAC
16110102 Highway and street sign installation 17110401 Mechanical contractor
16229902 Highway construction, elevated 17110000 Plumbing, heating, air-conditioning
16110100 Highway signs and guardrails
16110205 Resurfacing contractor Roofing, siding, and sheet metal work
16110200 Surfacing and paving 17610103 Roofing contractor
16229903 Tunnel construction
FINAL REPORT APPENDIX C, PAGE 3
Figure C-1.
Subindustries and work types included in the availability analysis (continued)
Industry Code Industry Description Industry Code Industry Description
Construction (continued)
Water, sewer, and utility lines Water, sewer, and utility lines (continued)
16230200 Communication line and transmission tower construction 16230300 Water and sewer line construction
16230302 Sewer line construction 16230303 Water main construction
16230203 Telephone and communication line construction 16230000 Water, sewer, and utility lines
16239906 Underground utilities contractor
Non-professional services and goods
Automobiles and vehicle parts and supplies Communications equipment (continued)
50130100 Automotive supplies and parts 36699901 Intercommunication systems, electric
55110000 New and used car dealers 36630106 Marine radio communications equipment
55119903 Trucks, tractors, and trailers: new and used 59990605 Mobile telephones and equipment
36630107 Multiplex equipment
Cleaning and janitorial services 36630108 Pagers (one-way)
73490100 Building and office cleaning services 36630000 Radio and t.v. communications equipment
73490101 Building cleaning service 36630100 Radio broadcasting and communications equipment
36630109 Radio receiver networks
Communications equipment 57319907 Radios, two-way, citizens band, weather, short-wave
36630101 Airborne radio communications equipment 36630110 Receivers, radio communications
36630102 Amplifiers, RF power and IF 59990603 Telephone equipment and systems
59990601 Audio-visual equipment and supplies 36630111 Transmitter-receivers, radio
73590501 Audio-visual equipment and supply rental
36630103 Carrier equipment, radio communications Concrete, asphalt, sand, and gravel products
36630104 Cellular radio telephone 50329901 Aggregate
36630105 Citizens' band (CB) radio 29510000 Asphalt paving mixtures and blocks
50650200 Communication equipment 32410000 Cement, hydraulic
36690000 Communications equipment, not elsewhere classified 32730000 Ready-mixed concrete
FINAL REPORT APPENDIX C, PAGE 4
Figure C-1.
Subindustries and work types included in the availability analysis (continued)
Industry Code Industry Description Industry Code Industry Description
Non-professional services and goods (continued)
Electrical equipment and supplies Furniture (continued)
50630000 Electrical apparatus and equipment 25420200 Office and store showcases and display fixtures
50630205 Electrical construction materials 25220200 Office bookcases, wallcases and partitions, except wood
50630206 Electrical supplies, not elsewhere classified 25220300 Office cabinets and filing drawers, except wood
50650000 Electronic parts and equipment, not elsewhere classified 25220100 Office chairs, benches, and stools, except wood
36690201 Highway signals, electric 25220400 Office desks and tables, except wood
50630504 Signaling equipment, electrical 25410104 Office fixtures, wood
36690206 Traffic signals, electric 57129904 Office furniture
36690200 Transportation signaling devices 25220000 Office furniture, except wood
50210106 Office furniture, not elsewhere classified
Facilities support services 25220202 Panel systems and partitions, office: except wood
87440000 Facilities support services 25429904 Shelving, office and store, except wood
25410203 Shelving, office and store, wood
Furniture 25999905 Stools with casters (not household or office)
25220101 Benches, office: except wood 25220103 Stools, office: except wood
25210101 Benches, office: wood 25210103 Stools, office: wood
25220201 Bookcases, office: except wood 25410100 Store and office display cases and fixtures
25210201 Bookcases, office: wood 25220402 Tables, office: except wood
25220301 Cabinets, office: except wood 25210302 Tables, office: wood
25210202 Cabinets, office: wood 25220203 Wallcases, office: except wood
25220102 Chairs, office: padded or plain: except wood 25210100 Wood office chairs, benches and stools
25210102 Chairs, office: padded, upholstered, or plain: wood 25210300 Wood office desks and tables
25220401 Desks, office: except wood 25210200 Wood office filing cabinets and bookcases
25210301 Desks, office: wood 25210000 Wood office furniture
25210203 Filing cabinets (boxes), office: wood 25219900 Wood office furniture, not elsewhere classified
25420204 Fixtures, office: except wood
25420206 Fixtures: display, office, or store: except wood
50210100 Office and public building furniture
FINAL REPORT APPENDIX C, PAGE 5
Figure C-1.
Subindustries and work types included in the availability analysis (continued)
Industry Code Industry Description Industry Code Industry Description
Non-professional services and goods (continued)
Heavy construction equipment rental Office equipment and supplies (continued)
50820301 Concrete processing equipment 51110000 Printing and writing paper
50820302 Contractor's materials 51120000 Stationery and office supplies
50820303 Cranes, construction 59430000 Stationery stores
50820304 Excavating machinery and equipment
50820300 General construction machinery and equipment Other construction materials
73530000 Heavy construction equipment rental 50840803 Elevators
50820305 Ladders 35340100 Elevators and equipment
50820306 Masonry equipment and supplies
50820308 Tractors, construction Other goods
51430000 Dairy products, except dried or canned
Industrial equipment and machinery 51419901 Food brokers
50850000 Industrial supplies 51430100 Milk
50840805 Pumps and pumping equipment, not elsewhere classified 51420000 Packaged frozen goods
51450200 Snack foods
Landscaping services
07829903 Landscape contractors Other services
49530100 Hazardous waste collection and disposal
Office equipment and supplies 75210101 Parking lots
59991401 Business machines and equipment 49530200 Refuse collection and disposal services
50440200 Copying equipment
51120405 Laser printer supplies Other transit services
50440000 Office equipment 41420000 Bus charter service, except local
50449900 Office equipment, not elsewhere classified 47299901 Carpool/vanpool arrangement
51120500 Office filing supplies 41199906 Vanpool operation
59439902 Office forms and supplies
51129907 Office supplies, not elsewhere classified
50440207 Photocopy machines
FINAL REPORT APPENDIX C, PAGE 6
Figure C-1.
Subindustries and work types included in the availability analysis (continued)
Industry Code Industry Description Industry Code Industry Description
Non-professional services and goods (continued)
Petroleum and petroleum products Safety equipment (continued)
51720202 Diesel fuel 50870500 Firefighting equipment
51720200 Engine fuels and oils 50990300 Safety equipment and supplies
59830000 Fuel oil dealers
51720100 Gases Security guard services
51720203 Gasoline 73810105 Security guard service
51729905 Petroleum brokers
51719901 Petroleum bulk stations Security systems services
51710000 Petroleum bulk stations and terminals 73820000 Security systems services
51719900 Petroleum bulk stations and terminals, not elsewhere classified
51720000 Petroleum products, not elsewhere classified Staffing services
51719902 Petroleum terminals 73610000 Employment agencies
73630103 Temporary help service
Printing, copying, and mailing
27520000 Commercial printing, lithographic Trucking, hauling, and storage
42129905 Dump truck haulage
Rebar and reinforcing steel 42140000 Local trucking with storage
34410000 Fabricated structural metal
Uniforms and apparel
Safety equipment 72130204 Uniform supply
50630500 Electric alarms and signaling equipment 56990102 Uniforms
50990100 Firearms and ammunition, except sporting 56990100 Uniforms and work clothing
Professional services
Advertising, marketing, and public relations Business and management consulting
73119901 Advertising consultant 87429904 General management consultant
87439903 Public relations and publicity
Construction management
Architectural and design services 87419902 Construction management
87120000 Architectural services 87420402 Construction project management consultant
73899907 Contractors' disbursement control
FINAL REPORT APPENDIX C, PAGE 7
Figure C-1.
Subindustries and work types included in the availability analysis (continued)
Industry Code Industry Description Industry Code Industry Description
Professional services (continued)
Engineering Landscape architecture
87120101 Architectural engineering 07810201 Landscape architects
87110402 Civil engineering 07810000 Landscape counseling and planning
87110400 Construction and civil engineering 07810202 Landscape counseling services
07810203 Landscape planning services
Environmental services
87489905 Environmental consultant Testing and inspection
73890200 Inspection and testing services
Financial services and consulting
87210000 Accounting, auditing, and bookkeeping Transportation planning services
87480204 Traffic consultant
Human resources and job training services 87420410 Transportation consultant
87420200 Human resource consulting services 87480200 Urban planning and consulting services
IT and data services
73730000 Computer integrated systems design
73710101 Computer software systems analysis and design, custom
73730200 Systems integration services
FINAL REPORT APPENDIX C, PAGE 8
f. Interest in future work. The surveyor asked businesses about their interest in future prime contract
and subcontract work with the Commonwealth or other government agencies (Question A4). Surveyors
continued the survey only with those entities that responded “yes” to that question.
g. Confirmation of primary lines of work. The respondent was asked to confirm their primary lines of
work according to D&B (Question A5a). If D&B’s work specialization codes were incorrect, businesses
described their primary lines of work (Question A5b). Surveyors then asked businesses about other
types of work they perform (Question A5c). BBC coded information on primary lines of work and
additional types of work (if any) into appropriate 8-digit D&B work specialization codes.
h. Locations and affiliations. The surveyor asked if the business had other locations (Questions A6, A7a,
and A7b) and if the business was a subsidiary or affiliate of another business (Questions A8 and A9).
i. Willingness and ability to work. The surveyor asked businesses that do construction-related and
professional services-related work whether they are willing and able to work in various roles (Questions
B1 through B3)(not included in the non-professional services and goods survey instrument).
j. Geographic area. The surveyor asked whether the business could serve customers in various regions
of Virginia (Questions C1 through C10).
k. Capacity. The surveyor asked about the value of the largest prime contract and subcontract the
business can compete for and perform (Question D1), as well as the smallest prime contract and
subcontract the business would be willing to compete for or perform (Question D2).
l. Ownership. The surveyor asked whether the business was at least 51 percent owned and controlled
by minorities, women, or SDVs (Questions E1 through E5). If the respondent indicated that the business
was minority-owned, the respondent was also asked about the race of the business’ owner(s) (Question
E3). BBC confirmed that information through several other data sources, including:
Commonwealth contract and vendor data;
The Small, Women-owned, and Minority-owned Business (SWaM) Program certification directory;
D&B business listings and other business information sources;
Information from other available certification directories and business lists; and
Business websites and other secondary research.
m. Business size. The surveyor asked questions about the business’ size in terms of revenue and number
of employees across all the business’ locations (Questions F1 through F4).
n. Potential barriers in the marketplace. The surveyor asked an open-ended question about the
respondent’s experiences working with the Commonwealth and other local government agencies as well
as general insights about conditions in the Virginia marketplace (Question G1). In addition, the survey
included a question asking whether the respondent would be willing to participate in a follow-up
interview about conditions in the local marketplace, which BBC used to recruit participants for in-depth
interviews (Question G2).
