Department of Economic Inclusion

Contracting disparities are identified by comparing the utilization of minority- and women-owned businesses with the availability of those businesses within the City's relevant geographic market area during the study period. The comparison is expressed as a disparity index, which is calculated by dividing utilization by availability. An index of 100 indicates that utilization is proportional to availability. An index below 100 indicates that a group is being utilized at a lower rate than its availability would suggest.

A disparity index of 80 or less is commonly used in disparity studies as a benchmark for identifying a substantial disparity, meaning that a group is receiving 80% or less of the contract participation that would be expected based on its availability. The 80% benchmark is commonly referred to as the "80 percent rule" and has been used in legal and statistical analyses of disparities.

The disparity index is one part of the analysis. Additional statistical tests may be used to determine whether an observed disparity is statistically significant and unlikely to have occurred by chance. The study may also examine other quantitative and qualitative evidence to assess potential explanations for identified disparities.

​Key Terms:​

• Availability: The availability of minority- and women-owned firms within the City's relevant geographic market area that are ready, willing, and able to participate in City contracting. 

• Disparity Index: A measure of the relationship between utilization and availability, calculated by dividing utilization by availability and multiplying by 100. An index of 100 indicates utilization proportional to availability. An index of 80 indicates utilization at 80% of availability.

• Study Period: The specific, bounded historical timeframe, (typically spanning 3 to 5 years) for which a government agency’s prime contracts, subcontracts, and procurement data are statistically analyzed.

• Statistical Significance: A statistical assessment of whether an observed difference between utilization and availability is unlikely to have occurred by chance. Disparity studies may use statistical tests, such as standard deviation analysis, to evaluate the significance of identified disparities.

• Utilization: The percentage of contract dollars the City currently spends with minority- and women-owned firms within the City's relevant geographic market area during the study period.