Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

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Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

NATIONAL COOPERATIVE HIGHWAY RESEARCH PROGRAM

NCHRP REPORT 644
Guidelines for Conducting
a Disparity and Availability Study
for the Federal DBE Program
Jon Wainwright
NERA ECONOMIC CONSULTING
Austin, TX

Colette Holt
COLETTE HOLT & ASSOCIATES
Chicago, IL

Subject Areas

Transportation Law

Research sponsored by the American Association of State Highway and Transportation Officials
in cooperation with the Federal Highway Administration

TRANSPORTATION RESEARCH BOARD
WASHINGTON, D.C.
2010
www.TRB.org

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

NATIONAL COOPERATIVE HIGHWAY
RESEARCH PROGRAM

NCHRP REPORT 644

Systematic, well-designed research provides the most effective
approach to the solution of many problems facing highway
administrators and engineers. Often, highway problems are of local
interest and can best be studied by highway departments individually
or in cooperation with their state universities and others. However, the
accelerating growth of highway transportation develops increasingly
complex problems of wide interest to highway authorities. These
problems are best studied through a coordinated program of
cooperative research.
In recognition of these needs, the highway administrators of the
American Association of State Highway and Transportation Officials
initiated in 1962 an objective national highway research program
employing modern scientific techniques. This program is supported on
a continuing basis by funds from participating member states of the
Association and it receives the full cooperation and support of the
Federal Highway Administration, United States Department of
Transportation.
The Transportation Research Board of the National Academies was
requested by the Association to administer the research program
because of the Board’s recognized objectivity and understanding of
modern research practices. The Board is uniquely suited for this
purpose as it maintains an extensive committee structure from which
authorities on any highway transportation subject may be drawn; it
possesses avenues of communications and cooperation with federal,
state and local governmental agencies, universities, and industry; its
relationship to the National Research Council is an insurance of
objectivity; it maintains a full-time research correlation staff of
specialists in highway transportation matters to bring the findings of
research directly to those who are in a position to use them.
The program is developed on the basis of research needs identified
by chief administrators of the highway and transportation departments
and by committees of AASHTO. Each year, specific areas of research
needs to be included in the program are proposed to the National
Research Council and the Board by the American Association of State
Highway and Transportation Officials. Research projects to fulfill these
needs are defined by the Board, and qualified research agencies are
selected from those that have submitted proposals. Administration and
surveillance of research contracts are the responsibilities of the National
Research Council and the Transportation Research Board.
The needs for highway research are many, and the National
Cooperative Highway Research Program can make significant
contributions to the solution of highway transportation problems of
mutual concern to many responsible groups. The program, however, is
intended to complement rather than to substitute for or duplicate other
highway research programs.

Project 20-76
ISSN 0077-5614
ISBN 978-0-309-11815-6
Library of Congress Control Number 2009942701
© 2010 National Academy of Sciences. All rights reserved.

COPYRIGHT INFORMATION
Authors herein are responsible for the authenticity of their materials and for obtaining
written permissions from publishers or persons who own the copyright to any previously
published or copyrighted material used herein.
Cooperative Research Programs (CRP) grants permission to reproduce material in this
publication for classroom and not-for-profit purposes. Permission is given with the
understanding that none of the material will be used to imply TRB, AASHTO, FAA, FHWA,
FMCSA, FTA, or Transit Development Corporation endorsement of a particular product,
method, or practice. It is expected that those reproducing the material in this document for
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any reprinted or reproduced material. For other uses of the material, request permission
from CRP.

NOTICE
The project that is the subject of this report was a part of the National Cooperative Highway
Research Program conducted by the Transportation Research Board with the approval of
the Governing Board of the National Research Council. Such approval reflects the
Governing Board’s judgment that the program concerned is of national importance and
appropriate with respect to both the purposes and resources of the National Research
Council.
The members of the technical committee selected to monitor this project and to review this
report were chosen for recognized scholarly competence and with due consideration for the
balance of disciplines appropriate to the project. The opinions and conclusions expressed
or implied are those of the research agency that performed the research, and, while they have
been accepted as appropriate by the technical committee, they are not necessarily those of
the Transportation Research Board, the National Research Council, the American
Association of State Highway and Transportation Officials, or the Federal Highway
Administration, U.S. Department of Transportation.
Each report is reviewed and accepted for publication by the technical committee according
to procedures established and monitored by the Transportation Research Board Executive
Committee and the Governing Board of the National Research Council.
The Transportation Research Board of the National Academies, the National Research
Council, the Federal Highway Administration, the American Association of State Highway
and Transportation Officials, and the individual states participating in the National
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or manufacturers’ names appear herein solely because they are considered essential to the
object of this report.

Published reports of the

NATIONAL COOPERATIVE HIGHWAY RESEARCH PROGRAM
are available from:
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Printed in the United States of America

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

COOPERATIVE RESEARCH PROGRAMS

CRP STAFF FOR NCHRP REPORT 644
Christopher W. Jenks, Director, Cooperative Research Programs
Crawford F. Jencks, Deputy Director, Cooperative Research Programs
Christopher J. Hedges, Senior Program Officer
Eileen P. Delaney, Director of Publications
Hilary Freer, Senior Editor

NCHRP PROJECT 20-76 PANEL
Area of Special Projects
Sally A. Howard, Office of the Governor - Kansas, Topeka, KS (Chair)
Greg Diehl, Colorado DOT, Denver, CO
Jeffery W. Brown, Alabama DOT, Montgomery, AL
Olivia Fonseca, California DOT, Sacramento, CA
Mark G. Kelsey, City of Columbus, Columbus, OH
Robert J. Shea, Pennsylvania DOT, Harrisburg, PA
Lester Woods, Jr., Missouri DOT, Jefferson City, MO
Candace J. Groudine, FHWA Liaison
Martine A. Micozzi, TRB Liaison

AUTHOR ACKNOWLEDGMENTS
The research reported herein was performed under NCHRP Project 20-76. NERA Economic Consulting was the contractor and Colette Holt & Associates was the subcontractor.
NERA Vice President Dr. Jon Wainwright was project director and co-Principal Investigator. Attorney
Colette Holt of Colette Holt & Associates was co-Principal Investigator. The other authors of this report
are Kim Stewart, M.S., Research Assistant at NERA, and J. Wesley Stewart, A.A., Research Assistant at
NERA. The work was performed under the general supervision of Dr. Wainwright and Attorney Holt.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

FOREWORD

By Christopher J. Hedges
Staff Officer
Transportation Research Board

This report presents guidelines for state departments of transportation (DOTs) on how
to conduct effective and legally defensible disparity and availability studies to meet the
requirements of the Disadvantaged Business Enterprise program for federally funded projects. It includes guidance to assist DOTs in determining when and if a disparity or availability study is recommended, a model scope of work that can be used in a request for proposals, and detailed recommendations on how to design and implement disparity and
availability studies. The report will serve as an invaluable resource for legal and contracting
staff in all state transportation agencies.

Since 1987, the U.S. DOT has required that grantees implement a Disadvantaged Business Enterprise (DBE) program based on regulations found in 49 C.F.R Parts 23 and 26. The
most current regulations, contained at 49 C.F.R Part 26, provide the states with an annual
DBE goal-setting methodology. State DOTs must set DBE goals based on demonstrable evidence of the availability of “ready, willing and able” DBEs. The regulations state that a disparity study can be used to demonstrate availability, but does not require its use. A ruling
in the Ninth Circuit Court of Appeals, however, has made the use of a valid disparity study
a legal requirement to meet the standards in that Circuit. The ruling in the Ninth Circuit as
well as those in other Circuits demonstrates a trend toward utilizing a disparity study to justify race-conscious elements of a DOT DBE program in response to constitutional challenges. Thus, state DOTs, especially those in the Ninth Circuit, will be conducting disparity studies at considerable expense.
There are no guidelines or standards provided to states by the U.S. DOT on the elements
of an effective disparity and availability study. Because each state is unique, a broad, overarching framework is needed to guide the development and conduct of disparity and availability studies.
Under NCHRP Project 20-76, a research team led by NERA Economic Consulting
reviewed current DOT goal-setting methods, conducted a thorough review of existing disparity and availability studies, and analyzed relevant court decisions. Current studies were
compared according to key elements: definition and use of geographic and product markets, development of availability estimates, analysis of contracting disparities, analyses of
economy-wide disparities, and collection of anecdotal evidence. A model scope of work was
developed that identified major elements to be included and offered tips for a successful
process. The report includes appendices on the importance of collecting comprehensive
subcontract data, understanding the concept and definition of “capacity,” and legal standards for race-conscious government contracting programs.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

CONTENTS

1
1
2
2
7
8

9
9
12
16
25

29
29
29
30
48
48
51
51

54
54
54
55
55
55
56
56
56
57
57
58

60
60
60
62
62
63

Chapter 1 Overview of Legal Standards for Disadvantaged
Business Enterprise Programs
Strict Scrutiny Standard
Intermediate Scrutiny
Strict Scrutiny as Applied to the Disadvantaged Business Enterprise Program
Implications and Effects of Western States
TRB Model Disparity Study Project

Chapter 2 Designing Defensible DBE Programs
Introduction
Guidelines for Conducting Disparity and Availability Studies
Review of Existing Studies
Current State DOT Goal-Setting Methods

Chapter 3 Model Disparity Study
Determination of Relevant Geographic Market Area
Determination of Relevant Product Market
Estimation of DBE Availability
State DOT Utilization Analyses
State DOT Disparity Analyses
Economy-Wide Disparity Analyses for the Relevant Markets
Anecdotal Analyses

Chapter 4 Study Resource Issues
Sources of Funds
Management of the Study Process
In-House Studies versus Outside Consultants
Availability Studies versus Disparity Studies
Collection of Subcontracting Data
Subrecipient Data
Examples of Costs for Other Analytical Elements
Multi-Jurisdiction Studies
Multi-Agency State Studies
Model Study Scope of Work
Tips for a Successful DBE Disparity or Availability Study RFP Process

Appendix A Importance of Comprehensive
Subcontract Data Collection
Introduction
Non-DBE Subcontract Data Is Just as Important as DBE Subcontract Data
Subcontract Data Allow Detailed Industry Statistics
Methods for Collecting Subcontract Data in Anticipation of Future Studies
Methods for Addressing Missing Subcontract Data for Current Studies

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

Appendix B Understanding “Capacity”

Appendix C Legal Standards for Race-Conscious Government
Contracting Programs

68
79
82
84
88
92
94

Strict Scrutiny Standard
Strict Scrutiny as Applied to the Disadvantaged Business Enterprise Program
State DOTs’ Implementation of Part 26 Must be Narrowly Tailored
Judicial Review of DBE Goal Setting Under Part 26
Additional Evidence of Discrimination
Additional Elements of Narrowly Tailored DBE Goal Setting
Implications of Western States

Appendix D Glossary

References

99
100
101
101
101
102

Cases (Alphabetical)
Cases (By Circuit)
Statutes
Regulations
General References
Disparity and Availability Studies

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

CHAPTER 1

Overview of Legal Standards for
Disadvantaged Business Enterprise Programs
The project to develop the National Model Disparity Study
and Request for Proposals for state departments of transportation (state DOTs) seeks to address the evidentiary tests created
by the federal courts that govern the Disadvantaged Business
Enterprise (DBE) Program for federally assisted transportation contracts.1 In general, race- and gender-based government actions are subject to high levels of scrutiny: a program
must be based on strong evidence and designed to be narrow
in its remedies.
It is in response to these strictures that disparity studies of
discrimination in the market for public contracts were first
conducted. It is therefore crucial to canvass the state of the
law to develop national guidelines for the examination of evidence of discrimination in the market for federally assisted
transportation contracts.
This Model Study Project is designed to assist state DOTs
in meeting the regulatory goal-setting requirements in conformance with strict constitutional scrutiny. Where state
DOT DBE programs have been challenged, a disparity or
availability study has survived judicial review. It should provide evidence relevant to the two steps in annual overall goal
setting—estimating the base figure of DBE availability and
the expected DBE utilization “but for” the effects of the DBE
program and discrimination—as well as data relevant to
contract-level goal setting.2 Specifically, we were directed to
“prepare an analysis of the federal DBE goal-setting regulations and case law in all federal circuits considering challenges
to the constitutionality of the U.S. Disadvantaged Business
Program. Identify common themes and key distinguishing
factors in state DOT DBE programs that influenced the court
ruling on constitutionality.”
What follows is a summary of the case law and regulations
relevant to the development of a disparity study model, with

the focus on evidentiary issues. A more detailed discussion,
with case and other citations, is provided in Appendix C to
the report.

Strict Scrutiny Standard
In City of Richmond v. J. A. Croson Co.,3 the United States
Supreme Court established the constitutional contours of permissible race-based public contracting programs. Strict scrutiny
requires that a government entity prove both its “compelling
interest” in remedying identified race discrimination based
upon a “strong basis in evidence,” and that the measures
adopted to remedy that discrimination are “narrowly tailored”
to that evidence.
In Croson, the Court struck down Richmond’s Minority
Business Enterprise Plan that required prime contractors
awarded city construction contracts to subcontract at least 30%
of the project to minority-owned business enterprises (MBEs).
In affirming the court of appeals’ determination that the plan
was unconstitutional, the Court held:
[A] state or local subdivision . . . has the authority to eradicate
the effects of private discrimination within its own legislative jurisdiction. . . . [Richmond] can use its spending powers to remedy private discrimination, if it identifies that discrimination
with the particularity required by the Fourteenth Amendment. . . . [I]f the City could show that it had essentially become
a “passive participant” in a system of racial exclusion . . . [it]
could take affirmative steps to dismantle such a system.

Having found that Richmond had not presented evidence to
support its compelling interest in remedying discrimination—
the first prong of strict scrutiny—the Court went on to make
two observations about the narrowness of the remedy—the

49 C.F.R. Part 26.
See infra at pp. 38–39.

488 U.S. 469 (1989).

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

second prong of strict scrutiny. First, Richmond had not considered race-neutral means to increase MBE participation.
Second, the 30% quota had no basis in evidence and was applied regardless of whether the individual MBE had suffered
discrimination.
Apparently recognizing that the opinion might be misconstrued to categorically eliminate all race-conscious contracting efforts, the Court explicitly stated:
Nothing we say today precludes a state or local entity from taking action to rectify the effects of identified discrimination within
its jurisdiction. If the City of Richmond had evidence before it
that non-minority contractors were systematically excluding minority businesses from subcontracting opportunities, it could
take action to end the discriminatory exclusion. Where there is a
significant statistical disparity between the number of qualified
minority contractors willing and able to perform a particular
service and the number of such contractors actually engaged by
the locality or the locality’s prime contractors, an inference of
discriminatory exclusion could arise. . . . Moreover, evidence of
a pattern of individual discriminatory acts can, if supported by
appropriate statistical proof, lend support to a local government’s determination that broader remedial relief is justified.

In Adarand v. Peña,4 the court extended the analysis of strict
scrutiny to race-based federal enactments such as the DBE
Program. Just as in the local government context, the national
government must have a compelling interest for the use of race
and the remedies adopted must be narrowly tailored to the
evidence relied upon.

Intermediate Scrutiny
In general, courts have subjected preferences for WomenOwned Business Enterprises (WBEs) to “intermediate
scrutiny”: gender-based classifications must be supported by
an “exceedingly persuasive justification” and “substantially
related” to the objective. However, appellate courts reviewing
the constitutionality of the DBE Program have applied strict
scrutiny to the gender-based presumption of social disadvantage. Therefore, state DOTs would be wise to meet the rigors
of strict scrutiny for gender preferences.

Strict Scrutiny as Applied to
the Disadvantaged Business
Enterprise Program
In the wake of Adarand, Congress reviewed and revised
the DBE Program’s authorizing statute and implementing
regulations. To date, every court that has considered the

515 U.S. 200 (1995) (Adarand III).

issue has found the regulations to be constitutional on
their face.5
Congress Established its Compelling Interest
in Remedying Discrimination
All courts agree that the first prong of strict scrutiny is satisfied by the Congressional record that forms the basis for the
DBE Program. Relevant evidence included:
• Disparities between the earnings of minority-owned firms

and similarly situated white-owned firms;
• Disparities in commercial loan denial rates between black

business owners compared to similarly situated white business owners;
• The large and rapid decline in minorities’ participation in
the construction industry when race-conscious contracting programs were struck down or abandoned; and
• Various types of overt and institutional discrimination by
prime contractors, trade unions, business networks, suppliers, and sureties against minority contractors.
It is important to note Congress need not make specific
findings on every possible ethnic subgroup that might be
subject to discrimination. Moreover, much of the evidence
of public and private sector discrimination went beyond the
results of the DBE Program to address whether a recipient
would be a passive participant in a discriminatory federal-aid
market without race-conscious measures. Therefore, public
and private discrimination is generally relevant not only in
government contracts but also in the construction industry.
DBE Regulations are Narrowly Tailored
Next, the regulations are narrowly tailored. Part 26 provides that:
• The overall goal must be based upon demonstrable evi-

dence of the number of DBEs ready, willing, and able to
participate on the recipient’s federally assisted contracts;6
• The goal may be adjusted to reflect the availability of
DBEs but for the effects of the DBE Program and of
discrimination;7
5See Adarand Constructors, Inc. v. Slater, 228 F.3d 1147 (10th Cir. 2000), cert.
granted, 532 U.S. 941, then dismissed as improvidently granted, 534 U.S. 103
(2001) (Adarand VII); Sherbrooke Turf, Inc. v. Minnesota Department of Transportation, and Gross Seed Co. v. Nebraska Department of Roads, 345 F.3d. 964
(8th Cir. 2003), cert. denied, 541 U.S. 1041 (2004); Western States Paving Co., Inc.
v. Washington Department of Transportation, 407 F.3d 983 (9th Cir. 2005), cert.
denied, 546 U.S. 1170 (2006); Northern Contracting, Inc. v. Illinois Department of
Transportation, 473 F.3d 715 (7th Cir. 2007) (Northern Contracting III).
649 C.F.R. § 26.45(b).
7
49 C.F.R. § 26.45(d).

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

3
• The recipient must meet the maximum feasible portion
8

•

•
•
•
•

of the goal through race-neutral measures, as well as estimate that portion of the goal it predicts will be met through
such measures;9
The use of quotas is not permitted,10 and set-asides are limited only to extreme circumstances when no other method
could reasonably be expected to redress egregious instances
of discrimination;11
The goals are to be adjusted during the year to remain
narrowly tailored;12
Absent bad faith administration of the program, a recipient
cannot be penalized for not meeting its goal;13
Eligibility is limited to small firms owned by persons whose
net worth is less than $750,000;14
Certification is available to persons who are not presumptively disadvantaged but can demonstrate actual social and
economic disadvantage;15
The presumption of social disadvantage for minorities and
women is rebuttable;16
The firm must be a small business;17
Exemptions from any or all program requirements are
available;18 and
The authorizing legislation is subject to Congressional
reauthorization that will ensure periodic public debate.

State DOTs’ Implementation of Part 26
Must be Narrowly Tailored
Part 26 requires that a state DOT narrowly tailor its DBE
efforts to the evidence of discrimination in its marketplace.
The regulations prescribe narrowly tailored methods for setting annual DBE goals to achieve a level playing field for DBEs.
49 C.F.R. § 26.45 provides that recipients must set an overall
goal for DBE participation in their federally assisted contracts
“based on demonstrable evidence of the availability of ready,
willing and able DBEs relative to all businesses ready, willing
and able to participate on your DOT-assisted contracts (hereafter, the ‘relative availability of DBEs’). The goal must reflect
your determination of the level of DBE participation you
would expect absent the effects of discrimination.”
Step 1 Analysis: Estimating DBE Availability. The process
to set the overall annual DBE goal is divided into two steps
8

49 C.F.R. § 26.51(a)
9
49 C.F.R. § 26.51(c).
10
49 C.F.R. § 26.43(a).
11
49 C.F.R. § 26.43(b).
12
49 C.F.R. § 26.51(f ).
13
49 C.F.R. § 26.47(a).
14
49 C.F.R. § 26.67(b).
15
49 C.F.R. Part 26, Appendix E.
16
49 C.F.R. § 26.67(b).
17
49 C.F.R. § 26.65.
18
49 C.F.R. § 26.15(a).

under 49 C.F.R. § 26.45(c). Step 1 is to determine “a base figure for the relative availability of DBEs. The following are examples of approaches that you may take toward determining
a base figure. . . . (1) Use DBE Directories and Census Bureau
Data. . . . (2) Use a bidders list. . . . (3) Use data from a disparity study. . . . (4) Use the goal of another DOT recipient. . . .
(5) Alternative methods. Subject to the approval of the DOT
operating administration, you may use other methods to
determine a base figure for your overall goal.”
Step 2 Analysis: Examining Evidence of Disparities in
DBE Opportunities. After the state DOT has estimated its
Step 1 base figure of DBE availability, it must estimate the level
of DBE availability in a discrimination-free market, that is,
DBE availability “but for” discrimination. 49 C.F.R. § 26.45(d)
requires that state DOTs must consider the “current capacity
of DBEs to perform work in your DOT-assisted contracting
program, as measured by the volume of work DBEs have
performed in recent years; [and] [e]vidence from disparity
studies conducted anywhere within your jurisdiction, to the
extent it is not already accounted for in your base figure” and
may consider “[s]tatistical disparities in the ability of DBEs to
get the financing, bonding and insurance” and “[d]ata on employment, self-employment, education, training and union
apprenticeship programs. . . . If you attempt to make an adjustment to your base figure to account for the continuing effects
of past discrimination (often called the “but for” factor) or the
effects of an ongoing DBE program, the adjustment must be
based on demonstrable evidence that is logically and directly
related to the effect for which the adjustment is sought.” Disparity or availability studies should provide data probative of
this inquiry.
Judicial Review of Disadvantaged Business
Enterprise Goal Setting Under Part 26
To develop a model disparity or availability study for
state DOTs, it is critical to understand the cases reviewing
state DOTs’ application of Part 26. We briefly summarize the
three decisions that speak directly to the types of evidence
relevant and necessary for state DOTs’ narrowly tailored
program implementation.
Northern Contracting, Inc. v. Illinois Department of
Transportation. In the most recent case, the Seventh Circuit Court of Appeals held that the Illinois Department of
Transportation’s (IDOT’s) Federal Fiscal Year (FFY) 2005
DBE Plan was narrowly tailored.
IDOT had commissioned an availability study to meet Part
26’s requirements.19 For Step 1, the IDOT Study developed a
19
NERA Economic Consulting. 2004a. Disadvantaged Business Enterprise Availability Study: Prepared for the Illinois Department of Transportation.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

“custom census” designed to provide an accurate calculation
of the current relative availability of DBEs, which employed a
seven-step analysis that:
• Created a database of representative IDOT projects;
• Identified the appropriate geographic market for IDOT’s

contracting activity;
• Identified the appropriate product market for IDOT’s con-

tracting activity;
• Counted all businesses in those relevant markets;
• Identified minority-owned and women-owned businesses

in those markets;
• Verified the ownership status of minority-owned and

women-owned businesses; and
• Verified the ownership status of all other firms.

For Step 1, the study estimated that DBEs comprised 22.77%
of IDOT’s available firms.
For Step 2, the study examined whether and to what extent
there were disparities between the rates at which minorities
and women form businesses relative to similarly situated
white men, as well as disparities in the relative earnings of
those businesses. Controlling for numerous variables such as
the owner’s age, education, and the like, the study found that
in a race-neutral marketplace, the availability of DBEs would
be approximately 20.8% higher, yielding a Step 2 estimate of
DBE availability “but for” discrimination of 27.51%.
In addition to the IDOT Study, the court considered:
• An availability study designed to meet Part 26 conducted
•

•

•
•
•

•

for Metra, the Chicago commuter rail agency;
Expert reports from a decision holding that the City of
Chicago had a compelling interest in its minority and women
business program for construction contracts;
Expert reports and anecdotal testimony presented to
the Chicago City Council in support of the city’s revised
Minority and Women Business Enterprise (M/WBE) Program ordinance;
Anecdotal evidence gathered at IDOT’s public hearings on
the DBE program;
Data on DBE utilization on construction projects in “unremediated” markets without DBE goals;
DBE utilization of 1.6% in the Illinois State Toll Highway
Authority’s voluntary DBE program for non-federal-aid
contracts; and
IDOT’s “zero goal” experiment, where DBEs received approximately 1.5% of the total value of contracts without
goals.

The trial and appellate courts held this to be sufficient
proof of discrimination such that race-neutral measures
alone would be inadequate to ensure that DBEs operate on a

“level playing field” for IDOT’s contracts and subcontracts.
Of particular importance for the Model Study Project is the
court’s affirmance of estimating the availability of DBEs by
relying on the study’s “custom census” approach rather than
simply counting the certified DBEs among IDOT bidders,
prequalified prime contractors, and registered subcontractors, as the plaintiff had urged. The court held that the remedial nature of the program favors a method of DBE availability
calculation that “casts a broader net.”
Sherbrooke Turf, Inc. v. Minnesota Department of Transportation. The Minnesota Department of Transportation’s
(Mn/DOT’s) implementation of Part 26, based on a similar
availability study, was likewise held to be constitutional. After
holding that Congress had ample evidence of discrimination
against DBEs in the market for federal-aid transportation contracts, the Eighth Circuit noted that “Sherbrooke presented
evidence attacking the reliability of the data the state used in
determining its recommended overall goal.” But Sherbrooke
“failed to establish that better data was [sic] available or that
Mn/DOT was otherwise unreasonable in undertaking this
thorough analysis and in relying on its results. The precipitous
drop in DBE participation in 1999, when no race-conscious
methods were employed, supports Mn/DOT’s conclusion
that a substantial portion of its 2001 overall goal could not be
met with race-neutral measures.”20
In Sherbrooke’s companion case, the Nebraska Department
of Roads’ (NDORs’) DBE goal based on an availability study21
was upheld.
Western States Paving Co., Inc. v. Washington State
Department of Transportation. The result from the Ninth
Circuit was dramatically different in the challenge to the Washington State Department of Transportation’s (WSDOT’s) DBE
Program. While the DBE Program’s legislation and regulations were held to facially satisfy strict scrutiny, WSDOT’s
implementation of the regulations was not sufficiently narrowly tailored. Although a recipient need not demonstrate an
independent compelling interest for its DBE Program, it is
necessary to undertake an “as applied” inquiry into whether
the state’s program is narrowly tailored to its marketplace.
The Ninth Circuit held that grantees must proffer additional evidence of discrimination beyond that relied upon by
Congress to apply race-conscious contract goals to meet the
annual goal, including that discrimination must have affected
all of the presumptively socially disadvantaged groups included
in Part 26.

Sherbrooke, 345 F.3d. at 973–74.
MGT of America, Inc., September 2000, “Availability and Goal Setting Study.”
This study used the bidders list approach to estimating Step 1 availability. The
Eighth Circuit did not comment on this method.
21

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

WSDOT determined its Step 1 base figure of DBE availability by dividing the number of certified DBEs by the total
number of establishments in the Census Bureau’s County
Business Patterns (CBP) database. In Step 2, it followed the
U.S.DOT’s guidelines and adjusted the base figure to reflect
the average of the Step 1 estimate averaged with the median
of prior 5 years’ DBE participation. WSDOT did not have statistical evidence upon which to make an adjustment for discriminatory barriers and therefore could only rely upon the
gap between its Step 1 estimate of 14% and the 9% DBE participation on contracts without goals. However, the court
held that this 14% figure reflects the effects of the DBE Program, and thus is not indicative of DBE utilization in a raceneutral market. Further, the disparity between DBE availability and DBE utilization on race-neutral contracts was entitled
to little weight because it did not account for the “relative
capacity” of DBEs. Finally, the state did not rely upon any
anecdotal evidence of discrimination in Washington’s transportation marketplace in setting its goal.
The opinion is unclear how much evidence of discrimination in a recipient’s jurisdiction is necessary to support the use
of race-conscious contract goals. The court somewhat collapses
the compelling interest requirement of “strong evidence” of
discrimination with the requirement that the remedy be narrowly tailored to that evidence. The regulations disavow the
need for grantees to conduct disparity studies, yet the opinion demands evidence that closely resembles a disparity study.
It also seems to confuse the setting of an overall agency
goal—the expected DBE participation in a discriminationfree market—with the means used to achieve that goal—the
use of race-conscious subcontracting goals. Even if a recipient
concluded that its market was fully fair and open, that does
not mean that it would not set a goal, only that it would not
employ race-based measures to meet it.
Perhaps this merely illustrates that if a party presents no
study, the court then lacks guidance on the correct economic
and legal analysis of discrimination. The Ninth Circuit pointed
out that “[b]oth Minnesota and Nebraska had hired outside
consulting firms to conduct statistical analyses of the availability and capacity of DBEs in their local markets, and the
Eighth Circuit relied upon those studies to hold that the
States’ DBE Programs independently satisfied strict scrutiny’s
narrow tailoring requirement.”22 As a result of no study and
no expert testimony, the Ninth Circuit made several serious
errors, including imposing a requirement for a Step 2 adjustment, ignoring the effects of discrimination on DBE “capacity,”
and misstating the test for whether a disparity is substantively
significant.
Given the Ninth’s Circuit’s reliance on Sherbrooke, what
WSDOT lacked was the type of expert statistical evidence pre22

407 F.3d at 997.

sented by IDOT, Mn/DOT, and NDOR in support of their
programs. The Sherbrooke and Northern Contracting courts
reviewed ample targeted evidence of DBEs’ availability to
perform on state DOT contracts and subcontracts, as well as
evidence of the discriminatory barriers those firms face in
pursuing such opportunities.
Additional Evidence of Discrimination
Step 2 requires recipients to consider evidence of the effects
of the DBE Program and discrimination on DBE availability.
The case law is very sparse regarding analysis of the elements
of the determination of availability “but for” the effects of discrimination. The Western States opinion does not address what
would suffice, and IDOT determined not to make a Step 2 adjustment. Sherbrooke noted without further comment that
the DBE availability figure was adjusted from 11.4 to 11.6%.
This report therefore looks to cases construing state and
local M/WBE programs for guidance on the types of evidence
relevant to whether discrimination continues to affect the
Step 1 base figure. Proof of the disparate impacts of economic
factors on minority- and women-owned firms and the disparate treatment of such firms by actors critical to success
should be shown using statistics and economic models to examine the effects of systems or markets on different groups.
Anecdotal evidence of personal experiences with discriminatory conduct, policies, or systems is also probative. Specific
evidence of discrimination or its absence may be direct or circumstantial and should include economic factors and opportunities in the private sector affecting the business success of
minority and women disadvantaged business enterprises
(M/W/DBEs).
Utilization of DBEs. Disparity studies examine whether
and to what extent there are disparities between the availability of DBEs and their utilization on public and private sector
contracts and subcontracts. This is known as the “disparity
index” or “disparity ratio,” which is calculated by dividing the
utilization of DBEs by the availability of DBEs. Courts have
looked to disparity indices in determining whether Croson’s
evidentiary foundation is satisfied. An index less than 100%
indicates that a given group is being utilized less than would
be expected based on its availability, thereby supporting an
inference of the present effects of discrimination.
The government need not prove that the statistical inferences
of discrimination are “correct.” Statistical evidence creating
inferences of discriminatory motivations has been held to
meet strict scrutiny. It is the plaintiff who must then persuade
the court that such proof does not support those inferences.
Past utilization of DBEs on state DOT contracts is useful in
suggesting a “floor” of the availability of DBEs that are “ready,
willing and able.” That DBEs are utilized on the agency’s

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

contracts at greater percentages than the Step 1 headcount
does not end the inquiry into whether discrimination still creates barriers to equal contracting opportunities. However,
where the government has been implementing race-conscious
remedies like the long-standing DBE Program, DBE utilization may merely reflect those efforts; it does not signal the end
of discriminatory barriers but rather the program’s success in
reducing those barriers.
While § 26.45(d) clearly defines “capacity” as past utilization, some agencies have added a gloss of “capacity analysis”
to lower the Step 1 base figure. They note that DBEs are often
smaller and newer than established white male-owned businesses and may lack the qualifications needed for DOT work
(prior DOT track record, high bonding capacity, ownership
or long-term leases of equipment, existing union agreements,
etc.). The agency therefore downgrades the remedial goal to
reflect the “real-world” effects of discrimination.
The Ninth Circuit has further confused the issue by rejecting
the only type of “capacity” marker required to be considered by
the regulations it held to be constitutional—past state DOT
DBE utilization. WSDOT argued that DBE capacity should
reflect the relationship between its Step 1 availability estimate
and its past utilization. The court, however, held that was “no
evidence of discrimination” because utilization was affected
by the imposition of DBE contract goals. It then rejected the
disparity between DBE availability and utilization because the
availability measure did not statistically control for the “relative capacity” (which it did not define). The court does not
appear to have contemplated that the existence of the program
would provide DBEs with more “capacity” (that is, supply) by
creating more opportunities to work (that is, demand) by the
application of contract goals.
In Northern Contracting, the Seventh Circuit recognized that
lack of DBE “capacity” reflects the injury of discrimination; it
is not an argument for limiting or abandoning the cure. As discussed in Appendix B, applying a “capacity” adjustment is scientifically unsound and contrary to the DBE Program’s objective of remedying, not affirming, the results of discrimination.
Size, longevity, bonding limits, etc., have been affected and reduced by the discrimination the legislation seeks to ameliorate,
and therefore cannot be used to dilute the remedy. Proper statistical analysis should not control for the variables affected by
the behavior sought to be isolated. Moreover, the construction
industry is particularly elastic, such that any firm’s “capacity”
today is not its “capacity” tomorrow, as the award of new contracts, the completion of existing projects, and the ability to
employ temporary workers and rent equipment make the
ability to perform a particular contract at a particular moment
impossible to determine from a research standpoint.
Economy-Wide Evidence of Discrimination. Evidence
of discriminatory barriers in the private sector or economy-

wide activities is also highly relevant to the state DOT’s passive participation in discrimination. If DBEs are suffering
discrimination in the private markets, the government has an
interest in ensuring that its own contracting activities do not
further this evil.
Economy-wide evidence has consisted of various types.
Barriers to the formation of DBE contractors have included
the following:
• Exclusion from “good old boy” networks, often the result of

several generations of family participation in the industry;
• Barriers to union membership; and
• Race-based denial of access to start-up and working capital.

