Vancouver is awarding fewer contract dollars to minority- and women-owned businesses than it should under a fair system, according to a disparity study commissioned by the city.
The study presented Monday to the Vancouver City Council found “substantial disparities” for African American, Hispanic, Native American and white woman-owned firms, while Asian American-owned firms experienced smaller disparities.
The researchers recommend developing a program that ensures minority- and women-owned businesses receive more opportunities to compete for work than they do now.
Disparity studies, although not required under Washington law, are commonly undertaken by local governments looking to improve equity in doling out contracts.
Often, the studies are a necessary step to establish programs that support minority- and women-owned businesses, including additional resources. Governments must have evidence of disparities before implementing any race-conscious programs, such as minority business programs, according to the 1989 U.S. Supreme Court decision in City of Richmond v. J.A. Croson Co.
The city of Vancouver paid Keen Independent Research, an economic consulting firm specializing in disparity studies for local governments, almost $439,000 to conduct the study.
Keen Independent Research found between January 2015 and December 2022, about 9 percent of city contract dollars went to minority- and women-owned businesses when 24 percent of these businesses were qualified and interested in city contracts and subcontracts.
In a level playing field, 27 percent of city contract dollars should have gone to minority- and women-owned businesses, according to the study.
The researchers also collected anecdotes from anonymous business owners.
Many minority business owners described barriers to accessing capital — an essential part of meeting the financial requirements of city contracts.
“The idea that I haven’t proven myself to be able to have financing is just mind-blowing to me when we like to put people of color on posters at banks and say, ‘look at how much we’re doing for our community.’ … You’re doing it with businesses that are already established and grown. That has been the most challenging,” one Native American woman who owns a professional services firm told researchers.
Others described stereotyping and discrimination during the contracting process, including women being talked down to or treated like they don’t have industry knowledge. Business owners of color also detailed hostility at job sites, racism and heightened pressure.
“In general, I always just feel like I have to do better, kind of go above (and beyond) the rest than everybody else,” one African American professional services firm owner told researchers.
Researchers recommended a series of actions to make the city’s contract awarding process more fair. This includes establishing aspirational goals for minority- and women-owned business participation, building relationships with these businesses and promoting their development, and continue contacting these businesses for contracts less than $50,000 (the threshold for contracts that don’t need public advertisement).
Allowing preference points for small businesses competing for publicly advertised contracts and a program that requires prime contractors to consider minority- and women-owned businesses (as well as socially and economically disadvantaged firms in general) for subcontract opportunities will also improve fairness, researchers said.
Councilors discussed the need for additional training for city staff reviewing contracts.
“We also need to look at our own systems and see if there’s some improvement needed there,” Councilor Diana Perez said.