FINAL REPORT APPENDIX C, PAGE 9
o. Contact information. The survey concluded with questions about the respondent’s name, position
with the business, and contact information (Questions H1 through H3).
2. Data verification. As with nearly any survey effort, BBC largely took survey respondents’ responses
at face value. If we had data that allowed us to verify certain responses, we did so. (For example, if a
survey respondent indicated that their business’ bid capacity was $100 million but its annual revenue
was $500,000, then we used a defined process to adjust the business’ bid capacity downward.) Although
it is possible that respondents misrepresented information about their businesses as part of availability
surveys, there are two factors that help mitigate the effect any such misrepresentations had on our
analyses:
First, in the introduction to the survey, surveyors explicitly informed potential respondents that the
survey was designed solely to collect information about their businesses, and it would have no
impact on any present or future work opportunities with any organizations in the region (see the
example survey instrument at the end of Appendix C). We did so to minimize any motivation to
mischaracterize or exaggerate business characteristics such as annual revenue, bid capacity, or
primary lines of work.
Second, misrepresentations of business information would be particularly problematic if certain
types of businesses (e.g., minority- or woman-owned businesses) were more likely to do so than
other types of businesses (e.g., non minority- or woman-owned businesses), because the
availability analysis and other disparity study analyses were largely conducted in terms of
percentages relative to other businesses. However, BBC had no evidence that participants
representing certain groups of businesses were more or less likely to provide erroneous
information as part of availability surveys than other groups.
Finally, it is important to note that courts that have assessed disparity study methodology—including
the Ninth Circuit Court of Appeals—have ruled that organizations and researchers are not required to
verify the accuracy of self-reported information from surveys, interviews, and other efforts in order to
use that information to assess outcomes and barriers that businesses face in competing for
organizations’ contracts and procurements. 3
D. Survey Execution
Davis Research conducted all availability surveys between May and August 2025. The firm attempted to
survey the owner, manager, or other officer of each business who could provide accurate responses to
survey questions.
1. Businesses the study team successfully contacted. Figure C-2 presents the disposition of the
21,357 businesses the study team attempted to contact for availability surveys and how that number
resulted in the 3,609 businesses the study team was able to successfully contact.
3 For example, see Associated General Contractors of America, San Diego Chapter, Inc. v. California Department of Transportation, et al., 713
F.3d 1187, (9th Cir. 2013).
FINAL REPORT APPENDIX C, PAGE 10
Figure C-2.
Number of
Disposition of attempts to
businesses
contact businesses for
availability surveys
Beginning list 21,357
Less non-working phone numbers 2,621
Less wrong number/business 1,045
Unique business listings with working phone numbers 17,691
Less no answer 10,945
Less could not reach responsible staff member 3,115
Less language barrier 22
Businesses successfully contacted 3,609
a. Non-working or wrong phone numbers. Some of the business listings BBC purchased from D&B were:
Non-working phone numbers (2,621 listings); or
Wrong numbers for the desired businesses (1,045 listings).
Some non-working phone numbers and wrong numbers resulted from businesses going out of business
or changing their names and phone numbers between the time D&B listed them and the time the study
team attempted to contact them.
b. Working phone numbers. As shown in Figure C-2, there were 17,691 businesses with working phone
numbers Davis Research attempted to contact. The firm was unsuccessful in contacting many of those
businesses for various reasons:
The firm could not reach anyone after multiple attempts for 10,945 businesses.
The firm could not reach a responsible staff member after multiple attempts for 3,115 businesses.
The firm could not conduct the availability survey due to language barriers for 22 businesses.
Thus, Davis Research was able to successfully contact 3,609 businesses.
2. Businesses included in the availability database. Figure C-3 presents the disposition of the
3,609 businesses Davis Research successfully contacted and how that number resulted in the 1,255
businesses BBC considered potentially available for Commonwealth work.
FINAL REPORT APPENDIX C, PAGE 11
Figure C-3.
Number of
Disposition of
businesses
successfully contacted
businesses
Businesses successfully contacted 3,609
Less businesses not interested in discussing availability for work 1,408
Less companies no longer in business 620
Less not a for-profit business 16
Businesses that completed surveys 1,565
Less line of work outside of study scope 8
Less no interest in future work 269
Less cannot perform work in Virginia 6
Less multiple locations of same business 27
Businesses potentially available for Commonwealth work 1,255
a. Businesses not eligible or interested in discussing availability for Commonwealth work. Of the 3,609
businesses the study team successfully contacted:
We excluded 1,408 businesses that reported that they were not interested in discussing their
availability for Commonwealth work;
We excluded 620 businesses that indicated they were no longer in business; and
We excluded 16 businesses from the analysis that indicated they were not-for-profit businesses.
b. Businesses available for Commonwealth work. A total of 1,565 businesses completed availability
surveys, but BBC did not deem all of those businesses as potentially available for the prime contracts
and subcontracts the Commonwealth awards. We excluded many of the businesses that completed
surveys from the availability database for various reasons:
BBC excluded eight businesses that reported primary lines of work outside the study scope. 4
We excluded 269 businesses that reported they were not interested in contracting opportunities
with the Commonwealth or other government organizations.
We excluded six businesses that reported that they do not perform work in Virginia.
We excluded 27 survey participants who represented different locations of the same businesses.
Prior to analyzing results, BBC combined responses from multiple locations of the same business
into a single data record according to the following rules:
If respondents from different locations of the same business indicated different lines of work,
BBC conducted additional secondary research to reconcile that information into one primary
line of work.
BBC combined the different roles of work (i.e., prime contractor or subcontractor) different
respondents representing the same business reported into a single response. For example, if
one respondent reported that the business works as a prime contractor and another
4 Examples include software, banking, real estate, and utilities.
FINAL REPORT APPENDIX C, PAGE 12
respondent reported that the business works as a subcontractor, then BBC considered the
business as available for both prime contracts and subcontracts.
BBC considered the largest project any respondents representing the same business reported
being able to perform as the business’ capacity (i.e., the largest project for which the business
could be considered available).
After those exclusions and reconciliations, BBC compiled a database of 1,255 businesses we considered
potentially available for Commonwealth work.
FINAL REPORT APPENDIX C, PAGE 13
AVAILABILITY SURVEY INSTRUMENT.
Construction
Hello. My name is [INTERVIEWER NAME] from Davis Research, calling on behalf of the Commonwealth
of Virginia. This is not a sales call. The Commonwealth is conducting a disparity study to assess
barriers that businesses might face in the local marketplace. As part of that research, the
Commonwealth wants to understand the availability of different types of businesses for the contracts
and procurements it awards. We are conducting a survey to collect information about businesses
qualified and interested in performing construction-related work for government and other public
agencies, entities, and offices in Virginia.
The survey is designed only to gather information and will have no impact on present or future work
opportunities with the Commonwealth or any other organizations. Your participation in the survey
would be very valuable to the process, and it should only take 15 minutes to complete.
Whom can I speak with to gather information about your business’ characteristics and potential
interest in working with government and other public agencies, entities, and offices in the region?
[AFTER REACHING AN APPROPRIATELY SENIOR STAFF MEMBER, THE INTERVIEWER SHOULD RE-
INTRODUCE THE PURPOSE OF THE SURVEY AND BEGIN WITH QUESTIONS.]
[IF ASKED, THE INFORMATION DEVELOPED IN THE SURVEYS WILL RESULT IN DATA ON BUSINESSES
QUALIFIED AND INTERESTED IN WORKING WITH GOVERNMENT AND OTHER PUBLIC AGENCIES,
ENTITIES, AND OFFICES IN THE REGION AND WILL INFORM VARIOUS ANALYSES AS PART OF THE
RESEARCH.]
Please answer each question as honestly and accurately as possible so the Commonwealth can
develop a realistic understanding of the businesses potentially available for government and other
public agency work in the region.
X1. I have a few basic questions about your business and the type of work you do. Can you
confirm this is [BUSINESS NAME]?
1=Correct business [SKIP TO Y4]
2=Incorrect business
99=Refused [TERMINATE]
Y1. What is the name of this business?
1=Verbatim
FINAL REPORT APPENDIX C, PAGE 14
Y2. Is [NEW BUSINESS NAME] associated with [OLD BUSINESS NAME] in any way?
1=Yes, same owner doing business under a different name
2=Yes, can give information about new business
3=Business bought/sold/changed ownership
98=No, does not have information [TERMINATE]
99=Refused to give information [TERMINATE]
Y3. Do you work for [NEW BUSINESS NAME]?
1=Yes
2=No [TERMINATE]
Y4. Can you give me the address for [BUSINESS NAME/NEW BUSINESS NAME]?
[NOTE TO INTERVIEWER - RECORD IN THE FOLLOWING FORMAT]:
. STREET ADDRESS
. CITY
. STATE
. ZIP
1=VERBATIM]
A1. Let me confirm [BUSINESS NAME/NEW BUSINESS NAME] is a for-profit business, as opposed
to a non-profit organization, a foundation, or government office. Is that correct?
1=Yes, a for-profit business
2=No, other [TERMINATE]
A2. In what year was your business established?
1=VERBATIM
A3. Is your company currently in business and operational?