Barriers to competition by existing DBEs have included the
following:
• Nonsolicitation of DBEs in the absence of DBE goals;
• Bid shopping of DBE quotes to non-DBEs;
• Industry domination by “informal, racially exclusionary

business networks”;
• Discrimination by surety bonding companies; and
• Price and delivery discrimination by suppliers.

Unremediated Markets Data. It is critical to measure the
participation of minority- and women-owned firms in the absence of race-conscious goals, if such evidence is available.
Evidence of race and gender discrimination in relevant “unremediated” markets, that is, markets that have no raceconscious subcontracting goals, provides an important indicator of the effects of the DBE Program and the level of DBE
participation to be expected in the absence of DBE contract
goals, that is, a totally race-neutral program.
The courts are clear that the government has a compelling
interest in not financing the evil of private prejudice with
public dollars. If DBE utilization is below availability in unremediated markets, then an inference of discrimination may
be supportable. Numerous courts have recognized that the
virtual disappearance of M/W/DBE participation after programs have been enjoined or abandoned strongly indicates
substantial barriers remain to the participation of minority
contractors. This analysis addresses whether the government has been and continues to be a “passive participant”
in such discrimination, in the absence of race-conscious
remedies. Thus, the results of nongoals contracts can help
to demonstrate that, but for the interposition of remedial
race-conscious measures, discrimination would lead to disparities in government contracting.
Anecdotal Evidence. Anecdotal evidence of experiences
with discrimination in contracting opportunities, including
testimony from other governments’ studies and programs, is

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

relevant since it goes to the question of whether observed statistical disparities are due to discrimination and not to some
other nondiscriminatory cause or causes. Testimony about
discrimination by prime contractors, unions, bonding companies, suppliers, and lenders has been found relevant regarding barriers both to minority subcontractors’ business formation and to their success on governmental projects. While
anecdotal evidence is insufficient standing alone, such proof
“may bring cold numbers convincingly to life.” There is no
requirement that anecdotal testimony be verified.
Additional Elements of Narrowly
Tailored DBE Goal Setting
Definition of State DOT’s Marketplace. Part 26 directs
grantees to set goals based on the “relative availability of
DBEs in your market.”23 State DOTs must therefore apply
economic principles to empirically establish the geographic
and industry dimensions of their contracting marketplace to
ensure that the evidence is narrowly tailored. The studies relied upon by IDOT, Mn/DOT, and NDOR defined the relevant geographic market as those locations and industries that
collectively accounted for at least 75% of the contract dollars
awarded.
Race- and Gender-Neutral Remedies. Race- and genderneutral approaches are a necessary component of a defensible and effective DBE Program. The Constitution and the
regulations require that they be used to the maximum feasible extent and applied in good faith. Such measures include
unbundling of contracts into smaller units, providing technical support, and addressing issues of financing, bonding, and
insurance important to all small and emerging businesses.24
Difficulty in accessing procurement opportunities, restrictive
bid specifications, excessive experience requirements, and
overly burdensome insurance and/or bonding requirements,
for example, might be addressed by recipients without resort
to using race or gender in their decision making. Further,
governments have a duty to ferret out and eliminate discrimination against minorities and women by their contractors,
staff, lenders, bonding companies, or others.
Collecting data is another necessary race-neutral measure.
Agencies should track the utilization of M/W/DBEs as a measure of their success in the bidding process, including as subcontractors. Part 26 goes further in mandating the creation
and maintenance of a bidders list.25
However, strict scrutiny does not require that every raceneutral approach must be implemented and then proven ineffective before race-conscious remedies may be utilized.

While an entity must give good-faith consideration to raceneutral alternatives, every possible such alternative need not
be exhausted.
Annual and Contract Goal Setting. DBE goals must be
substantially related to the availability of such firms in the relevant market. To freeze the goals at current head counts would
set the results of discrimination—depressed DBE availability—
as the marker of the elimination of discrimination. It therefore
should be reasonable for the government to seek to attempt to
level the racial playing field by setting targets somewhat higher
than the current head count. Thus, 49 C.F.R. § 26.51 requires
grant recipients to determine the availability of DBEs in their
marketplaces, absent the presence of discrimination.
In addition to the overall, aspirational goals for their annual, aggregate spending, state DOTs must set subcontracting goals for specific projects based upon the availability of
DBEs to perform the anticipated scopes of subcontracting,
not reiterate annual aggregate targets.26 Not only is contractspecific goal setting probably necessary to ensure constitutionally required flexibility, but also setting goals that reflect
the reality of the scopes of work of the job instead of overall
agency spending targets reduces the need to conduct goodfaith effort reviews because bidders are more likely to achieve
realistic targets. Contract goals also reduce the temptation to
create “front” companies and sham participation to meet
goals not reflective of the project.

Implications and Effects
of Western States
The implications and effects of Western States have been
profound. All grantees in the Ninth Circuit have been directed
to suspend the use of subcontracting goals until the opinion’s
evidentiary standards are satisfied. How to meet those standards led in large part to TRB’s commissioning of this report.
U.S.DOT Guidance for Ninth Circuit Recipients
In response to Western States, the U.S.DOT General Counsel, in 2005, provided guidance that all Ninth Circuit grantees
that lacked sufficient evidence of discrimination or its effects
were to submit all race-neutral overall goals for FFY 2006 and
an action plan, with timetables, to conduct a study.
In particular, the guidance provides the following:
• The study should ascertain the evidence for discrimination
and its effects separately for each of the groups presumed by
Part 26 to be disadvantaged.
• The study should include an assessment of any anecdotal and
complaint evidence of discrimination.

49 CFR §26.45(b).
49 C.F.R. § 26.51(b).
25
49 C.F.R. § 26.11(c).
24

49 C.F.R. § 26.51.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

8
• Recipients may consider the kinds of evidence that are used in
‘Step 2’ of the Part 26 goal-setting process, such as evidence of
barriers in obtaining bonding and financing, and disparities
in business formation and earnings.
• With respect to statistical evidence, the study should rigorously determine the effects of factors other than discrimination that may account for statistical disparities between DBE
availability and participation. This is likely to require a multivariate/regression analysis.
• The study should quantify the magnitude of any differences
between DBE availability and participation, or DBE participation in race-neutral and race-conscious contracts. Recipients
should exercise caution in drawing conclusions about the
presence of discrimination and its effects based on small differences.
• In calculating availability of DBEs, the study should not rely
on numbers that may have been inflated by race-conscious
programs or that may not have been narrowly tailored.
• Recipients should consider, as they plan their studies, evidencegathering efforts that Federal courts have approved in the
past. These include the studies by Minnesota and Nebraska
cited in Sherbrooke Turf . . . [and] the Illinois evidence cited
in Northern Contracting.

DBE Program Implementation and Goal Setting
in the Ninth Circuit
While the Guidance provided the contours of the types of
evidence to be analyzed, precisely what evidence a defensible
study should include in the Ninth Circuit is not established.
If WSDOT had presented a Sherbrooke/Northern Contractingtype availability study and proffered expert testimony in support of its analysis, then the court may have approved the
program. Whether additional evidence of discrimination of
the type presented at the Northern Contracting trial should
also be included is uncertain because while the Western States
court suggests disparity evidence is required, it also relied
upon Sherbrooke where such evidence was not presented. The
Seventh Circuit explained the Ninth Circuit’s misreading of
a previous Seventh Circuit case upon which the Ninth Circuit
heavily relied, but the IDOT trial presented evidence of the
type referred to by the Ninth Circuit, so it is again impossible to know the outcome had Illinois relied solely upon its
availability study.
What is certain is that at a minimum, Ninth Circuit grantees,
and perhaps all U.S.DOT aid recipients, must significantly cus-

tomize their DBE goals to withstand strict scrutiny. It is not
enough to plug the Step 1 availability estimate into a formula
without considering the effects of discrimination. Western
States also casts doubt on the value of using the state DOT’s
past levels of DBE utilization as a measure of the availability of
DBEs “but for” discrimination because of the interposition of
the DBE program. Any adjustment must be a quantifiable representation of the qualitative judgment that the ongoing effects
of past or current discrimination either do or do not continue
to impede DBEs’ full and fair access to the recipient’s market.
Western States further implies, and the U.S.DOT guidance
provides, that when a Ninth Circuit recipient determines
that not all the enumerated groups have suffered discrimination in its market, it must petition U.S.DOT for a waiver of
the prohibition against separate goals for racial and ethnic
minorities and white women. If a group is not found to suffer discrimination in the state DOT’s marketplace, then certified DBEs owned by such persons cannot be counted by a
prime contractor toward meeting a DBE contract goal. For
example, in response to their disparity studies’ findings of insufficient evidence of discrimination, a waiver to remove
Hispanic and Subcontinent Asian males from goal credit has
been granted to the California Department of Transportation’s (Caltrans’), and the Oregon Department of Transportation’s (ODOT’s) request to exclude white females and
Hispanics is pending.

TRB Model Disparity Study Project
This TRB project was undertaken to assist grantees in meeting these guidelines, as well as the mandates of strict scrutiny
and Part 26. In particular, we were retained to do the following:
• Provide guidelines to state DOTs to determine when studies

are needed;
• Develop a model scope of work for Requests for Proposals
(RFPs) for studies;
• Develop a model disparity/availability study design; and
• Determine what data should be collected.
What follows is our best professional judgment on how
best to respond to the evidentiary issues involved for state
DOTs in meeting strict scrutiny and regulatory mandates.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

CHAPTER 2

Designing Defensible DBE Programs

• “To help remove barriers to the participation of DBEs in

Introduction
The federal government apportions tens of billions of dollars each year from the National Highway Trust Fund to the
fifty states and the District of Columbia to assist and support
the construction and maintenance of the nation’s highway
infrastructure.27 In the decade between FFYs28 1998 and 2007,
more than $325 billion in federal highway transportation assistance (in 2007 dollars) was allocated to state DOTs.29 In FFY
2007 alone, the amount distributed was almost $32 billion.
Table 1 shows the apportionment of federal highway funds
among state DOTs in FFY 2007, as well as their 2007 rankings
and their average rankings from FFYs 1998 through 2007.
As a condition of receipt of these federal funds, the state
DOTs must agree to abide by certain federal rules and regulations, including those governing the U.S.DOT’s DBE Program.30 The DBE Program, as originally enacted and as
revised, was established by Congress in response to widespread evidence of discrimination against businesses owned
by minorities and women in the construction industries, and
in particular the highway construction industries.31
The principal objectives of the DBE Program are to:
• Ensure “nondiscrimination in the award and administra-

tion of DOT-assisted contracts in the Department’s highway, transit, and airport financial assistance programs”;
• “To create a level playing field on which DBEs can compete
fairly for DOT-assisted contracts”;

27 Highway Trust Fund monies are also allocated to American Samoa, Guam, the
Northern Mariana Islands, Puerto Rico, and the Virgin Islands. These entities,
however, are excluded from the scope of the present report.
28 The federal fiscal year runs from October 1 through September 30.
29 U.S. Department of Transportation (2008) and U.S. Department of Labor
(2008).
30 49 C.F.R. Part 26.
31 See, e.g., The Compelling Interest for Affirmative Action in Federal Procurement,
61 Fed. Reg. 26050 et seq (1996).

DOT-assisted contracts”; and
• “To assist the development of firms that can compete successfully in the marketplace outside the DBE program.”32
The DBE Program operates on both the supply-side and the
demand-side of the market for highway construction. On the
supply-side, the program encourages recipients to undertake
efforts to increase the number of firms that can be certified to
participate in the program and to enhance the ability of DBEs
to compete effectively in the highway contracting marketplace.
Such “race-neutral” activities include structuring solicitations,
quantities, specifications, and delivery schedules to facilitate
increased participation by DBEs; assisting DBEs to overcome
barriers related to surety bonding and other types of financing;
assisting start-up DBE firms to become established; implementing communications programs regarding contracting
procedures and specific contract opportunities; implementing
supportive services programs to develop business management, record keeping, and accounting skills; helping firms
learn to handle increasingly significant projects and a greater
diversity of project types; and assisting firms in the adoption of
emerging technologies and use of electronic media.33
On the demand-side, the DBE Program requires state DOTs
to encourage prime contractors and consultants to subcontract to DBEs by placing percentage participation goals on certain contracts and requiring prime contractors and consultants to make good-faith efforts to meet those goals, and
ensuring distribution of the DBE directory to the widest feasible universe of prime contractors.34 Such demand-side activities are described in Part 26 as “race-conscious” efforts.35
32

49 C.F.R. 26.1.
49 C.F.R. 26.51(b).
34 49 C.F.R. 26.51(d).
35 Since women-owned firms can also qualify as DBEs, such efforts can also be
“gender-conscious.” Following the nomenclature of Part 26, we shall refer to
both types of efforts as “race-conscious.”
33

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

10
Table 1. Federal-aid highway apportionments by state, FFYs 1998–2007.

State

Federal-aid Highway

Fund Apportionment

(in thousands)

Rank

FFY 2007

(in thousands)

Rank

FFY 1998–FFY 2007

California

$2,960,914

$26,397,793

Texas

$2,624,571

$23,067,022

New York

$1,512,802

$14,129,262

Florida

$1,556,841

$14,044,320

Pennsylvania

$1,508,597

$13,666,393

Georgia

$1,148,445

$10,325,502

Ohio

$1,085,685

$10,079,858

Illinois

$965,678

$9,447,852

Michigan

$971,738

$8,996,057

North Carolina

$890,846

$8,150,729

New Jersey

$831,505

$7,554,338

Virginia

$819,035

$7,546,287

Indiana

$751,898

$6,935,524

Missouri

$739,140

$6,759,202

Tennessee

$696,083

$6,444,907

Alabama

$629,576

$5,745,715

Wisconsin

$614,695

$5,658,072

Arizona

$594,321

$5,184,202

Massachusetts

$552,890

$5,140,683

Kentucky

$539,127

$4,990,111

Washington

$519,858

$4,953,246

South Carolina

$516,771

$4,799,501

Maryland

$502,039

$4,638,775

Louisiana

$489,304

$4,526,336

Oklahoma

$493,726

$4,464,640

Minnesota

$416,012

$4,246,007

Connecticut

$450,100

$4,217,953

Arkansas

$396,891

$3,693,491

Colorado

$391,802

$3,628,968

Mississippi

$371,797

$3,511,338

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

11
Table 1. (Continued).

State

Federal-aid Highway

Fund Apportionment

(in thousands)

Rank

(in thousands)

Rank

FFY 1998–FFY 2007

FFY 2007
Oregon

$355,299

$3,359,554

Iowa

$334,938

$3,296,421

Kansas

$340,126

$3,221,821

Alaska

$281,428

$3,148,654

West Virginia

$338,224

$3,088,318

Montana

$301,199

$2,867,240

New Mexico

$301,437

$2,796,547

Nebraska

$229,493

$2,213,989

Utah

$225,006

$2,169,214

Idaho

$232,943

$2,126,670

Nevada

$200,879

$2,028,138

Wyoming

$214,290

$2,005,894

South Dakota

$209,154

$1,995,007

North Dakota

$194,716

$1,872,619

Rhode Island

$158,583

$1,639,456

Maine

$139,141

$1,440,198

New Hampshire

$152,770

$1,411,474

Hawaii

$140,971

$1,393,796

Vermont

$133,324

$1,294,456

Delaware

$124,031

$1,246,687

District of Columbia

$125,354

$1,142,586

Source: U. S. Department of Transportation, Federal Highway Administration (2008).

As discussed in Chapter One, and in more detail in Appendix C, the U.S. Supreme Court’s plurality opinion in City of
Richmond v. J. A. Croson Co., requires the highest level of
review on the use of race-conscious classifications by public
entities, even when such classifications are used as a tool for
remedying the effects of past and present discrimination.36
The Court’s explanation of the type of evidence that would
support a race-conscious contracting program gave rise to the
“disparity study.” These studies gathered statistical and anec36

488 U.S. 469. See Chapter One for an overview and Appendix C for a detailed
discussion of the law governing contracting affirmative action.

dotal evidence of discrimination against M/WBEs to allow
state or local policy makers to determine whether there was a
“strong basis in evidence”—the standard of proof imposed by
the Supreme Court—to adopt race-conscious remedies.
This project seeks to provide guidance and models to state
DOTs considering what evidence is necessary to meet their
constitutional obligations and regulatory mandates. The guidelines for disparity and availability studies, presented below,
reflect recent judicial decisions about what is necessary to
meet strict constitutional scrutiny and implement best practices for DBE Programs, based upon controlling precedents,
sound science, and practical experience.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

Guidelines for Conducting Disparity
and Availability Studies
The objective of the study is to develop the following tools
for state DOTs:
• Guidelines to assist them in determining when and if a

disparity/availability study is recommended;
• A Model Scope of Work to be included in future RFPs or

similar solicitations for disparity/availability studies; and
• Detailed recommendations on how to design and imple-

ment availability and disparity studies.
In Croson, the city’s central piece of statistical evidence
was that “while the general population of Richmond was
50% black, only 0.67% of the city’s prime construction contracts had been awarded to minority businesses [between]
1978 and 1983.”37 The Court ruled, in essence, that the city’s
disparity statistic compared “apples to oranges” and therefore did not support an inference of discrimination. The
correct benchmark for business discrimination cases was
held to be the percentage of minority-owned firms in the
business population of an area. The Court stressed that “proper”
statistical evidence—evidence that revealed significant racial
disparities between a government’s minority procurement
and the availability of minority businesses in the surrounding economy—would be an acceptable form of evidence in
future litigation. Such evidence—possibly standing alone,
or in combination with other factual showings—could be
used to support an inference of discriminatory exclusion.
“There is no doubt that ‘[w]here gross statistical disparities
can be shown, they alone in a proper case may constitute
prima facie evidence of a pattern or practice of discrimination’ under Title VII.”38
In light of Croson and subsequent decisions, many state and
local governments abandoned their efforts at race-conscious
contracting either voluntarily or upon being enjoined by the
courts.39 Others took a different approach and commissioned
disparity studies to determine whether, in light of Croson, there
was sufficient evidence of discrimination for their jurisdictions
to justify continuation or enactment of race-conscious contracting programs.
At the federal level, the Adarand case established that Congress must also meet strict scrutiny. To meet this test, the
DBE Program was revised in 1999 based upon the necessary
compelling interest, and narrowly tailored regulations were
adopted. 49 C.F.R. Part 26 describes five methods recipients
may employ to set narrowly tailored goals for their imple-

mentation of the DBE Program.40 One is to conduct a disparity study.
Over 300 disparity studies have been conducted in the
20 years since Croson.41 Studies have varied considerably in
content and in quality. At their best, they have been independent, objective, comprehensive assessments conducted in
accordance with accepted practices in social science research
and have been instrumental in assisting government entities,
including state DOTs, to survive constitutional challenges to
their M/WBE or DBE Programs. At their worst, they have
been poorly conceived and executed, ultimately wasting the
scarce public resources expended on them when they proved
inadequate in litigation or even leading to ongoing programs
being dropped without a legal challenge.
Below, we describe in more detail the major and minor
components that are typically found in the best disparity
studies. In summary, such studies typically include the following major elements:
1. A legal review discussing Croson and subsequent case law
and legal standards;
2. An empirical assessment of the appropriate geographic
market relevant to an agency’s contracting activity;
3. An empirical assessment of the appropriate product
markets relevant to an agency’s contracting activity;
4. An estimate of the fraction of businesses within the
agency’s geographic and product markets that are owned
by DBEs (i.e., “availability”);
5. An estimate of the percentage of all prime contract and
subcontract dollars earned by DBEs (i.e., “public sector
utilization”);
6. A statistical comparison of public sector utilization to
availability (i.e., “public sector disparity ratios”);
7. Econometric analyses of DBEs’ success, relative to nonDBEs’ (e.g., in business formation rates and in business
owner earnings), and holding nondiscriminatory factors
constant, in the market area surrounding the agency in
question (i.e., “private sector disparity ratios”);
8. Econometric analysis of DBEs’ access to capital and
credit, relative to non-DBEs’, holding balance sheet and
creditworthiness information constant;
9. Qualitative evidence from DBEs and non-DBEs concerning experiences doing business or attempting to do business in the relevant marketplace, including experiences
of institutionalized discrimination and/or individual disparate treatment, gathered through surveys, personal interviews, and/or public hearings (i.e., “anecdotal evidence”);

Croson, 488 U.S., at 479–80.
488 U.S. at 501.
39 For example, programs in New Jersey, Atlanta, Cleveland, Cook County,
Columbus, the District of Columbia, Miami, and Philadelphia were enjoined.
The State of Louisiana and the City of Milwaukee voluntarily dropped their raceconscious contracting programs.

49 CFR. § 26.45.
We have catalogued over 300 disparity studies performed between 1989 and
2008. Of these, 39 were performed directly for state DOTs or included state
DOTs among the agencies studied and explicitly included federally assisted DOT
contracts. Ten of these 39 have been superseded at their respective agencies by
more recent studies. See Table 2.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

Figure 1. An availability study is a
subset of a disparity study.

10. Qualitative and/or quantitative analysis of the effectiveness of race-neutral measures to address low DBE participation in public contracting; and
11. Review of existing policies and procedures related to
DBE participation, with recommendations for changes/
revisions designed to improve the effectiveness of the
program and increase legal compliance.

Of the 11 elements that comprise a quality disparity study,
a quality availability study focuses primarily on elements 2
through 4. Availability studies often include the business
formation studies listed under number 7 above as part of
the “Step 2” goal-setting procedure,43 and therefore provide
compelling interest evidence in addition to their primary
focus on narrow tailoring.44 Prior to Western States, some
state DOTs chose to forgo the expense of conducting a full
disparity study because recipients are not required to independently demonstrate compelling interest (since that has
previously been established by Congress).45 Instead, some
commissioned availability studies to assist their programs to
become narrowly tailored by providing improved estimates
of DBE availability from which to set annual DBE participation goals, as required by 49 CFR 26. To date, this approach
has been upheld by the court that has addressed the issue.46
In the remainder of this chapter, we identify best practices
regarding if, when, why, and how state DOTs should conduct
disparity or availability studies rather than employ one of the
other four methods allowed for under 49 CFR 26.45.47 These
results will contribute to improved state DOT decision making and more effective implementation of the DBE Program.
When is a Study Required?

Additionally, the best studies are supervised by professionals who can be qualified as expert witnesses under the exacting standards of the Federal Rules of Evidence to testify about
a disparity or availability study’s data, methods, and findings.42 To the extent that the content of these studies largely
involves economics and statistics, the courts will require
expert witnesses to possess professional experience and qualifications, such as a doctoral degree, in these fields rather than
in other tangential disciplines such as, for example, political
science or anthropology.
Closely related to the disparity study is the “availability
study.” This has often caused confusion about the differences,
if any, between the two. An availability study is a subset of a
disparity study, focusing primarily on measuring the fraction
of businesses in the relevant marketplace that are DBEs or
potential DBEs (see Figure 1). Its main purpose is to assist
federal grant recipients to meet the narrow tailoring requirements of strict scrutiny, and it operates on the assumption that
evidence of the recipient’s compelling interest in remedying
discrimination is not required.

Fed. Reg. Ev. 702 (“If scientific, technical, or other specialized knowledge will
assist the trier of fact to understand the evidence or to determine a fact in issue,
a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise, if (1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of
reliable principles and methods, and (3) the witness has applied the principles
and methods reliably to the facts of the case.”)

It is neither possible nor prudent to provide definite or
absolute answers to the question of when or if a state DOT
should conduct a disparity or availability study since the law
in this field is constantly evolving and each state DOT’s situation is likely to be unique in several respects. With this caveat
firmly in mind, we offer the following guidance.
Part 26 does not require state DOTs to independently
establish evidence of business discrimination within their
contracting marketplace in order to satisfy the compelling
interest prong of constitutional strict scrutiny. The Western
States ruling, however, has created uncertainty about this
principle for Ninth Circuit state DOTs.48

49 C.F.R § 26.45(d).
This is because business formation studies use econometrics to answer the
question of “how different would minority (or female) business formation rates
be if they faced the same market structure as similarly situated non-minority
males?” If minority or female business formation rates would be statistically significantly larger under the nonminority male market structure, this difference
can be used to quantify a “Step 2” adjustment under 49 CFR 26.45. Most economists would also accept it as evidence of discrimination. See, e.g. Oaxaca (1973),
Fairlie and Meyer (2000), and Wainwright (2000).
45Adarand Constructors, Inc. v. Slater, 228 F.3d 1147 (10th Cir. 2000), cert. granted,
532 U.S. 941, then dismissed as improvidently granted, 534 U.S. 103 (2001)
(Adarand VII); Sherbrooke Turf, Inc. v. Minnesota Department of Transportation,
(8th Cir. 2003), cert. denied, 541 U.S. 1041 (2004).
46Sherbrooke Turf, Inc, 345 F.3d. at 973–74.
47I.e., (1) using DBE directories and Census data; (2) using bidders lists; (3) using
the DBE goal of another U.S.DOT recipient; or (4) using other types of contractor lists.
48See Chapter One, supra, and Appendix C, infra.
44

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

State DOTs in the Ninth Circuit must now gather evidence
of discrimination (as part of a disparity study, an availability
study, or through other means), if they have not already done
so, and include it as part of their annual DBE goal submission. All nine state DOTs in the Ninth Circuit have opted to
collect such evidence by means of a disparity study.
Compliance with the federal regulations and guidance, however, is only one of several considerations. First, the state DOT’s
legal counsel must consider the likelihood of litigation against
its implementation of the DBE Program.49 Litigation risks can
be influenced by many factors, including the following:
• The level of consensus in the local contracting community,

•
•
•
•
•
•

•

both DBE and non-DBE, concerning the need for and
appropriateness of race-conscious contracting goals;50
The quality of relationships between the state DOT and the
local contracting community, both DBE and non-DBE;
The extent of the race-neutral aspects of the DBE Program
and the level of resources devoted to such efforts;
How vigorously the race-conscious aspects of the DBE Program are implemented and enforced;
The reasonableness of the current overall DBE goals;
The reasonableness of the current contract-level DBE goals
and the method by which they are determined;
The reasonableness of the agency in granting waivers of
DBE goals when legitimate good-faith efforts to achieve the
goals proved insufficient; and
Whether there is a race-conscious program for statefunded transportation contracts in addition to the federal
DBE Program.

49It seems probable that the U.S.DOT directive and an assessment of increased
likelihood of a challenge played a role in Ninth Circuit state DOTs’ decision to
conduct disparity studies.
50Building and achieving consensus is important. If racial and ethnic disparities
in business enterprise emerge due to unequal business opportunities caused by
discrimination, then the entire country pays a price resulting from decreased
competition, underdeveloped human resources, and reduced social cohesion.
Marshall (1991, 10), for example, has observed that, “. . . as long as minorities
and women are denied access to business opportunities, the distribution of
wealth, income, and power will continue to be unfair and even to polarize, with
grave consequences for the economy, polity, and society.” Similarly, Fairlie and
Meyer (1994, 1–2), note that

Understanding the ethnic/racial character of self-employment is important for at least three reasons. First, conflicts between ethnic and racial
groups in the U.S. have often been partly caused by business ownership
patterns. . . . Second, self-employment has historically been a route of
economic advancement for some ethnic groups. . . . Third, small business owners have an important effect on political decisions in the U.S.
The under-representation of many ethnic/racial groups in business
means that these groups may possess less political power than is suggested by their proportion of the population.
Aronson (1991, 76–77) expressed similar concerns, noting, “[h]istorically, selfemployment and small business ownership have been an important path by
which ethnic, racial, and religious minorities in the United States have overcome
social and cultural disabilities and entered the so-called mainstream.”

The greater the perceived likelihood of a legal challenge to
the DBE Program, the more prudent it becomes to consider
commissioning a disparity or availability study.
Although we do not read the law as requiring it, if a legal
challenge does occur, being able to rely on a reasonably current and high-quality disparity or availability study, and
access to credible expert witnesses to testify about the data,
methods, and findings of the study, will be a great asset to
state DOT defendants. In Sherbrooke and Northern Contracting, proffering these studies along with qualified experts to
testify about these studies’ data, methods, and findings, contributed significantly to each agency’s successful defense.
In the Western States case, in contrast, WSDOT’s DBE
goals at the time were not based on an availability study and
no expert testimony was presented. In general, race-conscious
contracting programs supported by only an outdated study,
or a study with inadequate evidence, or no study at all, have
not fared well when challenged.51
There is one other circumstance in which a disparity study
should be considered: where all or most of a state DOT’s
annual DBE goal is projected to be met through race-neutral
means. Although an all race-neutral program is unlikely to
draw a constitutional challenge, it must be consistent with
Congress’ findings that discrimination still results in a lack of
equal opportunities for DBEs. Therefore, state DOTs that
propose to wholly or mostly eliminate race-conscious contract goal setting should be confident that such an approach
to ensuring a level playing field is warranted by quantitative
and qualitative evidence of a lack of discrimination in its relevant markets, a consistent ability in the past to meet its DBE
goals without race-conscious means, and a numerical goal
that fairly reflects DBE availability.
Disparity Study or Availability Study?
State DOTs in the Ninth Circuit would be prudent to conduct disparity studies rather than availability studies to make

See, e.g., Thompson Building Wrecking Company, Inc., v. Augusta, Georgia, 2007
U.S. Dist. LEXIS 27127 (S.D Ga. 2007) (13-year-old study not sufficient to establish ongoing compelling interest, M/WBE program enjoined); Builders Association of Greater Chicago v. County of Cook, 256 F.3d 642 (7th Cir. 2001) (no disparity study or analysis); Associated Utility Contractors of Maryland, Inc. v. Mayor
and City Council of Baltimore et al, 83 F.Supp.2d 613 (D. Md. 2000) (10-year-old
evidence to justify goals is equivalent to no evidence); Association for Fairness in
Business, Inc. v. New Jersey, 82 F.Supp.2d 353 (D. N.J. 2000) (no evidence leading to particularized findings of discrimination); W. H. Scott Construction Company, Inc. v. City of Jackson, Mississippi, 199 F.3d 206 (5th Cir. 1999) (study
addressed only prime contracts; no evidence about the availability and utilization of subcontractors); Associated General Contractors of Ohio, Inc. v. Drabik, 50
F.Supp.2d 741 (S.D. Ohio 1999) (old evidence was insufficient); Associated General Contractors of America v. City of Columbus, 936 F.Supp. 1363 (S.D. Ohio
1996) (studies rejected as invalid and incomplete); Associated General Contractor of Connecticut v. City of New Haven, 791 F.Supp. 941 (D. Conn. 1992) (no statistical evidence presented).

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

sure that they have examined the type of evidence of discrimination in their markets that establishes the need to use raceconscious measures to meet the annual DBE goal. While
the court in Western States clearly held that the regulations are
constitutional, and the regulations are explicit in not requiring a disparity study,52 the types of evidence listed by the
Ninth Circuit would be included in a disparity study but not
typically in an availability study.53
Outside the Ninth Circuit, an availability study may be sufficient to meet a state DOT’s constitutional obligations under
strict scrutiny. There are risks to this approach, however, as
only the Eighth Circuit has relied solely upon an availability
study to uphold a recipient’s program. Therefore, if the state
DOT believes there is a substantial likelihood of a challenge
to the DBE Program, then serious consideration should be
given to conducting a disparity study that provides quantitative and qualitative evidence of discrimination. An availability study, in contrast, generally does not present any qualitative or quantitative evidence regarding discrimination.54
If a constitutional challenge is not likely, but consensus
regarding the DBE Program is still lacking in the local contracting community, a disparity study can still be a useful tool
for building agreement about the need for a race-conscious
remedy and the scope of the remedy. If consensus exists, then
a periodic disparity or availability study can play a role in
maintaining such consensus.55
If the state as a whole (not just the state DOT) has a raceconscious M/WBE Program for state-funded transportation
contracts, then a disparity study is strongly recommended
because such a program may not be able to rely upon Congressional findings of a compelling interest.56 In such cases, the marginal cost of expanding the scope of such a study to also include
a DBE availability or disparity study should be relatively modest. Therefore, it may be sensible for a state DOT to consider
adding a DBE study onto the state-funds disparity study.
52

The “Department is not requiring recipients to do a disparity study.” 64 Fed.
Reg. 5110.
53
407 F.3d at 999–1001 (evidence of discrimination against each minority group
and women in the state’s marketplace, detailed availability analysis, disparity
testing, anecdotal evidence, etc.).
5449 C.F.R. §26.45 requires public input regardless of the method chosen to set
DBE goals.
55The State of Maryland, for example, under the supervision of the Maryland
Department of Transportation (MDOT) conducts a disparity study, by law,
every 5 years. Each study is used to revise the state’s MBE Program, as well as to
provide current data to support the DBE goal-setting activities at all of MDOT’s
modal administrations. The study also collects feedback from DBEs and nonDBEs about the operation of the various programs.
56Therefore, a state or local government that is setting race-conscious goals on
non-federally funded contracts should have a disparity study documenting that
such goals are based on a compelling government interest and are narrowly tailored to the evidence relied upon. For contracts subject to 49 C.F.R. Part 26 or
Part 23, outside the Ninth Circuit, an availability study may still suffice to
demonstrate a narrowly tailored program. Since Western States, it seems clear
that in the Ninth Circuit it would be prudent to supplement an availability study
with evidence of discrimination.

