What Is a Disparity Study?

Disparity studies are one of the most effective tools cities, counties, transit agencies, and public institutions use to evaluate fairness in public contracting. While often treated as compliance requirements, well-designed disparity studies serve a much broader purpose. At their core, disparity studies explain who has access to contracting opportunities, who ultimately receives them, and why gaps may exist. They provide the analytical foundation agencies need to make informed, legally defensible decisions about supplier diversity, procurement policy, and economic inclusion.

Defining the Public Contracting Market

Establishing the Relevant Marketplace

A disparity study begins by defining the actual market in which firms compete. This includes identifying the geographic area where qualified businesses operate, the industries and work categories under review, and the types of contracts being awarded, such as construction, professional services, or goods. Accurate market definition ensures that all comparisons in the study are grounded in real competitive conditions rather than assumptions. Disparities in contracting rarely begin at the bid stage. They are often influenced by broader economic conditions that affect whether businesses can form, grow, and compete. A comprehensive disparity study examines factors such as access to capital and bonding, entry into industry networks, market volatility, and structural barriers that affect participation long before procurement occurs. These conditions help explain why some firms enter the marketplace with advantages while others face systemic obstacles.

Measuring Business Availability

Who Is Ready, Willing, and Able to Perform the Work?

Availability analysis determines which firms could realistically compete for public contracts within the defined market. Rather than relying solely on certification lists, rigorous availability analysis aligns contract types with industry classifications, builds a comprehensive universe of firms from multiple data sources, validates business status and ownership, and groups firms consistently across industries and owner categories. This process identifies the true pool of qualified firms that represent available contracting capacity.

Analyzing Contract Utilization

Who Is Actually Receiving Public Contracts?

Once availability is established, the study evaluates utilization—how public contracting dollars are actually awarded. Utilization analysis includes prime contract awards and subcontract participation, reviewed across industries, contract sizes, project types, and multiple years. This step reveals whether contracting outcomes reflect the composition of the available market.

Identifying Contracting Disparities

Comparing Availability and Utilization

Disparity is identified by comparing utilization against availability across industries and ownership groups. When utilization is significantly lower than availability, the study highlights gaps that may indicate structural or discriminatory barriers. These findings transform raw data into actionable insights that agencies can use to evaluate and improve procurement practices. Quantitative analysis shows what is happening. Lived experience explains why it is happening. Disparity studies incorporate interviews, surveys, public testimony, and firsthand accounts from business owners to understand challenges related to bonding, financing, insurance, subcontracting access, and industry networks. This qualitative data provides critical context for interpreting statistical findings.

Equity and Opportunity Findings

A Complete, Evidence-Based Narrative

A high-quality disparity study integrates market definition, economic context, availability, utilization, disparity analysis, and lived experience into a single, coherent narrative. Together, these findings enable public agencies to strengthen supplier diversity programs, improve procurement outcomes, increase competition and value, and support equitable economic development through data-driven policy decisions. A disparity study is more than a legal requirement. It is a roadmap for expanding opportunity and building a more inclusive local economy. If your agency is seeking to conduct a legally defensible disparity study, strengthen supplier diversity initiatives, increase small business participation, or align procurement with economic empowerment goals, we welcome the opportunity to connect.