1=Yes
2=No [TERMINATE]
FINAL REPORT APPENDIX C, PAGE 15
A4. I’m also interested in the sectors in which your business works. Specifically, is your business
interested in performing work on projects for government or other public agencies, entities, or
offices in the region?
1=Yes
2=No [TERMINATE]
98=Don’t know
99=Refused
[NOTE TO INTERVIEWER: IF ASKED, EXAMPLES INCLUDE STATES, CITIES, COUNTIES, PUBLIC
SCHOOLS AND UNIVERSITIES, TRANSPORTATION ORGANIZATIONS, AND OTHERS]
A5a. Let me also confirm what kind of business this is. The information we have from Dun &
Bradstreet indicates your main line of work is [SIC DESCRIPTION]. Is that correct?
[NOTE TO INTERVIEWER – IF ASKED, DUN & BRADSTREET OR D&B, IS A COMPANY THAT COMPILES
INFORMATION ON BUSINESSES THROUGHOUT THE COUNTRY]
1=Yes [SKIP TO A5c]
2=No
98=Don’t know
99=Refused
A5b. What would you say is the main line of work at [BUSINESS NAME/NEW BUSINESS NAME]?
[NOTE TO INTERVIEWER – IF RESPONDENT INDICATES BUSINESS’ MAIN LINE OF WORK IS “GENERAL
CONSTRUCTION” OR “GENERAL CONTRACTOR,” PROBE TO FIND OUT MORE DETAIL ABOUT TYPES OF
WORK THEY PERFORM.]
1=VERBATIM
A5c. What other types of work, if any, does your business perform?
1=VERBATIM
97=(NONE)
A6. Is this the sole location of your business, or do you have offices in other locations?
1=Sole location [SKIP to A8]
2=Have other locations
98=Don’t know
99=Refused
FINAL REPORT APPENDIX C, PAGE 16
A7a. Is this location the principal location for your business, or is your business primarily
conducted at another location?
[NOTE TO INTERVIEWER – “PRINCIPAL LOCATION” MEANS THE OFFICE AT WHICH SENIOR
MANAGEMENT AND LEADERSHIP ARE LOCATED AND WHERE MANAGEMENT AND FINANCIAL
RECORDS ARE MAINTAINED.]
1=Yes [SKIP TO A8]
2=No
98=(DON'T KNOW) [SKIP TO A8]
99=(REFUSED) [SKIP TO A8]
A7b. What is the city and state of your business’ principal location?
[NOTE TO INTERVIEWER - RECORD IN THE FOLLOWING FORMAT]:
. CITY
. STATE
1=VERBATIM
A8. Is your business a subsidiary or affiliate of another business?
1=Independent [SKIP TO B1]
2=Subsidiary or affiliate of another business
98=Don’t know [SKIP TO B1]
99=Refused [SKIP TO B1]
A9. What is the name of the parent company?
1=VERBATIM
98=Don’t know
99=Refused
A prime or general contractor is a business that contracts directly with the project owner. In contrast,
a subcontractor is a business that contracts with a prime or general contractor as part of a larger
project. Some businesses work in both roles on different projects. Based on these definitions:
FINAL REPORT APPENDIX C, PAGE 17
B1. Is your business willing and able to work as a prime contractor or general contractor?
1=Yes
2=No
98=Don’t know
99=Refused
B2. Is your business willing and able to work as a subcontractor?
1=Yes
2=No
98=Don’t know
99=Refused
B3. Is your business willing and able to supply construction materials or goods?
1=Yes
2=No
98=Don’t know
99=Refused
As you answer the following questions, please think about the geographic areas in Virginia your
business is able to perform work or serve customers in.
C1. Is your business able to perform work throughout Virginia or only in certain parts of the
state?
1=All of the state [SKIP to D1]
2=Only parts of the state
3=None of the state [SKIP TO D1]
98=Don’t know
99=Refused
I’m going to go through several regions of Virginia. For each one, please tell me if your business is able
to work there.
FINAL REPORT APPENDIX C, PAGE 18
C2. Is your business able to perform work in any part of the Hampton Roads region, which
includes Virginia Beach, Newport News, Norfolk, and other nearby cities and towns?
1=Yes
2=No
98=Don’t know
99=Refused
C3. Is your company able to do work in any part of the Southern region of Virginia, which
includes Danville and Martinsville?
1=Yes
2=No
98=Don’t know
99=Refused
C4. Is your company able to do work in any part of the Southwest region of Virginia, which
includes Bristol and Galax?
1=Yes
2=No
98=Don’t know
99=Refused
C5. Is your company able to do work in any part of the West Central region of Virginia, which
includes Lynchburg, Roanoke, and Blacksburg?
1=Yes
2=No
98=Don’t know
99=Refused
C6. Is your company able to do work in any part of the Central region of Virginia, which includes
Richmond and Charlottesville?
1=Yes
2=No
98=Don’t know
99=Refused
FINAL REPORT APPENDIX C, PAGE 19
C7. Is your company able to do work in any part of the Valley region of Virginia, which includes
Harrisonburg, Staunton, and Winchester?
1=Yes
2=No
98=Don’t know
99=Refused
C8. Is your company able to do work in any part of the Northern region of Virginia, which
includes Alexandria and Fairfax?
1=Yes
2=No
98=Don’t know
99=Refused
C9. Is your company able to do work in any part of the Eastern region of Virginia, which includes
Essex, Northumberland, and Lancaster counties but does not include the Eastern shore?
1=Yes
2=No
98=Don’t know
99=Refused
C10. Is your company able to do work in any part of the Eastern shore of Virginia, which includes
Accomack and Northampton counties?
1=Yes
2=No
98=Don’t know
99=Refused
FINAL REPORT APPENDIX C, PAGE 20
D1. Now I’d like to ask you about the size of work your business is able to compete for or
perform. In terms of dollar value, what is the largest prime contract, subcontract, or other piece
of work your company is able to compete for or perform?
1=VERBATIM
[NOTE TO INTERVIEWER - READ CATEGORIES IF NECESSARY]
1=$100,000 or less 9=More than $20 million to $50 million
2=More than $100,000 to $250,000 10=More than $50 million to $100 million
3=More than $250,000 to $500,000 11= More than $100 million to $200 million
4=More than $500,000 to $1 million 12=Greater than $200 million
5=More than $1 million to $2 million 97=(NONE)
6=More than $2 million to $5 million 98=(DON'T KNOW)
7=More than $5 million to $10 million 99=(REFUSED)
8=More than $10 million to $20 million
D2. Now, what is the smallest prime contract, subcontract, or other piece of work your company
is willing to compete for or perform?
1=VERBATIM
[NOTE TO INTERVIEWER - READ CATEGORIES IF NECESSARY]
1=$100,000 or less 9=More than $20 million to $50 million
2=More than $100,000 to $250,000 10=More than $50 million to $100 million
3=More than $250,000 to $500,000 11= More than $100 million to $200 million
4=More than $500,000 to $1 million 12=Greater than $200 million
5=More than $1 million to $2 million 97=(NONE)
6=More than $2 million to $5 million 98=(DON'T KNOW)
7=More than $5 million to $10 million 99=(REFUSED)
8=More than $10 million to $20 million
FINAL REPORT APPENDIX C, PAGE 21
E1. My next questions are about the ownership of your business. A business is defined as a
woman-owned business if more than half—that is, 51 percent or more—of the ownership and
control of daily management and operations is by individuals who identify as women. By this
definition, is [BUSINESS NAME/NEW BUSINESS NAME] a woman-owned business?
1=Yes
2=No
98=Don’t know
99=Refused
E2. A business is defined as a minority-owned business if more than half—that is, 51 percent or
more—of the ownership and control of daily management and operations is by individuals who
identify as Asian, Black, Hispanic, Native American, Middle Eastern or North African, or another
non-White race or ethnicity. By this definition, is [BUSINESS NAME/NEW BUSINESS NAME] a
minority-owned business?
1=Yes
2=No – [SKIP TO E4]
98=Don’t know [SKIP TO E4]
99=Refused [SKIP TO E4]
E3. Which of the following best represents the race/ethnicity of the business’ owner(s)?
1=Black
2=Asian Pacific (examples include persons whose origins are from Japan, China, Taiwan, Korea,
Burma (Myanmar), Vietnam, Laos, Cambodia (Kampuchea), Thailand, Malaysia, Indonesia,
the Philippines, Brunei, Samoa, Guam, the U.S. Trust Territories of the Pacific Islands
(Republic of Palau), the Commonwealth of the Northern Marianas Islands, Macao, Fiji, Tonga,
Kiribati, Tuvalu, Nauru, Federated States of Micronesia, or Hong Kong)
3=Hispanic or Latin (examples include persons of Mexican, Puerto Rican, Cuban, Dominican,
Central or South American, or other Spanish or Portuguese culture or origin, regardless of
race)
4=Native American (examples include American Indians, Alaska Natives, or Native Hawaiians)
5=Subcontinent Asian (examples include persons whose origins are from India, Pakistan,
Bangladesh, Bhutan, the Maldives Islands, Nepal, or Sri Lanka)
6=Middle Eastern or North African (examples include persons whose origins are from
Afghanistan, Algeria, Armenia, Bahrain, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon,
Libya, Mauritania, Morocco, Oman, Palestinian Authority, Qatar, Saudi Arabia, Sudan, Syria,
Tunisia, Turkey, United Arab Emirates, or Yemen)
7=Other, specify ___________________
98=Don’t know
99=Refused
FINAL REPORT APPENDIX C, PAGE 22
E4. A business is defined as a veteran-owned business if more than half—that is, 51 percent or
more—of the ownership and control of daily management and operations is by veterans of the
United States military. By this definition, is [BUSINESS NAME/NEW BUSINESS NAME] a veteran-
owned business?
[NOTE TO INTERVIEWER – U.S. MILITARY SERVICES INCLUDE THE U.S. ARMY, AIR FORCE, NAVY,
MARINES, AND COAST GUARD.]
1=Yes
2=No [SKIP TO F1]
98=Don’t know [SKIP TO F1]
99=Refused [SKIP TO F1]
E5. Does the owner(s) have a mental or physical disability that resulted directly from their
service in the United States military?