Timing
If a state DOT’s DBE Program that is not based on a study
for its annual DBE goal setting is challenged, then it may still
be possible in some cases to commission a study and employ
the results at trial. The obvious advantage to this strategy is
that, if no challenge occurs, it saves the resources that would
otherwise be expended on a study. There are at least three disadvantages to not collecting independent evidence prior to a
legal challenge.
First, the state DOT runs the risk that the trial court will
either deny the motion to supplement the record or will not
allow enough time to complete the work and prepare witnesses before trial. Such was the case in Kossman Contracting
Co., Inc. v. Texas Department of Transportation.57 The challenge to Texas’ Historically Underutilized Business Program
for state-funded contracts was filed just before Christmas
1999, and the judge set the trial date for mid-February 2000—
leaving insufficient time for the state to prepare its defense,
let alone conduct a new study. As a result, TxDOT settled the
case by dropping race-conscious subcontracting goals and
paying the plaintiff’s legal fees and costs.
Second, the costs of a study procured during litigation are
likely to rise due to the time pressures involved. Nevertheless,
this is preferable to going to trial with no study at all.
Finally, failing to gather and evaluate evidence beyond
DBE directories and bidders lists risks presenting an incomplete picture of the barriers to full opportunities for DBEs.
Adopting broad measures of availability, examining economywide data, and gathering anecdotal evidence gives a fuller picture of the elements relevant to a narrowly tailored program
as well as provides a supportable benchmark for determining
the level of DBE participation in a marketplace that does not
discriminate. This furthers the overall remedial purpose of
the DBE Program.
Quality of Disparity and Availability Studies
Completing a disparity or availability study before a challenge is only part of the equation. The study must also be of
sufficient breadth, depth, and quality to withstand judicial
scrutiny. Moreover, to the extent the study is used as a tool
for consensus building, its scope and quality matter regardless of the likelihood of a challenge.
In the remaining sections of this report, we review disparity
and availability studies performed for state DOTs, identifying
included and excluded elements and discussing differences in
how the elements have been designed and implemented. Next,
we provide an overview of goal-setting methods currently in
use at state DOTs along with an extended discussion of our rec57

C.A. No. H-99-0637 (S.D. Tex. 2000).

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

ommended method for measuring DBE availability. Finally,
we incorporate these elements into a Model Scope of Work to
be used in future RFPs, along with other advice for improving
the disparity/availability study RFP process. Appendix A, as
well as other subsections in the report, provides detailed information on the type and quality of data necessary to support a
high-quality disparity or availability study. Appendix D provides a glossary of abbreviations and technical terms such as
“endogenous,” and “multivariate regression,” and their meaning in disparity and availability studies. Appendix C is a full discussion of the legal issues and judicial decisions.

Review of Existing Studies
State DOTs That Have Performed Disparity
or Availability Studies
For this report, we contacted each state DOT and the District of Columbia and requested its annual DBE goal submissions for FFYs 2006, 2007, and 2008.58 We also asked whether
each was currently performing, had recently performed, or
had ever performed a disparity or availability study. If an
agency had recently performed or was currently performing a
study, we also asked for a copy of the RFP for the study.
Of the 51 state DOTs we contacted, 26 have performed or
are currently performing, a disparity or availability study.
These 26 states account for 28 studies altogether since two
states—Colorado (CDOT, ongoing) and North Carolina
(NCDOT, ongoing)—are currently conducting studies to
replace earlier ones. Of those 28 studies, 22 were commissioned directly by the state DOT while the remaining 6
included the DOT as part of a multi-agency statewide study.59
Five state DOTs have studies in progress, as of this writing—
Hawaii (HDOT, ongoing) and Montana (MDT, ongoing),
both in the Ninth Circuit; as well as Colorado (CDOT, ongoing), New York State (NY, ongoing), and North Carolina
(NCDOT, ongoing).
Sixteen states have completed studies within the last six years
This includes the other seven Ninth Circuit state DOTs—
Arizona DOT (ADOT, 2009), Caltrans (2007), Idaho Transportation Department (ITD, 2007), Nevada DOT (NDOT,
2007), ODOT (2007), WSDOT (2006), and Alaska Department
of Transportation and Public Facilities (Alaska DOT&PF,
58Few DOTs post their annual DBE goals and supporting goal-setting methods
on their departmental Web sites. Of those that did, most posted only the latest
submission. In a few cases, despite providing a letter of introduction from TRB,
we had to file open records/freedom of information requests to obtain the goalsetting information. In contrast, a handful of state DOTs had a great deal of information posted on their Web sites. North Dakota DOT’s [NDDOT] Web site, in
particular, was excellent. See http://www.dot.nd.gov/divisions/civilrights/dbe
program.htm.
59Multi-agency statewide studies in this category not only had to include the state
DOT but also had to include federally assisted state DOT contracts.

2008)—as well as Georgia DOT (GDOT, 2005), IDOT (2004),
the State of Maryland (MD, 2006), Mn/DOT (2005), Missouri DOT (MoDOT, 2004), the State of New Jersey (NJ,
2005), NCDOT (2004), Tennessee DOT (TDOT, 2007), and
Virginia DOT (VDOT, 2004).
Seven states currently have studies that are more than 5 years
old: CDOT (2001), Florida DOT (FDOT, 1999), the State of
Louisiana (LA, 1990; LA, 1991);60 NDOR (2000); New Mexico
DOT (NMDOT, 1995); the State of Ohio (OH, 2001a; OH,
2001b);61 and South Carolina DOT (SCDOT, 1995).
Of the 14 state DOTs with current studies,62 only 863 used
them, in whole or in part, as the basis for DBE goals for FFYs
2006, 2007, and/or 2008.64 CDOT used its previous study to
set goals for FFY 2006 and used the City of Denver’s local
study to set goals for FFYs 2007 and 2008,65 and it is currently
conducting a new study (CDOT, ongoing). GDOT made
explicit use of its disparity study in recommending DBE goals
for FFYs 2006, 2007, and 2008 to the State Transportation
Board. However, the board adopted lower goals, without
explanation or modification of the evidentiary basis, in lieu
of the recommended ones in all three years. ADOT’s study
(ADOT, 2009) is being used as the basis for its FFY 2009 DBE
goals. The remaining five DOTs66 used one of the other methods from § 26.45(c) to set annual goals.
Common Elements in State DOT Disparity
and Availability Studies
As a prelude to developing the model recommendations,
we reviewed 25 of the 28 studies identified above.67 Nineteen
were disparity studies; the remaining five were availability
studies. Table 2 lists the 29 studies, the study type (disparity
or availability), and the year they were completed. Table 3
shows which studies included which elements.
60
Volume 1 of the 1990 State of Louisiana Study was performed by two local university professors and completed in 1990. The state subsequently determined
additional analysis was needed and commissioned another consultant, D.J.
Miller & Associates, to perform Volume II, which was completed in 1991.
61Ohio’s study was conducted by two consultants. D. J. Miller & Associates conducted the statistical portion and Mason Tillman Associates, Ltd. conducted the
historical and anecdotal portion.
62
California, Georgia, Idaho, Illinois, Maryland, Minnesota, Missouri, Nevada,
New Jersey, North Carolina, Oregon, Tennessee, Virginia, and Washington.
63
California, Illinois, Maryland, Minnesota, Missouri, Nevada, North Carolina,
and Washington.
64
Alaska’s study was not completed in time to be used for FFY 2008.
65
Colorado DOT used CDOT (2001) to help set goals for FFY 2006. For FFY 2007
and 2008, it used CCD (2006).
66
New Jersey, Virginia, Tennessee, Oregon, and Idaho.
67
We were unable to review the remaining three studies. For one that was ongoing, we were unable to obtain a copy of the winning proposal (NCDOT). Another
study was never publicly released (TDOT), and a copy of one study could not be
located (FDOT). For the other four ongoing studies (CDOT, Hawaii DOT
[HDOT], Montana DOT [MDT], and New York State), we obtained copies of the
winning proposals and based our review on the contents of those proposals.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

17
Table 2. State DOT disparity and availability studies reviewed.
State

Type of

Year

Study

Completed

D. Wilson Consulting Group, LLC

Disparity

2008

MGT of America, Inc.

Disparity

2009

BBC Research & Consulting

Disparity

2007

MGT of America, Inc.

Disparity

2001

D. Wilson Consulting Group, LLC

Disparity

ongoing

MGT of America, Inc.

Disparity

1999

Boston Research Group

Disparity

2005

NERA Economic Consulting

Disparity

ongoing

BBC Research & Consulting

Disparity

2007

NERA Economic Consulting

Availability

2004

D.J. Miller & Associates & Lunn/Perry

Disparity

1991

NERA Economic Consulting

Disparity

2006

NERA Economic Consulting

Availability

2005

NERA Economic Consulting

Availability

2004

D. Wilson Consulting Group, LLC

Disparity

ongoing

EuQuant68

Disparity

ongoing

MGT of America, Inc.

Disparity

2004

MGT of America, Inc.

Availability

2000

Mason Tillman Associates, Ltd.

Disparity

2005

BBC Research & Consulting

Disparity

1995

BBC Research & Consulting

Disparity

2007

NERA Economic Consulting

Disparity

ongoing

Disparity

2001

Consultant

D.J. Miller & Associates & Mason Tillman
Associates, Ltd.

MGT of America, Inc.

Disparity

2007

MGT of America, Inc.

Disparity

1995

Mason Tillman Associates, Ltd.

Disparity

2007

MGT of America, Inc.

Disparity

2004

NERA Economic Consulting

Availability

2006

EuQuant was formerly Boston Research Group.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

The remainder of this section discusses important study
elements and whether these were included in the studies we
examined. For ease of reference, Table 3 is presented in three
parts, 3a, 3b, and 3c: study elements (a) through (d) are referenced in Table 3a, study elements (e) through (i) are referenced in Table 3b, and study elements (j) through (m) are
referenced in Table 3c.
The next section introduces our proposed Model Disparity Study by examining differences in how certain elements
were implemented in these 25 studies and making recommendations as to the most constitutionally sound approach
to each study element.
Executive Summary and Introduction. None of the five
availability studies (0%) included an executive summary. All
(100%) included an introduction. Seventeen of 18 disparity
studies (94%) included an executive summary. Seventeen of
18 disparity studies (94%) included an introduction.69 Every
study, though, included at least one or the other.
An introductory chapter describing, at a minimum, the
objectives of the study and the structure of the study report orients the reader to the material to follow and is a useful contribution to any study. An executive summary that briefly
describes the data, methods, key findings, and conclusions also
provides a handy digest of what is typically a lengthy and fairly
complex collection of quantitative and qualitative analyses. The
longer the study, the more important an executive summary.
Although an executive summary provides a handy digest,
it is only that—a digest. Should a DBE Program that is supported by a disparity or availability study ever be challenged,
it will be helpful to be able to establish that key decision makers in the organization read and carefully considered the
entire study—not just the executive summary.
Legal Review. Four of the five availability studies (80%)
included a legal review. Fifteen of 20 disparity studies (75%)
included a legal review.
Since the case law in the field of race-conscious contracting
is constantly evolving, it is helpful to include a section in
the study that reviews and evaluates relevant case law and
shows how the study methods comport with the consultant’s
understanding of the law. This section of the study also provides helpful information for state DOT attorneys if a program is challenged. This section allows the state DOT’s attorneys to determine whether the consultant’s grasp of strict
scrutiny and the relationship of its methods to the law is sat-

69For CDOT (ongoing) and MDT (ongoing), only the proposals were available,
and these did not specify whether introductory chapters or executive summaries
would be provided. For FDOT (1999), neither the study nor a copy of the proposal could be located. For NCDOT (ongoing), the proposal was not available,
and for TDOT (2007) the study was never released.

isfactory, and guides the court about the legal principles as
applied by the consultant.
Historical Review. None of the five availability studies
(0%) included any review of the history of the impact of discrimination on business enterprise. Only two of 20 disparity
studies (10%) included such an historical review, and they
were also among the oldest studies we examined (LA, 1991;
SCDOT, 1995).70
Many disparity studies in the immediate post-Croson era
included historical reviews, including of the civil rights movement, and the emergence of black-owned businesses. This
approach soon fell out of favor. Nothing in Croson, however,
indicates that specific historical evidence of discrimination
does not have a place as part of a larger mosaic of quantitative and qualitative evidence produced in a disparity study,
only that such studies cannot rest on such evidence in isolation. On the contrary, high-quality historical analyses can
provide important context, for both policy makers and jurists,
for understanding how current disparities arose and the linkages between different types of past discrimination and the
current disadvantaged status of many minority- and womenowned business enterprises. Such information may be solicited
as part of the anecdotal interviews with local business owners, however, rather than as a stand alone section in a study.
For example, in finding that the City of Chicago had a strong
basis in evidence to continue its M/WBE program for construction contracts, the court reviewed the history of the
“long, slow, painful and continuing process” of eradicating
the continuing effects of slavery and discrimination.71
Review of Contracting Policies and Procedures. None
of the five availability studies (0%) included a review of contracting policies and procedures. Fourteen of 20 disparity
studies (70%) included such a review.
A race- and gender-based contracting program must be
“narrowly tailored” to any evidence of discrimination in the
agency’s markets. For state DOTs, this is the crucial task for
goal setting under Part 26:72 recipients must utilize raceneutral means to the maximum feasible extent to meet the
overall goal73 and project the portion of the goal that it expects
to meet through race-neutral measures and race-conscious
subcontracting goals.74 The requirement that recipients utilize
70The State of Ohio study (OH, 2001b) also included an historical section. However, it was only two pages in length and did not qualify to be counted in this category.
71Builders Association of Greater Chicago v. City of Chicago, 298 F. Supp.2d 725,
727 (N.D. Ill. 2003).
7264 Fed. Reg. 5109 (Feb. 2, 1999) (section 26.45 “is critical to meeting our constitutional obligation to ensure that the program is narrowly tailored to remedy
the effects of discrimination.”).
7349 C.F.R. § 26.51(a).
74
49 C.F.R. § 26.51(c).

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

19
Table 3a. Elements included in state DOT disparity and availability studies.

Executive
Summary

Legal
Review
and
Analysis

Historical
Analysis

Review
of Contracting
Policies
and
Procedures

Type

Introduction

WSDOT (2006)

Mn/DOT (2005)

MoDOT (2004)

IDOT (2004)

NDOR (2000)

HDOT (ongoing)

NY (ongoing)

MD (2006)

ADOT (2009)

ODOT (2007)

NCDOT (2004)

VDOT (2004)

CDOT (2001)

FDOT (1999)

n/a

SCDOT (1995)

Caltrans (2007)

ITD (2007)

NDOT (2007)

NMDOT (1995)

OH (2001)

LA (1991)

NJ (2005)

TDOT (2007)

Alaska DOT&PF (2008)

Study

n/a

CDOT (ongoing)

n/a

MDT (ongoing)

n/a

GDOT (2005)

NCDOT (ongoing)

n/a

Notes: (1) x indicates the relevant study element was present, an empty cell indicates that the element was not present;
(2) in the type column, A indicates an availability study, D indicates a disparity study; (3) n/a means the necessary
information to make a determination was not available, usually because the study was ongoing and the study proposal was
not available or did not address a particular element, or because the study was never released or could not be located.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

20
Table 3b. Elements included in state DOT disparity and availability studies.

Type

Geographic
Market
Definition

Product
Market
Definition

Availability
Analysis

WSDOT (2006)

Mn/DOT (2005)

MoDOT (2004)

IDOT (2004)

NDOR (2000)

HDOT (ongoing)

NY (ongoing)

MD (2006)

Public
Sector
Utilization

Public
Sector
Disparity

ADOT (2009)

ODOT (2007)

NCDOT (2004)

VDOT (2004)

CDOT (2001)

FDOT (1999)

n/a

SCDOT (1995)

Caltrans (2007)

ITD (2007)

NDOT (2007)

NMDOT (1995)

OH (2001)

LA (1991)

NJ (2005)

TDOT (2007)

n/a

Alaska DOT&PF (2008)

CDOT (ongoing)

n/a

MDT (ongoing)

n/a

GDOT (2005)

NCDOT (ongoing)

n/a

Study

n/a

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

21
Table 3c. Elements included in state DOT disparity and availability studies.

Type

Private
Sector
Disparities

WSDOT (2006)

Mn/DOT (2005)

MoDOT (2004)

IDOT (2004)

NDOR (2000)

HDOT (ongoing)

NY (ongoing)

MD (2006)

ADOT (2009)

ODOT (2007)

NCDOT (2004)

VDOT (2004)

CDOT (2001)

FDOT (1999)

n/a

SCDOT (1995)

Caltrans (2007)

ITD (2007)

NDOT (2007)

Study

Credit
Access

Anecdotal Evidence

Recommendations

x
n/a

n/a

NMDOT (1995)

OH (2001)

LA (1991)

NJ (2005)

TDOT (2007)

n/a

Alaska DOT&PF (2008)

CDOT (ongoing)

MDT (ongoing)

GDOT (2005)

NCDOT (ongoing)

n/a

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

race-neutral measures to the maximum feasible extent has
been critical to the unanimous judicial conclusion that the
regulations are facially narrowly tailored.75 It was also useful
in defending IDOT’s DBE Program, where expert testimony
was admitted to establish that the DBE Program complied
with Part 26 and best practices, as well as the process for
adopting the annual goal. A review of current contracting
policies and procedures should therefore document whether,
and to what extent, the state DOT’s implementation of the
regulations meets the constitutional objective.
Conducting this type of review also familiarizes the consultant with the agency’s policies and procedures, which
allows a more effective collection and analysis of anecdotal
and other qualitative information regarding the interaction
of both DBEs and non-DBE with the agency’s policies and
procedures. It further permits recommendations for program
improvements that support the success of the state DOT’s
program in leveling its playing field.
Determination of Relevant Geographic Market Area. All
five availability studies (100%) included a section describing
how geographic markets were empirically determined based
on contract and subcontract expenditure data. Nineteen of 20
disparity studies (95%) included a geographic market analysis.
The importance of establishing the geographic market area
stems from Croson:
Finally, the city and the District Court relied on Congress’ finding in connection with the set-aside approved in Fullilove76 that
there had been nationwide discrimination in the construction
industry. The probative value of these findings for demonstrating the existence of discrimination in Richmond is extremely
limited. By its inclusion of a waiver procedure in the national
program addressed in Fullilove, Congress explicitly recognized
that the scope of the problem would vary from market area to
market area.77

While the DBE Program was established by Congress and
based on findings of nationwide discrimination in the construction industry, establishing the state DOT’s geographic
market area is nevertheless an important component of narrowly tailoring its DBE Program. The DBE annual goal
should reflect DBE availability within the specific geographic
market from which that state DOT draws the vast bulk (75%
or more) of its contractors and subcontractors.
Determination of Relevant Product Market Area. Four
of the five availability studies (80%) included a section
describing how product markets were empirically deter75See, e.g., Sherbrooke Turf, Inc. v. Minnesota Department of Transportation, 345
F.3d. 964, 973 (8th Cir. 2003), cert. denied, 541 U.S. 1041 (2004).
76Fullilove v. Klutznick, 448 US 448 (1980).
77
Croson, at 504 (citations omitted, emphasis added).

mined based on contract and subcontract expenditure data.78
Only eight of 18 disparity studies (44%) included a product
market analysis.79
Narrow tailoring also applies to product markets. The
extent of discrimination may differ from industry to industry
just as among geographic locations.80 Documenting the specific industries that comprise a state DOT’s contracting activities and the relative importance of each to contract and
subcontract spending is an important study element. A careful product market definition allows for (1) implementation
of more narrowly tailored availability estimation methods,
(2) contract-level goal setting, and (3) overall DBE availability estimates and annual goals that are a weighted average of
underlying industry-level availability estimates, rather than a
simple average. The weights used are the proportion of dollars spent with each industry and allow the overall availability measure to be influenced more heavily by availability in
those industries where more contracting dollars are spent,
and less heavily by availability in those industries where relatively few contracting dollars are spent.
Estimation of DBE Availability. Estimating DBE availability is at the core of any disparity or availability study. Measures of DBE availability are needed in order to set narrowly
tailored goals and to make comparisons to utilization in order
to gauge disparities. All five availability studies (100%) and all
20 disparity studies (100%) included a section describing
how availability was estimated.
State DOT DBE Utilization. Only one of the five availability studies (20%) included a section on DBE utilization by
the state DOT itself. However, all 20 disparity studies (100%)
included a utilization section.
Like availability, measuring the utilization of DBEs as
prime contractors and subcontractors on state DOT contracts is a key part of any disparity study. It is not as often seen
as a stand-alone section in availability studies since the focus
is on assisting state DOTs with narrowly tailored goal setting
rather than making compelling interest determinations of
disparities (derived in part by comparing DBE utilization to
DBE availability).

78The NDOR (2000) study included some statistical analysis of how the department’s contract dollars were distributed according to internal work codes (grading, concrete pavement, landscaping, bridges, etc.); however, this information
was not used to weight the overall DBE availability figure according to the different levels of spending within each work code.
79CDOT (ongoing) and MDT (ongoing) were excluded from this figure since we
could not determine from the proposals whether a product market analysis
would be included in the study.
80See, however, Wainwright (2000), documenting that, in general, the similarities in the amount of discrimination present in different industries and geographic locations significantly outweighs the differences.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

State DOT Disparity Analysis. Only one of the five
availability studies (20%) included a section on disparities in
the state DOT’s own utilization. However, all 20 disparity
studies (100%) included such a section.
Assessing disparities between DBE participation on DOT
contracts and DBE availability in the DOT’s relevant markets
is a central element of any disparity study. To determine
whether DBEs have or have not been used by the state DOT
in proportion to their availability in the marketplace, the consultant should ideally examine contracting expenditures that
were not subject to race-conscious goals. However, since a
state DOT’s federally assisted contracting expenditures are
subject to the DBE Program, its data may not show evidence
of a lack of participation even if it exists in the private sector
of the state’s relevant market area. Instead, the state DOT’s
own data are typically most useful for examining the effectiveness of its DBE policies during the study period. On the
other hand, of course, if actual participation in state DOT
contracts still turns out to be significantly less than availability in any industry or procurement category, then the state
DOT’s data will still provide evidence of adverse impact.
Economy-Wide Disparity Analyses. Four of the five
availability studies (80%) included a section on economy-wide
disparity analyses. Fifteen of 20 disparity studies (75%)
included such a section.
Assessing the presence or absence of disparities in contracting and other business activities that are not already subject to
race-conscious goals is at the core of the compelling interest
inquiry. As the Tenth Circuit noted in Adarand VII:
[T]he evidence presented by the government in the present case
demonstrates the existence of two kinds of discriminatory barriers to minority . . . enterprises, both of which show a strong link
between racial disparities in the federal government’s disbursements of public funds for construction contracts and the channeling of those funds due to private discrimination. The first discriminatory barriers are to the formation of qualified minority . . .
enterprises due to private discrimination, precluding from the outset competition for public construction contracts by minority enterprises. The second discriminatory barriers are to fair competition
between minority and non-minority . . . enterprises, again due to
private discrimination, precluding existing minority firms from
effectively competing for public construction contracts. The government also presents further evidence in the form of . . . studies of
local subcontracting markets after the removal of affirmative
action programs.81

In disparity studies, econometric studies of minority and
female business formation rates address the first type of bar-

Adarand Constructors, Inc. v. Slater (Adarand VII), 228 F.3d 1147, 1167–68
(10th Cir. 2000), cert. granted, 532 U.S. 941, then dismissed as improvidently
granted, 534 U.S. 103 (2001) (emphasis added).

rier, and econometric studies of minority and female business
owner earnings address the second type of barrier. These
analyses focus on the private sector as opposed to the public
sector because race-conscious contracting in the private sector is far less common and there are a significant number of
construction firms that work in both sectors.
The business formation disparity analysis can also be important for assessing “Step 2” adjustments under §26.45(d)(3), as
a way to quantify how much higher “Step 1” DBE availability
would be “but-for” the “present effects of past discrimination.”
This type of disparity analysis can additionally be conducted by comparing DBE participation on public sector
contracts with goals to participation on contracts without
goals. There are several possible sources of data on contracts
without goals. Within the public sector, they can come from
non-federally assisted state DOT contracts without M/WBE
requirements (such as, for example, in California or Washington State);82 representative state DOT “control” or “zero
goals” contracts, such as IDOT presented at the Northern
Contracting trial;83 and from comparing different time periods within the same geographic and product markets when
goals were and were not in force. Moreover, comparisons can
also be made between the state DOT and other public agencies in the relevant market without race-conscious programs.84 In the private sector, F.W. Dodge Reports or Reed
Construction Data can be used, in some circumstances,85 to
compare M/WBE participation on private contracts in a
given geographic market to M/WBE participation on public
contracts. Some studies also used building permit data for
this purpose.
This type of economy-wide evidence is relevant not only
to the presence or absence of discrimination in the marketplace but also to whether any discrimination would be sufficiently ameliorated through solely race-neutral methods.
Surprisingly, some disparity studies omit these critical
economy-wide analyses, making it impossible to determine
whether an agency is a passive participant in a discriminatory marketplace.

82Both states have passed citizen-initiated propositions banning the use of raceconscious affirmative action in public contracting. Cal. Const. art. 1, sec. 31(a);
RCW 49.60.400.
83See fn. 136 and the accompanying discussion.
84Comparisons between DBE participation at IDOT and the Illinois State Toll
Highway Authority were mentioned previously. In a recent study performed for
the Commonwealth of Massachusetts, similar comparisons were made between
two agencies operating race-conscious programs, the Massachusetts Housing
Finance Agency and the Division of Capital Asset Management, and two agencies whose programs had been either legally enjoined (Massachusetts Bay Transportation Authority) or voluntarily suspended pursuant to a disparity study
(City of Boston) (MA, 2006; MA, 2008).
85The completeness of these data sources varies significantly by region. Some
parts of the country have very complete data (e.g., NCDOT, 2004, Ch. 7), others
much less so (e.g., ODOT, 2007, Ch. 7).

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

Credit Market Access. None of the five availability studies (0%) included a section on lending discrimination. Nine
of 20 disparity studies (45%) included this section.
Discrimination in access to capital is one of the most common and long-standing problems voiced by minority and
women entrepreneurs. As long ago as 1944, Gunnar Myrdal’s
seminal study of race in America found:
The Negro businessman . . . encounters greater difficulties than
whites in securing credit. This is partly due to the marginal position of Negro business. It is also partly due to prejudicial opinions
among whites concerning business ability and personal reliability
of Negroes. In either case a vicious circle is in operation keeping
Negro business down.86

Evidence of this type of discrimination has proven repeatedly persuasive to courts in upholding race-conscious contracting programs. In determining that the DBE Program met
strict scrutiny, the Tenth Circuit wrote:
The government’s evidence is particularly striking in the area of
the race-based denial of access to capital, without which the formation of minority subcontracting enterprises is stymied. . . .
[One study,87 for example] . . . surveyed 407 business owners in
the Denver area. It found that African Americans were 3 times
more likely to be rejected for business loans than whites. The
denial rate for Hispanic owners was 1.5 times as high as white
owners. Disparities in the denial rate remained significant even
after controlling for other factors that may affect the lending rate,
such as the size and net worth of the business. The study concluded that “despite the fact that loan applicants of three different racial/ethnic backgrounds in this sample (Black, Hispanic and
Anglo) were not appreciably different as businesspeople, they
were ultimately treated differently by the lenders on the crucial
issue of loan approval or denial.”
Lending discrimination alone of course does not justify
action in the construction market. . . . However, the persistence of such discrimination, which is already unlawful under
federal law, supports the assertion that the formation, as well
as utilization, of minority-owned construction enterprises has
been impeded.88

The first formal econometric analysis of credit market discrimination was introduced during the Concrete Works v.
Denver trial. Using data compiled by the Federal Reserve
Board and the U.S. Small Business Administration, Denver’s
expert economists demonstrated that large and statistically
significant differences in commercial loan denial rates
between minority and nonminority firms were evident even
when balance sheet and creditworthiness measures were held
86

Myrdal (1944, 308).
Colorado Center for Community Development (1996). See also, U.S. Department of Justice (1996, at 26057–58).
88
Adarand VII at 1169–70, fn 13, citations omitted.
87

constant.89 Denver also introduced the Colorado Center for
Community Development (CCD, 1996) study, as well as testimony from the former top state banking official in Colorado who examined the financial records of several DBEs
who had been recently denied credit and concluded that the
denials could not be justified by their finances. Additionally,
there was testimony from MBEs and WBEs concerning their
difficulties in obtaining capital for their businesses and requirements that were placed on them by lenders that were not
placed on majority firms.
Upon review, the Tenth Circuit noted:
The City presented evidence of lending discrimination to support its position that M/WBEs in the Denver MSA90 construction industry face discriminatory barriers to business formation. . . . [Plaintiffs] did not present any evidence that
undermines the reliability of the lending discrimination evidence but simply repeats the argument, foreclosed by circuit
precedent, that it is irrelevant. . . . [However,] in Adarand VII
we took “judicial notice of the obvious causal connection
between access to capital and ability to implement public works
construction projects.”

Outside of litigation, analysis of lending discrimination
problems has been relatively rare in disparity studies. Statistical tabulations comparing M/WBE and non-M/WBE
answers to a number of survey questions relating to credit
and bonding were included in Louisiana (LA, 1991). Formal
econometric analysis of race and gender differences in lending discrimination did not appear, however, until Maryland
(MD, 2001). Recently, Caltrans (2007), ITD (2007), NDOT
(2007), ODOT (2007), and ADOT (2009) have included similar analyses.91
Anecdotal Analyses. One of the five availability studies
(20%) included anecdotal and/or other types of qualitative
evidence. Nineteen of 20 disparity studies (95%) included
anecdotal evidence.
Qualitative or anecdotal evidence of the direct experiences
of minority and female business owners with discrimination
is a crucial complement to the statistical evidence in any dis-

89In the interest of full disclosure, Denver’s trial experts were NERA economists
and Colette Holt served as outside counsel.
90“Metropolitan Statistical Area.” See also Appendix D—Glossary.
91The two proposals from D. Wilson Consulting, LLC (CDOT, ongoing; MDT,
ongoing) mention the main data set that has been used to produce econometric
studies of lending discrimination (the Survey of Small Business Finances) but give
no indication how it will be used: “The Wilson Group will use data from the
National Survey of Small Business Finances (NSSBF) conducted by the Federal
Reserve Board and the U.S. Small Business Administration, the Current Population Survey (CPS) and the Five Percent Public Use Microdata Samples (PUMS)
from the 2000 decennial census. These data are used to examine the incidence of
minority and female business ownership and [their] earnings. . . .” However, the
NSSBF cannot be used for analyses of M/WBE ownership or earnings and the
CPS and PUMS cannot be used to analyze disparities in credit access.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

parity study. As we have already noted in Chapter One, anecdotal evidence of experiences with discrimination in contracting opportunities is highly relevant since it addresses
whether observed statistical disparities are due to discrimination and not to some other nondiscriminatory cause or
causes. As stated in Croson, “. . . [e]vidence of a pattern of
individual discriminatory acts can, if supported by appropriate statistical proof, lend support to a local government’s
determination that broader remedial relief is justified.”92 Testimony about personal experiences can bring “cold numbers
convincingly to life.” As the Supreme Court has put it, in the
context of an employment discrimination case:
The company’s principal response to this evidence is that statistics can never in and of themselves prove the existence of a pattern or practice of discrimination, or even establish a prima facie
case shifting to the employer the burden of rebutting the inference raised by the figures. But, as even our brief summary of the
evidence shows, this was not a case in which the Government
relied on “statistics alone.” The individuals who testified about
their personal experiences with the company brought the cold
numbers convincingly to life. . . . In any event, our cases make it
unmistakably clear that “[s]tatistical analyses have served and
will continue to serve an important role” in cases in which the
existence of discrimination is a disputed issue. We have repeatedly approved the use of statistical proof, where it reached proportions comparable to those in this case, to establish a prima
facie case of racial discrimination in jury selection case. Statistics
are equally competent in proving employment discrimination.
We caution only that statistics are not irrefutable; they come in
infinite variety and, like any other kind of evidence, they may be
rebutted. In short, their usefulness depends on all of the surrounding facts and circumstances.93

Anecdotal evidence is not often included in availability studies, since they are addressed primarily toward narrow tailoring,
with the understanding that the existence of discrimination has
already been established. The Ninth Circuit’s Western States
decision, as previously noted, has confused and conflated the
distinction between the two prongs of strict scrutiny. Reflecting this, WSDOT (2006) supplemented its availability study
with anecdotal evidence to support resuming the use of DBE
subcontracting goals to meet its annual goal.
Findings and Recommendations. All availability studies
and disparity studies included a final chapter containing findings and recommendations.
Recommendations allow the consultant to opine whether
the evidence developed in its study could or could not support the adoption or continuation of race-conscious mea-

sures. Some consultants further advise the client on what DBE
goals to adopt; other researchers, including ourselves, do not
because it usurps the agency’s role as policy maker. Translating availability measures into DBE goals is the responsibility
of agency policy makers, not the consultant, because it reflects
the application of judgment to the findings of the study in
relationship to overall agency objectives.

