Disparities Found Regarding State Minority Business Contracting

On Jan 23, 2024

Gov. Phil Murphy and Treasurer Elizabeth Maher Muoio today announced the release of a statewide disparity study examining public contracting opportunities for Minority and Women-Owned (MWBE) businesses. Conducted by Mason Tillman and Associates (MTA), the study reviewed statewide procurement data relating to goods and services, professional services, and construction over a five-year span and concluded that disparity in the awarding of public contracts exists across multiple minority-owned and women-owned business enterprises in those sectors.

Commissioned by the Murphy Administration in 2020, the purpose of the disparity study was to evaluate the participation of MWBEs in the state’s multi-billion dollar contracting universe and determine if additional programs are warranted to create a more equitable business environment in New Jersey.

Significant disparities were found in contracting with Minority Business Enterprises – including specifically in contracting with businesses owned by Black Americans, Asian Americans, and Hispanic Americans – for formal prime contracts in construction, professional services, and goods and services and for informal prime contracts across all industries studied. For example, minority-owned businesses represented 27.97% of the available construction businesses but received only 3.69% of the dollars for prime construction contracts valued from $65,000 to $5,710,000. Likewise, minority-owned businesses represented 23.56% of the available goods and services businesses but received only 4.24% of the dollars on prime goods and services contracts valued from $40,000 to $360,000.

Statistically significant disparities were found in contracting with Woman Business Enterprises – including in contracting with businesses owned by Caucasian females – for formal prime contracts in construction, professional services, and goods and services and for informal prime contracts across all industries studied. For example, woman-owned businesses represented 37.75% of the available professional services businesses but received only 9.91% of the dollars on prime professional services contracts valued from $40,000 to $800,000.

In the award of state contracting agencies’ subcontracts in the construction industry, the study found statistically significant disparities in subcontracts awarded to Minority Business Enterprises, including specifically businesses owned by Black Americans and Asian Americans.

In the award of state contracting agencies’ subcontracts for professional services, the study found statistically significant disparities in subcontracts awarded to businesses owned by Black Americans and Hispanic Americans and to Woman Business Enterprises, including businesses owned by Caucasian females.

Conversely, the study found statistically significant overutilization of businesses owned by non-minority males across all areas studied.

According to Murphy, “The critical findings from this study will ensure the state is well equipped to address the inequities in public contracting opportunities faced by Women-owned, Minority-owned businesses, and service-disabled Veteran-owned businesses. I look forward to the work ahead as we identify responsive state action while launching initiatives to promote equitable contracting practices with the support of our lawmakers and the business community.”

Michele Siekerka, president and CEO of the New Jersey Business & Industry Association (NJBIA), commented that data found in the statewide disparity study is compelling, but unfortunately not unforeseen.

“There are great challenges to doing business in New Jersey, which unquestionably disproportionately harms minority- and women-owned businesses as we have seen and heard firsthand during our Diversity and Inclusion council meetings and our everyday work with the business community,” Siekerka said.

“Clearly, more equal opportunity needs to be provided in terms of access to state government contracts and this study should be a catalyst to making that happen. However, much-needed action items should also be grounded on lessening the costs of doing business and reducing overregulation that serves as an impediment to all New Jersey businesses, Siekerka continued. “If we make our great and diverse state better for all businesses, we will lift up minority and women-owned businesses to an even greater extent. And the lifting of MWBEs will help all New Jersey businesses, as well, in addition to New Jersey’s overall economy.”

In conducting the study, the state’s first since 2005, MTA reviewed more than 1.2 million records and 240,000 contracts from over 60 contracting agencies, authorities, commissions, state colleges and universities. The contracts reviewed were awarded between July 1, 2015 and June 30, 2020 and included procurement of goods and services, professional services, and construction.

While the study was proceeding, Treasury has been undertaking a series of initiatives to promote equitable contracting practices. For example, after determining that the lack of a statewide, centralized repository with uniform data for collection and retrieval made it harder to analyze contractor diversity, in January 2023, Treasury launched a statewide web-based Supplier Diversity Management System (SDMS) to collect real-time vendor, contract, and diverse spending data. The SDMS will allow for real-time monitoring and analysis of statewide diverse spending data, so State agencies are better able to take action when necessary. In an effort to encourage certification of MWBEs, in 2021 Treasurer Elizabeth Maher Muoio announced the waiver of the $100 fee required for all business certifications.

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