1=Yes
2=No
98=Don’t know
99=Refused
F1. Now I want to ask you a few questions about your business’ size. Dun & Bradstreet indicates
that your business has about [number] employees across all its locations. Is that an accurate
estimate of the number of employees who work at your business, including both full-time and
part-time employees?
1=Yes [SKIP TO F3]
2=No
98=Don’t know [SKIP TO F3]
99=Refused [SKIP TO F3]
FINAL REPORT APPENDIX C, PAGE 23
F2. About how many employees work at your business, including both full-time and part-time
employees, across all your locations?
1=VERBATIM
[NOTE TO INTERVIEWER – READ CATEGORIES IF NECESSARY]
1=Sole proprietorship/no employees 10=251-500 employees
2=1-4 employees 11=501-750 employees
3=5-9 employees 12=751-1,000 employees
4=10-25 employees 13=1,001-1,250 employees
5=26-50 employees 14=1,251-1,500 employees
6=51-100 employees 15=1,501 or more employees
7=101-150 employees 98=(DON'T KNOW)
8=151-200 employees 99=(REFUSED)
9=201-250 employees
F3. Dun & Bradstreet lists the average annual gross revenue of your business, including all your
locations, as [DOLLAR AMOUNT]. Is that an accurate estimate of your business’ average annual
gross revenue?
1=Yes [SKIP TO G1a]
2=No
98=Don’t know [SKIP TO G1a]
99=Refused [SKIP TO G1a]
F4. Roughly, what was the average annual gross revenue of your business over the past three
years, including all of your locations?
1=VERBATIM
[READ LIST IF NECESSARY]
1=$1 Million or less 7= More than $19 Million to $25 Million
2=More than $1 Million to $3 Million 8= More than $25 Million to $30 Million
3=More than $3 Million to $6 Million 9=More than $30 Million
4=More than $6 Million to $9 Million 98= (DON'T KNOW)
5=More than $9 Million to $12 Million 99= (REFUSED)
6=More than $12 Million to $19 Million
FINAL REPORT APPENDIX C, PAGE 24
G1. We're interested in whether your business has experienced barriers or difficulties related to
working with, or attempting to work with the Commonwealth of Virginia or other government or
public agencies, entities, or offices in Virginia. Do you have any thoughts to share?
1=VERBATIM [PROBE FOR COMPLETE THOUGHTS]
97=No comments
G2. Would you be willing to participate in a follow-up interview about any of those topics?
1=Yes
2=No
H1. Just a few final questions. What is your name?
1=VERBATIM
H2. What is your position at [BUSINESS NAME/NEW BUSINESS NAME]?
1=Receptionist
2=Owner
3=Manager
4=CFO
5=CEO
6=Assistant to Owner/CEO
7=Sales manager
8=Office manager
9=President
10=Other, specify ___________________
99=Refused
H3. At what email address can you be reached?
1= VERBATIM
Thank you very much for your participation. If you have any questions or concerns, please
contact Verniece Love, Deputy Director, Virginia Department of Small Business and Supplier
Diversity at 804-786-3100 or Verniece.love@sbsd.virginia.gov.
If you have any questions for the Disparity Study project team or wish to submit written
questions, comments, or insights about the marketplace, please email
VAdisparity@bbcresearch.com.
FINAL REPORT APPENDIX C, PAGE 25
APPENDIX D.
Disparity Analysis Results Tables
As part of the disparity analysis, BBC Research & Consulting (BBC) compared the actual participation, or
utilization, of small businesses and microbusinesses, as well as minority-, woman-, and service-disabled
veteran (SDV)-owned businesses in construction, professional services, and non-professional services
and goods prime contracts and subcontracts Commonwealth of Virginia state agencies and higher
education institutions (collectively referred to as the Commonwealth) awarded between July 1, 2019 and
June 30, 2024 (the study period) with the percentage of contract and procurement dollars one might
expect them to award to those businesses based on their availability for that work. 1 Appendix D
presents results from the disparity analysis for relevant business groups and various sets of projects the
Commonwealth awarded during the study period.
A. Format and Information
Each table in Appendix D presents disparity analysis results for a different set of projects. For example,
Figure D-1 presents disparity analysis results for all relevant projects state agencies awarded during the
study period. A review of Figure D-1 introduces the calculations and format of all disparity analysis
tables in Appendix D. Figure D-1 presents disparity study results for each relevant business group in
separate rows:
“All businesses” in row (1) pertains to information about all businesses regardless of their size or
ownership characteristics.
Row (2) presents results for all minority-owned businesses considered together, regardless of their
certification status.
Rows (3) through (6) present results for businesses of each relevant minority group, regardless of
their certification status.
Row (7) presents results for all White woman-owned businesses, regardless of their certification
status.
Row (8) presents results for all SDV-owned businesses, regardless of their certification status.
Row (9) presents results for microbusinesses, regardless of their certification status.
Row (10) presents results for all small businesses, regardless of their certification status.
Microbusinesses are also included in results alongside other small businesses.
1. Utilization analysis results. Each results table includes the same columns of information:
Column (a) presents the total number of prime contracts and subcontracts (i.e., contract elements)
BBC analyzed as part of the set. As shown in row (1) of column (a) of Figure D-1, we analyzed
243,091 contract elements state agencies awarded during the study period. The values presented
1 “Woman-owned businesses” refers to White woman-owned businesses. Information and results for businesses owned by women of
color are included along with those of businesses owned by men of color according to their corresponding race/ethnic groups.
FINAL REPORT APPENDIX D, PAGE 1
in column (a) represent the number of contract elements in which businesses of each group
participated. For example, as shown in row (4) of column (a), Black-owned businesses participated
in 14,831 contract elements state agencies awarded during the study period.
Column (b) presents the total number of unique businesses that participated in each contract set.
As shown in row (1) of column (b) in Figure D-1, 3,765 unique businesses participated in state
agency contracts and procurements during the study period. The values presented in column (b)
represent the number of unique businesses in each business group that participated in agency
work. For example, as shown in row (4) of column (b), 183 unique Black-owned businesses
participated in state agency contracts and procurements awarded during the study period.
Column (c) presents the dollars (in thousands) associated with the set of contract elements. As
shown in row (1) of column (c) of Figure D-1, BBC examined approximately $17.1 billion that was
associated with the 243,091 relevant contract elements state agencies awarded during the study
period. The value presented in column (c) for each individual business group represents the dollars
state agencies awarded to that particular group on the set of contract elements. For example, as
shown in row (4) of column (c), the organization awarded approximately $207.5 million in project
dollars to Black-owned businesses during the study period.
Column (d) presents the participation of each business group as a percentage of total dollars
associated with the set of contract elements. BBC calculated each percentage in column (d) by
dividing the dollars going to a particular group in column (c) by the total dollars associated with
the set of contract elements shown in row (1) of column (c) and then expressing the result as a
percentage. For example, for Black-owned businesses, the study team divided $207.5 million by
$17.1 billion and multiplied by 100 for a result of 1.2 percent, as shown in row (4) of column (d).
2. Availability results. Column (e) of Figure D-1 presents the availability of each relevant group for all
the contract elements BBC analyzed as part of the project set. Availability represents the percentage of
dollars one might expect the Commonwealth to award to businesses of a particular group based on their
specific characteristics and the characteristics of the contract elements included in a particular set of
projects. Availability estimates, which are represented as percentages of the total dollars associated with
the project set, serve as benchmarks against which to compare the participation of specific groups in
those projects. For example, as shown in row (4) of column (e), the availability of Black-owned
businesses for state agency work is 7.7 percent. That is, one might expect the organization to award 7.7
percent of relevant contract dollars to Black-owned businesses based on their availability for that work.
3. Disparity indices. BBC calculated a disparity index, or ratio, for each relevant business group, which
compares the participation of small businesses; microbusinesses; and minority-, woman-, and SDV-
owned businesses in state agency work to their estimated availability for that work. Column (f) of Figure
D-1 presents the disparity index for each group. For example, as reported in row (4) of column (f), the
disparity index for Black-owned businesses was $0.16, indicating that state agencies awarded
approximately $0.16 to Black-owned businesses for every dollar one might expect the organization to
award to those businesses based on their availability for that work. For disparity indices exceeding
$2.00, BBC reported an index of “$2.00+.”
FINAL REPORT APPENDIX D, PAGE 2
B. Index and Tables
The table of contents presents an index of the sets of projects for which BBC analyzed disparity analysis
results. In addition, the heading of each table in Appendix D provides a description of the subset of
projects BBC analyzed for that particular set of projects.