Current State DOT
Goal-Setting Methods
Of the 51 state DOTs examined, only 10 set DBE goals during any portion of FFYs 2006–2008 using disparity or availability studies. Table 4 and the accompanying Figures 2–4
show the goal-setting method used by each DOT in each of
the three fiscal years studied.
Clearly, the most commonly employed method for establishing annual DBE goals is the use of a bidders list.94 Just over half
the state DOTs opted for this approach. For FFY 2006, 27 state
DOTs used bidders lists, and two employed a combination of
a bidders list approach and a disparity study. For FFY 2007,
27 state DOTs employed the bidders list approach, one
employed a combination of a bidders list approach and a disparity study, and one used a combination of a bidders list
approach and two other approaches.95 For FFY 2008, 25 state
DOTs employed a bidders list approach, one used a combination of a bidders list approach and a disparity study, and one
used a combination of a bidders list approach and two other
approaches.
After the bidders list approach, the next most frequently
used is an “alternate method.”96 In all cases, the alternate
method has been essentially the bidders list approach—but
with a different list. In the vast majority of these cases, the
alternate list chosen for use was a list of prequalified contractors. State DOTs using prequalified contractor lists to set DBE
goals were Indiana, Kentucky, Michigan, Ohio, Pennsylvania,
Tennessee, Virginia, and West Virginia.97
By comparison to the use of bidders lists and alternates
such as prequalified contractor lists, the two remaining goalsetting options were employed with much less frequency.
Other than Maine DOT in FFYs 2007 and 2008, no state DOT
has used the goals of other DOT recipients to set its own
goals, and only five states have employed the DBE directory
and Census Bureau data approach.

49 C.F.R. § 26.45(c)(2).
Maine DOT combined of a bidders list approach and two other approaches. For
2007 and 2008, Maine calculated Step 1 availability using three different approaches:
bidders list; DBE directory and Census Bureau data; and the goals of other DOT
recipients. It then used the average of all three to arrive at the Step 1 figure.
9649 C.F.R. § 26.45(c)(5).
97Other types of lists employed included lists of licensed contractors (Nevada),
plan holders (Iowa), and contractors with approved EEO policies (Kansas).
95

Croson, at 509.
International Brotherhood of Teamsters v. United States, et al., 431 U.S. 324
(1977), at 339; see also Concrete Works II, 36 F.3d at 1521 (“Croson impliedly
endorsed the inclusion of personal accounts of discrimination”).
93

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

26
Table 4. Goal-setting methods employed by state DOTs, FFYs 2006–2008.
FHWA DBE Overall

FHWA DBE Overall

Goal 2006 Method

Goal 2007 Method

Goal 2008 Method

California

Colorado

2&3

Georgia

Illinois

Maryland

1&3

Minnesota

Missouri

Nevada

2&3

Washington

Hawaii

New Jersey

New York

Alabama

Alaska

100

Arizona

Arkansas

Connecticut

D. C.

Delaware

Florida

Idaho

Louisiana

Massachusetts

Mississippi

Montana

101

State

North Carolina

98Alabama DOT (ALDOT) was awaiting approval of its 2008 goal documents by
FHWA.
99Alaska DOT&PF indicated that data problems prevented it from setting a DBE
goal in FFY 2007 or FFY 2008 using any of the methods available in § 26.45(c).
Instead, Alaska set a 4% all race-neutral goal in each year.

100

See fn 99.
According to our correspondence with Montana DOT (MDT), it did not submit an annual DBE goal to FHWA for FFY 2006.
101

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

Table 4. (Continued).
FHWA DBE Overall

FHWA DBE Overall

Goal 2006 Method

Goal 2007 Method

Goal 2008 Method

Nebraska

New Hampshire

New Mexico

North Dakota

Oklahoma

Oregon

Rhode Island

South Carolina

South Dakota

Texas

Utah

Vermont

Wisconsin

Wyoming

Indiana

Iowa

Kansas

Kentucky

Michigan

Ohio

Pennsylvania

Tennessee

Virginia

West Virginia

Maine

1, 2 & 4

State

Note: Method 1 corresponds to 49 C. F. R. 26.45(c)(1) (used DBE directories and Census Bureau data); method 2 or 5
corresponds to 49 C. F. R. 26.45(c)(2) or (c)(5) (used bidders list or other types of contractor lists); method 3 corresponds
to 49 C. F. R. 26.45(c)(3) (used disparity or availability study) method 4 corresponds to 49 C. F. R. 26.45(c)(4) (used the
goal of another DOT recipient, 26.45(c)(5) “Use an alternative method.”

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

10%

76%

DBE Directories & Census Data

Bidders List or Similar

Disparity or Availability Study

Other Methods

Source: Table 15

Figure 2. Goal-setting methods used by state DOTs, FFY 2006.

12%

76%

DBE Directories & Census Data

Bidders List or Similar

Disparity or Availability Study

Other Methods

Source: Table 15

Figure 3. Goal-setting methods used by state DOTs, FFY 2007.

6.1% 6.1%
16%

71%

DBE Directories & Census Data

Bidders List or Similar

Disparity or Availability Study

Other Methods

Source: Table 15

Figure 4. Goal-setting methods used by state DOTs, FFY 2008.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

CHAPTER 3

Model Disparity Study

The disparity and availability studies reviewed for this
report differ not only in the elements included but also in their
design and implementation. In this section, we compare the
studies reviewed according to the key elements: the definition
and use of geographic and product markets; the development
of availability estimates; the analyses of state DOT contracting
disparities; the analyses of economy-wide disparities; and the
collection of anecdotal evidence. For each key element, we
present the recommended approach judged by actual success
or potential for success under strict scrutiny review.

Determination of Relevant
Geographic Market Area
Recommended Approach. In high-quality disparity and
availability studies, the relevant geographic market area identifies those vendor locations that account for at least 75% of
contract and subcontract102 dollar expenditures in the project
database for the study period.103 The report should describe
how the contract and subcontract data were used to make this
determination and one or more tables should be presented
showing the results.
Location should be determined by linking the zip code of
the contractor or subcontractor to the associated state and
county. For multi-establishment firms, location does not
have to be defined as the headquarters of the firm. If the firm
has established a local presence, then it is appropriate to use
that address for purposes of market determination.
Since the two major contracting categories typically examined in state DOT studies are construction and constructionrelated professional services,104 it is also advisable to make
102

To the extent that studies have not reconstructed or otherwise accounted for
incomplete subcontractor or subconsultant data, the determination of the relevant geographic market area will be incomplete.
103
A detailed description of the project database and the steps necessary to its
assembly appears in Step A—Create a Database of Representative, Recent, and
Complete State DOT Projects, infra.
104Sometimes also referred to as “architecture & engineering,” “design,” “preconstruction,” or just “consulting.”

separate geographic market determinations for each category,
as well as for a combined category.105
Review of Studies. Most of the studies followed the recommended approach in most or all respects. When they did
not, the following were the chief concerns:
• Assuming, rather than empirically determining, the market

area;
• Not including subcontract data in the determination;
• Using states rather than counties as the unit of analysis for

the determination;106
• Not providing details or tables showing how the determination was made; and
• Not providing separate determinations for construction
and construction-related professional services.
Some studies went beyond the minimum recommended
approach and provided separate geographic market calculations by highway district as well as statewide.

Determination of Relevant
Product Market
Recommended Approach. In high-quality disparity and
availability studies, the relevant product market identifies the
detailed industries that account for at least 75% of contract
and subcontract dollar expenditures in the project database
for the study period. The amounts accounted for by each
industry should be listed by dollars and as a percentage of
overall contract and subcontract spending.107
The report should describe how the contract and subcontract data were used to make this determination and one or
more tables should be presented showing the results.
105

See, e.g., Sherbrooke, 345 F.3d at 973–74.
This is less of a concern in very small states such as Delaware or Rhode Island.
107
The percentage distribution by industry is used elsewhere in the study to calculate overall DBE availability as a dollar-weighted average of detailed industry level
DBE availability. See infra, Carrying Out Final Step 1 Availability Calculations.
106

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

Detailed industry affiliation should be determined by
assigning a four-, five-, or six-digit North American Industry Classification System (NAICS) code, as appropriate, to
each contractor and subcontractor in the project database.
For firms whose work qualifies under more than one NAICS
code, the assignment should be made based on the firm’s primary code unless there is enough information available to allocate the firm’s work by dollars across multiple industries.108
However, if multiple NAICS codes are assigned to firms, the
study must be careful to avoid double-counting.
We recommend using NAICS codes even if agencies use
systems other than NAICS (such as Construction Specification Institute codes or other internal work code systems) to
classify contract and subcontract work.109 This is because the
data necessary to implement high-quality availability estimates
are classified according to NAICS (i.e., Dun & Bradstreet data).
Moreover, the courts are familiar with NAICS and Standard
Industrial Classification (SIC, NAICS predecessor), but will be
less so with other types of work classification systems.
While all the studies examined provided results according to
aggregate industry sectors (e.g., construction and constructionrelated professional services), only a few:
• Calculated detailed industry weights to be used for produc-

ing dollar-weighted overall availability estimates.
• Provided detailed industry availability estimates and/or

carried out utilization and disparity analyses by detailed
industry.
One study asserted that the lack of disaggregated data by
industry was due to limitations of the state DOT’s contract
and subcontract data:
Some studies have provided for data at the . . . SIC . . . level and
others have aggregated the data into business type categories such
as architect & engineering; construction; professional services;
and goods and non-professional services. The amount of data
[dis]aggregation is generally limited by a governmental agency’s
record-keeping format. The business type or procurement categories identified above [architecture/engineering, construction,
professional services, and goods and non-professional services]
form the level of aggregation for this study.110

This is not a problem with the state DOT’s data but rather
with the study’s methods. If the project database assembled
108If the state DOT’s contract data contain enough descriptive information about
the nature of the work being performed, then this may be possible. Otherwise,
the allocation becomes arbitrary. For example, should a firm working in two
NAICS codes be classified as split between them 50/50, or 70/30, or 90/10?
109Commodities are sometimes classified according to the National Institute of
Government Purchasing (NIGP) system. This system is commodity based rather
than industry based. For studies that include commodities as a contracting category, we would recommend classifying according to NAICS.
110
OH (2001, Ch. 3, n.p.).

for the study contains the name of the firm, its address, and a
brief description of the project, then the study can assign a
detailed SIC or NAICS code. Even without a project description, lookups in Dun & Bradstreet, SelectPhone, InfoUSA, or
even Google, will almost always turn up enough information
to properly assign a detailed industry code to a firm.
Without a dollar-weighted overall availability estimate, availability in an industry with only $1,000 of contract and subcontract spending has as much impact on the overall availability
estimate as availability in an industry with $1,000,000,000 of
contract and subcontract spending.111 Without availability estimates by detailed industry, the state DOT is deprived of an
extremely useful tool for conducting contract-level goal setting.
Without utilization and disparity analyses by detailed industry,
a study can be criticized for ignoring aggregation issues.112

Estimation of DBE Availability
Recommended Approach. The recommended approach
to estimating availability is a “custom census” designed to
provide an accurate calculation of the current availability of
DBEs in the relevant market.113 This is the only method under
Part 26 that has received favorable judicial analysis.114 The
custom census approach employs a seven-step analysis that
(1) creates a database of representative state DOT projects,
(2) identifies the appropriate geographic market for the state
DOT’s contracting activity, (3) identifies the appropriate product market for the state DOT’s contracting activity, (4) counts
all businesses in those relevant markets, (5) identifies listed
minority-owned and women-owned businesses in the relevant
markets, (6) verifies the ownership status of listed minorityowned and women-owned businesses, and (7) verifies the
ownership status of all other firms. This method results in
an overall DBE availability number that is a dollar-weighted
average of all the underlying industry availability numbers,
with larger weights applied to industries with relatively more
spending and lower weights applied to industries with relatively less spending. The availability figure can also be subdivided by race, ethnicity, and gender group, as well as by
highway district, where appropriate.115
111

U.S.DOT “Tips for Goal-Setting in the Disadvantaged Business Enterprise
(DBE) Program” (“Whenever possible, use weighting . . . to insure that your Step
One Base Figure is as accurate as possible.”).
112Simpson’s Paradox states that outcomes observed when data are aggregated
may not be observed when data are disaggregated, and vice versa. Some courts
have criticized public agencies for ignoring this issue. See Appendix A, Non-DBE
Subcontract Data is Just as Important as DBE Subcontract Data, for further discussion of this phenomenon.
113See Northern Contracting III, 473 F.3d at 723; Sherbrooke, 345 F.3d at 973.
114Sherbrooke, 345 F.3d at 973; see Concrete Works IV, 321 F.3d at 966 (custom
census was “more sophisticated” than earlier studies using Census data and
bidders lists).
115Recommended Approach to Measuring DBE Availability, supra, provides an
extended discussion of how to implement the “custom census” method.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

Review of Studies: Different Approaches
to Measuring Availability
A variety of approaches to measuring availability appear in
the 25 studies we reviewed. The recommended approach, discussed in detail in Recommended Approach to Measuring DBE
Availability, was used in seven of 25 studies. Another ten
studies relied primarily on internal state DOT lists of contractors and subcontractors, such as certified DBE directories,
bidders lists, prequalified contractor lists, registered subcontractor lists, licensed contractor lists, plan-holder lists, or
lists of winning contractors or subcontractors. Internal lists
were sometimes supplemented with lists gathered from
other sources. However, the internal lists remained primary.
We will refer to this as the “bidders list approach.”
The bidders list approach has appeal since these types of
lists tend to be readily available and since it seems natural to
base an availability measure on firms that are already working or trying to work with the state DOT. Some have also
posited that inclusion on the lists is a measure of whether
DBEs are “ready, willing and able.”116 However, there are several drawbacks to this approach:
• The remedial aspect of Congress’ intent in passing the DBE

•

Program is easily lost because it limits the availability pool
to only those firms with which the state DOT is already
familiar or already does business. A broader measure is
preferred.117
To the extent that there is still discrimination against
DBEs, they are likely to be underrepresented on such lists.
This approach is therefore likely to lead to lower estimates
of availability than are actually present in the relevant
markets.
To the extent that economy-wide discrimination in the relevant markets channels DBEs into state DOT work because
of the remedy of the DBE Program, DBEs may be overrepresented on such lists. This approach is therefore likely to
lead to higher estimates of availability than are actually
present in the relevant markets.
To the extent that such lists are produced using different
methods and criteria (e.g., criteria for DBE certification is
different from criteria for prime or subcontractor prequalification), such lists mix “apples and oranges.”
The bidders list approach often calculates availability separately for prime contractors and subcontractors. First, firms
may perform as subcontractors on some jobs and prime
contractors on others, so assigning firms to separate cate-

116See, e.g., Concrete Works IV, 321 F.3d at 984 (discussing plaintiff’s argument
that bidding data are the only measure of availability).
117Northern Contracting III, 473 F.3d at 723 (The “remedial nature of the federal
scheme militates in favor of a method of DBE availability calculation that casts a
broader net.”).

gories may not yield an accurate picture. This may be especially true for state DOTs that are implementing aggressive
race-neutral measures to reduce barriers for DBEs seeking
to perform prime contracts (e.g., setting aside smaller contracts for bidding by small firms, providing bonding and
financing support, reducing prequalification burdens).
Further, if DBEs suffer discrimination in the relevant markets, then their ability to progress from subcontractors to
prime contracts is likely to have been affected.118 Creating
separate availability measures for primes and subs serves to
exacerbate rather than remedy this problem.119
• The bidders list approach rarely includes attempts to validate
whether firms are correctly classified by race and gender.
A variation on the bidders list approach was used in four
studies. Three studies used one such variation and a fourth
used another. We will refer to these collectively as the “bidders list approach with capacity adjustments.”
This method seeks to test whether firms with lower revenues won fewer contracts and subcontracts while firms with
higher revenues won more. The method was implemented by
surveying state DOT bidders to collect data on revenues and
then comparing that data to existing data on contract and
subcontract awards using regression analysis.
However, the three studies that employed this “capacity” test
could not find a statistically significant relationship between
revenues and contract awards.120 In part, the data did not fit
because firms of given revenue sizes won a variety of contracts
and subcontracts both large and small.121
Despite finding no empirical support for the hypothesized
relationship between revenue size and propensity to win contract and subcontract awards, all three studies proceeded
without explanation to eliminate firms from their availability
calculations if they had revenue levels lower than those of survey respondents that had actually won state DOT contracts or
subcontracts. This resulted in an unjustified downward
adjustment to most of the initial availability estimates.

118

See Northern Contracting II, 2005 U.S. Dist. Lexis at *74 (“The ability of DBEs to
compete successfully for prime contracts may be indirectly affected by discrimination in the subcontracting market, or in the bonding and financing markets. Such
discrimination is particularly burdensome in the construction industry. . . .”).
119See Appendix B for further discussion.
120Moreover, none of these studies describes why a firm’s revenue can be appropriately construed as a race-neutral explanatory variable. Additional discussion
of the difficulties involved in using variables, such as revenue, that can be
impacted by discrimination to explain success or failure in the award of contracts
or subcontracts appears in Appendix B.
121See Concrete Works IV, 321 F.2d at 981 (“At trial, Denver introduced evidence
that the median number of employees of all construction firms in the Denver MSA
is three and presented testimony that even firms with few permanent employees
can perform large, public contracts by hiring additional employees or subcontractors and renting equipment. Additionally, the district court found that ‘most firms
have few full-time permanent employees and must grow or shrink their performance capacity according to the volume of business they are doing.’ ”).

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

A fourth study also implemented a “capacity” adjustment
with its bidders list approach to measuring availability. This
adjustment, however, was implemented in a way that was not
obviously biased by past discrimination against DBEs. The
study performed a regression analysis of total dollars awarded
to non-DBE contractors and subcontracts against the largest
successful bid from each non-DBE contractor or subcontractor. It then applied the statistical relationship implied by the
non-DBE regression to DBEs and used the results to estimate
“expected utilization” for DBEs. The expected utilization figure was then compared to the actual utilization figure to form
a disparity ratio. This approach is roughly analogous to the
approach used to estimate potential business formation among
minorities and women.122 As a potential measure of disparity,
it is quite useful. As a measure of availability, however, it suffers from the same infirmities as other bidders list approaches
to availability measurement.123
Moreover, from a practical standpoint, the necessary
data on successful and unsuccessful bid values, particularly
at the subcontractor level, are rarely available. This study did
not describe how complete the data were for this exercise,
although elsewhere there are indications that a significant
amount of non-DBE subcontractor data were in fact missing.
The study’s regression results do not report the number of
DBE and non-DBE observations included. These omissions
made it difficult to evaluate this approach’s litigation potential, as an adverse party’s expert might be unable to duplicate
the results from the study.
Another method used to account for capacity appears in
three other studies we reviewed. We will refer to this as the
“custom census approach with capacity adjustments.”
The three studies using this method started with Dun &
Bradstreet data as their source for the availability denominator. The Dun & Bradstreet data were then restricted to the relevant geographic market based on the location of contractors
and subcontractors on federally assisted state DOT contracts.
The data were further restricted to the relevant product market by matching the names and addresses of firms that had
bid on state DOT contracts as prime contractors or first-tier
subcontractors with the Dun & Bradstreet data to determine
the relevant SIC or NAICS codes.
All the firms identified in this manner were then surveyed
by telephone. Firms that could not be reached were discarded, including firms that may actually have worked for the
agency as prime contractors or subcontractors. Any firms
that had not worked or attempted to work on construction or

122A business formation regression is calculated for nonminority males and the
resulting model is applied to minorities and women to derive their expected rate
of business formation. See Chapter Three, Economy-Wide Disparity Analysis for
the Relevant Markets, infra.
123
See Chapter Three, Estimation of DBE Availability, supra.

construction-related professional services contracts were also
discarded. In one of these studies, for example, the original
pool of 39,911 establishments was reduced by over 90%—
leaving only 3,398 firms in the availability denominator. The
process used in the other two studies was very similar.
As part of the telephone survey, each firm was asked
whether it was 51% or more minority or female owned. If it
reported being minority owned, then the survey asked
which race or ethnicity comprised the bulk of the minority
ownership. In this way, 32% of the 3,398 firms identified in
the survey were identified as minority owned and/or woman
owned.
The study examined five years of DOT contract and subcontract data. From this, dollar-based weights were derived to
account for the amount of contract and subcontract spending
in each SIC or NAICS code. Although the study does not
describe the method, additional weights were also derived to
account for prime contractor versus subcontractor status,
contract dollar size categories, and regions within the state.
Based on this weighting procedure, the overall estimate of
availability fell from 32% to under 18%.
Finally, firms that were considered too large to meet
U.S.DOT DBE certification guidelines were excluded from
the availability measure. Any DBE construction firm that
responded to the telephone survey and reported prior year
gross revenues exceeding $10 million,124 or any DBE engineering firm reporting more than $5 million, was dropped from the
calculation. The final availability figure arrived at through this
process was 13.5%.
As with the “bidders list with capacity adjustments”
approach, the “custom census with capacity adjustments”
approach is biased downward. It reduces the availability percentage by controlling for factors that are likely to be directly
affected by the presence of discrimination in the relevant markets. Whether firms have worked or attempted to work on state
DOT projects have been awarded prime contracts or the size
of those contracts should not be used to limit the DBE availability measure.125 Not only is this a problem in its own right,
but also it may hide the existence of discrimination because a
downward bias in availability can lead to a conclusion of no
significant disparity when, in fact, a disparity exists.126

124Cf. 49 C.F.R. § 26.65, establishing the size limits for DBE eligibility as those
imposed by the SBA under 13 C.F.R. Part 121. SBA limits at the time of the study
ranged from $13 million for specialty trade contractors to $31 million for general and heavy construction firms. The current overall DBE Program cap is
$20.41 million. No explanation is provided in the study of how the lower ceiling
was determined or why it was imposed.
125See also the discussion of capacity in Appendix B.
126Based on the results of one of these studies, the state DOT has sought a waiver
to exclude DBEs owned by Hispanic males and Subcontinent Asian males from
its race-conscious measures, i.e., denying their eligibility for credit toward meeting subcontracting goals based on a finding of no significant disparity.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

Disparity study authors, along with a number of courts,
have wrestled with the concept of DBE or M/WBE “capacity.”
Concerns regarding capacity arise not only in the context of
availability measurement but also in the context of assessing
disparities. Appendix B provides an extended discussion of
“capacity” issues in the context of disparity and availability
studies and related litigation. In summary, where “capacity,”
whether measured by firm revenues, employment size, or
some other metric, is influenced by the presence of discrimination in the relevant markets, it is inappropriate to use such
measures to “correct” or “adjust” Step 1 availability or Step 2
disparity statistics.
Finally, one study calculated DBE availability six different
ways yielding six different estimates. Such an approach can be
a drawback in litigation as it provides a plaintiff an opportunity to cast doubt on the entire study by pointing out that the
multiple estimates cannot all be correct.127 In fairness, however, this particular study is one of the earliest that we
reviewed, from a period when recipients were still striving to
find an approach to availability measurement that the courts
would find acceptable.128
Recommended Approach to Measuring
DBE Availability
Introduction. The determination of DBE availability is
the cornerstone of an availability or disparity study. Accurate,
comprehensive estimates of availability are critical. An expansive concept of availability is important because, as the courts
have held, looking beyond the recipient’s contracting results
helps to further Congress’ remedial intent.
[T]he purpose of the overall goal—and, in fact, the DBE program, as a whole—is to achieve a “level playing field” for DBEs
seeking to participate in federal-aid transportation contracting.
To reach a level playing field, recipients need to examine their
programs and their markets and determine the amount of participation they would expect DBEs to achieve in the absence of
discrimination and the effects of past discrimination.129

Limiting the inquiry to agencies’ internal lists of firms cannot fully result in an annual goal that “reflect[s] . . . the level
of DBE participation you would expect absent the effects of
discrimination.”130 Such an approach reflects in part the current effects of past or current discrimination and so should

127

Cf. Associated General Contractors of America v. City of Columbus, 936 F. Supp.
1363, (S.D. Ohio 1996) (discussing various measures of availability).
128Another of these early studies presented seven different availability measures.
However, the agency ultimately chose just one (a bidders list approach) to use
for disparity testing purposes.
12964 Fed. Reg. 5108.
130
Ibid.

not be used to limit the examination of how the market
would look if it became discrimination free.
Although 49 C.F.R. § 26.45(c)(1) permits the use of DBE
directories and Census Bureau data to estimate availability,
this is a less than optimal approach. It necessitates a comparison of “apples to oranges” because the methods used to
identify and certify firms as DBEs are entirely different from
the methods used by the Census Bureau to count businesses
or business establishments for inclusion in CBP Survey of
Business Owners (SBO) or other statistical databases. As a
result, no defensible comparisons are likely to result from
dividing figures from one of the latter sources by figures
from the former.
What has been termed the “custom census” approach to
measuring DBE availability, when properly executed, is superior to the other methods allowable under 49 C.F.R. § 26.45
for at least four reasons. First, it provides an internally consistent and rigorous “apples to apples” comparison between
firms in the availability numerator and those in the denominator. Second, by “casts[ing] a broader net” it comports with
the remedial nature of the DBE Program. Third, a custom
census is less likely to be tainted by the effects of past and
present discrimination than the other methods.
Finally, it has been upheld by every court that has reviewed
it. The Tenth Circuit found the custom census approach to
be “a more sophisticated method to calculate availability
than the earlier studies.”131 Likewise, this method was successful in the defense of the DBE Programs for Mn/DOT132
and IDOT,133 as well as the M/WBE construction program for
the City of Chicago.134
The following are the seven steps to the custom census
approach:
(A) Create a database of representative, recent, and complete
state DOT projects;
(B) Identify the contracting activity’s relevant geographic
market;
(C) Identify the contracting activity’s relevant product market for the contracting activity in question;
(D) Count all businesses in the relevant markets;
(E) Identify listed minority-owned and women-owned businesses in the relevant markets;
(F) Verify the ownership status of listed minority-owned
and women-owned businesses; and
131
Concrete Works of Colorado, Inc. v. City and County of Denver, 321 F.3d 950,
966 (10th Cir. 2003) (Concrete Works IV), cert. denied, 540 U.S. 1027 (2003).
132
Sherbrooke Turf, Inc. v. Minnesota Department of Transportation, 345 F.3d. 964
(8th Cir. 2003), cert. denied, 541 U.S. 1041 (2004).
133
Northern Contracting, Inc. v. Illinois Department of Transportation, 473 F.3d
715 (7th Cir. 2007).
134
Builders Association of Greater Chicago v. City of Chicago, 298 F. Supp.2d 725
(N.D. Ill. 2003).

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

(G) Verify the ownership status of all other firms in the relevant markets.
Each step is described in more detail below, in the context of
estimating availability for construction and constructionrelated professional services—the two most commonly studied
(and litigated) sectors in disparity and availability studies.
The methods generalize to other industry sectors as well.
Step A—Create a Database of Representative, Recent, and
Complete State DOT Projects. The first step is to create a
database of state DOT projects. This database provides the
empirical basis for many of the statistical analyses in the study.
Each project in the database should contain information on all
relevant prime contracts and all associated first-tier agreements with subcontractors, subconsultants, or suppliers.135
It is imperative to obtain subcontract information for both
DBEs and non-DBEs. If all of the necessary subcontract data
have been maintained, then all of it should typically be included
in the project database. If the state DOT has not collected and
maintained this data, then it will be necessary to either request
the information directly from each relevant prime contractor
or consultant or reconstruct the required information by
other means.136
The project database must be representative of the type of
work usually undertaken by the state DOT. It is therefore
advisable to study several years’ worth of contract and subcontract data so that atypical projects do not unduly affect the
statistical analysis.137
Most state DOT disparity and availability studies have relied
on a study period of 5 years—typically the most recent five full
fiscal or calendar years.138 Of the 28 state DOTs that have performed, or are currently performing, a disparity or availability
study, we were able to obtain the number of years of contract
and subcontract data studied for 25. This is shown in Table 5.139
Of these 23 studies, study periods ranged from 2 years to
14 years. A study period of only two years, in our view, is

135Hereafter, unless otherwise indicated, we refer to these collectively as “subcontractors” or “subcontracts.”
136
For additional discussion of the subcontract data collection issue, see
Appendix A.
137
In some cases, it can be appropriate to ignore or prorate unusual projects. For
example, in Denver’s study, 1999 projects associated with the construction of the
Denver International Airport were excluded from the main analysis, because this
sort of project was not representative of typical Denver construction projects and
was unlikely to be undertaken again for decades. In that same study, several large
bond-funded public library construction projects that were likely to be undertaken only once per decade were prorated. Since the study period was 5 years,
half of the value of these projects was included in the database.
138
Typically, the federal fiscal year (which runs from October through September) is used, although calendar years are sometimes used depending on the
study’s scope and on organization of the agency’s data.
139
Of the remaining three, one is ongoing (North Carolina), one could not be
located (Florida), and one was never released (Tennessee).

likely to be inadequate due to the smaller sample sizes yielded.
For example, a significant share of projects awarded during
that period may still not yet be complete. This could cause the
resulting database to be biased by the exclusion of larger projects with longer completion times.
The median study period length was 5 years and the average was 5.3 years. The disparity or availability studies introduced as evidence in the Sherbrooke and Northern Contracting
cases covered 5 years.
Because the types of subcontracting that occur early in a
project are often different from those that occur later, we recommend that only complete or substantially complete projects be studied; that is, enough of the project has been finished
(e.g., it is now open to traffic) so an accurate picture of all subcontracting activity emerges. If payment data are being used
in the analysis (as opposed to or in addition to award data),
then including incomplete projects could lead to inaccurate
conclusions about the relative weight of different subcontracting activities.
In order to assist in the determination of the level of DBE
participation that would be expected in a race-neutral contracting environment, it is important that the project database
include contracts with and without DBE goals.140 In states
without a M/WBE program for state-funded contracts, this
can be achieved by including non-federally assisted projects
in the database.
For states without these data, more creative approaches
can be applied. For example, in preparing for the Northern
Contracting trial, IDOT initiated a “zero goals” experiment,
where selected prime contracts that ordinarily would have
been subject to a DBE goal based on the scopes of work and
DBEs certified in those industries were solicited with a “zero
goal.” The result was that DBEs received approximately 1.5%
of the total value of these contracts. This evidence of the
results of totally race-neutral measures was found to be probative by the court.141 Several courts have likewise held that a
large contrast between DBE participation on contracts with
and without goals can be probative of the continuing need for
race-conscious remedies.142

140

One objective of the DBE Program is to “assist the development of firms that
can compete successfully in the marketplace outside the DBE program.” 49 C.F.R.
§ 26.1(f) (emphasis added). A disparity study can examine how DBEs are faring
on contracts that are not federally assisted, which may provide information that
is useful to the agency in this regard, as well as the need to continue to use raceconscious goals to meet the annual goal.
141Northern Contracting III, 473 F.3d at 719.
142See, e.g., Western States, 407 F.3d at 992 (Congress properly considered evidence of the “significant drop in racial minorities’ participation in the construction industry” after state and local governments removed affirmative action
provisions); Adarand VII, 228 F.3d at 1186 (evidence included “studies of local
subcontracting markets after the removal of affirmative action programs”); Concrete Works IV, 321 F.3d at 984–85.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

35
Table 5. Study period length for state DOTs that are currently performing
or have recently performed disparity or availability studies.
State
NC

Consultant
EuQuant

Years of Contract Data
in Most Recent Study
ongoing

MGT of America, Inc.

not obtained

Mason Tillman Associates, Ltd.

not released

D.J. Miller & Associates

Mason Tillman Associates, Ltd.

MGT of America, Inc.a

3.5

BBC Research & Consulting

D. Wilson Consulting Group, LLC

BBC Research & Consulting

D. Wilson Consulting Group, LLCb

BBC Research & Consulting

D.J. Miller & Associates

MGT of America, Inc.

MGT of America, Inc.c

MGT of America, Inc.

NERA Economic Consulting

MGT of America, Inc.

Boston Research Group

D. Wilson Consulting Group, LLCb

NERA Economic Consultingd

MGT of America, Inc.

6.5

Notes: (a) Colorado’s current study is ongoing—this figure is for its 2001 study; (b) study is ongoing, study
period based on consultant’s proposal; (c) North Carolina’s current study is ongoing—this figure is for its 2004
study; (d) figure is for construction contracts—only 3 years of data were available for construction-related
professional services and local assistance contracts.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

For each project in the database, the following are key
prime contract fields that should be included:143
• Unique contract number for prime contract;
• Brief description of the prime contract;
• Department or subdepartment for which the project was
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•

performed;
Date of prime contract award;
Original dollar amount of prime contract;
Total dollar amount of prime contract (including all
change orders);
Date of completion or substantial completion;
Total dollar amount paid through completion or substantial completion;
Business name of prime contractor or consultant;
Unique identification code for the prime contractor or
consultant;144
Street address, city, state, and zip code of prime contractor
or consultant;
Telephone number of prime contractor or consultant;
Contact person name and title for prime contractor or
consultant;
Certification status of prime contractor or consultant;
Race and gender of prime contractor or consultant
ownership;145
Brief description of prime contractor work specialties;
Indication of whether prime contract was federally assisted;
DBE goal for the prime contract; and
DBE goal for associated change orders.146

•
•
•
•
•
•
•
•
•
•
•
•
•

Unique contract number for prime contract;
Brief description of the subcontract;
Original dollar amount of subcontract;
Total dollar amount of subcontract (inclusive of all change
orders);
Total dollar amount paid through completion or substantial completion;
Business name of subcontractor or consultant;
Unique identification code for the subcontractor;
Street address, city, state, and zip code of subcontractor;
Telephone number of subcontractor;
Contact person name and title for subcontractor;
Certification status of subcontractor;
Race and gender of subcontractor ownership;147 and
Brief description of subcontractor work specialties.

