Measuring Disparity in Government Procurement: Problems with Using Census Data in Estimating Availability

The Supreme Court's ruling in City of Richmond v. J.A. Croson (1989) has restricted the use of government procurement assistance programs for minorities and women without the prerequisite support of a disparity study. Recently, an increasing number of disparity studies have been rejected by the courts as "junk science" and the related programs have been ruled unconstitutional. A central issue in these cases has been the approach used to estimate the availability of minority and women firms. Data from the Economic Census are commonly used as the basis for these availability estimates. However, there are significant problems and limitations with the Census data relative to the Croson guideline that the availability of women and minority firms should reflect the number of qualified, willing, and able firms. Given the number and difficulty of the required adjustments to the Census data, it is unlikely that these data will provide availability estimates that are accurate enough to allow for valid statistical tests of an inference of discriminatory exclusion. If minimizing court challenges is a goal of the public administrator who is responsible for the program, then the recommendation here is that a primary source of availability data should be considered. Furthermore, the information system needed to support the women and minority assistance programs should be designed and installed prior to initiating the program.