FINAL REPORT APPENDIX D, PAGE 3
FINAL REPORT APPENDIX D, PAGE 4
Table of Contents
Table Agency Contract area Role Contract size Region Subcontractor Plan
D-1 State agencies All industries Prime contracts and subcontracts N/A N/A All contracts
D-2 State agencies, VASCUPP Tier 2, VASCUPP Tier 3 All industries Prime contracts and subcontracts N/A N/A All contracts
D-3 State agencies, VASCUPP Tier 2, VASCUPP Tier 3 Construction Prime contracts and subcontracts N/A N/A All contracts
D-4 State agencies, VASCUPP Tier 2, VASCUPP Tier 3 Professional services Prime contracts and subcontracts N/A N/A All contracts
D-5 State agencies, VASCUPP Tier 2, VASCUPP Tier 3 Non-professional services and goods Prime contracts and subcontracts N/A N/A All contracts
D-6 State agencies, VASCUPP Tier 2, VASCUPP Tier 3 All industries Prime contracts N/A N/A All contracts
D-7 State agencies, VASCUPP Tier 2, VASCUPP Tier 3 All industries Subcontracts N/A N/A All contracts
D-8 State agencies, VASCUPP Tier 2, VASCUPP Tier 3 All industries Prime contracts Large N/A All contracts
D-9 State agencies, VASCUPP Tier 2, VASCUPP Tier 3 All industries Prime contracts Small N/A All contracts
D-10 State agencies, VASCUPP Tier 2, VASCUPP Tier 3 All industries Prime contracts Micro N/A All contracts
D-11 State agencies Construction Prime contracts and subcontracts N/A N/A All contracts
D-12 State agencies Professional services Prime contracts and subcontracts N/A N/A All contracts
D-13 State agencies Non-professional services and goods Prime contracts and subcontracts N/A N/A All contracts
D-14 State agencies All industries Prime contracts N/A N/A All contracts
D-15 State agencies All industries Subcontracts N/A N/A All contracts
D-16 State agencies All industries Prime contracts Large N/A All contracts
D-17 State agencies All industries Prime contracts Small N/A All contracts
D-18 State agencies All industries Prime contracts Micro N/A All contracts
D-19 State agencies All industries Prime contracts and subcontracts N/A Hampton Roads All contracts
D-20 State agencies All industries Prime contracts and subcontracts N/A Southern All contracts
D-21 State agencies All industries Prime contracts and subcontracts N/A Southwest All contracts
D-22 State agencies All industries Prime contracts and subcontracts N/A West Central All contracts
D-23 State agencies All industries Prime contracts and subcontracts N/A Central All contracts
D-24 State agencies All industries Prime contracts and subcontracts N/A Valley All contracts
D-25 State agencies All industries Prime contracts and subcontracts N/A Northern All contracts
D-26 State agencies All industries Prime contracts and subcontracts N/A Eastern All contracts
D-27 State agencies All industries Prime contracts and subcontracts N/A Eastern Shore All contracts
D-28 State agencies All industries Prime contracts and subcontracts N/A N/A Yes
D-29 State agencies All industries Prime contracts and subcontracts N/A N/A No
D-30 VASCUPP - Tier 3 All industries Prime contracts and subcontracts N/A N/A All contracts
D-31 University of Virginia All industries Prime contracts and subcontracts N/A N/A All contracts
D-32 Virginia Polytechnic Institute & State University All industries Prime contracts and subcontracts N/A N/A All contracts
D-33 Virginia Commonwealth University All industries Prime contracts and subcontracts N/A N/A All contracts
D-34 George Mason University All industries Prime contracts and subcontracts N/A N/A All contracts
D-35 James Madison University All industries Prime contracts and subcontracts N/A N/A All contracts
D-36 College of William & Mary All industries Prime contracts and subcontracts N/A N/A All contracts
D-37 VASCUPP - Tier 2 All industries Prime contracts and subcontracts N/A N/A All contracts
Figure D-1.
Agency Name: State agencies
Time period: 07/01/2019 - 06/30/2024
Contract area: All industries
Contract role: Prime contracts and subcontracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 243,091 3,765 $17,109,559
Race and gender
(2) Minority 23,422 408 $1,835,523 10.7 % 23.3 % $0.46
(3) Asian 5,221 121 $1,419,828 8.3 % 10.5 % $0.79
(4) Black 14,831 183 $207,487 1.2 % 7.7 % $0.16
(5) Hispanic 1,863 93 $191,880 1.1 % 4.7 % $0.24
(6) Native American 1,507 11 $16,328 0.1 % 0.4 % $0.24
(7) White woman 61,996 339 $701,788 4.1 % 13.6 % $0.30
Veteran status
(8) Service-disabled veteran 4,400 50 $130,721 0.8 % 7.1 % $0.11
Business size
(9) Micro 124,200 1,811 $3,183,000 18.6 % 40.4 % $0.46
(10) Small 189,678 2,949 $10,092,690 59.0 % 88.5 % $0.67
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
Figure D-2.
Agency Name: State agencies, Tier 2 HEIs, Tier 3 HEIs
Time period: 07/01/2019 - 06/30/2024
Contract area: All industries
Contract role: Prime contracts and subcontracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 693,154 4,847 $27,085,269
Race and gender
(2) Minority 35,743 482 $2,271,798 8.4 % 21.6 % $0.39
(3) Asian 8,626 131 $1,522,760 5.6 % 9.0 % $0.63
(4) Black 20,364 219 $408,580 1.5 % 6.7 % $0.22
(5) Hispanic 4,573 119 $307,672 1.1 % 5.3 % $0.21
(6) Native American 2,180 13 $32,787 0.1 % 0.6 % $0.21
(7) White woman 154,601 417 $1,244,175 4.6 % 12.3 % $0.37
Veteran status
(8) Service-disabled veteran 5,943 57 $166,329 0.6 % 5.6 % $0.11
Business size
(9) Micro 188,888 2,285 $5,066,129 18.7 % 40.4 % $0.46
(10) Small 462,294 3,719 $17,415,171 64.3 % 88.5 % $0.73
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
Figure D-3.
Agency Name: State agencies, Tier 2 HEIs, Tier 3 HEIs
Time period: 07/01/2019 - 06/30/2024
Contract area: Construction
Contract role: Prime contracts and subcontracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 43,269 1,432 $8,882,629
Race and gender
(2) Minority 4,375 143 $230,123 2.6 % 19.7 % $0.13
(3) Asian 195 25 $20,134 0.2 % 5.5 % $0.04
(4) Black 1,464 61 $50,885 0.6 % 3.7 % $0.15
(5) Hispanic 2,659 52 $150,375 1.7 % 9.2 % $0.18
(6) Native American 57 5 $8,729 0.1 % 1.2 % $0.08
(7) White woman 2,742 128 $245,080 2.8 % 7.1 % $0.39
Veteran status
(8) Service-disabled veteran 228 13 $19,136 0.2 % 1.9 % $0.11
Business size
(9) Micro 18,696 766 $1,993,741 22.4 % 33.9 % $0.66
(10) Small 38,836 1,264 $7,269,368 81.8 % 91.0 % $0.90
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
Figure D-4.
Agency Name: State agencies, Tier 2 HEIs, Tier 3 HEIs
Time period: 07/01/2019 - 06/30/2024
Contract area: Professional services
Contract role: Prime contracts and subcontracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 76,316 1,409 $10,590,860
Race and gender
(2) Minority 10,759 170 $1,487,041 14.0 % 29.6 % $0.47
(3) Asian 7,750 90 $1,336,882 12.6 % 16.3 % $0.77
(4) Black 351 53 $53,203 0.5 % 9.4 % $0.05
(5) Hispanic 652 22 $76,202 0.7 % 3.6 % $0.20
(6) Native American 2,006 5 $20,753 0.2 % 0.3 % $0.68
(7) White woman 5,416 108 $301,165 2.8 % 14.4 % $0.20
Veteran status
(8) Service-disabled veteran 2,326 16 $124,731 1.2 % 9.7 % $0.12
Business size
(9) Micro 14,548 596 $1,771,058 16.7 % 45.0 % $0.37
(10) Small 36,242 909 $5,893,949 55.7 % 90.1 % $0.62
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
Figure D-5.
Agency Name: State agencies, Tier 2 HEIs, Tier 3 HEIs
Time period: 07/01/2019 - 06/30/2024
Contract area: Non-professional services and goods
Contract role: Prime contracts and subcontracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 573,569 2,006 $7,611,780
Race and gender
(2) Minority 20,609 169 $554,634 7.3 % 12.8 % $0.57
(3) Asian 681 16 $165,743 2.2 % 2.8 % $0.78
(4) Black 18,549 105 $304,491 4.0 % 6.5 % $0.61
(5) Hispanic 1,262 45 $81,094 1.1 % 3.2 % $0.33
(6) Native American 117 3 $3,306 0.0 % 0.3 % $0.17
(7) White woman 146,443 181 $697,931 9.2 % 15.4 % $0.59
Veteran status
(8) Service-disabled veteran 3,389 28 $22,462 0.3 % 4.3 % $0.07
Business size
(9) Micro 155,644 923 $1,301,330 17.1 % 41.5 % $0.41
(10) Small 387,216 1,546 $4,251,854 55.9 % 83.3 % $0.67
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
Figure D-6.
Agency Name: State agencies, Tier 2 HEIs, Tier 3 HEIs
Time period: 07/01/2019 - 06/30/2024
Contract area: All industries
Contract role: Prime contracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 690,110 4,030 $21,639,039
Race and gender
(2) Minority 35,367 335 $1,842,699 8.5 % 21.6 % $0.39
(3) Asian 8,492 55 $1,257,779 5.8 % 9.5 % $0.61
(4) Black 20,249 192 $306,329 1.4 % 6.7 % $0.21
(5) Hispanic 4,454 75 $247,787 1.1 % 4.8 % $0.24
(6) Native American 2,172 13 $30,804 0.1 % 0.6 % $0.24
(7) White woman 154,261 388 $968,369 4.5 % 12.9 % $0.35
Veteran status
(8) Service-disabled veteran 5,929 50 $145,620 0.7 % 5.9 % $0.11
Business size
(9) Micro 187,697 1,957 $3,309,856 15.3 % 39.9 % $0.38
(10) Small 459,956 3,259 $13,257,194 61.3 % 88.1 % $0.70
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
Figure D-7.
Agency Name: State agencies, Tier 2 HEIs, Tier 3 HEIs
Time period: 07/01/2019 - 06/30/2024
Contract area: All industries
Contract role: Subcontracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 3,044 1,475 $5,446,230
Race and gender
(2) Minority 376 202 $429,099 7.9 % 21.6 % $0.37
(3) Asian 134 89 $264,980 4.9 % 6.9 % $0.71
(4) Black 115 53 $102,251 1.9 % 6.7 % $0.28
(5) Hispanic 119 58 $59,885 1.1 % 7.4 % $0.15
(6) Native American 8 2 $1,983 0.0 % 0.5 % $0.07
(7) White woman 340 120 $275,806 5.1 % 10.1 % $0.50
Veteran status
(8) Service-disabled veteran 14 11 $20,708 0.4 % 4.3 % $0.09
Business size
(9) Micro 1,191 611 $1,756,273 32.2 % 42.2 % $0.76
(10) Small 2,338 1,020 $4,157,977 76.3 % 89.9 % $0.85
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
Figure D-8.