Steps B & C—Identify the Relevant Markets. Markets
have both a geographic and an industry dimension.148 Once
the project database is assembled, the next step in determining availability is to identify the geographic locations and the
industries from which the state DOT draws the preponderance of its prime contractors and consultants and from which
the state DOT’s prime contractors and consultants draw the
preponderance of their subcontractors, subconsultants, and
suppliers.
The unit of analysis to define “preponderance” should be
the number of contract dollars since subcontracting goals are
set as a percentage of total dollars awarded and since contracts
and subcontracts vary greatly by dollar size.149

For each project in the database, the following key subcontract fields should be included:

143

For projects procured using the construction manager or construction
manager at-risk process, similar data should be included for the construction
manager.
144
The use of unique codes to identify vendors in contracting records is preferable
to using the vendor’s name as an identifier, since vendor names can (and usually
are) entered inconsistently. Reconciling this inconsistent information can be a
huge, costly, and time-consuming task for a study consultant, especially in contract files containing thousands (or millions) of records. The use of unique vendor IDs eliminates the inconsistency inherent in the use of names as identifiers. It
also facilitates the integration of contracting and contractor data into larger relational database systems, which have many advantages, from an information management perspective, over more traditional, or flat file database management
systems. See, e.g. Wiley Publishing, Inc. (2008).
145
If the contractor is publicly owned, this should be noted. In the absence of
information to the contrary on a specific company, however, it is appropriate to
treat publicly owned companies as non-DBEs. According to the Census Bureau
(2008, Tables 2 and 5), of the total value of stock and mutual fund shares owned
by U.S. households in 2002 (the latest data available), black households owned
only 3.5%, Hispanic households 6.9%, Asian households 4.3%. Non-Hispanic
white households owned 77.3%.
146
We have observed many instances where DBE goals on awarded contracts have
not been applied to change orders. Since change orders can often account for a
large share of a construction project’s dollar value, this can lead to a significant
dilution of DBE participation.

147
If the subcontractor is publicly owned, this should be recorded in lieu of race
and gender. See footnote 145.
148
See, e.g., Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 459 (1993).
149
For example, data from WSDOT for FFY 1999–2003 [NERA Economic Consulting (2005)] included 624 federally funded prime construction contracts valued at $1.52 billion. These contracts ranged in value from a minimum of $54,000
to a maximum of $204 million, with a median of $961,000 and an average of
$2.44 million. Of the 624 prime contracts, 182 (29%) were valued at $500,000 or
less. However, these 182 contracts accounted for less than 3.5% of total dollars.
Even if we exclude the largest prime contracts (e.g., those in excess of $20 million),
which collectively account for 35% of all dollars, the share of total dollars
accounted for by contracts of $500,000 or less is still only 5.0% of the total. A similar pattern is observed in subcontracts. In the WSDOT data, there were 4,998
subcontracts totaling almost $560 million. Subcontracts ranged in size from $100
to almost $15 million, with a median of $18,000 and an average of $111,000. Subcontracts of $15,000 or less accounted for 46% of all subcontracts but less than
2.5% of all subcontract dollars. Once again, even if we ignore all subcontracts valued above $2 million (27% of all subcontract dollars), subcontracts of $15,000 or
less account for just over 3.0% of all subcontract dollars. Finally, in the WSDOT
data, more than 96% of all DBE participation occurred on contracts valued above
$500,000. Similar patterns are observed in the construction-related professional
services contracts data. Not only does this example demonstrate the wide variation in prime contract and subcontract sizes, but it also casts in doubt a method
that limits most or all statistical analyses to prime contracts of $500,000 or less.
This approach will cause a very large share of its contract spending, including the
DBE spending, to go unanalyzed. See, e.g., Texas Building and Procurement Commission (2007, 5–6).

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

37
Table 6. Distribution of contract dollars by contract category.
Construction

Consulting

Subrecipients

(%)

Inside State

82.1

83.8

82.4

Outside State

17.9

16.2

17.6

Inside Metropolitan Statistical Area

86.7

89.2

99.6

Outside Metropolitan Statistical Area

13.3

10.8

0.4

Location

Using the project database, the county in which each contractor is located can be identified using the firm’s zip code.
Then, the percent of dollars awarded and/or paid to contractors and subcontractors in each state/county unit can be calculated. Drawing on work in the antitrust field, a geographic
market can be defined as that area in which the state DOT
operates and as well as the area where it “can predictably turn”
to obtain construction services and where “the vast bulk” of
the agency’s contract and subcontract dollars are spent.150
Although there is no single numerical percentage that determines “the vast bulk,” a figure of 75% is often employed as a
reasonable approximation.151 Table 6, drawn from an actual
availability study, provides an example of how the information from the project database can be arrayed by geography to
assist in determining the appropriate geographic market. For
that study, the geographic market was defined to be the state
as a whole.
In order to identify the product market, each contactor
and subcontractor in the project database can be assigned a
primary industry code, using the NAICS system. If enough
detail is provided in the project database, the project name
and description can be used to assign primary industry codes
to prime contractors and the subcontract task descriptions
can be used to assign codes to subcontractors.
When the description of the task does not clearly indicate
the appropriate NAICS code for a contract or subcontract,
lookups can be performed using Dun & Bradstreet’s MarketPlace, SelectPhone, InfoUSA, or other sources. Most of these
sources still use SIC codes, the predecessor to the NAICS system, to classify firms. Crosswalk tables allowing conversion
between SIC and the several editions of NAICS and vice versa
are available online from the Census Bureau.152 In construction

150See, e.g., Tampa Electric Co. v. Nashville Coal Co., 365 U.S. 320, 367 (1963);
United States v. Philadelphia National Bank, 374 U.S. 321, 359 (1963); also
Areeda, Kaplow and Edlin (2004).
151This was the benchmark employed in the availability studies that were upheld
in the Sherbrooke and Northern Contracting cases.
152
See NAICS at http://www.census.gov/epcd/www/naics.html.

and construction-related professional services, a four-digit
NAICS code is most comparable to a four-digit SIC code for
general contracting categories.153 For specialty trades and professional services, a five-digit NAICS code is most comparable.
Once NAICS codes are assigned to all firms in the project
database, the percent of dollars awarded and/or paid to contractors and subcontractors in each detailed industry can be
calculated to determine which ones are most relevant for a
state DOT’s contracting activity. Some NAICS codes will have
much larger percentage shares than others, as some industries
account for a larger share of agency contract spending than
others. These percentage shares are referred to as “product
market weights” because they will be used to create an overall availability figure that is a weighted average of all the
individual four-digit and five-digit NAICS level availability
estimates, with the weights being the percentage dollar shares
of spending. Table 7, drawn from an actual availability study
we performed, provides an example of how the information
from the project database can be arrayed by industry (in this
case using SIC rather than NAICS codes) to assist in determining the appropriate product market.
As Table 7 shows, 22 SIC codes were identified in this state
DOT’s subrecipient contracting market. Ninety percent of
such contracting and subcontracting activity occurred in just
eight industries and that one industry, SIC 1611, accounted
for 24% of all such activity.
As with the geographic market, it is important that the disparity or availability study captures the “vast bulk” of an
agency’s spending. Here too, the courts have not established
any clear numerical boundary.154 Since one of the deliverables
from a high-quality study should be detailed (i.e., four-digit
or five-digit NAICS) estimates of DBE availability that can be
used to assist in establishing DBE contract goals, the agency
should have as many relevant NAICS codes included in its
study as possible. On the other hand, it is not cost-effective to
153

Four digits is the most detailed classification available in the SIC system.
See fn. 149; however, it is not advisable to structure a study so that only a small
fraction of overall spending is captured.

154

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

Table 7. Product market for subrecipient contracts.
SIC Code

SIC Description

Percentage

Cumulative
Percentage

1611

Highway and Street Construction

24.26

1622

Bridge, Tunnel, and Elevated Highway

22.10

46.35

1794

Excavation Work

14.69

61.04

1771

Concrete Work

11.43

72.48

1623

Water, Sewer, and Utility Lines

6.02

78.49

1542

Nonresidential Construction, n.e.c.

5.30

83.80

1629

Heavy Construction, n.e.c.

3.42

87.22

0782

Lawn and Garden Services

3.27

90.49

1731

Electrical Work

3.12

93.61

3273

Ready-Mixed Concrete

1.44

95.05

1521

Single-Family Housing Construction

1.08

96.13

5051

Metals Service Centers and Offices

1.05

97.18

1791

Structural Steel Erection

0.86

98.05

4212

Local Trucking without Storage

0.73

98.78

1541

Industrial Buildings and Warehouses

0.39

99.17

7359

Equipment Rental and Leasing, n.e.c.

0.30

99.47

8711

Engineering Services

0.22

99.69

3272

Concrete Products, n.e.c.

0.18

99.86

1721

Painting

0.06

99.92

5063

Electrical Apparatus and Equipment, Wiring
Supplies, and Construction Materials

0.04

99.97

5172

Petroleum and Petroleum Products Wholesalers,
except Bulk Stations and Terminals

0.02

99.98

3446

Architectural Metal Work

0.02

100.00

TOTAL

$48,540,859

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

create availability estimates for NAICS codes in which the
total spending over a 5-year study period is relatively negligible; some balance must be struck. Our experience is that in
using a well-constructed project database, it is usually possible to analyze at least 80% of contract spending and in some
cases as much as 95% or more.155
Steps D & E—Count All Businesses in the Relevant Markets and Identify Listed Minority-Owned and WomenOwned Firms. Once the geographic and product markets
have been defined, it is possible to define the “baseline” population of relevant businesses for the study. In the custom
census approach, Dun & Bradstreet’s MarketPlace database is
used to define the baseline business population. MarketPlace
is the most comprehensive and objective available microlevel database of U.S. businesses.156 MarketPlace contains over
14 million records, is updated continuously, and revised each
quarter. Using MarketPlace, it is possible to purchase a list of
all businesses within the geographic market area that have an
NAICS code to which a product market weight has been
assigned using the project database.
While extensive, MarketPlace does not sufficiently identify
businesses owned by minorities or women. That is, although
these firms are included in MarketPlace, they are not always
identified as being minority or women owned. Although many
such businesses are correctly identified in MarketPlace, experience has demonstrated that many are not. For this reason, the
minority- and women-owned share of the baseline business
population cannot be calculated directly from MarketPlace.
Doing so would yield an availability estimate that was lower
than the actual share of minority- and women-owned businesses in the relevant markets.
To compensate for this limitation, the custom census
method supplements the existing MarketPlace race and gender
identifiers with race and gender identifiers from other directories and business listings gathered within and around the relevant geographic market. This requires conducting an “extensive
and intensive” search for information on minority-owned and
women-owned businesses in the relevant geographic market.157
155
This can be done by excluding all prime contracts below a certain dollar
threshold, say $25,000, or by cumulating total spending by NAICS code and then
excluding contract spending in those NAICS codes above a certain percentage
cutoff, say 90%, or by some combination of these two methods. See also the discussion at fn. 149.
156
“Micro-level” means a database where the individual firms within the database
can be identified. Many Census databases, by contrast, simply provide counts of
businesses in different categories.
157
We say “extensive” because, as the list below illustrates, a wide variety and large
number of organizations were contacted as potential sources of information on
minority- and women-owned businesses. We say “intensive” because obtaining
a given list in the necessary timeframe with the necessary information (i.e., race
and gender identification in addition to standard data such as business name,
address, and telephone number) and in a usable format often requires a great
deal of patience and perseverance.

Beyond the information already in MarketPlace, this includes
obtaining the state’s Unified Certification Program directory as
well as DBE listings from numerous other public and private
entities in the relevant market.
As an example, the following is a listing of directories
obtained and/or agencies contacted as part of the WSDOT
(2006) availability study:
WSDOT certified DBE directory
Associated General Contractors of Washington
Bank of America Supplier Diversity Program
Black Chamber of Commerce Pacific Northwest
Boeing Company Supplier Diversity Program
Boise Cascade Corp Supplier Diversity Program
Business Research Services National Directory of MinorityOwned Businesses
Business Research Services National Directory of WomenOwned Businesses
Caltrans
Central Contractor Registration database
CH2M Hill
Chevron/Texaco Supplier Diversity Program
City of Bellevue
City of Olympia
City of Portland Sheltered Market Program
City of Seattle Boost Program
City of Seattle Vendor & Contractor Registration
City of Spokane
City of Tacoma
City of Vancouver
City of Olympia
Coca-Cola Supplier Diversity Program
Community Capital Development SMWBE list
Conoco/Phillips Supplier Diversity Program
Urban League of Metropolitan Seattle
Diversity Information Resources
Georgia-Pacific Supplier Diversity Program
Howard S. Wright Construction Supplier Diversity Program
Idaho Transportation Department
King County
Kroger Company
Microsoft Supplier Diversity Program
Montana Department of Transportation
National Association of Minority Contractors
National Association of Women Business Owners—Inland
Northwest Chapter
National Association of Women in Construction (various
Chapters)
National Center for American Indian Economic Development
National Minority Business Council
Nevada Department of Transportation
Nike Supplier Diversity Program

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

Nordstrom Department Stores Supplier Diversity Program
Northwest Minority Business Council
Northwest Native American Business Development Center
Oregon Association of Minority Entrepreneurs
Oregon Office of Minority, Women and Emerging Small
Business
Pepsico
Port of Portland
Port of Seattle
Port of Tacoma
Qwest Communications
Raytheon
Safeco Insurance Company Supplier Diversity Program
Seattle Mariners Supplier Diversity Program
Seattle Monorail Project
Seattle/Washington State Minority Business Development
Center
Sound Transit Diversity Programs
South Puget Sound Hispanic Chamber of Commerce
Starbucks Supplier Diversity Program
Tabor 100 (Northwest Association of African-American
Businesses)
Tacoma Housing Authority
Thurston County
U.S. Army Corps of Engineers
University of Washington
W.W. Grainger Co. Supplier Diversity Program
Washington Mutual
Washington State Hispanic Chamber of Commerce
Washington State Office of Minority & Women’s Business
Enterprise
Wells Fargo Supplier Diversity Program
Women and Emerging Small Business
Women Business Owners of Puget Sound
Women’s Business Enterprise National Council
Xerox Corporation.
Not every agency in the list above ultimately provided a
directory or listing to the study team. Some entities use the
lists of other agencies, some do not track race or gender information (rendering the list much less useful for disparity or
availability study purposes), and some had lists but were
unwilling or unable to cooperate with the study effort.
All of the lists and directories obtained in this manner are
combined in a standardized format. Duplicate entries are eliminated and information from multiple records consolidated
and reconciled. Obvious out-of-scope and non-M/W/DBE
listings should be dropped. The result is a “master directory”
of listed (or “known”) M/W/DBEs.
The master directory is then merged with the corresponding Dun & Bradstreet MarketPlace database to enhance the
identification of minority- and women-owned firms. How-

ever, in order to maintain the “apples to apples” comparability between M/W/DBEs and non-M/W/DBEs, firms in the
master directory for which there is no corresponding record
in MarketPlace are not included in the analysis.
Steps F & G. Verifying the Ownership Status of Firms in
the Relevant Markets. If the listed DBEs158 identified above
are, in fact, all DBEs and are the only DBEs among all the
businesses identified, then the custom census estimate of
DBE availability reduces simply to the number of listed DBEs
divided by the total number of businesses in the relevant market. However, neither of these two conditions holds true in
practice, and therefore this is not a complete measure of DBE
availability.
In order to derive a more accurate measure of availability,
the possibility that some firms have been incorrectly classified
as DBEs must be taken into account. This type of misclassification, if uncorrected, will lead to estimates of DBE availability that are upwardly biased. Similarly, the possibility that
some firms not initially identified as DBEs are, in fact, DBEs
must also be accounted for. This type of misclassification
(which we refer to as “nonclassification” to avoid confusion),
if uncorrected, will lead to estimates of DBE availability that
are downwardly biased.
In the custom census method, these two types of classification bias are corrected by a supplementary telephone survey administered to a stratified random sample of firms in
the baseline business population. These firms are contacted
and asked directly about the race and gender of the firm’s
primary owner(s). The results of the survey are then used to
statistically adjust the estimates of DBE availability for misclassification by race and gender.
Tables 8 through 11 summarize the results from a misclassification survey we recently completed for a large municipality in the southwest. Tables 8 and 9 show the fraction of firms
originally classified as DBEs that were verified as such through
the survey. Table 8 arrays the results by industry grouping and
Table 9 by race and gender. Tables 10 and 11 show comparable results for the firms originally classified as non-DBE. As
these four tables make clear, misclassification fractions are
not insubstantial.
Carrying Out Final Step 1 Availability Calculations. Once
steps A through G are completed, final overall and detailed
availability figures can be calculated. Below we define terms and
provide the specific formula for estimating custom census availability. We also provide a prose description of how the estimates
are calculated in practice using the formula.
158

As used here, “DBE” includes not only certified DBEs but also all other
minority-owned and/or women-owned firms. See the discussion from the
Northern Contracting case in Appendix C, Judicial Review of DBE Goal Setting
Under Part 26.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

41
Table 8. Listed DBE survey—amount of misclassification
by NAICS code grouping.
Listed DBE By
NAICS Code
Grouping

Misclassification
(Percentage
White Male)

Percentage Actually
M/WBE Owned

Number of Businesses
Interviewed

NAICS 236

24.0

76.0

104

NAICS 237

37.8

62.2

NAICS 238

20.2

79.8

252

NAICS 327, 332

25.0

75.0

NAICS 484

18.0

82.0

NAICS 42

31.8

68.2

129

NAICS 5413
Balance of NAICS
Codes
All NAICS Codes

19.5

80.5

174

12.2

87.8

557

18.6

81.4

1,304

Note: NAICS 236—Building Construction, NAICS 237—Heavy Construction, NAICS 238—Special
Trades Construction, NAICS 327—Nonmetallic Mineral Product Mfg., NAICS 332—Fabricated Metal
Product Mfg., NAICS 484—Truck Transportation, NAICS 42—Wholesale Trade, NAICS
5413—Architecture, Engineering & Related Services.

Table 9. Listed DBE survey—amount of misclassification
by putative DBE type.

Putative
Race/Gender
African-American
(either gender)
Hispanic
(either gender)

MisclassiMisclassification
fication
(Percentage
(Percentage
Other DBE
White Male)
Type)

Percentage
Correctly
Classified

Number of
Businesses
Interviewed

12.3

5.2

82.5

114

15.5

4.4

80.1

401

Asian (either gender)

17.1

3.1

73.7

Native American
(either gender)

47.6

26.2

White female

20.0

5.5

74.5

671

All DBE Types

18.6

81.4

1,304

N/A

Table 10. Nonclassified businesses survey—
by NAICS code grouping.
Listed DBE by SIC
Code Grouping

Percentage Actually
White Male Owned

Percentage DBE

Number of
Businesses
Interviewed

NAICS 236

88.4

11.6

335

NAICS 237

88.6

11.4

140

NAICS 238

81.1

18.9

874

NAICS 327, 332

92.1

7.9

NAICS 484

67.6

32.4

145

NAICS 42

82.8

17.2

442

NAICS 5413

89.6

10.4

574

Balance of NAICS
Codes

80.9

19.1

507

All NAICS Codes

83.6

16.4

3,080

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

42
Table 11. Nonclassified businesses survey—by race and gender.
Number of Businesses
Interviewed

Percentage of Total

2,575

83.6

White female

254

8.3

African-American

0.8

Hispanic

170

5.5

Asian

1.0

Native American

0.8

3,080

100.0

Verified Race/Gender
White male

Total

All terms defined below are restricted to the relevant geographic market.
Individual industry categories are denoted by the subscript i, which runs from 1 through n, where n is the total
number of detailed industries included in the analyses, that is
(i = 1, 2, . . . , n). In this particular example, n is 20.

(F2) Availability percentage in industry i:

Di — Total number of “listed DBE” establishments in
industry i.
Ni — Total number of establishments in industry i.
xi — Percentage of listed DBE establishments in industry i that
aren’t actually minority or female owned—the “misclassification percentage.”
yi — Percentage of establishments other than listed DBEs in
industry i that aren’t actually majority male owned—the
“nonclassification percentage.”
1-xi — Percentage of listed DBEs in industry i that are actually minority or female owned.
1-yi — Percentage of establishments other than listed DBEs in
industry i that are actually majority male owned.
Dai — Total number of DBE establishments in industry i,
adjusted for misclassification and nonclassification.
Ai — Estimated percentage availability in industry i.
wi— Percentage of total dollars spent in industry i, (“dollarbased industry weights”). Note: these weights sum to 1.0.
A— Overall estimated percentage availability.

A = ∑ ( Ai w i )

(

Ai = Dai

) 100

(F3) Overall percentage availability:
20

The overall availability percentage, A, is then derived as
follows:159
(F1) Total adjusted number of DBE establishments in
industry i:
Dai = Di (1 − x i ) + ( N i − Di ) ( yi )

159

Asterisk (*) indicates multiplication.

i =1

(F4) The full estimated availability formula is therefore:
A = ∑⎛ ⎛
⎝⎝
i=1
20

( Di (1 − xi ) + ( N i − Di ) ( yi ))

⎞

( N i )⎠ 100⎠ w i

Below we provide a numerical representation of how this
formula was used to derive the Step 1 DBE availability figure
of 24.34% in a state DOT study we recently completed, along
with a detailed explanation of the derivation. Table 12 provides the actual numbers used for that study.
Step 1 availability is calculated as a weighted average of the
20 individual estimated availability percentages (Ai). There is
one individual availability estimate for each of the 20 SIC
codes included in the calculation. These 20 individual availability percentages appear in column (9) of Table 12. For example,
Ai for SIC code 1611 is 20.95%, for SIC code 8711 it is 24.51%,
and so on.
To derive the overall Step 1 availability estimate, A, of
24.34%, these 20 individual estimates must be averaged
together, using Formula F3 above and the individual weights,
wi, that appear in column (8) of Table 12. To calculate this
weighted average, each individual availability estimate, Ai,
from column (9) is multiplied by its corresponding weight,
wi, from column (8). The result of this multiplication is
shown in column (10). For SIC code 1611, for example, Ai
equals 20.95%, wi equals 0.4293, and the product of the two
is equal to 8.99, as shown in column (10). The sum of the 20

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

43
Table 12. Numeric representation of Step 1 DBE availability calculation.
(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

(9)

(10)

SIC
Code

Dai

Ai * wi

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

1611
8711
1622
1541
5051
1731
1771
1791
1623
3273
1794
1799
1721
3569
782
8748
3531
1629
1741
6512

0.13338
0.11932
0.15458
0.12547
0.26484
0.17129
0.16293
0.18101
0.14372
0.26653
0.16959
0.17113
0.16933
0.26462
0.26543
0.27544
0.25857
0.13153
0.16877
0.26450

134.93
877.83
8.57
59.03
66.03
763.94
253.40
34.75
59.75
23.83
205.16
769.08
663.21
8.83
857.35
4253.52
12.80
70.99
231.79
538.82

78
655
8
33
19
331
131
24
29
9
65
278
330
2
202
2432
2
35
87
90

0.238
0.193
0.238
0.253
0.159
0.231
0.231
0.231
0.238
0.159
0.231
0.231
0.231
0.159
0.159
0.159
0.159
0.238
0.231
0.159

644
3582
24
307
208
3305
1068
114
291
70
980
3523
2748
29
2792
10449
45
372
1064
1841

0.4293
0.1243
0.0862
0.0736
0.0610
0.0357
0.0311
0.0239
0.0189
0.0179
0.0145
0.0140
0.0129
0.0123
0.0090
0.0087
0.0076
0.0071
0.0069
0.0052

20.95
24.51
35.71
19.23
31.75
23.11
23.73
30.48
20.53
34.04
20.93
21.83
24.13
30.44
30.71
40.71
28.45
19.08
21.78
29.27

Overall Step 1 M/W / DBE Availability:

numbers in column (10) is 24.34%—the overall Step 1 DBE
availability figure for the agency.
The individual availability estimates, Ai, were calculated
using formulas F1 and F2 above. Formula F2 says that each
Ai is equal to the total number of listed DBE establishments
in industry i, adjusted for misclassification and nonclassification (Dai), divided by the total number of establishments
in industry i. The result is then multiplied by 100 to yield a
percentage.
Before we can carry out this calculation, however, we
must calculate Dai. For that, we use formula F1 above, where
Dai is equal to the number of “listed” DBE establishments in
industry i, Di, multiplied by 1 minus the misclassification
percentage, xi, plus the total number of remaining establishments in industry i, (Ni − Di), multiplied by the nonclassification percentage yi. That is, Dai = Di ∗ (1 − xi) + (Ni − Di) ∗
(yi). In SIC code 1611, for example, Di equals 78, 1 minus xi
equals (1 − 0.238) = 0.762, Ni − Di equals 644 minus 78, or
566, and yi equals 0.13338. Therefore, Dai is (78 ∗ 0.762) +
(566 ∗ 0.13338) which equals 134.93, as shown in column (7)
of Table 12.
Now that we know Dai is equal to 134.93 for SIC code 1611,
we can calculate estimated availability for that industry, Ai,
using formula (2) above. That is, we divide 134.93 by 644 and
multiply the result by 100 to yield the estimated availability
figure for SIC code 1611 of 20.95%, as shown in column (9)
above.
This process is repeated for each of the 20 SIC codes in the
agency’s product market, which yields the 20 individual
industry availability estimates, Ai, that appear in column (9)
of Table 12. Finally, as explained above, each one of these Ai

8.99
3.05
3.08
1.42
1.94
0.82
0.74
0.73
0.39
0.61
0.30
0.31
0.31
0.37
0.28
0.35
0.22
0.13
0.15
0.15
24.34

estimates is multiplied by its corresponding dollar-based
industry weight, wi, to yield the Ai∗ wi figures in column (10).
The 20 figures in column (10) are then added together to
obtain the overall Step 1 DBE availability figure, A, of 24.34%.
Below, we repeat formulas F1 through F4 and provide
numerical tables below each formula showing the exact calculations undertaken at each step for this particular example.
(F1) Total adjusted number of DBE establishments in
industry i:
Dai = Di (1 − x i ) + ( N i − Di ) ( yi )

SIC
Code

Dai

(1–xi) + (Ni –Di) *

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

1611
8711
1622
1541
5051
1731
1771
1791
1623
3273
1794
1799
1721
3569
782
8748
3531
1629
1741
6512

134.93
877.83
8.57
59.03
66.03
763.94
253.40
34.75
59.75
23.83
205.16
769.08
663.21
8.83
857.35
4253.52
12.80
70.99
231.79
538.82

=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=

78
655
8
33
19
331
131
24
29
9
65
278
330
2
202
2432
2
35
87
90

*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*

0.762
0.807
0.762
0.747
0.841
0.769
0.769
0.769
0.762
0.841
0.769
0.769
0.769
0.841
0.841
0.841
0.841
0.762
0.769
0.841

+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+

566
2927
16
274
189
2974
937
90
262
61
915
3245
2418
27
2590
8017
43
337
977
1751

*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*

yi
0.13338
0.11932
0.15458
0.12547
0.26484
0.17129
0.16293
0.18101
0.14372
0.26653
0.16959
0.17113
0.16933
0.26462
0.26543
0.27544
0.25857
0.13153
0.16877
0.26450

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

(F2) Availability percentage in industry i:

(

Ai = Dai

Relationship Between Choice of Availability
Measure and Resulting Annual DBE Goals

) 100

SIC
Code

(Dai

Ni)

100

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

1611
8711
1622
1541
5051
1731
1771
1791
1623
3273
1794
1799
1721
3569
782
8748
3531
1629
1741
6512

20.95
24.51
35.71
19.23
31.75
23.11
23.73
30.48
20.53
34.04
20.93
21.83
24.13
30.44
30.71
40.71
28.45
19.08
21.78
29.27

=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=

134.93
877.83
8.57
59.03
66.03
763.94
253.40
34.75
59.75
23.83
205.16
769.08
663.21
8.83
857.35
4253.52
12.80
70.99
231.79
538.82

÷
÷
÷
÷
÷
÷
÷
÷
÷
÷
÷
÷
÷
÷
÷
÷
÷
÷
÷
÷

644
3582
24
307
208
3305
1068
114
291
70
980
3523
2748
29
2792
10449
45
372
1064
1841

*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*

100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100

(F3) Overall percentage availability for state DOT:
20

A = ∑ ( Ai w i )
i =1

SIC
Code

Ai * wi

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

1611
8711
1622
1541
5051
1731
1771
1791
1623
3273
1794
1799
1721
3569
782
8748
3531
1629
1741
6512

8.99
3.05
3.08
1.42
1.94
0.82
0.74
0.73
0.39
0.61
0.30
0.31
0.31
0.37
0.28
0.35
0.22
0.13
0.15
0.15

=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=

20.95
24.51
35.71
19.23
31.75
23.11
23.73
30.48
20.53
34.04
20.93
21.83
24.13
30.44
30.71
40.71
28.45
19.08
21.78
29.27

*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*

0.4293
0.1243
0.0862
0.0736
0.0610
0.0357
0.0311
0.0239
0.0189
0.0179
0.0145
0.0140
0.0129
0.0123
0.0090
0.0087
0.0076
0.0071
0.0069
0.0052

The difference between the custom census method and
other methods is evident when the annual DBE goals set by
state DOTs during FFYs 2006, 2007, and 2008 are examined.
Table 13 shows the overall DBE goals set by each state DOT
during this period, as well as their race-conscious portions.160
Using the goal information in Table 13, we calculated some
summary statistics to compare DBE goals derived from disparity or availability studies to those derived using bidders
lists, prequalified contractor list, or other types of contractor
lists or from DBE directories and Census Bureau data. The
results of this analysis are shown in Table 14.
Consistent with the concept of “casting a broader net,” it is
clear from the top six rows of Table 14 that disparity or availability studies tend to yield larger estimates of DBE availability than the other methods. Compared to the bidders list or
prequalified contractors list approach, the disparity or availability study approach yielded median overall DBE goals that
were 3.8 percentage points higher on average, and mean overall DBE goals that were 5.6 percentage points higher on average. Compared to the method of DBE directories and Census
Bureau data, the figures were 1.6 and 3.2 percentage points
higher, respectively.
The difference is even more pronounced when the raceconscious portion of the goal is examined. The disparity or
availability study approach yielded median race-conscious
DBE goals that were 4.5 percentage points higher and mean
goals that were 5.8 percentage points higher, on average,
compared to using bidders lists, prequalified contractor lists,
or other contractor lists. Compared to using DBE directories
and Census Bureau data, the race-conscious figures were 6.3
and 6.3 percentage points higher, respectively.161
It is possible that these differences do not arise because the
availability estimation methods of disparity studies generally
cast a broader net, but are instead due to larger M/WBE shares
in those states that commissioned (and used) disparity or
availability studies for their goal setting. To check for this
possibility, we standardized the comparisons by dividing all
the goals by the percentage of the construction business population that was minority owned or women owned according to the 2002 SBO.162 The results appear in the last six rows

160

(F4) The full estimated availability formula is therefore, once
again:
A = ∑⎛ ⎛
⎝⎝
i=1
20

( Di (1 − xi ) + ( N i − Di ) ( yi ))

⎞

( N i )⎠ 100⎠ w i

The race-neutral portion, of course, is obtained by subtracting the raceconscious portion from the overall goal.
161
Similar differences are observed in both overall and race-conscious goals if
state DOTs from the Ninth Circuit are excluded from the comparison.
162
These percentages of minority-owned and women-owned businesses in each
state were derived from U.S. Census Bureau (2006). The 2002 data are the most
recent available.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

45
Table 13. FHWA annual DBE goals submitted by state DOTs, FFYs 2006–2008.
DBE
State

Method

Overall
Goal
2006

DBE RaceConscious
Goal 2006

DBE
Overall
Goal
2007

DBE RaceConscious
Goal 2007

DBE
Overall
Goal
2008

DBE RaceConscious
Goal 2008

10.50%

0.00%

10.50%

0.00%

13.50%

6.75%

12.19%

10.89%

13.76%

10.45%

12.80%

10.50%

12.00%

6.00%

12.00%

6.00%

12.00%

6.00%

22.77%

20.74%

22.77%

20.74%

22.77%

18.85%

16.10%

8.90%

24.34%

19.79%

25.30%

21.90%

9.57%

8.75%

6.27%

4.27%

15.30%

13.60%

13.50%

9.45%

13.37%

9.36%

13.34%

10.00%

10.40%

7.66%

9.90%

7.40%

10.10%

7.60%

3.30%

0.00%

3.00%

0.00%

5.70%

0.00%

12.70%

9.34%

18.77%

14.70%

18.77%

14.70%

11.00%

0.00%

9.00%

0.00%

7.50%

0.00%

15.10%

14.10%

15.10%

14.50%

15.60%

0.38%

12.00%

9.20%

12.00%

9.50%

12.00%

5.00%

2 or 5

7.50%

3.50%

4.00%

0.00%

5.00%

0.00%

2 or 5

9.14%

4.32%

9.54%

5.34%

2 or 5

8.40%

6.40%

8.00%

6.10%

7.80%

5.00%

2 or 5

10.50%

0.00%

9.67%

0.00%

9.91%

0.00%

2 or 5

15.50%

9.50%

13.40%

8.40%

13.60%

8.40%

2 or 5

32.84%

7.16%

32.70%

8.50%

26.89%

19.37%

2 or 5

11.02%

9.40%

10.01%

8.52%

11.73%

10.66%

2 or 5

7.87%

0.00%

8.12%

0.00%

8.07%

0.00%

2 or 5

4.80%

4.32%

4.50%

4.10%

4.60%

4.10%

2 or 5

11.00%

10.39%

11.00%

7.98%

11.00%

7.98%

2 or 5

9.85%

4.97%

8.80%

3.73%

9.90%

4.18%

2 or 5

9.19%

7.49%

10.02%

7.07%

10.19%

6.85%

2 or 5

7.00%

5.00%

7.00%

5.00%

7.00%

5.00%

2 or 5

10.00%

9.00%

10.00%

9.00%

10.50%

9.50%

(continued on next page)

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

46
Table 13. (Continued).
DBE
State

Method

Overall
Goal
2006

* We

DBE RaceConscious
Goal 2006

DBE
Overall
Goal
2007

DBE RaceConscious
Goal 2007

DBE
Overall
Goal
2008

DBE RaceConscious
Goal 2008

2 or 5

13.80%

8.00%

13.80%

9.00%

13.80%

10.00%

2 or 5

6.60%

1.60%

6.00%

1.00%

4.50%

1.00%

2 or 5

11.00%

8.50%

11.00%

8.50%

11.00%

8.50%

2 or 5

10.00%

4.00%

10.00%

5.00%

10.00%

4.00%

2 or 5

0.00%

10.50%

0.00%

9.89%

0.00%

2 or 5

8.12%

3.25%

7.68%

3.88%

7.38%

3.76%

2 or 5

7.08%

4.32%

6.91%

4.44%

6.48%

4.53%

2 or 5

5.00%

1.00%

4.00%

1.00%

5.00%

1.00%

2 or 5

9.69%

0.00%

8.79%

0.00%

9.32%

0.00%

2 or 5

6.70%

5.60%

6.70%

5.90%

7.10%

5.80%

2 or 5

8.50%

6.50%

8.10%

5.10%

8.10%

4.52%

2 or 5

10.26%

5.89%

11.32%

0.00%

11.58%

0.00%

2 or 5

9.52%

6.88%

9.49%

5.37%

7.70%

4.52%

2 or 5

10.00%

7.00%

11.00%

6.20%

10.00%

7.04%

2 or 5

10.50%

7.50%

10.50%

7.50%

10.50%

7.50%

2 or 5

8.30%

3.59%

8.33%

3.64%

8.30%

3.94%

2 or 5

8.48%

6.96%

9.87%

6.63%

8.38%

5.04%

2 or 5

12.54%

6.00%

12.12%

6.00%

12.12%

6.00%

2 or 5

8.30%

4.40%

8.20%

4.00%

8.00%

3.80%

2 or 5

10.02%

10.20%

9.80%

9.50%

2 or 5

6.90%

0.00%

5.00%

0.00%

5.20%

0.00%

2 or 5

14.44%

11.20%

10.65%

7.15%

11.00%

8.80%

2 or 5

5.20%

4.00%

6.75%

5.46%

7.89%

5.15%

2 or 5

5.00%

0.00%

6.00%

0.00%

4.05%

0.00%

were unable to obtain a copy of ALDOT’s FFY 2008 DBE goals.

Notes: (1) Method 1 corresponds to 49 C. F. R. 26.45(c)(1) (DBE directories and Census Bureau data), method 2 or 5
corresponds to 49 C. F. R. 26.45(c)(2) or (c)(5) (bidders lists or other types of contractor lists), method 3 corresponds to
49 C. F. R. 26.45(c)(3) (disparity or availability study); (2) the race-neutral portion of the goal for each FFY is not presented
due to space limitations. To calculate it, simply subtract the race-conscious goal from the corresponding overall goal;
(3) goals were not necessarily approved as submitted to U.S.DOT; (4) Caltrans’ goals were set using method 1 in FFYs 2006
and 2007 and method 3 in FFY 2008; (5) Mn/DOT’s goals were set using method 3 in FFYs 2006 and 2008 and method 2 in
FFY 2007; (6) NDOT’s goals were set using method 2 in FFYs 2006 and 2007 and method 3 in FFY 2008.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

47
Table 14. Summary statistics for DBE goals set by different methods.
GoalSetting
Method

Summary
Statistic

Overall FFY DBE Goal

2006

Race-Conscious FFY DBE Goal

2007

2008

2006

2007

2008

Median

11.5%

11.3%

12.0%

4.6%

4.8%

0.4%

2 or 5

Median

9.2%

9.5%

9.6%

5.3%

5.1%

4.8%

Median

12.4%

13.8%

13.4%

9.1%

10.5%

10.3%

Mean

12.2%

11.7%

5.8%

6.0%

1.8%

2 or 5

Mean

9.6%

9.4%

5.2%

4.7%

5.2%

Mean

13.7%

16.4%

15.0%

10.2%

12.6%

11.0%

Minimum

10.5%

9.0%

7.5%

0.0%

2 or 5

Minimum

3.3%

3.0%

4.1%

0.0%

Minimum

9.6%

9.9%

5.7%

6.0%

0.0%

Maximum

15.1%

15.6%

14.1%

14.5%

5.0%

2 or 5

Maximum

32.8%

32.7%

26.9%

11.2%

10.2%

19.4%

Maximum

22.8%

24.3%

25.3%

20.7%

21.9%

No. Obs.

2 or 5

No. Obs.

Std. Median

0.420

0.485

0.186

0.192

0.021

2 or 5

Std. Median

0.726

0.752

0.758

0.482

0.460

0.436

Std. Median

0.874

0.825

0.805

0.704

0.671

0.680

Std. Mean

0.465

0.457

0.492

0.289

0.298

0.074

2 or 5

Std. Mean

0.791

0.781

0.802

0.461

0.415

0.442

Std. Mean

0.881

0.978

0.922

0.680

0.751

0.698

Note: Method 1 corresponds to 49 C. F. R. 26.45(c)(1) (used DBE directories and Census Bureau data); method 2 or 5
corresponds to 49 C. F. R. 26.45(c)(2) or (c)(5) (used bidders lists or other types of contractor lists); method 3
corresponds to 49 C. F. R. 26.45(c)(3) (used disparity or availability study).

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

of Table 14. As with the raw data, both the median and mean
standardized DBE goals—overall and race-conscious—are
larger among those state DOTs that used disparity or availability studies to help in the goal-setting process.
It is also worth noting that for both FFY 2006 and FFY 2007,
no state DOT that relied upon a disparity or availability study
to assist in its DBE goal setting had an entirely race-neutral
DBE goal.163

State DOT Utilization Analyses
Recommended Approach. A high-quality utilization
and disparity analysis requires a well-constructed project
database detailing several years of past contract and subcontract activity. It is important that the database capture subcontracting activity for both DBEs and non-DBEs.164
Utilization and disparity statistics are most informative when
they are disaggregated along the following four key dimensions, including:
• Race, ethnicity, and gender, as well as more aggregated

groupings—minorities, white women, and all DBEs;
• Contracts with DBE goals versus contracts without DBE

goals;165
• Major procurement categories (i.e., construction and
construction-related professional services); and
• NAICS sectors (two-digit) and subsectors (three-digit),
and industry groups (four-digit).
Disaggregating by highway districts can also be useful,
depending on the state DOT’s needs.
All the disparity studies reviewed provided utilization statistics by race, ethnicity, and gender as well as for the aggregated
groupings of MBE, WBE, and DBE.166 Most studies provided
comparisons of federally assisted contracts to non-federally
assisted contracts or otherwise attempted to provide comparisons of DBE utilization on projects with goals to projects
without goals. All of the studies examined utilization by major
procurement categories.
Most studies conducted separate utilization analyses for
prime contracts versus subcontracts. In such cases, it is recom-

163See line 9 in Table 14, above. This changed in FFY 2008 with the introduction
of a completely race-neutral goal at NDOT subsequent to completion of its disparity study.
164See Step A—Create a Database of Representative, Recent, and Complete State
DOT Projects, for an extended discussion of how to build such a database. Appendix A also provides an discussion regarding the collection of subcontract data.
165See Chapter Three, Economy-Wide Disparity Analysis for the Relevant Markets, supra, for discussion of different methods for making this comparison.
166The one availability study that included a utilization analysis (NDOR, 2000)
did not disaggregate by race, ethnicity, and gender.

mended that utilization also be calculated for prime contracts
and subcontracts combined in order to provide a fuller picture
of DBE participation relative to all contract and subcontract
spending.167
Some studies did not have complete subcontractor data.
The usefulness of their utilization (and disparity) statistics is
correspondingly reduced.
Few studies provided any utilization statistics by NAICS
sector or subsector; omitting such detailed industry analysis is a practice that has been viewed negatively by some
courts.168

State DOT Disparity Analyses
Recommended Approach. A disparity analysis of state
DOT spending is simply a comparison of DBE utilization to
DBE availability. Therefore, the preceding discussions of market definition, availability measurement, and utilization statistics are all relevant to the ability to produce a useful disparity
analysis. The primary analysis should be conducted on projects or business activities that were generally not subject to
race-conscious contracting requirements. This means state
DOT contracts without DBE goals, or the utilization of DBEs
in the surrounding economy or, preferably, both. Proper testing for substantive and statistical significance must be performed in order to identify whether disparities are large and
whether the observed disparities could have arisen due to random chance alone.
Data Impacted by Race-Conscious
Contracting Requirements
As already explained, performing a disparity analysis on
contracting and subcontracting dollars that were subject to
race-conscious affirmative action requirements, as is often
the case for state DOTs, is of limited value in strict scrutiny
analysis. Much more informative is disparity analysis on contracting and subcontracting dollars that were not subject to
affirmative action requirements, at the state DOT, economywide, or both.
Some studies performed disparity analyses only on state
DOT contracts and subcontracts that were subject to race-

167See 49 C.F.R. § 26.45(a) (goals are set on DOT-assisted contracts, not just the
subcontract portion of DOT-assisted contracts); Northern Contracting, Inc. v.
Illinois Department of Transportation, 2005 U.S. Dist. LEXIS 19868, *73 (Sept. 8,
2005) (Northern Contracting II) (“At no point do the Regulations limit the application of DBE goals to the subcontracting portion of contracts. To the contrary,
the Regulations expressly provide that the goals requirements are imposed on
prime contractors.”).
168See, e.g., fn. 191.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

conscious contracting requirements.169 These studies included
no comparison of DBE participation on projects with goals to
DBE participation on projects without goals and also lacked
any economy-wide analysis of business disparities. When
studies such as these find “overutilization” in certain categories, policy makers may be misled to conclude that there is
an absence of discrimination.
Several courts have recognized that this is incorrect. The
plaintiffs in Concrete Works III argued that “overutilization”
on projects subject to race-conscious contracting requirements indicated an absence of discrimination. The court
rejected this argument, concluding that the more pertinent
inquiry should focus on M/WBE participation on projects
without goals.170
Disparity analyses should strive to compare DBE participation and DBE availability on projects that were not subject
to race-conscious contracting requirements, either in the
public sector, economy-wide, or both. This has been accomplished in several ways, described below:
• Comparing disparity ratios on contracts subject to goals to

those on contracts not subject to goals. In states where
there is no M/WBE program for state-funded projects, this
can be accomplished by comparing disparities on federally
assisted contracts with those on state-funded contracts.
• Selecting certain contracts to be “control” or “zero goals”
contracts and comparing disparity ratios on these contracts to those on contracts with goals.
• Comparing disparity ratios on state DOT projects subject
to goals to disparity ratios from other public entities in the
relevant market that do not use goals.
• Comparing disparity ratios on state DOT projects subject
to goals to disparity ratios from private entities in the relevant market.

type of significance addresses the size of a given disparity.
The second is “statistical” significance. This type of significance
addresses whether a given disparity could have arisen due to
random chance alone. Both types of significance need to be
considered in disparity analyses.
For example, suppose DBE participation in a given category
(not subject to race-conscious contracting requirements) was
13.9% and DBE availability in that same category was 14.0%.
The disparity ratio would be 0.139 ÷ 0.140 = 0.99. While it is
possible that this disparity might be statistically significant
(if, e.g., a large number of contracts and subcontracts was
involved), it is difficult to imagine such a small disparity being
a source of concern to anyone. In contrast, sometimes substantively significant disparities may not be statistically significant. This often occurs when statistics are based on a relatively
small sample of contracts.
The Equal Employment Opportunity Commission has
adopted a standard for substantive significance in the employment discrimination setting. This so-called “80% rule” has
been endorsed as a relevant way to gauge legally meaningful
racial or gender disparities rather than simply testing for statistical significance alone. According to Meier, Sacks, and Zabell
(1986, 32):
Properly understood, the 80% rule has the potential to rationalize much of the case law to date. . . . As a practical matter, even
when statistically significant differences have been noted, the
courts have been reluctant to find adverse impact when the differences lack what is variously described as “practical,” “substantive,” or “constitutional” significance. And conversely, substantial
disparities have been found insufficient to establish a prima facie
case when the sample sizes are so small as to make statistical significance unlikely. The 80% rule appears to be a reasonable
articulation of a statistical criterion to determine whether statistically significant differences are substantial enough to warrant
legal liability.

Importance of Significance Testing
Another important aspect to disparity analysis is significance
testing. There are two dimensions to assessing significance. The
first is “constitutional” or “substantive” significance.171 This

169
CDOT (2001), GDOT (2005), OH (2001), NJ (2005). The OH (2001) study
included some limited analysis of private sector disparities but still treated
“overutilization” of M/WBEs by state agencies subject to affirmative action
requirements as evidence of the absence of discrimination (“American Indian
[firms at Ohio DOT] are overutilized at rates that are statistically significant. . . .
Accordingly, race- and gender-conscious remedies are . . . [not] recommended . . .
for American Indians.”).
170
Concrete Works III, 321 F.3d at 984–85; see also Western States, 407 F.3d at 992;
Northern Contracting II, 2004 U.S. Dist. Lexis at *37–38; Hershell Gill Consulting
Engineers, Inc. v. Miami-Dade County, Florida, 333 F.Supp.2d 1305, 1318 (S.D.
Fla. 2004) (“[The court] will keep the potential effect of the MWBE programs in
mind when analyzing the evidence presented by the County.”).
171
See also fns. 395 and 201 and the accompanying discussion in the text.

The 80% rule states that for statistical disparities to be
taken as legally dispositive in the discrimination context, they
should be (a) statistically significant and (b) “substantively”
significant. Substantive significance is taken to mean, for
example, a DBE utilization measure that is less than or equal
to 80% of the corresponding DBE availability measure. The
distinction between these two types of “significance” has
sometimes been a source of confusion to courts (Gastwirth
1988, 248).
Among the studies we reviewed, four indicated whether disparity ratios were at or below the 80% threshold but did not
perform any statistical significance testing on the disparity
ratios. As Meier, Sacks, and Zabell (1986) note, a proper use
of the 80% rule requires disparity ratios to be at or below 80%
and also be statistically significant.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

Three of the studies we reviewed employed the 80% rule and
tested for statistical significance. Three more employed statistical significance testing but did not employ the 80% rule.
However, in all six of these studies, the significance test used is
only correct under the assumption that contracts and subcontracts are all the same size. If each contract and subcontract
were the same size, the correct t-statistic would be:
t=

(1)

u−a

a (1 − a )

where u is the ratio of DBE contract and subcontract dollars
to total contract and subcontract dollars, and a is the ratio of
DBE firms to all firms.
However, contract and subcontract values vary greatly in
amount. Consequently, the correct t-statistic is:172
(2)

u−a

a (1 − a ) ∑ ci2

( ∑ c i )2

where ci is the dollar award or payment amount for contract
or subcontract i.173 This statistic is employed to do disparity
testing in only three of the studies we reviewed.
Not all data are normally distributed, but many probability distributions are approximately normal and samples from
many other distributions are approximately normal. The tdistribution is one such distribution. It is often employed in
practice to model data based on the assumption that the sample they are drawn from is approximately normal.
In any particular application, the absolute value of the tstatistic resulting from equation (2) can be compared to a
table of critical values for Student’s t distribution to determine whether the result is statistically significant.174 In discrimination cases, the courts have usually required p-values
of 5% or less to establish statistical significance in a two-sided
case. The analogous p-value for the one-sided case is half of
the two-sided p-value, or 2.5%.
A two-sided p-value of 5% corresponds approximately to
two standard deviations. The relevance of “two standard
deviations” in statistics and the law is that it corresponds to a
95% confidence interval around a normal distribution. In the
simplest terms, in normally distributed data, approximately
95% of the values lie within two standard deviations (a 95%
confidence interval) above or below the mean, and 5% lie
outside this range. Therefore, if we compare two numbers

172

TX (1994, 88–90).
In implementing this test statistic, prime contractor award or payment
amounts must be a net of subcontract award or payment amounts.
174A table of critical values for the t-distribution can be found in any college-level
statistics textbook.
173

drawn from a normal probability distribution and their difference is greater than or equal to two standard deviations, we
can infer that the observed difference in the numbers is due
to more than just random chance. If we were to draw these
two numbers repeatedly, we would observe that this inference
was correct, on average, only 19 out of every 20 draws. In
other words, it would be correct 95% of the time and incorrect 5% of the time.
One other type of significance testing was observed in
three of the studies we reviewed—Monte Carlo simulation
studies. Starting from the project database of contracts and
subcontracts, all with differing dollar sizes, these studies
simulate the award process by programming a computer to
randomly assign contract awards to the several types of DBEs
as well as to non-DBEs, based on their estimated availability
percentage. For example, if black-owned firms had estimated availability of 5%, then the computer would randomly pick 5% of the contracts and subcontracts and assign
them to black-owned firms. The total value of the randomly
assigned awards would then be totaled and compared to
availability to assess whether there was a disparity between
utilization and availability. The simulation exercise is then
repeated a large number of times. If utilization fell below
availability in 95% or more of the runs, that disparity is statistically significant.
Monte Carlo studies are typically used in cases where sample sizes are small and the underlying distribution is not
known. In large samples, however, sample mean statistics tend
to converge toward a normal distribution, and the t-statistic
provided in equation (2) can be used. In the three studies we
reviewed, the Monte Carlo simulations were performed only
on the full overall sample of contracts and subcontracts. In
one study we reviewed, simulations were performed once for
all federally funded construction and engineering contracts
statewide over the entire study period and once for all statefunded construction and engineering contracts statewide over
the entire study period. Both of these samples were quite large
and the t-test from equation (2) could have been easily implemented instead. No explanation was provided of the choice to
use Monte Carlo simulations.
However, these three studies also presented dozens of separate tables of disparity statistics disaggregated along several
dimensions, for example, agency, funding source, major procurement category, contractor type, time period, and geographic region. Several of these tables therefore had only a
small number of contracts and subcontracts included. Disparity statistics were presented in each of these tables, but no
significance testing was done. These tables would have been
excellent candidates for Monte Carlo simulations that, as we
have said, can be helpful for assessing the significance of disparity ratios in cases with small samples. No explanation was
provided of the choice not to use Monte Carlo simulations.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

Economy-Wide Disparity Analyses
for the Relevant Markets
Recommended Approach. Statistical analyses that assess
how minorities and women fare in several key aspects of business enterprise activity should be conducted to determine
whether a state DOT is passively participating in an industry
sector tainted by discrimination.
In Concrete Works III, the court discussed the importance of
evidence of economy-wide (or “marketplace”) discrimination:
In Adarand VII, we specifically concluded that evidence of marketplace discrimination can be used to support a compelling
interest in remedying past or present discrimination through the
use of affirmative action legislation. . . . We clearly stated that evidence explaining “the Denver government’s role in contributing
to the underutilization of MBEs and WBEs in the private construction market in the Denver MSA” was relevant to Denver’s burden
of producing strong evidence. . . .
The City can demonstrate that it is a “passive participant in a
system of racial exclusion practiced by elements of the local construction industry” by compiling evidence of marketplace discrimination and then linking its spending practices to the private
discrimination. Therefore, evidence of marketplace discrimination is not only relevant but, in this case, it is essential to the City’s
claim that it is an indirect participant in private discrimination.
Consequently, we again reject [plaintiff’s] argument and conclude that the district court’s determination that the marketplace
data was irrelevant was a legal error that significantly affected the
court’s analysis of Denver’s evidence.175

A disparity studies should not ignore such evidence.176
Evidence of economy-wide discrimination in disparity
and availability studies has taken several forms, including the
following:
• Regression analyses comparing business formation rates

between minorities, women, and similarly situated nonminority males in the relevant markets. These have been
implemented using the Census Bureau’s 5% Public Use
Microdata Samples (PUMS) from the decennial census
and/or the Current Population Surveys (CPS), produced
jointly by the Census Bureau and the Bureau of Labor
Statistics.
• Regression analyses comparing the earnings of minority
and female business owners to those of similarly situated
nonminority male business owners in the relevant markets.
These have also been implemented using the PUMS and/or
the CPS.
• Regression analyses comparing denial rates on commercial
loans between minority, female, and similarly situated non-

175
176

Id. at 976.
See Adarand VII, 228 F.3d at 1167–68.

minority male business owners. These have been implemented using data from the Survey of Small Business Finances
produced by the Federal Research Board and the Small Business Administration.
• Disparity ratios comparing market share of revenues to
market share of business population between minority,
female, and nonminority businesses using data from the
Census Bureau’s SBO.
• Disparity ratios comparing minority and female utilization
to availability using data on private sector construction
projects from Reed Construction Data and/or F. W. Dodge
and/or building permit databases.
Regression analyses of business formation rates have also
been used to quantify Step 2 adjustments, which must be considered under 49 C.F.R. § 26.45(d). This is accomplished by
first estimating a business formation regression model for nonminority males and then applying that model to the minority
and female observations to estimate the business formation
rate that would be expected if minorities and women faced the
same market structure as nonminority males.

Anecdotal Analyses
Recommended Approach. Anecdotal evidence has been
collected in a variety of formats including mail surveys, individual interviews, group interviews or focus groups, and public hearings. All of these approaches can and have produced
qualitative evidence of barriers to full and fair participation by
DBEs in the public contracting and subcontracting process.
High-quality studies often employ multiple approaches to
gathering this type of evidence, e.g., mail surveys and focus
groups or personal interviews.
Mail surveys are particularly important to establish a broad
base of coverage that is capable of being quantified. Several
studies used mail or telephone surveys, but most failed to test
for nonresponse bias. Since response rates on voluntary surveys tend to be low (typically 5%–115%), it is important to test
whether nonrespondents differ from respondents in ways that
would alter the conclusions drawn from the survey. Failure to
test for nonresponse bias may likewise undermine the persuasiveness of the results.
Studies should gather evidence from non-DBEs as well as
DBEs. It is critical to explore the extent to which barriers
reported by anecdotal sources are the result of discrimination
rather than the usual challenges facing all businesses related to
developing markets, finding suppliers, managing cash flow,
etc. This is also the state DOT’s opportunity to explore the
operations of the DBE Program. This should include questions regarding the use of race-conscious goals from the
point of view of both the DBEs and non-DBEs. These include

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

52
Table 15. Types of anecdotal evidence collected in state DOT disparity and
availability studies.

Study

Study
Type

Individual
Interviews

Focus
Groups

Public
Hearings

Mail
Surveys

IDOT (2004)

Mn/DOT (2005)

MoDOT (2004)

NDOR (2000)

WSDOT (2006)

CDOT (ongoing)

HDOT (ongoing)

MDT (ongoing)

NCDOT (ongoing)

n/a

NY (ongoing)

ADOT (2009)

Alaska DOT&PF (2008)

Caltrans (2007)

ITD (2007)

NDOT (2007)

ODOT (2007)

TDOT (2007)

n/a

MD (2006)

GDOT (2005)

NJ (2005)

NCDOT (2004)

VDOT (2004)

CDOT (2001)

OH (2001)

FDOT (1999)

n/a

NMDOT (1995)

SCDOT (1995)

LA (1991)

Telephone
Surveys

Nonresponse
Testing

n/a

x
x

n/a
x

x
x

x
n/a

n/a

x
x

n/a

Note: (1) x indicates this type of anecdotal evidence was collected as part of the study; n/a indicates that we do not know
whether this type of anecdotal evidence was collected as part of the study or not, because the study was unavailable to us;
a blank indicates that this type of anecdotal evidence was not collected as part of the study; (2) anecdotal evidence is
sometimes collected directly by the state DOT rather than the consultant and presented in its annual DBE goals
submissions to the FHWA.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

how goals are set; evaluating bidders’ DBE submissions; and
monitoring compliance with DBE contractual commitments.
Evidence gathering should also include the effectiveness of
race-neutral measures such as unbundling contracts and
setting aside contracts for bidding by small firms; bonding and
financing support programs; certification outreach; and other
supportive services. Special emphasis should be placed on the
experiences of DBEs that desire to obtain prime contracts as a
measure of continuing barriers to full participation in the
marketplace. Careful consideration of race-neutral measures
is necessary to provide support for the state DOT’s projection
of the amount of the DBE goal it can meet solely through raceneutral measures.
Studies should also have a wide enough variety of interviewees, survey participants, etc., to ensure representation of all
racial and ethnic minorities, white women and white men,
and all major procurement categories.
All disparity studies provided some anecdotal evidence;
one availability study was supplemented with anecdotal evi-

dence through interviews with business owners.177 The evidence collected ranged from individual interviews, to group
interviews, to public hearings, to large scale quantitative surveys. As Table 15 shows, the most commonly used technique
was individual interviews.
While the interviews generally elicited useful information,
some studies interviewed only DBEs, or only a very small number of non-DBEs. This is a serious deficiency, as it is important
to tease out the effects of discrimination from the general barriers faced by all small and new firms. This lack of balance may
undermine the results, since the race-conscious elements must
be narrowly tailored to only the categories of identified victims
of discrimination and the impact of race-conscious programs
on third-parties such as non-DBE subcontractors must be
considered.

177
This anecdotal evidence was gathered after the completion of the study in light
of Western States.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

CHAPTER 4

Study Resource Issues

It’s unwise to pay too much, but it’s also unwise to pay too little. When you pay too much you lose a little money, that is all.
When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it
was bought to do. The common law of business balance prohibits paying a little and getting a lot——it can’t be done. If
you deal with the lowest bidder, it is well to add something for
the risk you run. And if you do that, you will have enough to
pay for something better.
—John Ruskin (1819–1900)
English author, artist, scientist, poet, philosopher

Sources of Funds

The cost of conducting an availability or disparity study is a
significant concern for state DOTs. Limited resources and
competing priorities mean that costs must be justified and
managed to deliver the best value. A study’s true value, however, comes in its ability to withstand strict scrutiny in court.
While studies were expensive, as a percentage of total state
DOT contract awards over 5 or 6 years, the cost of a disparity
or availability study is still very small.178 In many ways, a disparity study is like an insurance policy for the DBE Program:
the cost is a small fraction of the value of what is being insured.
We interviewed several state DOTs to obtain information
about the price of their studies, the internal resources necessary to manage the process, and advice for other agencies
considering studies. The following issues emerged that state
DOTs may want to consider when they evaluate the costs of
procuring studies and conducting studies. As with the other
challenges of conducting studies, the costs must be weighed
against the litigation risk that accompanies a less comprehensive study, or no study at all, and the benefits of a constitutionally sound DBE Program.

Most state DOTs stated that it was critical to include senior
management in the study process as early as possible, including ensuring that they understood the study’s legal and statistical challenges. This helped to ensure that the process was
adequately funded and realistic timelines were developed.
A few agencies have hired outside consultants to assist with
drafting the RFP or managing the study process. One state
DOT paid $20,000 to a supportive services consultant to assist
with the drafting process and to respond to the DBE community’s desire to participate in the study. That consultant surveyed stakeholders about their preferences for what to include
in the study and incorporated those concerns into the RFP.
A multi-agency statewide study that included the state DOT
hired an outside study manager for approximately $100,000
over 18 months. All agencies strongly stressed that a (close to)
full-time study manager was necessary to ensure smooth and
timely completion. If an outside study manager is used, it is
important that he/she be vested with the bureaucratic authority to obtain responsiveness from other state DOT personnel
and prime contractors. An outside manager who is unfamiliar
with key actors may encounter significant difficulties securing
their assistance with the study.
One DBE director suggested that the state DOT also consider hiring a consultant to assist it to communicate with the
department’s outside constituencies about the study. While

178

The average Federal-aid highway fund apportionment to state DOTs in FFY
2007 was about $600 million—or about $3 billion per state DOT over a 5-year
period. See Table 1. If a disparity study for the average state DOT will cost
$1.5 million, which was actually the price for only the largest states, this would
be 0.05% of the federal funds disbursed during the study’s projected coverage.

Most state DOTs used state funds to pay for their studies,
regardless of type. At least one state DOT expressed concern
that the FHWA would want to direct the study process if the
state DOT used federal funds. One state DOT we interviewed
had successfully used FHWA funds, Airport Improvement
Program grant funds (the airport was included in the study),
and contributions from the other local partners.

Management of the Study Process

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

the study consultant can provide information to outside parties, it is important that the perception of the firm’s objectivity not be compromised by “reporting” to groups or persons
with vested interests in the study’s outcome. This state DOT
reported that an excellent communications strategy would
have helped to increase inclusion in the study’s anecdotal
data-gathering efforts and stakeholders’ familiarity with the
legal and administrative challenges of the process. No cost estimate was available, as this approach was not in fact pursued
by the department. However, one state DOT reported that it
used internal personnel to conduct extensive community
outreach and Web site maintenance.
If no outside assistance is procured, the state DOT must
“budget” internally for a study manager and communications strategy. It would be prudent to allocate the time, if not
the salary, of a full-time experienced employee to oversee the
study process.

In-House Studies versus
Outside Consultants
Despite the potential for reducing study costs, conducting
disparity or availability studies using primarily state personnel
is not recommended because of the possible appearance of bias
in favor of the agency’s decisions. No state DOT conducted a
study using its own personnel. While there were some public
entities that produced studies in-house in the early days after
Croson, governments quickly learned that outside consultants
were needed to provide the type of independent statistical and
economic expertise that courts would require. While it would
obviously be less costly in the short run to conduct the study
using state staff already on payroll, the risk of such a report
being rejected by the courts as biased is equally obvious.
State personnel have, however, been used to calculate
DBE goals using the nonstudy methods listed in 49 C.F.R §
26.45 (c).179

Availability Studies versus
Disparity Studies
One critical factor in determining the cost of studies is
which analytical elements are included. Availability studies,
because they typically lack the compelling interest components, cost less. Forgoing disparity testing on the state DOT’s
own contracts and subcontracts, eliminating the gathering of
statistical evidence of economy-wide discrimination, not
gathering anecdotal or other qualitative evidence of discrimination, and not including a review of the state DOT’s race-

179

E.g., dividing the number of firms in a state DOT’s DBE Directory by the
County Business Patterns data or the use of bidder’s list information.

and gender-neutral policies will significantly reduce study
costs. One state DOT outside the Ninth Circuit has successfully relied solely upon an availability study.180
For these reasons, we found that availability studies generally
cost under $400,000, and potentially less if complete subcontract data are available. According to our interviews, costs for
disparity studies ranged from a low of approximately $405,000
for a smaller DOT to $1,500,000 for a large state DOT.

Collection of Subcontracting Data
A second significant cost element of studies is the collection of data on first-tier subcontracts. This cost element plays
a role in both disparity and availability studies since it is a prerequisite for developing a defensible estimate of DBE availability.181
One of the first tasks for a state DOT considering a study is
to evaluate the state of its existing subcontract records. Often,
records on non-DBE subcontracts are less complete than
those on DBE subcontracts, and even absent in their entirety.
A good disparity or availability study will reconstruct the missing data for at least a sample of relevant contracts, and this reconstruction is one of the most significant single elements in
a study. A study that includes good subcontract records is less
vulnerable if challenged than one that does not.182
If such subcontract data are complete, then a study cost reduction of 15%–20% may be achieved.183 If such data are missing or incomplete, before commissioning a study the state
DOT itself can reconstruct the missing data.184 If done correctly, similar cost savings can then be achieved when the state
DOT commissions a study. However, all DBE directors we interviewed specifically mentioned problems with data collection
related to subcontracts. One state DOT attempted to save
money by gathering the missing data itself, but reported that
the effort did not work out well and strongly urged others to
have the consultant conduct all data gathering.

180 Sherbrooke Turf, Inc. v. Minnesota Department of Transportation, 345 F.3d. 964
(8th Cir. 2003), cert. denied, 541 U.S. 1041 (2004).
181 Information on how the state DOT’s contract and subcontract dollars are distributed across different industries and geographic locations is used to provide
weighted availability statistics, which, in turn, are important to support assertions that an agency’s statistics are narrowly tailored. See supra at Chapter Three,
Determination of Relevant Product Market.
182 E.g., Contractors Association of Eastern Pennsylvania, Inc. v. City of Philadelphia, 91 F.3d 586, 601 (3rd Cir. 1996) (the subcontracting analysis was insufficient because the review of records by a city employee was “cursory” and the
study did not include subcontracting. There was not a “firm basis for inferring
discrimination by contractors in the subcontracting market during the period,”
and therefore insufficient evidence for a subcontracting goal).
183 Detailed cost data for different consultants could not be obtained. This estimate is based on our own experience in conducting studies.
184The particular issues involved in reconstructing missing or incomplete subcontract records are discussed in detail in Appendix A.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

In addition to the costs associated with reconstructing past
subcontract records, state DOTs are well advised to take steps
to ensure the collection of current and future data.185 Once
procedures have been adopted for subcontract data collection, appropriate software for maintaining and tracking this
data can be developed or purchased. There are several contract compliance software products on the market that make
ongoing data gathering easier and facilitate production of required annual U.S.DOT submissions and other reports. Since
disparity and availability studies must be repeated periodically (every 5 to 6 years is recommended),186 investment in
subcontract data collection procedures and software will generate cost savings on future studies.
Finally, a state DOT should provide complete and accurate
information to potential proposers so that proposed cost estimates will accurately reflect the costs of reconstructing
missing data. To the extent that the department does not provide full information, proposers are likely to assume the worst
and price accordingly.