Agency Name: State agencies, Tier 2 HEIs, Tier 3 HEIs Large contracts
Time period: 07/01/2019 - 06/30/2024
Contract area: All industries
Contract role: Prime contracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 1,493 571 $14,812,587
Race and gender
(2) Minority 90 34 $1,253,087 8.5 % 20.8 % $0.41
(3) Asian 32 6 $957,962 6.5 % 10.0 % $0.64
(4) Black 29 18 $154,446 1.0 % 5.3 % $0.20
(5) Hispanic 25 9 $134,128 0.9 % 4.9 % $0.19
(6) Native American 4 1 $6,551 0.0 % 0.6 % $0.08
(7) White woman 102 37 $445,354 3.0 % 12.1 % $0.25
Veteran status
(8) Service-disabled veteran 9 5 $73,688 0.5 % 6.2 % $0.08
Business size
(9) Micro 266 116 $1,966,894 13.3 % 31.3 % $0.42
(10) Small 933 355 $9,038,350 61.0 % 85.9 % $0.71
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
Figure D-9.
Agency Name: State agencies, Tier 2 HEIs, Tier 3 HEIs Small contracts
Time period: 07/01/2019 - 06/30/2024
Contract area: All industries
Contract role: Prime contracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 4,959 1,210 $3,400,560
Race and gender
(2) Minority 384 81 $272,813 8.0 % 24.6 % $0.33
(3) Asian 152 15 $163,000 4.8 % 9.6 % $0.50
(4) Black 132 37 $52,851 1.6 % 9.9 % $0.16
(5) Hispanic 88 25 $49,866 1.5 % 4.6 % $0.32
(6) Native American 12 4 $7,095 0.2 % 0.5 % $0.41
(7) White woman 370 101 $225,581 6.6 % 13.9 % $0.48
Veteran status
(8) Service-disabled veteran 52 11 $37,806 1.1 % 6.0 % $0.19
Business size
(9) Micro 999 335 $629,331 18.5 % 56.4 % $0.33
(10) Small 3,192 805 $2,066,107 60.8 % 92.6 % $0.66
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
Figure D-10.
Agency Name: State agencies, Tier 2 HEIs, Tier 3 HEIs Micro contracts
Time period: 07/01/2019 - 06/30/2024
Contract area: All industries
Contract role: Prime contracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 683,658 3,850 $3,425,892
Race and gender
(2) Minority 34,893 323 $316,799 9.2 % 22.1 % $0.42
(3) Asian 8,308 52 $136,817 4.0 % 7.0 % $0.57
(4) Black 20,088 189 $99,032 2.9 % 9.8 % $0.30
(5) Hispanic 4,341 70 $63,793 1.9 % 4.5 % $0.41
(6) Native American 2,156 12 $17,158 0.5 % 0.7 % $0.68
(7) White woman 153,789 381 $297,434 8.7 % 15.0 % $0.58
Veteran status
(8) Service-disabled veteran 5,868 50 $34,127 1.0 % 4.8 % $0.21
Business size
(9) Micro 186,432 1,918 $713,631 20.8 % 60.5 % $0.34
(10) Small 455,831 3,165 $2,152,737 62.8 % 93.2 % $0.67
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
Figure D-11.
Agency Name: State agencies
Time period: 07/01/2019 - 06/30/2024
Contract area: Construction
Contract role: Prime contracts and subcontracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 17,714 1,037 $3,453,149
Race and gender
(2) Minority 1,257 109 $87,138 2.5 % 19.8 % $0.13
(3) Asian 113 21 $14,271 0.4 % 4.7 % $0.09
(4) Black 793 47 $15,787 0.5 % 4.3 % $0.11
(5) Hispanic 297 36 $49,492 1.4 % 9.8 % $0.15
(6) Native American 54 5 $7,588 0.2 % 1.0 % $0.22
(7) White woman 1,346 93 $65,210 1.9 % 7.5 % $0.25
Veteran status
(8) Service-disabled veteran 155 11 $2,242 0.1 % 2.7 % $0.02
Business size
(9) Micro 8,792 575 $1,131,524 32.8 % 37.6 % $0.87
(10) Small 15,605 942 $2,755,832 79.8 % 90.4 % $0.88
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
Source: BBC Research & Consulting Disparity Analysis.
Figure D-12.
Agency Name: State agencies
Time period: 07/01/2019 - 06/30/2024
Contract area: Professional services
Contract role: Prime contracts and subcontracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 36,805 1,077 $8,717,919
Race and gender
(2) Minority 6,822 144 $1,381,959 15.9 % 30.2 % $0.52
(3) Asian 4,673 84 $1,261,472 14.5 % 17.1 % $0.84
(4) Black 248 40 $44,471 0.5 % 9.2 % $0.06
(5) Hispanic 525 16 $68,815 0.8 % 3.6 % $0.22
(6) Native American 1,376 4 $7,200 0.1 % 0.3 % $0.33
(7) White woman 3,867 78 $208,817 2.4 % 14.5 % $0.16
Veteran status
(8) Service-disabled veteran 1,551 12 $113,452 1.3 % 10.6 % $0.12
Business size
(9) Micro 9,755 441 $1,300,989 14.9 % 41.3 % $0.36
(10) Small 19,589 687 $4,723,687 54.2 % 90.7 % $0.60
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
Figure D-13.
Agency Name: State agencies
Time period: 07/01/2019 - 06/30/2024
Contract area: Non-professional services and goods
Contract role: Prime contracts and subcontracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 188,572 1,651 $4,938,491
Race and gender
(2) Minority 15,343 155 $366,426 7.4 % 13.5 % $0.55
(3) Asian 435 16 $144,084 2.9 % 2.8 % $1.03
(4) Black 13,790 96 $147,228 3.0 % 7.3 % $0.41
(5) Hispanic 1,041 41 $73,573 1.5 % 3.1 % $0.48
(6) Native American 77 2 $1,540 0.0 % 0.3 % $0.12
(7) White woman 56,783 168 $427,761 8.7 % 16.1 % $0.54
Veteran status
(8) Service-disabled veteran 2,694 27 $15,026 0.3 % 4.0 % $0.08
Business size
(9) Micro 105,653 795 $750,487 15.2 % 40.9 % $0.37
(10) Small 154,484 1,320 $2,613,170 52.9 % 83.3 % $0.64
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
Figure D-14.
Agency Name: State agencies
Time period: 07/01/2019 - 06/30/2024
Contract area: All industries
Contract role: Prime contracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 241,225 3,113 $13,558,518
Race and gender
(2) Minority 23,161 277 $1,481,915 10.9 % 23.2 % $0.47
(3) Asian 5,100 47 $1,156,006 8.5 % 11.1 % $0.77
(4) Black 14,765 159 $138,180 1.0 % 7.6 % $0.13
(5) Hispanic 1,790 60 $171,603 1.3 % 4.1 % $0.31
(6) Native American 1,506 11 $16,127 0.1 % 0.4 % $0.32
(7) White woman 61,822 319 $574,821 4.2 % 14.4 % $0.30
Veteran status
(8) Service-disabled veteran 4,389 44 $110,425 0.8 % 7.6 % $0.11
Business size
(9) Micro 123,412 1,531 $1,829,745 13.5 % 39.8 % $0.34
(10) Small 188,271 2,562 $7,305,288 53.9 % 88.1 % $0.61
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
Figure D-15.
Agency Name: State agencies
Time period: 07/01/2019 - 06/30/2024
Contract area: All industries
Contract role: Subcontracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 1,866 1,012 $3,551,041
Race and gender
(2) Minority 261 160 $353,608 10.0 % 23.8 % $0.42
(3) Asian 121 83 $263,822 7.4 % 8.2 % $0.91
(4) Black 66 36 $69,307 2.0 % 7.9 % $0.25
(5) Hispanic 73 40 $20,278 0.6 % 7.2 % $0.08
(6) Native American 1 1 $201 0.0 % 0.5 % $0.01
(7) White woman 174 65 $126,967 3.6 % 10.6 % $0.34
Veteran status
(8) Service-disabled veteran 11 9 $20,296 0.6 % 5.3 % $0.11
Business size
(9) Micro 788 433 $1,353,255 38.1 % 42.7 % $0.89
(10) Small 1,407 699 $2,787,402 78.5 % 90.3 % $0.87
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
Figure D-16.
Agency Name: State agencies Large contracts
Time period: 07/01/2019 - 06/30/2024
Contract area: All industries
Contract role: Prime contracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 912 386 $9,795,237
Race and gender
(2) Minority 66 25 $1,102,413 11.3 % 22.6 % $0.50
(3) Asian 28 5 $934,491 9.5 % 11.9 % $0.80
(4) Black 14 11 $36,761 0.4 % 6.2 % $0.06
(5) Hispanic 20 8 $124,610 1.3 % 4.1 % $0.31
(6) Native American 4 1 $6,551 0.1 % 0.3 % $0.23
(7) White woman 54 25 $282,565 2.9 % 14.0 % $0.21
Veteran status
(8) Service-disabled veteran 2 2 $62,462 0.6 % 8.3 % $0.08
Business size
(9) Micro 145 68 $1,134,265 11.6 % 32.3 % $0.36
(10) Small 529 241 $5,163,879 52.7 % 86.0 % $0.61
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
Figure D-17.
Agency Name: State agencies Small contracts
Time period: 07/01/2019 - 06/30/2024
Contract area: All industries
Contract role: Prime contracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 2,755 753 $1,951,855
Race and gender
(2) Minority 242 51 $167,696 8.6 % 26.0 % $0.33
(3) Asian 110 12 $112,241 5.8 % 10.5 % $0.55
(4) Black 77 23 $31,501 1.6 % 11.3 % $0.14
(5) Hispanic 49 14 $21,180 1.1 % 3.7 % $0.29
(6) Native American 6 2 $2,774 0.1 % 0.5 % $0.30
(7) White woman 209 63 $125,533 6.4 % 14.9 % $0.43
Veteran status
(8) Service-disabled veteran 34 7 $25,212 1.3 % 6.4 % $0.20
Business size
(9) Micro 526 192 $332,814 17.1 % 58.2 % $0.29
(10) Small 1,689 503 $1,093,816 56.0 % 93.2 % $0.60
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
Figure D-18.