Subrecipient Data
State DOTs routinely pass-through a portion of their
federal-assistance dollars to other state and local agencies.
These dollars support activities such as construction, design,
planning, and transit and airport operations.
State DOTs should consult with their regional modal administrations to confirm which of their subrecipients, if any,
are responsible for reporting DBE activity; this will ensure
that those subrecipients will be included in the scope of any
availability or disparity study. Further, the subrecipients’
contracting and subcontracting data should conform to the
same requirements presented above for the state DOT’s direct contracting and subcontracting data. Any additional effort required to acquire the subrecipients’ data and bring it
up to the same quality level as the state DOT’s data should be
factored into the estimated cost and timeframe of any study.

Examples of Costs for Other
Analytical Elements
Verification of Business Owner Race and Gender
As previously illustrated, the race and gender of business
owners obtained from various directories and lists is often in

185 See Appendix A, Methods for Collecting Subcontract Data in anticipation of
Future Studies.
186 Five to six years is our recommendation as a rule of thumb based on the study
period length documented in Table 5. A shorter period than this may lead to
unnecessary expenditure of public funds on disparity or availability studies,
while a period much longer than this runs the risk of a court, in a constitutional
challenge to a DBE Program, finding that the data placed into evidence are
“stale.”

error.187 It is therefore important to verify race and gender assignments by contacting a sample of business owners directly.
Such “misclassification” surveys, typically done by phone, are
costly due in part to the sample sizes required for reliable results.188 Studies that include such verification procedures will
cost more than studies that do not. Studies that do not, however, may prove more vulnerable to the charge that they are
not sufficiently narrowly tailored.
Nonrespondent Surveys
Similarly, most studies conduct one or more mail surveys
as part of their analyses. Such mail surveys typically achieve
response rates of 5%–15%, due largely to the fact that participation is voluntary. To have confidence in any inferences
drawn from such a survey, a competent social scientist will
test whether the respondents were representative of the entire
survey sample, that is, some comparison of respondents and
nonrespondents is required. Such nonresponse testing is also
typically conducted over the telephone and, like the misclassification surveys, is relatively costly. However, also like misclassification surveys, studies that ignore nonresponse bias
may find their mail survey results disregarded, if challenged.

Multi-Jurisdiction Studies
One potential source of costs savings is to conduct a study
jointly with other government agencies. This approach is most
cost-effective when there is significant overlap in the geographic and product markets of the participating agencies.
However, because state DOT contracting can differ substantially from that of governments like cities and counties,
geographic and product markets do not overlap as much as
might be desired. In these cases, the savings will be less than
would be the case with more compatible study partners.
There are, however, significant potential cost savings in
partnering with other compatible governments, particularly
for disparity studies. Costs for building the availability database, conducting the economy-wide statistical analyses, and
gathering the anecdotal evidence, can all be readily prorated
among the participants. State DOTs must, however, weigh
the inevitable delays and complications that will result from
more participants in the process against the potential cost
savings.
One way to offset these is to reach an understanding before issuing the RFP regarding the responsibilities of each
participating agency to provide its available contracting and

187

See supra, Tables 7–10.
Samples must typically be stratified by at least race, gender, and industry
group.
188

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

subcontracting data to the consultant in a timely manner.
Delay on the part of one agency can easily slow the study for
all. Large differences between agencies in the state of their
subcontract records can have a similar impact. Potential partners are advised to investigate these differences before agreeing
to collaborate on a study.
Another tip when conducting multi-agency studies is to
appoint a single person to manage the study on behalf of all
participating agencies, as opposed to having a separate study
manager at each agency. A single project manager can more
easily streamline communications with the consultant and
with personnel at each agency.
Only one state DOT has directly collaborated with other
government entities to conduct its study, which included the
state’s largest city and the state’s railroad authority. Other departments reported that it was not feasible for political or administrative reasons to collaborate with other governments.
For example, one Ninth Circuit state DOT with an existing
availability study conducted extensive outreach to the state’s
largest city, county, and airport and transit agencies to help
pay for additional elements of disparity analyses, but was
unable to reach an agreement.189

Multi-Agency State Studies
Some state DOTs have participated in statewide studies
that included all or most other state agencies. This has the advantage of sharing costs among numerous state departments.
However, it is critical in such statewide studies to ensure that
the special requirements of Part 26 are met, such as the need
to determine the agency’s spending with DBEs through raceneutral measures and the need to consider federally assisted
spending separately. A separate report for the state DOT is
also recommended.
As with partnering for multi-jurisdictional studies, the
state DOT must consider the likely increase in the time to
conduct a multi-agency study and the diffusion of focus
against the savings to the department. Several statewide
studies that we reviewed for possible inclusion in this report
were rejected because the statistical analyses of the state
DOT did not include or did not identify its federally assisted
contracts.

ology that reflects a thorough understanding of the case law
and presents sound economic analyses that will meet strict
scrutiny and the regulatory requirements.
For availability studies, the following major elements should
be included:
• An empirical assessment of the appropriate geographic

market relevant to an agency’s contracting activity;
• An empirical assessment of the appropriate product mar-

kets relevant to an agency’s contracting activity;
• An estimate of the fraction of businesses within the agency’s

geographic and product markets that are owned by DBEs
(i.e., “availability”);
• To the extent necessary to implement Step 2, econometric
analyses of DBEs’ success relative to non-DBEs’ (e.g., in
business formation rates and in business owner earnings),
and holding nondiscriminatory factors constant, in the
market area surrounding the agency in question (i.e., “private sector disparity ratios”);
• To the extent necessary to implement Step 2, econometric
analysis of DBEs’ access to capital and credit relative to
non-DBEs’, holding balance sheet and creditworthiness information constant; and
• Qualitative and/or quantitative analysis of the effectiveness
of race-neutral measures to address low DBE participation
in public contracting.
For disparity studies, the following major elements should
be included:
• A legal review discussing Croson, Adarand, and subsequent

case law and their impact;
• An empirical assessment of the appropriate geographic

market relevant to an agency’s contracting activity;
• An empirical assessment of the appropriate product mar-

kets relevant to an agency’s contracting activity;
• An estimate of the fraction of businesses within the agency’s

•

Model Study Scope of Work

•

We recommend that RFPs require the proposers to fully
explain their approach to all components described in this report. Proposals should provide a complete, detailed method•
189

Neither the airport nor the transit agency has conducted studies to date. They
continue to implement all race-neutral DBE Programs.

geographic and product markets that are owned by DBEs
(i.e., “availability”);
An estimate of the percentage of all prime contract and
subcontract dollars earned by DBEs (i.e., “public sector
utilization”);
A statistical comparison of public sector utilization to
availability (i.e., “public sector disparity ratios”);
Econometric analyses of DBEs’ success, relative to nonDBEs’ (e.g., in business formation rates and in business
owner earnings), and holding nondiscriminatory factors
constant, in the market area surrounding the agency in
question (i.e., “private sector disparity ratios”);
Econometric analysis of DBEs’ access to capital and credit
relative to non-DBEs’, holding balance sheet and creditworthiness information constant;

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

58
• Qualitative evidence from DBEs and non-DBEs concerning

• Keep the RFP simple. Ask for the proposers’ best profes-

experiences doing business or attempting to do business in
the relevant marketplace, including experiences of institutionalized discrimination and/or individual disparate treatment, gathered through surveys, personal interviews, and/
or public hearings (i.e., “anecdotal evidence”);
• Qualitative and/or quantitative analysis of the effectiveness
of race-neutral measures to address low DBE participation
in public contracting; and
• Review of existing policies and procedures related to DBE
participation, with recommendations for changes/revisions
designed to improve the effectiveness of the program and
increase legal compliance.

sional judgment, supported by the case law, of what constitutes a defensible study.
Do not commission a study unless sufficient funds are
available to fund it properly. A poorly funded study will be
of little or no value in supporting a state DOT DBE Program and could, in fact, do actual harm.190
Do not separate the conduct of the study into “phases.”
Many study approaches are integrated. An “availability”
phase is not readily separable from a “disparity” phase,
as both share many common elements (building project
database, relevant market determination, etc.). Moreover,
important types of statistical testing are done through regression analysis where disparities and their determining
factors are assessed simultaneously. Asking for a “disparity” phase and an “if there is a disparity, determine the
causes of the disparity” phase therefore requires a separation that is not possible with regression analysis. DBE directors who used this approach strongly recommended
against it because it just increased the time to engage the
consultant and complete the study with no benefit to the
study process or product.
Allow at least 12 months for the study to be completed.
Allow more time in the case of multi-agency studies. The
most time-consuming component is usually the collection
of adequate contract and subcontract data. Unless there is
active litigation, quality is more important than speed.
Do not mandate regular face-to-face meetings. They are
costly and time consuming, and with the technologies available, usually unnecessary. Requiring such meetings will increase the cost and the time required to perform a study.
Put all required attachments in one place in the RFP and
include a complete list of all attachments required in the
proposal.
Make the current DBE Program (and any programs for
non-federal-aid contracts) available electronically.
Provide a due date for questions, compile all questions and
answers, and email them to all who submitted questions.
To ensure that answers are provided in sufficient time to
address proposers’ concerns, allow at least one week between the provision of answers and the proposal due date.
Include information in the RFP about the number of and
dollar value of relevant agency contracts. Provide information regarding the format and availability of the contract
data. Include as much information as possible regarding
the number, dollar amounts, and types of contracts, as well
as the availability (hard copy, electronic, etc.) of the contract data for prime contractors and subcontractors.

•

Additionally, both types of studies should be supervised by
professional social scientists (e.g., economists and/or statisticians) who can be qualified as expert trial witnesses under the
exacting standards of the Federal Rules of Evidence to testify
about the study’s data, methods, and findings.

Tips for a Successful DBE Disparity
or Availability Study RFP Process

•

Drafting the RFP Document
• Immediately and directly involve state DOT legal counsel

in all phases of the RFP process, from drafting the RFP to
selecting the consultant. We recommend that state DOTs
consider placing the procurement and conduct of the
study under the supervision of a senior attorney in the legal
department. Not only will this ensure that critical legal
support is provided throughout the process but also the
attorney-client privilege may attach to many communications. A senior attorney is recommended because of the
complex and complicated nature of the legal and administrative issues involved.
• Develop a study team, whose members should be comprised of the following agency functions:
– Law,
– Purchasing and/or contract administration,
– Public works/engineering or equivalent,
– Finance/accounts payable or equivalent,
– Information technology,
– M/W/DBE program administration, and
– Communications and/or external affairs.
This team may be responsible for evaluating proposals, as
well as overseeing the study process. Additional state DOT
personnel may be included. We caution against including
persons external to the agency, such as representatives of contractor groups or community organizations, because of the
highly specialized nature of the study and the perception of
possible bias or conflicts of interest.

•

•
•

•

190

See W. H. Scott Construction Co., Inc. v. City of Jackson, Mississippi, 199 F.3d 206
(5th Cir. 1999) (City was not free to ignore the results of its disparity study).

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

59
• If a DBE goal is set for the study, ensure that it reflects a re-

•

•
•

•

alistic assessment of the amount of work likely to be done
by a local DBE that lacks direct study experience. Provide
a list of relevant potential DBE subcontractors if the UCP
Directory is not easily searchable.
We advise against limiting pages in the proposal. The
issues about study methods are complex and do not
lend themselves well to overly truncated presentations.
The state DOT will be served better by receiving more information rather than less about the approach and the
experts.
Ask for and check consultant references. Contact agencies
for which studies were conducted that are not listed as
references.
Request at least one sample study and have the state DOT
legal counsel review it for legal sufficiency.
Do not separate the process of procuring the study into
phases. Do not first require a Statement of Qualifications
and then later require a Proposal. In every instance we reviewed that used this approach, the information requested
of the bidders was, in general, the same in both documents.
Requiring what amounts to double proposals is time consuming and costly.
Proofread the RFP. Many questions and problems will be
eliminated with careful proofreading from the perspective of a proposer, including incorrect information, such as
for the time frame for study and period for study performance; unnecessary requirements, such as attachments and
information that are obviously for construction or engineering projects; and serious redundancy, such as requiring the same information be provided in more than one
place in the proposal. This will also reduce the state
DOT’s burden of responding to questions and evaluating
proposals.

Conducting the RFP Process
• Directly notify the relatively small pool of consultants that

performs disparity studies of the issuance of the RFP. It is
not reasonable to expect consultants to register with every
agency or search hundreds of public websites every day.

•

•
•
•

•

Failure to disseminate the RFP will reduce the competition
and breadth of choices for the state DOT.
Establish the due date for proposals on a Wednesday,
Thursday, or Friday. Proposals will be submitted from
consultants all over the country. This necessitates the use
of overnight delivery services. Because unforeseen circumstances may prevent packages from being delivered
overnight, prudence counsels that the proposal be shipped
two business days before the due date. If the due date is a
Monday or Tuesday, this can essentially eliminate three
days from the time the consultant has to work on preparing its best offer.
Proposals should be due after 2:00 p.m. local time. This will
lead to fewer problems with overnight delivery services.
Provide at least four weeks from the date of issuance for the
response.
Include face-to-face interviews as part of the evaluation
process for finalists. Not only is the state DOT hiring a
study consultant but also potentially an expert witness for
litigation. Face-to-face interviews permit the state DOT
and its lawyers to evaluate the consultant’s ability to explain the study data, methods, and findings and the team
member’s experience and demeanor for litigation.
If you plan to conduct interviews, propose an anticipated
timeline in the RFP and do your best to stick to it. This will
help avoid scheduling difficulties later on.
If changes or amendments to RFP must be made within
one week before the due date for proposals, then change
the due date of the RFP. Give proposers sufficient time to
revise their submissions.
Do not impose a mandatory pre-proposal meeting attendance requirement. Written questions and answers are the
most effective way to address proposers’ concerns.
If state procurement and records laws permit, make evaluation documents available to bidders after the final selection without filing Freedom of Information Act or similar
requests. Doing this in a timely manner benefits the DOT
because material errors have been discovered regarding the
evaluation and award process once the evaluation documents were made available to a bidder. Avoiding this type
of situation is in the state DOT’s best interest.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

APPENDIX A

Importance of Comprehensive
Subcontract Data Collection
Introduction
Twenty years after Croson, many public agencies with raceconscious subcontracting programs (including state DOTs)
still do not systematically collect and maintain adequate subcontracting data. Although state DOTs maintain records on
their DBE subcontracting, many do not maintain comparable records regarding non-DBE subcontracting. Although
non-DBE subcontract data are not necessary to produce the
standard types of DBE utilization reports requested by
U.S.DOT or the DOT’s executive leadership, which include,
for example, only that share of construction dollars awarded
during a given time to DBEs, such data are critical to producing a high-quality and legally defensible availability or disparity study.

Non-DBE Subcontract Data Is Just as
Important as DBE Subcontract Data
In contrast to such limited reporting, a high-quality disparity or availability study, among other things, should document
the share of all construction dollars awarded by detailed industry during a given period. In addition, a disparity study should
detail the share of dollars in each detailed industry awarded to
DBEs. Several courts have warned defendants about the use of
overly aggregated statistical comparisons in disparity studies
because such aggregation can provide misleading results.191
This phenomenon is known as Simpson’s Paradox. Since
many industries are only represented in state DOT projects
through subcontracting, knowledge of non-DBE as well as

DBE subcontract awards is imperative when building a project database for use in a disparity or availability study.
An example may illustrate the point. Consider the construction contract shown in Table A1, below. The overall
value of the contract is $12 million. The total value of the DBE
subcontracts is $1 million and the total DBE share is therefore
8.3%. For a disparity study, however, the consultant would
also want to know the dollar share accounted for by each
NAICS code and the DBE share for each code. The former is
needed in order to calculate properly weighted availability
estimates. The latter is needed in order to calculate utilization
and disparity statistics. These NAICS shares are shown in the
last six rows of Table A1. This exercise should be repeated for
each contract in the project database.
Some studies have ignored the problem of missing subcontract data. For example, one study states bluntly:
The utilization analysis of [M/WBEs] . . . does not include their
utilization as sub-contractors or sub-consultants. . . . [We were]
unable to secure sub-contracting/sub-consulting dollars from
the actual contract files during the data collection effort, simply
because the contract files do not contain the data relative to subcontracting or subconsulting activities. . . . This . . . is striking in
that . . . sub-contracting opportunities are often where much of
the utilization of M/WBEs is found.

Another study states:
The data made available to [us] . . . contain primarily reports of
subcontracts involving DBE participation, as the overall percentage of subcontracting (less than 8 percent) is significantly lower

191 See Engineering Contractors Association v. Metropolitan Dade County, 943 F. Supp. 1546, 1560 (S.D. Fla. 1996) (“The MRD study presents . . . data aggregated for all capital construction contracts (i.e., SIC 15, 16 and 17 together) and disaggregated by SIC category. . . . The Court will focus primarily on statistical analyses of the disaggregated data because these data are more likely to reflect the realities of competition in the construction industry. Firms that build hospitals (SIC 15) do not compete for
County contracts with firms that lay asphalt (SIC 16) or firms that install plumbing (SIC 17), therefore comparisons between these disparate entities would not produce
a reliable portrait of County contracting trends.”). Simpson’s Paradox has also been used to criticize combining highway districts together into statewide statistics. See
Phillips & Jordan, Inc. v. Watts, 13 F. Supp. 2d 1308, 1315 (N. D. Fla. 1998); Thompson Building and Wrecking Co. v. Augusta, 2007 U.S. Dist. LEXIS 27127, at * 8 (S.D. Geo.
March 14, 2007) (criticizing combining MBE statistics with WBE statistics).

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

61
Table A1. Subcontract data collection example.
Bid Package
Contractor Type

NAICS

DBE

Dollar Amount
Prime

$9,500,000

23621

Subcontractor

$750,000

23621

Subcontractor

$300,000

23621

Subcontractor

$50,000

23731

Subcontractor

$50,000

23731

Subcontractor

$200,000

23731

Subcontractor

$100,000

23731

Subcontractor

$30,000

23811

Subcontractor

$700,000

23821

Subcontractor

$140,000

23821

Yes

Subcontractor

$10,000

23899

Yes

Subcontractor

$60,000

23899

Subcontractor

$160,000

33599

TOTAL

Yes

$12,000,000

NAICS

Dollar Share

DBE Share

23621

87.6%

7.1%

23731

3.3%

25.0%

23811

0.2%

0.0%

23821

7.0%

16.7%

23899

0.6%

14.3%

33599

1.3%

0.0%

than subcontracting for most state Departments of Transportation (between 40 and 45 percent).

And, another states:
[D]ata were missing [pertaining] to subcontract awards to NonDBEs. This study disaggregated all contracting activity by prime
and subcontracting categories. As such, it would have been helpful
to have information on attainments by Non-DBE subcontractors.

In the first study, no subcontract data were available from
the client. In the second and third studies, the only data available from the client were for prime contracts that happened
to have DBE subcontractors. While it is apparent that all three
studies recognized the importance of capturing complete
subcontracting activity data, the problem remained unaddressed in the final reports. Any statistical conclusions resulting from such methods may be rejected by the courts since

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

the DBE program operates through the use of race-conscious
contract goals for subcontracting. A subcontracting program
requires subcontracting proof. In our view, disparity or availability studies that ignore missing subcontract data are
unlikely to withstand strict scrutiny.
Therefore, agencies must educate themselves before commissioning a study regarding their own data limitations and
ensure that the data collection method to be implemented
satisfactorily addressed the issue of missing subcontract data
and that a realistic allocation of resources is included in the
study budget to address the issue.

Subcontract Data Allow
Detailed Industry Statistics
As illustrated by Table A1, without complete subcontract
data it is not possible to carry out statistical analyses by detailed
industry categories. For state DOTs, one of the most important
uses of detailed industry statistics is to provide dollar-weighted
estimates of DBE availability.192
As shown above in the sample contract in Table A1, far
more dollars were expected to be spent in NAICS 23621 than
in NAICS 23821 or 23811. Consequently, to set an overall
DBE goal for this particular contract, the state DOT would
weight DBE availability in NAICS 23621 more heavily than
availability in NAICS 28321 or 23811. Exactly how much
weight to give each detailed industry availability estimate
would be determined by the proportional distribution of dollars across each relevant NAICS industry.
Another, simpler example appears in the U.S.DOT’s DBE
Program guidance: “if 90% of your contract dollars will be
spent on heavy construction and 10% on trucking, you should
weight your calculation of the relative availability of firms by
the same percentages.”193
Despite some court rulings warning against the dangers of
Simpson’s Paradox with respect to over-aggregation by industry, a substantial share of studies still fail to employ detailed
industry weights. Of the 28 state DOTs that have performed or
are currently performing a disparity or availability study, only
three of the eight consultants involved used detailed industry
data—i.e., three-digit NAICS/two-digit SIC or higher—to
construct weighted availability estimates.194
Weighted DBE availability estimates are important because
they allow state DOTs to meet the requirement that their
annual DBE goals be narrowly tailored to their specific contracting circumstances. Weighted estimates are further impor-

tant because narrow tailoring also requires DBE goals be set
on a contract-by-contract basis.195 For example, a new road
construction or a highway maintenance contract may have
very different opportunities for DBE participation than an
underground tunnel project. To set those goals, the agency
needs to have reliable estimates of DBE availability for all
detailed industry categories that may be involved in a project.
State DOTs should require such detailed data be included and
ensure that sufficient resources are allocated to the study to
create it.

Methods for Collecting
Subcontract Data in
Anticipation of Future Studies
Compensating for missing subcontract data is one of the
main factors affecting the cost of high-quality disparity and
availability studies. One of the most important ways to reduce
costs of future studies is to systematically collect and maintain complete subcontract data.
The most effective and least burdensome method is to
require prime contractors and consultants to submit, either
as part of their bid packages or at some other point prior to
the agency issuing a Notice to Proceed, a standardized form
listing all proposed first-tier subcontracts, both DBEs and
non-DBEs. This form should clearly identify the prime contract and prime contractor and should include, at a minimum, the following information:
•
•
•
•
•
•

Full business name of the subcontractor;
Subcontractor street address, city, state, and zip code;
Subcontractor telephone number;
Subcontractor contact person and title;
Anticipated dollar amount of the subcontract;
Short description of the services to be performed and/or
goods to be supplied; and
• Race and gender of subcontractor ownership, if known.
Additionally, the prime contractor should be periodically
required during contract performance to certify that no material changes have been made to the proposed roster of subcontractors or subcontract amounts.196 If change orders have
been issued to any subcontractors, if new subcontractors
have been added, or if original subcontractors have been
dropped, then this should be noted and the pertinent details
provided. At the final pay application, the prime contractor

192

Detailed industry statistics are also important in calculations of utilization and
disparity in disparity studies.
193U.S.DOT, OSDBU (n.d., Section II.F).
194Two of these three consultants, however, could not be evaluated because their
studies are not yet complete and they have no other completed studies on record.

19549 C.F.R § 26.51(d) and (e); see also Chapter Two, Review of Existing Studies,
supra.
196
This could be done at each pay application or each quarter.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

should be required to certify the final amounts actually paid
to each subcontractor.197
Beyond this, the state DOT may wish to consider working
with its IT personnel or engage an outside consultant to
develop methods to maintain this data electronically for general program management use. The collected information
can be integrated into existing data collection systems, or
alternately, there are several specialized software products on
the market designed to facilitate this process for DOTs and
other public agencies.

Methods for Addressing Missing
Subcontract Data for Current Studies
Obtain Missing Data Directly
from Prime Contractors and Consultants
If the state DOT has not collected and maintained this
data, it will be necessary to either request the information
directly from each relevant prime contractor or consultant or
reconstruct the required information by other means. If all of
the necessary subcontract data have not been maintained, it
will probably not be cost-effective to recreate it all. It may be
more feasible to recreate the missing subcontract information
for a statistically representative sample of prime contracts. It
is critical to ensure that the samples are properly drawn by
trained social scientists.
Once a sample is selected, the required subcontract information must be requested directly from the prime contractors. State contracts usually include audit provisions allowing
the state to obtain this information from the prime contractor. This is very useful not only for conducting studies but also
for program monitoring, so we suggest that all state DOT contracts include such provisions in the standard terms and conditions for construction and consulting contracts. Records
retention requirements should apply for at least five years.
Below is sample language from an actual contract:
“AUDIT RIGHT AND RETENTION OF RECORDS
AGENCY shall have the right, upon reasonable advanced notice
and during ordinary business hours, to audit the books, records,
and accounts of CONTRACTOR and its subcontractors that are
related to this Project. CONTRACTOR and its subcontractors
shall keep such books, records, and accounts as may be necessary
in order to record complete and correct entries related to the
Project. All books, records, and accounts of CONTRACTOR and
its subcontractors shall be kept in written form, or in a form
capable of conversion into written form within a reasonable
time, and upon request to do so, CONTRACTOR or its subcon197

If the state DOT makes local assistance grants to other public entities in the
state, and the contracts funded with such grants are subject to the DBE Program
then local recipients should be required to collect and maintain the same level of
prime contract and subcontract data as the state DOT.

tractor, as applicable, shall make same available at no cost to
AGENCY in written form.
CONTRACTOR and its subcontractors shall preserve and make
available, at reasonable times for examination and audit by
AGENCY, all financial records, supporting documents, statistical records, and any other documents pertinent to this Agreement for the required retention period of the ____ Public
Records Act, Chapter ____, ____ Statutes, as may be amended
from time to time, if applicable, or, if the ____ Public Records
Act is not applicable, for a minimum period of five (5) years after
termination of this Agreement. If any audit has been initiated
and audit findings have not been resolved at the end of the retention period or three (3) years, whichever is longer, the books,
records, and accounts shall be retained until resolution of the
audit findings. If the ____ Public Records Act is determined by
AGENCY to be applicable to CONTRACTOR and its subcontractors’ records, CONTRACTOR and its subcontractors shall
comply with all requirements thereof; however, no confidentiality or non-disclosure requirement of either federal or state law
shall be violated by CONTRACTOR or its subcontractors. Any
incomplete or incorrect entry in such books, records, and
accounts shall be a basis for CONTRACTOR disallowance and
recovery of any payment upon such entry.
CONTRACTOR shall, by written contract, require its subcontractors to agree to the requirements and obligations of this
Section.”

Prime contractors are more likely to comply if the data
request includes a letter from the Governor, the Director of
Transportation, or other senior official explaining the importance of the data collection effort to the state and encouraging
prime contractors to cooperate. Follow-up telephone calls
must be made to nonresponsive prime contractors, and they
are most effective when they are made by the state. This is
because the state has a pre-existing and in many cases an ongoing relationship with the prime contractor while the disparity
or availability consultant does not. While the initial round of
follow up can be made by the consultant if necessary, increasingly higher-level state DOT personnel must become involved
for those prime contractors who fail to provide the requested
information. Even under the best of circumstances, this entire
process can be costly and time-consuming. The necessary staff
resources to conduct this follow up should be planned for by
the state if it is considering commissioning a disparity or availability study and knows that it will need to supplement its existing subcontract record.
The combination of contract audit provisions, a letter, and
follow-up communications will typically achieve a response
rate accounting for 75% or more of the contract dollars in the
sample. Extreme cases have required more stringent methods,
such as auditing the prime contractor’s books or withholding
progress payments on current work, to achieve cooperation.
Finally, the longer the time from award, the more difficult
it will typically be for the prime contractor to provide the

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

requested information. In our experience, response rates for
contracts that are more than 5 years old are substantially
lower than those for more recent projects. Where this sampling method must be employed, a study period longer than
5 years may not be feasible or supportable, and is probably
not necessary.
Impute Missing Data Using Bid Tabulations,
Pay Items, or Similar Records
If subcontract data are missing and obtaining the information directly from the prime contractors is not feasible, it is
still possible to create a proxy for the missing information
using bid tabulations, pay items, or similar records. However,
these methods do not allow for the empirical determination
of the geographic market area and are therefore inferior to
and less defensible198 than obtaining data directly from the
prime contractors. Moreover, this approach is problematic
for disparity studies because of the uncertainty introduced
into utilization and disparity statistics.
We have constructed such proxies for two clients, using
somewhat different methods based on the data that were
available.
Case 1: Representative Bid Tabulations. In collaboration with engineering staff from a major metropolitan transit agency, we first identified the major types of contracts that
were undertaken in a typical year: (1) building construction,
(2) heavy elevated construction, and (3) signal construction.
Next, the agency provided detailed cost estimates associated
with nine upcoming representative construction projects—
three building projects, three elevated heavy construction projects, and three signal construction projects. We then worked
with agency engineering staff to assign detailed industry codes
to each major task and task dollars associated with each upcoming project.
In this manner, it was possible to produce the necessary
detailed industry estimates of DBE availability for use in set-

ting contract goals and the overall dollar-weighted DBE availability estimates for use in annual goal setting.
Case 2: Complete Pay Items. To determine the product
dimension of the large state DOT’s construction contracting,
we worked with agency staff to identify all construction contracts awarded during the study period. The agency then provided detailed pay item-level cost estimates for each contract.
Ultimately, more than 3,000 contracts consisting of almost
135,000 separate pay items and totaling almost $2.5 billion
were included in the study.
We matched each pay item number with its associated
section from the agency’s Standard Specifications. Once all
pay item numbers were linked with a specific section, we
calculated a dollar-based weight to apply to each section.
These weights were based on adjusted dollar amounts (i.e.,
original award amounts plus all change order amounts).
Next, we assigned detailed industry codes to each section of
the specification manual. Each section could be assigned
multiple detailed industry codes, depending on that section’s scope of work. For sections assigned more than one
detailed industry code, a second set of weights was applied
to reflect the importance of each industry code in dollar
terms within the section. These secondary weights were
assigned with reference to published construction estimating standards.199
As a check on the appropriateness of our assignment of
detailed industry codes, we asked agency staff to review our
selections, and we refined them further based on staff
input. For example, we eliminated several industries that
agency staff understood to have negligible opportunities for
prime contracting or subcontracting. Input from agency staff
resulted in several consolidations or expansions of our original industry code assignments.
In this manner, as with the bid tabulation method, it was
possible to produce the necessary detailed industry estimates
of DBE availability and the overall dollar-weighted DBE
availability estimates for use in annual goal setting.

198

Cf. 49 C.F.R § 26.45(b), requiring that the recipient’s goal reflect its market,
not the national goal.

199

See e.g., Richardson Engineering Services, Inc. (2000).

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

APPENDIX B

Understanding “Capacity”

Large and adverse statistical disparities between minorityowned or women-owned businesses and nonminority maleowned businesses have been documented in numerous research studies and reports since Croson.200 Business outcomes,
however, can be influenced by multiple factors, and it is important in disparity studies to examine the likelihood of
whether discrimination is an important contributing factor to
observed gross disparities.
One traditional way that the linkage between statistical disparities and discrimination has been established is through
the introduction of anecdotal or qualitative evidence. If the
thrust of such anecdotal evidence is consistent with the disparities observed, the case for the linkage is strengthened.
Another traditional way that the linkage between statistical disparities and discrimination has been established is to
consider the size of the observed disparities. That is, the larger
the disparity, the less likely it becomes that nondiscriminatory factors can account for the entire difference. It is
this straightforward observation that underpins the Equal
Employment Opportunity Commission’s long-standing
“four-fifths rule” for triggering employment discrimination
investigations.201
Some critics of race-conscious contracting programs and
some courts have criticized the validity of the use of the fourfifths rule in combination with anecdotal evidence on grounds
that the availability measure in the disparity statistic does not
factor in “capacity” or, stated another way, because availability statistics may include firms that are not “qualified, willing,
and able” to perform the work. One critic has called this “the
most common disparity study fallacy.”202 For several reasons,
such criticisms are unwarranted and unscientific.