Agency Name: State agencies Micro contracts
Time period: 07/01/2019 - 06/30/2024
Contract area: All industries
Contract role: Prime contracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 237,558 2,964 $1,811,425
Race and gender
(2) Minority 22,853 268 $211,805 11.7 % 23.4 % $0.50
(3) Asian 4,962 45 $109,274 6.0 % 7.6 % $0.80
(4) Black 14,674 156 $69,917 3.9 % 11.1 % $0.35
(5) Hispanic 1,721 57 $25,812 1.4 % 4.1 % $0.35
(6) Native American 1,496 10 $6,801 0.4 % 0.7 % $0.53
(7) White woman 61,559 312 $166,723 9.2 % 15.5 % $0.59
Veteran status
(8) Service-disabled veteran 4,353 44 $22,751 1.3 % 4.7 % $0.27
Business size
(9) Micro 122,741 1,498 $362,666 20.0 % 61.0 % $0.33
(10) Small 186,053 2,481 $1,047,593 57.8 % 93.8 % $0.62
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
Figure D-19.
Agency Name: State agencies
Time period: 07/01/2019 - 06/30/2024
Contract area: All industries
Contract role: Prime contracts and subcontracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 14,114 781 $266,677
Race and gender
(2) Minority 2,075 75 $8,669 3.3 % 18.7 % $0.17
(3) Asian 139 9 $3,298 1.2 % 5.0 % $0.25
(4) Black 1,846 51 $4,227 1.6 % 9.6 % $0.17
(5) Hispanic 85 13 $1,137 0.4 % 3.7 % $0.11
(6) Native American 5 2 $7 0.0 % 0.3 % $0.01
(7) White woman 4,203 105 $24,672 9.3 % 14.9 % $0.62
Veteran status
(8) Service-disabled veteran 83 17 $351 0.1 % 5.3 % $0.03
Business size
(9) Micro 8,361 365 $35,795 13.4 % 50.5 % $0.27
(10) Small 11,346 646 $138,111 51.8 % 91.1 % $0.57
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
Figure D-20.
Agency Name: State agencies Southside
Time period: 07/01/2019 - 06/30/2024
Contract area: All industries
Contract role: Prime contracts and subcontracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 26,890 863 $624,982
Race and gender
(2) Minority 1,330 73 $21,939 3.5 % 21.5 % $0.16
(3) Asian 112 8 $7,470 1.2 % 3.4 % $0.36
(4) Black 1,053 43 $11,453 1.8 % 12.7 % $0.14
(5) Hispanic 81 18 $2,691 0.4 % 5.0 % $0.09
(6) Native American 84 4 $325 0.1 % 0.4 % $0.13
(7) White woman 8,348 105 $70,017 11.2 % 17.3 % $0.65
Veteran status
(8) Service-disabled veteran 132 15 $891 0.1 % 2.5 % $0.06
Business size
(9) Micro 13,267 387 $159,058 25.4 % 52.9 % $0.48
(10) Small 20,873 709 $404,586 64.7 % 91.0 % $0.71
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
Figure D-21.
Agency Name: State agencies Southwest
Time period: 07/01/2019 - 06/30/2024
Contract area: All industries
Contract role: Prime contracts and subcontracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 13,544 485 $146,175
Race and gender
(2) Minority 1,150 19 $6,366 4.4 % 18.4 % $0.24
(3) Asian 88 4 $1,839 1.3 % 3.9 % $0.32
(4) Black 880 9 $3,547 2.4 % 4.2 % $0.58
(5) Hispanic 25 4 $819 0.6 % 9.5 % $0.06
(6) Native American 157 2 $162 0.1 % 0.7 % $0.16
(7) White woman 2,751 64 $12,730 8.7 % 16.8 % $0.52
Veteran status
(8) Service-disabled veteran 188 8 $277 0.2 % 3.8 % $0.05
Business size
(9) Micro 8,627 205 $28,522 19.5 % 50.3 % $0.39
(10) Small 11,313 371 $91,369 62.5 % 92.1 % $0.68
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
Figure D-22.
Agency Name: State agencies West Central
Time period: 07/01/2019 - 06/30/2024
Contract area: All industries
Contract role: Prime contracts and subcontracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 49,932 1,546 $1,141,156
Race and gender
(2) Minority 3,044 115 $69,530 6.1 % 16.9 % $0.36
(3) Asian 414 24 $44,623 3.9 % 8.5 % $0.46
(4) Black 1,489 58 $11,828 1.0 % 5.5 % $0.19
(5) Hispanic 294 26 $11,054 1.0 % 2.5 % $0.39
(6) Native American 847 7 $2,024 0.2 % 0.3 % $0.62
(7) White woman 11,299 177 $55,568 4.9 % 13.8 % $0.35
Veteran status
(8) Service-disabled veteran 1,302 20 $6,514 0.6 % 4.8 % $0.12
Business size
(9) Micro 23,909 700 $180,351 15.8 % 44.9 % $0.35
(10) Small 39,782 1,286 $857,206 75.1 % 88.9 % $0.84
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
Figure D-23.
Agency Name: State agencies Central
Time period: 07/01/2019 - 06/30/2024
Contract area: All industries
Contract role: Prime contracts and subcontracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 98,507 2,777 $13,478,349
Race and gender
(2) Minority 11,235 310 $1,671,379 12.4 % 23.9 % $0.52
(3) Asian 2,807 102 $1,321,198 9.8 % 11.1 % $0.88
(4) Black 6,972 132 $168,457 1.2 % 7.6 % $0.16
(5) Hispanic 1,151 66 $169,486 1.3 % 4.8 % $0.26
(6) Native American 305 10 $12,238 0.1 % 0.4 % $0.23
(7) White woman 24,154 257 $476,781 3.5 % 13.2 % $0.27
Veteran status
(8) Service-disabled veteran 2,224 34 $106,592 0.8 % 7.6 % $0.10
Business size
(9) Micro 52,735 1,218 $2,528,231 18.8 % 38.9 % $0.48
(10) Small 77,023 2,091 $7,987,778 59.3 % 88.5 % $0.67
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
Figure D-24.
Agency Name: State agencies Valley
Time period: 07/01/2019 - 06/30/2024
Contract area: All industries
Contract role: Prime contracts and subcontracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 8,243 479 $136,721
Race and gender
(2) Minority 507 24 $1,981 1.4 % 16.5 % $0.09
(3) Asian 74 4 $581 0.4 % 4.3 % $0.10
(4) Black 404 12 $808 0.6 % 7.3 % $0.08
(5) Hispanic 21 6 $127 0.1 % 4.5 % $0.02
(6) Native American 8 2 $464 0.3 % 0.3 % $1.31
(7) White woman 2,927 75 $13,116 9.6 % 14.1 % $0.68
Veteran status
(8) Service-disabled veteran 13 6 $28 0.0 % 2.6 % $0.01
Business size
(9) Micro 4,116 207 $19,832 14.5 % 50.8 % $0.29
(10) Small 6,527 379 $58,669 42.9 % 92.2 % $0.47
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
Figure D-25.
Agency Name: State agencies Northern
Time period: 07/01/2019 - 06/30/2024
Contract area: All industries
Contract role: Prime contracts and subcontracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 5,743 455 $319,410
Race and gender
(2) Minority 556 58 $6,028 1.9 % 21.4 % $0.09
(3) Asian 72 8 $1,527 0.5 % 7.6 % $0.06
(4) Black 380 22 $1,180 0.4 % 3.7 % $0.10
(5) Hispanic 99 26 $3,308 1.0 % 9.6 % $0.11
(6) Native American 5 2 $12 0.0 % 0.5 % $0.01
(7) White woman 1,563 66 $5,469 1.7 % 11.2 % $0.15
Veteran status
(8) Service-disabled veteran 59 8 $71 0.0 % 3.1 % $0.01
Business size
(9) Micro 3,190 212 $67,859 21.2 % 32.5 % $0.65
(10) Small 4,230 361 $104,051 32.6 % 77.9 % $0.42
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
Figure D-26.
Agency Name: State agencies Eastern
Time period: 07/01/2019 - 06/30/2024
Contract area: All industries
Contract role: Prime contracts and subcontracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 2,397 180 $22,543
Race and gender
(2) Minority 362 16 $1,041 4.6 % 17.9 % $0.26
(3) Asian 2 2 $37 0.2 % 2.3 % $0.07
(4) Black 353 10 $942 4.2 % 10.6 % $0.40
(5) Hispanic 6 3 $58 0.3 % 2.9 % $0.09
(6) Native American 1 1 $5 0.0 % 1.7 % $0.01
(7) White woman 967 31 $5,840 25.9 % 19.5 % $1.33
Veteran status
(8) Service-disabled veteran 3 3 $14 0.1 % 2.5 % $0.02
Business size
(9) Micro 1,498 72 $4,687 20.8 % 52.9 % $0.39
(10) Small 1,743 128 $9,813 43.5 % 92.9 % $0.47
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
Figure D-27.
Agency Name: State agencies Eastern Shore
Time period: 07/01/2019 - 06/30/2024
Contract area: All industries
Contract role: Prime contracts and subcontracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 401 60 $7,417
Race and gender
(2) Minority 17 7 $41 0.6 % 19.0 % $0.03
(3) Asian 2 1 $0 0.0 % 7.5 % $0.00
(4) Black 15 6 $41 0.6 % 5.5 % $0.10
(5) Hispanic 0 0 $0 0.0 % 4.9 % $0.00
(6) Native American 0 0 $0 0.0 % 0.6 % $0.00
(7) White woman 190 10 $125 1.7 % 3.4 % $0.49
Veteran status
(8) Service-disabled veteran 11 2 $35 0.5 % 11.4 % $0.04
Business size
(9) Micro 245 28 $6,660 89.8 % 36.3 % $2.00 +
(10) Small 272 47 $7,217 97.3 % 88.3 % $1.10
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
Figure D-28.
Agency Name: State agencies Subcontractor Plan
Time period: 07/01/2019 - 06/30/2024
Contract area: All industries
Contract role: Prime contracts and subcontracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 9,936 2,037 $15,990,084
Race and gender
(2) Minority 1,039 227 $1,685,076 10.5 % 23.5 % $0.45
(3) Asian 447 95 $1,340,754 8.4 % 10.8 % $0.77
(4) Black 340 67 $156,876 1.0 % 7.5 % $0.13
(5) Hispanic 219 60 $175,820 1.1 % 4.8 % $0.23
(6) Native American 33 5 $11,626 0.1 % 0.4 % $0.19
(7) White woman 635 147 $567,505 3.5 % 13.4 % $0.26
Veteran status
(8) Service-disabled veteran 97 19 $117,070 0.7 % 7.3 % $0.10
Business size
(9) Micro 2,083 729 $2,919,990 18.3 % 39.0 % $0.47
(10) Small 5,800 1,389 $9,380,872 58.7 % 88.2 % $0.67
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
Figure D-29.
Agency Name: State agencies No Subcontractor Plan
Time period: 07/01/2019 - 06/30/2024
Contract area: All industries
Contract role: Prime contracts and subcontracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 233,155 2,874 $1,119,475
Race and gender
(2) Minority 22,383 261 $150,446 13.4 % 20.5 % $0.65
(3) Asian 4,774 41 $79,074 7.1 % 5.7 % $1.23
(4) Black 14,491 154 $50,610 4.5 % 10.0 % $0.45
(5) Hispanic 1,644 56 $16,060 1.4 % 4.1 % $0.35
(6) Native American 1,474 10 $4,701 0.4 % 0.6 % $0.67
(7) White woman 61,361 309 $134,283 12.0 % 16.0 % $0.75
Veteran status
(8) Service-disabled veteran 4,303 43 $13,650 1.2 % 4.3 % $0.28
Business size
(9) Micro 122,117 1,481 $263,010 23.5 % 60.5 % $0.39
(10) Small 183,878 2,419 $711,818 63.6 % 93.4 % $0.68
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
Figure D-30.
Agency Name: Tier 3 HEIs
Time period: 07/01/2019 - 06/30/2024
Contract area: All industries
Contract role: Prime contracts and subcontracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 418,325 2,354 $7,483,913
Race and gender
(2) Minority 8,987 141 $246,849 3.3 % 19.1 % $0.17
(3) Asian 2,816 27 $75,401 1.0 % 6.7 % $0.15
(4) Black 3,397 63 $73,075 1.0 % 4.9 % $0.20
(5) Hispanic 2,501 45 $89,027 1.2 % 6.5 % $0.18
(6) Native American 273 6 $9,347 0.1 % 1.0 % $0.12
(7) White woman 87,275 205 $349,458 4.7 % 9.5 % $0.49
Veteran status
(8) Service-disabled veteran 887 20 $20,454 0.3 % 3.0 % $0.09
Business size
(9) Micro 53,886 924 $1,526,860 20.4 % 38.5 % $0.53
(10) Small 248,684 1,779 $5,604,913 74.9 % 88.2 % $0.85
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
Figure D-31.
Agency Name: University of Virginia
Time period: 07/01/2019 - 06/30/2024
Contract area: All industries
Contract role: Prime contracts and subcontracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 214,457 952 $2,174,406
Race and gender
(2) Minority 4,870 45 $79,969 3.7 % 20.2 % $0.18
(3) Asian 969 8 $16,429 0.8 % 6.1 % $0.12
(4) Black 1,574 24 $25,053 1.2 % 5.6 % $0.21
(5) Hispanic 2,205 11 $34,847 1.6 % 6.2 % $0.26
(6) Native American 122 2 $3,639 0.2 % 2.3 % $0.07
(7) White woman 40,396 74 $104,559 4.8 % 9.8 % $0.49
Veteran status
(8) Service-disabled veteran 61 5 $5,091 0.2 % 3.3 % $0.07
Business size
(9) Micro 19,763 295 $668,172 30.7 % 39.8 % $0.77
(10) Small 123,246 667 $1,743,251 80.2 % 87.8 % $0.91
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
Figure D-32.
Agency Name: Virginia Polytechnic Institute & State University
Time period: 07/01/2019 - 06/30/2024
Contract area: All industries
Contract role: Prime contracts and subcontracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 54,394 1,075 $1,576,886
Race and gender
(2) Minority 739 41 $42,218 2.7 % 13.4 % $0.20
(3) Asian 87 4 $4,239 0.3 % 5.4 % $0.05
(4) Black 483 22 $9,028 0.6 % 3.6 % $0.16
(5) Hispanic 69 11 $25,451 1.6 % 3.9 % $0.42
(6) Native American 100 4 $3,500 0.2 % 0.5 % $0.46
(7) White woman 1,238 86 $41,938 2.7 % 8.8 % $0.30
Veteran status
(8) Service-disabled veteran 255 4 $3,171 0.2 % 2.9 % $0.07
Business size
(9) Micro 13,262 377 $236,517 15.0 % 38.2 % $0.39
(10) Small 31,420 785 $1,127,432 71.5 % 87.2 % $0.82
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
Figure D-33.
Agency Name: Virginia Commonwealth University
Time period: 07/01/2019 - 06/30/2024
Contract area: All industries
Contract role: Prime contracts and subcontracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 75,051 724 $849,076
Race and gender
(2) Minority 1,718 43 $26,155 3.1 % 19.5 % $0.16
(3) Asian 937 6 $9,112 1.1 % 5.6 % $0.19
(4) Black 675 23 $14,836 1.7 % 7.4 % $0.24
(5) Hispanic 80 12 $1,868 0.2 % 5.6 % $0.04
(6) Native American 26 2 $339 0.0 % 0.9 % $0.04
(7) White woman 27,619 74 $61,494 7.2 % 12.2 % $0.59
Veteran status
(8) Service-disabled veteran 421 7 $2,555 0.3 % 4.4 % $0.07
Business size
(9) Micro 5,383 239 $248,526 29.3 % 45.8 % $0.64
(10) Small 45,953 516 $500,055 58.9 % 87.4 % $0.67
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
Figure D-34.
Agency Name: George Mason University
Time period: 07/01/2019 - 06/30/2024
Contract area: All industries
Contract role: Prime contracts and subcontracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 19,524 667 $1,281,475
Race and gender
(2) Minority 472 37 $69,955 5.5 % 27.5 % $0.20
(3) Asian 383 13 $36,242 2.8 % 10.1 % $0.28
(4) Black 37 9 $13,576 1.1 % 4.6 % $0.23
(5) Hispanic 47 13 $18,972 1.5 % 12.3 % $0.12
(6) Native American 5 2 $1,165 0.1 % 0.6 % $0.16
(7) White woman 1,973 47 $89,961 7.0 % 9.2 % $0.76
Veteran status
(8) Service-disabled veteran 77 9 $2,989 0.2 % 2.6 % $0.09
Business size
(9) Micro 2,556 156 $160,644 12.5 % 35.3 % $0.36
(10) Small 8,650 403 $792,296 61.8 % 88.2 % $0.70
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
Figure D-35.
Agency Name: James Madison University
Time period: 07/01/2019 - 06/30/2024
Contract area: All industries
Contract role: Prime contracts and subcontracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 24,776 589 $819,741
Race and gender
(2) Minority 480 22 $10,742 1.3 % 14.4 % $0.09
(3) Asian 79 6 $5,146 0.6 % 6.7 % $0.09
(4) Black 342 8 $3,213 0.4 % 2.7 % $0.15
(5) Hispanic 51 7 $1,821 0.2 % 4.7 % $0.05
(6) Native American 8 1 $563 0.1 % 0.2 % $0.33
(7) White woman 3,792 46 $32,945 4.0 % 7.4 % $0.54
Veteran status
(8) Service-disabled veteran 67 7 $1,334 0.2 % 2.2 % $0.07
Business size
(9) Micro 6,772 158 $56,162 6.9 % 34.4 % $0.20
(10) Small 15,891 404 $742,553 90.6 % 88.9 % $1.02
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
Figure D-36.
Agency Name: College of William & Mary
Time period: 07/01/2019 - 06/30/2024
Contract area: All industries
Contract role: Prime contracts and subcontracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 30,123 586 $782,329
Race and gender
(2) Minority 708 24 $17,811 2.3 % 18.1 % $0.13
(3) Asian 361 5 $4,232 0.5 % 6.3 % $0.09
(4) Black 286 11 $7,369 0.9 % 5.4 % $0.17
(5) Hispanic 49 7 $6,068 0.8 % 5.9 % $0.13
(6) Native American 12 1 $142 0.0 % 0.5 % $0.03
(7) White woman 12,257 58 $18,560 2.4 % 10.0 % $0.24
Veteran status
(8) Service-disabled veteran 6 5 $5,313 0.7 % 2.6 % $0.26
Business size
(9) Micro 6,150 168 $156,840 20.0 % 37.2 % $0.54
(10) Small 23,524 416 $699,327 89.4 % 91.2 % $0.98
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
Figure D-37.
Agency Name: Tier 2 HEIs
Time period: 07/01/2019 - 06/30/2024
Contract area: All industries
Contract role: Prime contracts and subcontracts
(a) (b) (c) (d) (e) (f)
Contract Businesses Dollars Disparity
Business group elements utilized (thousands) Participation Availability index
(1) All businesses 31,738 1,519 $2,491,798
Race and gender
(2) Minority 3,334 122 $189,426 7.6 % 17.7 % $0.43
(3) Asian 589 13 $27,531 1.1 % 5.5 % $0.20
(4) Black 2,136 77 $128,018 5.1 % 5.9 % $0.87
(5) Hispanic 209 28 $26,765 1.1 % 5.9 % $0.18
(6) Native American 400 4 $7,112 0.3 % 0.4 % $0.65
(7) White woman 5,330 174 $192,929 7.7 % 11.9 % $0.65
Veteran status
(8) Service-disabled veteran 656 22 $15,154 0.6 % 3.2 % $0.19
Business size
(9) Micro 10,802 596 $356,269 14.3 % 45.4 % $0.32
(10) Small 23,932 1,182 $1,717,568 68.9 % 89.1 % $0.77
Note: A business must have a location in the relevant geographic market area to be classified into the business groups in rows 2 through 10.
File and source
- File
- 2026-RD248.pdf
- Size
- 5,751,166 bytes
- SHA-256
- 60c900909074852f3305081a9bb0abfcbfdba9564021134eb5b7255d14fe595a
- Our copy
- 2026-RD248.pdf
- Original
- No public link identified.