200

See Enchautegui, et al. 1996.
The four-fifths rule says that any disparity ratios less than or equal to 0.8
(on a scale of zero to one, zero being perfect disparity and one being perfect
parity) indicate the presence of discrimination. See 29 C. F. R. § 1607.4(d).
202
La Noue 1994, p. 490.
201

First, it is helpful to consider an extreme example where
discrimination has prevented the emergence of any minorityowned firms. Suppose that racial discrimination was ingrained
in the state highway construction market. As a result, few minority construction employees are given the opportunity to
gain managerial experience in the business; minorities who
do end up starting construction firms are denied the opportunity to work as subcontractors for nonminority prime contractors; and nonminority prime contractors place pressure
on unions not to work with minority firms and on bonding
companies and banks to prevent minority-owned construction firms from securing bonding and capital. In this example, discrimination has essentially prevented the emergence
of a minority highway construction industry with “capacity.”
Excluding firms based on their “capacity” in a discriminatory
market would preclude a government agency from doing
anything to rectify the continuing support of such a system
with public dollars. There is no recognition that discrimination has prevented the emergence of “qualified, willing, and
able” minority firms. Without such firms, there can be no statistical disparity, and without a statistical disparity there can
be no remedy. The government is not so helpless in the face
of the current effects of discrimination, however.
Now, one might argue that this result is correct. The state
should try to prevent the discriminatory impediments, and
by doing so it will stimulate the formation of qualified, willing, and able firms. Of course, that ignores the logic of affirmative action. If injunctive relief could always remedy discrimination, affirmative action would never be necessary.
Affirmative action is used as a tool for minimizing discrimination against minorities and women without having to regulate decisions at every step along the line.
Second, terms such as “capacity,” “qualifications,” and “ability” are not well defined in any statistical sense. Should “capacity” be defined as revenues, employment size, or certain bonding limits? Does “qualified” or “able” mean possession of a
business license, or certain amounts or types of training or work

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

experience? How is a government agency supposed to obtain
information about such factors for subcontractors? Also, does
the meaning of these terms differ from industry to industry or
state to state?
Third, in dynamic business environments, and especially
in the construction sector, such “qualifications” can be obtained relatively easily. It is well known that small construction companies can expand rapidly as needs arise by hiring
workers and renting equipment. Many general contractors
subcontract the majority of a project. Subcontracting is one
important source of this elasticity, as has been noted by several academic studies. Bourdon and Levitt, for example, in
their study of construction labor markets, observed that:
“One of the unique aspects of the construction industry is the
prevalence of subcontracting. Construction projects are undertaken by a multitude of firms assembled for brief periods of
time on a site then disbanded. General contractors can undertake projects of considerable scale without large amounts of direct labor or fixed capital; subcontractors can start with one or
two employees and bid only on particularly highly specialized
contracts.”203

Eccles also noted the importance of subcontracting in construction.204 He found that subcontracting could be explained
as a response to uncertainty and complexity. He also found
that the larger the project the more subcontracting and the
more extensive the market the more subcontracting. Dowall
and Barone draw a similar conclusion regarding the use of
subcontractors.205
Academic studies have also found that, absent discrimination, entry into the construction industry is not difficult.
Bourdon and Levitt attribute this to subcontracting opportunities.206 Eccles observes that entry is easy based on the large
number of small firms and that capital requirements for fixed
assets are small.207 Gould, who followed the careers of six construction contractors, also demonstrates ease of entry.208 He
also notes that there is movement between small and large
firms not only via subcontracting, but also by experienced
staff at larger firms leaving to form smaller new firms. Dowall
and Barone, based on a survey of construction firms, note
that there is “considerable diversification into other types of
construction activities.”209
The construction market is dynamic, facing boom and
bust periods. In response, the “capacity” and “qualifications”
of firms in this sector remain highly elastic. Firms grow quickly
203

Bourdon and Levitt, 1980.
Eccles, 1981.
205 Dowall and Barone, 1993.
206 Bourdon and Levitt, 1980.
207 Eccles, 1981.
208 Gould, 1980.
209
Dowall and Barone, 1993.
204

when demand increases and shrink quickly when demand decreases. Therefore, focusing on the “capacity” of businesses in
terms of employment, revenue, bonding capacity, number of
trucks, and so forth is wrong as a matter of economics and
can potentially obscure the existence of discrimination. To
see this, consider using revenue as the measure of qualifications. Revenues simply measure the value of contracts that
firms are receiving. If minority-owned and women-owned
businesses are subject to marketplace discrimination, their
revenues will be smaller than nonminority male-owned businesses because they will be less successful at obtaining work.
Using revenues as a measure of DBE availability in contracting is like using pay as a measure of qualifications in an equalpay case. Revenue, like pay, measures the extent to which a
firm has succeeded in the marketplace—it does not measure
the ability to succeed.
Fourth, suppose for the sake of argument that DBE availability should be based on detailed “qualifications” or “capacity” measures like bonding capacity, working capital, years of
experience, and other items. Where would one obtain the
data? The critics do not tell us and neither do the courts. In the
Concrete Works trial, for example, a plaintiff’s expert complained that the availability measures proffered by the defendant’s expert, which controlled for detailed industry affiliation
and geographic location, nevertheless did not contain the detailed information on firm “qualifications” that he believed
were necessary for a proper analysis.210 However, plaintiff presented no data whatsoever on any detailed qualifications of
firms or their owners, the share of minority-owned firms that
have achieved a particular bonding capacity, the average
amount of capital equipment, amount of working capital, success on previous jobs, or any other possible metric of qualifications. Such information does not exist and would be difficult if not impossible to collect in any systematic fashion.
Indeed, plaintiff’s expert admitted this in his deposition:
“[t]here isn’t data in any database that tells you what all those
qualifications could be.”211 To the best of our knowledge, no
plaintiff’s expert has ever introduced statistical evidence
demonstrating that accounting for “qualifications” or “capacity” explains away large and statistically significant disparities
facing minority-owned or women-owned firms.
Fifth, although it is true that some disparity studies have
not controlled for factors such as “capacity” or “qualifications” or “willingness,” it is not necessarily their obligation to
do so. Although Croson provides little guidance on this matter, using a disparity study to consider whether there is a
prima facie case of disparate impact against certain groups
follows a long-established pattern in employment discrimi-

210
211

La Noue, 1998a, pp. 31–37.
La Noue, 1998b, p. 140.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

nation litigation.212 For example, by demonstrating that gross
statistical disparities facing a given group of minority business owners were both large and statistically significant, the
burden of proof shifts to the plaintiff, who must then demonstrate that the gross disparities in evidence diminish substantially in size or statistical significance (or both) once other
influential factors that are unlikely to be correlated with discrimination have been accounted for.213 As we have already
argued, most of these other factors are strongly correlated
with discrimination. Moreover, in those cases where plaintiff’s
experts have had the opportunity and the incentive to counter
defendant’s disparity statistics with their own statistics regarding “capacity” and “qualifications,” they have failed to do so
because such data do not exist.
Sixth, even in cases where “qualification”-type factors have
been controlled for in statistical analyses, results consistent
with business discrimination are still typically observed. For
example, as we noted above, Denver demonstrated that large
and statistically significant differences in commercial loan denial rates between minority and nonminority firms were evident even when detailed balance sheet and creditworthiness
measures were held constant.214 Similarly, economists using
the decennial census microdata have demonstrated that
statistically significant disparities in business formation and
business owner earnings between minorities and nonminorities remain even after controlling for a host of factors available in the data, including educational achievement, labor
market experience, marital status, locational mobility, number of workers in the family, number of children, immigrant
status, disability status, veteran status, interest and dividend
income, labor market attachment, industry, geographic location, and local labor market variables such as the unemployment rate, population growth rate, government employment
rate, and per capita income.215
Noted labor economist and former U.S. Secretary of Labor
Ray Marshall, in partnership with former Federal Reserve
Board Governor Andrew Brimmer, conducted one of the first
post-Croson disparity studies for the City of Atlanta in 1990.
Marshall summarizes well the arguments against using the
outcomes of discrimination to measure “capacity”:216

The problem of establishing statistical proof of whether or not
minority contractors are “qualified, willing and able” is particularly challenging. Croson provides limited guidance on this question. . . . Unfortunately, this lack of guidance has made it possible
for courts and opponents of [race-conscious contracting] programs to argue that the failure to produce perfect statistical
evidence—i.e., timely and highly specific, and methodologies that
control for everything except discrimination—invalidates these
programs despite the fact that the most reliable statistics and the
most appropriate methodologies confirm the persistence of discrimination. Our evidence for Atlanta suggests that even highly
qualified black contractors are disadvantaged relative to similarly
situated white contractors. . . . It also is hard to know how to define the qualifications of businesses in dynamic markets where expertise can be purchased in the open market and where “virtual”
companies are increasingly common. Once contractors are able
to obtain contracts, they usually are able to expand their capacity.
In a dynamic business environment, it would be difficult to argue,
as some critics have, that qualifications are determined mainly by
size. . . . Moreover, as the Tenth Circuit Court of Appeals observed in Adarand VII, there is no credible evidence that minority contractors who have been hired under [race-conscious contracting] programs have lacked adequate qualifications.
Nevertheless, analyses of available data for business owners that
enable personal characteristics and other factors to be controlled
for [generate results that are] compatible with racial exclusion.
There therefore is no credible evidence that the large disparities
in the utilization of minority contractors can be explained by the
lack of qualifications or the unwillingness to contract. Indeed,
strong historical, anecdotal and survey evidence . . . demonstrates that minority contractors are more willing than white
males to contract with governmental entities, even though they
recognize that public contracting is less desirable than the mainstream private sector, where their opportunities are greatly restricted. The greater participation of minorities and women is
compatible with the concept of “crowding,” mentioned earlier.
This is all the more reason not to use participation in these sectors as a measure of discrimination and why broader market
areas are more appropriate.

To summarize, the statistical analysis of the availability of
minority firms compared to nonminority firms to examine
the existence and effects of discrimination in disparity studies should not adjust for “capacity” because:
• “Capacity” has been ill defined;
• Small firms, particularly in the construction industry, are

212

See Connolly, et al., 2001, chs. 2–3.
213 In the present context, factors that are uncorrelated with discrimination are
referred to as exogenous variables. Factors that are correlated with discrimination are referred to as endogenous variables. Only exogenous variables should
be included as explanatory factors in a statistical model testing for disparities.
214 See Chapter Two, Review of Existing Studies.
215 E.g., Wainwright, 2000, pp. 85–135.
216 Marshall, 2002, pp. 81–82

highly elastic with regard to ability to perform;
• Many disparity studies have shown that even when

“capacity”- and “qualifications”-type factors are held
constant in statistical analyses, evidence of disparate impact against DBE and M/WBE firms tends to persist; and
• Most important, identifiable indicators of capacity are
themselves impacted by discrimination.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

APPENDIX C

Legal Standards for Race-Conscious
Government Contracting Programs
The project to develop the National Model Disparity Study
and Request for Proposals for state DOTs seeks to address the
evidentiary tests created by the federal courts that govern the
DBE Program for federally assisted transportation contracts.217
It is in response to these strictures that disparity studies for
public contracts were first conducted. It is therefore crucial to
canvass the state of the law to develop national guidelines for
the examination of evidence of discrimination in the market
for federally assisted transportation contracts.
Specifically, we “prepare[d] an analysis of the federal DBE
goal-setting regulations and case law in all federal circuits considering challenges to the constitutionality of the U.S. Disadvantaged Business Program. Identify common themes and
key distinguishing factors in state DOT DBE programs that
influenced the court ruling on constitutionality.”218
What follows is our detailed analysis of the case law and regulations relevant to the development of a disparity study model,
with the focus on evidentiary issues. We begin with a review of
the outlines of strict constitutional scrutiny as applied to public
contracts, then discuss the particular cases that have construed
how those outlines apply to the DBE program and its implementing regulations under 49 C.F.R. Part 26.

Strict Scrutiny Standard
Since the initial application of strict constitutional scrutiny
almost 20 years ago to race-conscious public contracting programs, federal appellate and district courts have developed
parameters for establishing a government’s compelling interest in remedying discrimination and evaluating whether the
remedies adopted to address that discrimination are narrowly
tailored. This area of constitutional law is complex and constantly shifting, and cases are usually quite fact bound. The

217
218

49 C.F.R. Part 26.
Task 1, Scope of Work and Associated Tasks.

following are the evidentiary tests that state DOTs must consider in evaluating their responses to judicial opinions, as well
as to the mandates of Part 26.
City of Richmond v. J.A. Croson Co.219
City of Richmond v. J.A. Croson Co. established the broad
constitutional contours of permissible race-based public
contracting programs. Reversing long-established law, the
Supreme Court for the first time extended the highest level
of judicial examination from measures designed to limit the
rights and opportunities of racial and ethnic minorities to legislation that benefits these historic victims of discrimination.
Strict scrutiny requires that a government entity prove both its
“compelling interest” in remedying identified discrimination
based upon a “strong basis in evidence,” and that the measures
adopted to remedy that discrimination are “narrowly tailored”
to that evidence. However benign the government’s motive,
race is always so suspect a classification that its use must pass
the highest constitutional test of “strict scrutiny.”
The Court struck down Richmond’s Minority Business
Enterprise Plan that required prime contractors awarded
city construction contracts to subcontract at least 30% of the
project to Minority Business Enterprises (MBEs). A business
located anywhere in the country that was at least 51% owned
and controlled by “Black, Spanish-speaking, Oriental, Indian,
Eskimo, or Aleut” citizens was eligible to participate. The plan
was adopted after a public hearing at which no direct evidence
was presented that the city had discriminated on the basis of
race in awarding contracts or that its prime contractors had
discriminated against minority subcontractors. The only evidence before the city council was: (a) Richmond’s population was 50% black, yet less than 1% of its prime construction
contracts had been awarded to minority businesses; (b) local

219

488 U.S. 469 (1989).

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

contractors’ associations were virtually all white; (c) the city
attorney’s opinion that the plan was constitutional; and
(d) general statements describing widespread racial discrimination in the local, Virginia, and national construction industries.
The plaintiff had submitted the single bid to furnish and
install specified plumbing fixtures in the City jail. It was unable
to meet the 30% set aside because there were no minority suppliers either interested in or able to submit a timely quote in
response to Croson’s request for quotations, in part because the
supplier for one of the two designated fixture companies had
already quoted directly to Croson. Twenty-one days after bid
opening, an MBE submitted a quote for one of the manufacturers that was significantly higher than the prime contractor
had used to estimate its bid and higher than quotes received
from non-MBEs; it also was not an authorized supplier. Richmond refused to grant a waiver or to increase the contract price
to reflect the costs of using the MBE.220 Croson sued.
In affirming the court of appeals’ determination that the
plan was unconstitutional, the plurality opinion rejected the
extreme positions that local governments either have carte
blanche to enact race-based legislation or must prove their
own illegal conduct:
[A] state or local subdivision . . . has the authority to eradicate
the effects of private discrimination within its own legislative
jurisdiction. . . . [Richmond] can use its spending powers to
remedy private discrimination, if it identifies that discrimination
with the particularity required by the Fourteenth Amendment. . . . [I]f the City could show that it had essentially become
a “passive participant” in a system of racial exclusion . . . [it]
could take affirmative steps to dismantle such a system.221

Strict scrutiny of race-based remedies is required to determine whether racial classifications are in fact motivated by
either notions of racial inferiority or blatant racial politics.
This highest level of judicial review “smokes out” illegitimate
uses of race by ensuring that the legislative body is pursuing
a goal important enough to warrant use of a highly suspect
tool.222 It further ensures that the means chosen “fit” this
compelling goal so closely that there is little or no possibility
that the motive for the classification was illegitimate racial
prejudice or stereotype. The Court made clear that strict
scrutiny seeks to expose racial stigma; racial classifications are
said to create racial hostility if they are based on notions of
racial inferiority.223

220

Id. at 481–83.
Id. at 491–92.
222See also Grutter v. Bollinger, 539 U.S. 306, 327 (2003) (“Not every decision
influenced by race is equally objectionable, and strict scrutiny is designed to provide a framework for carefully examining the importance and the sincerity of the
reasons advanced by the governmental decision maker for the use of race in that
particular context.”).
223
488 U.S. at 493.
221

Race is so suspect a basis for government action that
more than “societal” discrimination is required to restrain
racial stereotyping or pandering. Croson provided no definition of “societal” discrimination or any guidance about
how to recognize the ongoing realities of history and culture in evaluating race-conscious programs. The Court
simply asserted that:
[w]hile there is no doubt that the sorry history of both private and
public discrimination in this country has contributed to a lack of
opportunities for black entrepreneurs, this observation, standing
alone, cannot justify a rigid racial quota in the awarding of public contracts in Richmond, Virginia. . . . [A]n amorphous claim
that there has been past discrimination in a particular industry
cannot justify the use of an unyielding racial quota. It is sheer
speculation how many minority firms there would be in Richmond absent past societal discrimination.224

Richmond’s evidence was found to be lacking in every
respect. The city could not rely upon the disparity between its
utilization of MBE prime contractors and Richmond’s minority population because not all minority persons would be qualified to perform construction projects; general population
representation is irrelevant. No data were presented about the
availability of MBEs in either the relevant marketplace or their
utilization as subcontractors on city projects. Justice O’Connor
speculated that the extremely low membership of minority
firms in local contractors’ associations could be explained by
“societal” discrimination or perhaps blacks’ lack of interest
in participating as business owners in the construction
industry. To be relevant, the city would have to demonstrate
statistical disparities between eligible MBEs and actual
membership in trade or professional groups. Further, Richmond presented no evidence concerning enforcement of its
own anti-discrimination ordinance.
In the case at hand, the City has not ascertained how many
minority enterprises are present in the local construction market
nor the level of their participation in City construction projects.
The City points to no evidence that qualified minority contractors have been passed over for City contracts or subcontracts,
either as a group or in any individual case. Under such circumstances, it is simply impossible to say that the City has demonstrated “a strong basis in evidence for its conclusion that remedial action was necessary.”225

Richmond could not rely upon Congress’ determination
that there has been nationwide discrimination in the construction industry. Congress recognized that the scope of the
problem varies from market to market, and a local govern-

224
225

Id. at 499.
Id.at 510.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

ment is further constrained by the Fourteenth Amendment’s
Equal Protection Clause.226
The foregoing analysis was applied only to blacks. The Court
then emphasized that there was “absolutely no evidence”
against other nonwhites. “The random inclusion of racial
groups that, as a practical matter, may have never suffered from
discrimination in the construction industry in Richmond, suggests that perhaps the City’s purpose was not in fact to remedy
past discrimination.”227
Having found that Richmond had not presented evidence in support of its compelling interest in remedying
discrimination—the first prong of strict scrutiny—the Court
went on to make two observations about the narrowness of
the remedy—the second prong of strict scrutiny. First, Richmond had not considered race-neutral means to increase
MBE participation. Second, the 30% quota had no basis in evidence, and was applied regardless of whether the individual
MBE had suffered discrimination.228 Further, Justice O’Connor rejected the argument that individualized consideration
of plan eligibility is too administratively burdensome.
Apparently recognizing that the opinion might be misconstrued to categorically eliminate all race-conscious contracting efforts, Justice O’Connor closed with these admonitions:
Nothing we say today precludes a state or local entity from taking
action to rectify the effects of identified discrimination within its
jurisdiction. If the City of Richmond had evidence before it that
non-minority contractors were systematically excluding
minority businesses from subcontracting opportunities, it could
take action to end the discriminatory exclusion. Where there is a
significant statistical disparity between the number of qualified
minority contractors willing and able to perform a particular
service and the number of such contractors actually engaged by
the locality or the locality’s prime contractors, an inference of discriminatory exclusion could arise. Under such circumstances, the
City could act to dismantle the closed business system by taking
appropriate measures against those who discriminate based on
race or other illegitimate criteria. In the extreme case, some form
of narrowly tailored racial preference might be necessary to break
down patterns of deliberate exclusion. . . . Moreover, evidence of
a pattern of individual discriminatory acts can, if supported by
appropriate statistical proof, lend support to a local government’s
determination that broader remedial relief is justified.229

While much has been written about Croson, it is worth
stressing in the context of the Model Study inquiry what evidence was and was not before the Court. First, Richmond

226Id. at 504; but see Adarand v. Peña, 515 U.S. 200 (1995) (Adarand III) (applying strict scrutiny to Congressional race-conscious contracting measures) (discussed infra).
227488 U.S. at 510.
228See Grutter, 539 U.S. at 336–337 (quotas are not permitted; race must be used
in a flexible, nonmechanical way).
229
488 U.S. at 509 (citations omitted).

presented no evidence regarding the availability of MBEs to
perform as prime contractors or subcontractors and no evidence of the utilization of minority-owned subcontractors on
city contracts.230 Nor did Richmond attempt to link the remedy it imposed to any evidence specific to the Program; it used
the general population of the city rather than any measure of
business availability. The “city has not ascertained how many
minority enterprises are present in the local construction
industry nor the level of their participation in city construction
projects. The city points to no evidence that qualified minority
contractors have been passed over for city contracts or subcontracts, either as a group or in any individual case.”231
Some commentators have taken this dearth of any particularized proof and argued that only the most particularized
proof can suffice in all cases. They leap from the Court’s rejection of Richmond’s reliance on only the percentage of blacks
in the city’s population to a requirement that only firms that
bid or have the “capacity” or “willingness” to bid on a particular contract at a particular time can be considered in determining whether discrimination against black businesses
infects the local economy.232
This contention has been rejected explicitly by some
courts. For example, in denying the plaintiff firm’s summary
judgment motion to enjoin the City of New York’s M/WBE
construction ordinance, the court stated that:
. . . it is important to remember what the Croson plurality opinion did and did not decide. The Richmond program, which the
Croson Court struck down, was insufficient because it was based
on a comparison of the minority population in its entirety in
Richmond, Virginia (50%) with the number of contracts
awarded to minority businesses (0.67%). There were no statistics
presented regarding number of minority-owned contractors in
the Richmond area, Croson, 488 U.S. at 499, and the Supreme
Court was concerned with the gross generality of the statistics
used in justifying the Richmond program. There is no indication
that the statistical analysis performed by [the consultant] in the
present case, which does contain statistics regarding minority
contractors in New York City, is not sufficient as a matter of law
under Croson.233

Further, Richmond made no attempt to narrowly tailor a
goal for the procurement at issue that reflected the reality of

230

Id. at 502.
Id. at 510.
232See, e.g., Northern Contracting, Inc. v. Illinois Department of Transportation, 473
F.3d 715, 723 (7th Cir. 2007) (Northern Contracting III).
233North Shore Concrete and Associates, Inc. v. City of New York, 1998 U.S. Dist.
Lexis 6785, *28–29 (E.D. N.Y. 1998; see also Harrison & Burrowes Bridge Constructors, Inc. v. Cuomo, 981 F.2d 50, 61–62 (2nd Cir. 1992) (“Croson made only
broad pronouncements concerning the findings necessary to support a state’s
affirmative action plan”); cf. Concrete Works of Colorado, Inc. v. City and County
of Denver 36 F.3d 1513, 1528 (10th Cir. 1994) (Concrete Works II) (City may rely
on “data reflecting the number of MBEs and WBEs in the marketplace to defeat
the challenger’s summary judgment motion”).
231

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

the project. Arbitrary quotas, and the unyielding application
of those quotas, did not support the stated objective of ensuring equal access to city contracting opportunities. The Croson
Court said nothing about the constitutionality of flexible subcontracting goals based upon the availability of MBEs to perform the scopes of the contract in the government’s local
marketplace. The federal DBE Program, as discussed below,
avoids these pitfalls. Part 26 “provides for a flexible system of
contracting goals that contrasts sharply with the rigid quotas
invalidated in Croson.”234
While strict scrutiny is designed to require clear articulation of the evidentiary basis for race-based decision making
and careful adoption of remedies to address discrimination,
it does not, as Justice O’Connor stressed, have to be an impossible test that no proof can meet. Strict scrutiny need not be
“fatal in fact.”235
Preferences for Women
Courts usually review gender-based government decision
making under “intermediate scrutiny,” which requires that
gender-based classifications be supported by an “exceedingly
persuasive justification” and be “substantially related” to the
objective. Whether affirmative action procurement programs
that benefit women are subject to the lesser constitutional
standard of “intermediate scrutiny” has yet to be settled by the
Supreme Court.236 Most courts have applied intermediate
scrutiny to local program preferences for women,237 and then
evaluated the female preference under that standard.238 This
may be a distinction without meaningful difference, as only one
post-Croson court has upheld gender-based provisions while

234Western States Paving Co., Inc. v. Washington Department of Transportation,
407 F.3d 983, 994 (9th Cir. 2005), cert. denied, 546 U.S. 1170 (2006).
235See Adarand III, 515 U.S. at 237.
236Cf. United States v. Virginia, 518 U.S. 515 (1996) (applying standard of
“exceedingly persuasive justification” in striking down Virginia Military
Institute’s males only admissions policy); Northern Contracting III, 473
F.3d at 720 (“IDOT does not argue for a more permissive standard for its gender-based initiatives and therefore we will apply strict scrutiny to the entire
program.”).
237See, e.g., Associated Utility Contractors of Maryland, Inc. v. Mayor and City
Council of Baltimore, 83 F.Supp.2d 613, 620 (D. Md. 2000) (Baltimore I); but see
Brunet v. City of Columbus, 1 F.3d 390, 404 (6th Cir. 1993), cert. denied sub nom
Brunet v. Tucker, 510 U.S. 1164 (1994) (applying strict scrutiny).
238See, e.g., Northern Contracting, Inc. v. Illinois Department of Transportation, 2004
U.S. Dist. LEXIS, 3226, *44 (N.D. Ill., Mar. 3, 2004) (Northern Contracting I)
(women’s status as presumptively socially disadvantaged passes intermediate
scrutiny); W.H. Scott Construction Co., Inc. v. City of Jackson, Mississippi, 199
F.3d 206, 215 n.9 (5th Cir. 1999); Engineering Contractors Association of South
Florida, Inc. v. Metropolitan Dade County, 122 F.3d 895, 907–910 (11th Cir.
1997) (Engineering Contractors II); Concrete Works IV, 36 F.3d at 1519; Contractors
Association of Eastern Pennsylvania v. City of Philadelphia, 6 F.3d 990. 1009 (3rd
Cir. 1993) (Philadelphia II); Coral Construction Co. v. King County, 941 F.2d. 910,
930–31 (9th Cir. 1991); H.B. Rowe, Inc. v. Tippett, 2008 U.S. Dist. Lexis 100569,
*25 (E.D. N.C. 2008).

striking down race-based measures.239 Further, as observed by
the Seventh Circuit Court of Appeals, applying intermediate
scrutiny to gender “creates the paradox that a public agency may
provide stronger remedies for sex discrimination than for race
discrimination; it is difficult to see what sense that makes.”240
In any event, courts reviewing the constitutionality of the
DBE program have applied strict scrutiny to the gender-based
preference.241 The Ninth Circuit noted that “intermediate
scrutiny would not yield a different result than that obtained
under strict scrutiny’s more stringent standard.”242 Therefore,
state DOTs would be wise to meet the rigors of strict scrutiny
for gender preferences.
Establishing a “Strong Basis in Evidence”
for Local Race-Conscious Contracting Programs
The Croson Court’s guidance regarding the type of evidence
necessary to support a race-conscious contracting program
gave rise to the “disparity study.” Dozens of cities, states, and
other local entities engaged consultants to conduct studies
to provide statistical and anecdotal evidence of discrimination against MBEs and WBEs. These studies used various
approaches to estimating the availability of “ready, willing,
and able” MBEs and WBEs; determining the entity’s utilization
of such firms as prime contractors and subcontractors on its
projects; analyzing whether there was a large and statistically
significant disparity between availability and utilization; and
gathering anecdotal information about the experiences of
MBEs and WBEs on public and private contracts.
Despite millions of dollars spent on such analyses, the results
were often econometrically unsound,243 politically motivated,244
and legally inadequate. For nearly 15 years after Croson, the fed-

239

Coral Construction, 941 F.2d at 932 (applying intermediate scrutiny); cf. Western
States, 407 F.3d. at 991 n.6 (no need to conduct a separate analysis of sex-based classifications under intermediate scrutiny because it would not yield a different result
from strict scrutiny); F. Buddie Contracting Ltd., v. Cuyahoga Community College
District, 31 F.Supp.2d. 571, 584 n.18 (N.D. Oh. 1998) (“If Plain-tiff had made the
requisite showing of imminent harm this Court is convinced that . . . CCC’s FBE
program would likewise fail [as did the MBE program].”).
240Builders Association of Greater Chicago v. County of Cook, 256 F.3d 642, 644
(7th Cir. 2001) (Cook II).
241Adarand Constructors, Inc. v. Slater, 228 F.3d 1147, 1163 (10th Cir. 2000)
(Adarand VII), cert. granted, 532 U.S. 941, then dismissed as improvidently
granted, 534 U.S. 103 (2001) (applying a compelling interest analysis); Sherbrooke Turf, Inc. v. Minnesota Department of Transportation, 345 F.3d. 964, 969
(8th Cir. 2003), cert. denied, 541 U.S. 1041 (2004) (same); Northern Contracting,
Inc. v. Illinois Department of Transportation, 473 F.3d 715, 720 (7th Cir. 2007)
(Northern Contracting III) (same).
242Western States, 407 F.3d at 990 n.6.
243“Econometrics is the field of economics that concerns itself with the application of statistical inference to the empirical measurement of relationships postulated by economic theory.” (p. 1), Greene, William H. 1997. Econometric
Analysis, 3rd ed. Upper Saddle River, New Jersey: Prentice Hall.
244See, e.g., Associated General Contractors of America v. City of Columbus, 936 F.
Supp. 1363, 1431–33 (S.D. Ohio 1996) (“political pressure played a role in the
city’s adoption” of the M/WBE program and the study consultants).

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

eral courts had struck down almost every local M/WBE program for lacking sufficient evidence of discrimination and often
adopting insufficiently narrowly tailored remedies.245
Loss of race-conscious remedies led to almost immediate and
drastic reductions in the participation of M/WBEs as public
subcontractors. For example, the City of Richmond’s minority
business participation plummeted 93% within the first year
after Croson enjoined its program.246 Dramatic declines in
minority business utilization also occurred in Atlanta (60%);247
Fulton County, Georgia (90%);248 Philadelphia (97%);249 Hillsborough County, Florida (99%);250 Tampa (99%);251 San Jose,
California (80%);252 Cook County, Illinois (70%);253 and Elyria,
Ohio (a suburb of Cleveland) (98%).254 Large declines were
reported as well by officials in Detroit,255 Columbus,256 and
Washington, D.C.257
Similar decreases were observed when DBE utilization
mandated on federally assisted transportation projects was
compared to M/WBE utilization in the same state on state
funded transportation projects without race-conscious goals.
Data from 1996 for Arizona, Arkansas, Connecticut, Delaware, Louisiana, Michigan, Missouri, Nebraska, Oregon, and
Rhode Island, for example, showed that DBE participation on
Federal-aid contracts was several times higher than M/WBE
participation on state-funded contracts in the same state. It

245See, e.g., Associated General Contractors of Ohio, Inc. v. Drabik, 214 F.3d 730
(6th Cir. 2000); Associated General Contractors of Maryland, Inc. v. Mayor of
Baltimore, 83 F.Supp.2d 613 (D. Md. 2000) (Baltimore I); Contractors Association of Eastern Pennsylvania, Inc. v. City of Philadelphia, 91 F.3d 586 (3d Cir.
1996) (Philadelphia II); Engineering Contractors Association of South Florida,
Inc. v. Metro. Dade County, 122 F.3d 895 (11th Cir. 1997) (Engineering Contractors II); O’Donnell Construction Co. v. District of Columbia, 963 F.2d 420
(D.C. Cir. 1992); W.H. Scott Construction Co. v. City of Jackson, 199 F.3d 206
(5th Cir. 1999); Webster v. Fulton County, 51 F.Supp.2d 1354 (N.D. Ga. 1999),
aff’d, 218 F.3d 1267 (11th Cir. 2000).
246Brimmer and Marshall Economic Consultants, Inc. June 1990. Public Policy
and Promotion of Minority Economic Development: City of Atlanta and Fulton
County, Georgia: Part I. Washington, D.C., p. 10.
247Id.
248Id. at 10–11.
249United States Commission on Minority Business Development. 1992, Final
Report (Washington, D.C.: U.S. Government Printing Office), at 99.
250Id.
251Id.
252Id.
253Expert Report, Builders Association of Greater Chicago v. City of Chicago, et al.,
No. 96C 1122 (June 2003).
254Jon Wainwright telephone interview with L. Johnson, City of Elyria Office of
Contract Compliance, Feb. 27, 1998.
255———. Telephone interviews with K. Dones-Carter and D. Teeter, City
Council Research Department, City of Detroit Feb. 27, 1998.
256———. Telephone interview with M. Carter, City of Columbus Equal Business Opportunity Commission, Feb. 27, 1998.
257———. Telephone interview with B. Kim, Staff Attorney, Maryland Department of Transportation, concerning the Washington Suburban Sanitary
Commission, Feb. 27, 1998.

was 11 times higher in Michigan; over 13 times higher in
Delaware; and over 120 times higher in Rhode Island.258
Whatever the weaknesses in the disparity studies, it became
clear that, absent government intervention, ready, willing,
and able minority- and women-owned firms were excluded
from subcontracting opportunities on government projects.
Even the use by agencies of race-neutral measures such as
technical assistance, increased outreach, and “unbundling”
large projects failed to ensure equal access to contracting
opportunities without DBE goals.259
A different approach was clearly necessary if such dramatic
declines in public contracting participation by minorities and
women were to be forestalled. In 1999, a sea change occurred
in the way the issue of contracting affirmative action was
approached by its proponents.
First, the U.S.DOT revised its DBE Program in 1998 to
address strict scrutiny as required by the Supreme Court in
Adarand v. Peña.260 Second, in 1997, a local government
finally employed an improved disparity study method, which
we refer to as the “law and economics approach,” to defend
against a challenge to the constitutionality of its M/WBE Program. The City and County of Denver’s Program defense
relied primarily on expert reports and testimony derived
from an economic model of business discrimination.261 Denver recognized that the proper inquiry is not only whether
disparities remain despite the operation of its affirmative
action program (a statistical question to which many disparity studies, then and now, continue to limit themselves) but
also whether disparities remain when remedial intervention
is not present in the marketplace, as reflected by M/WBE participation on contracts without affirmative action goals in the
public sector, the private sector, or both.
The results of this improved approach to conducting disparity research and defending challenges to race-conscious
contracting programs have been dramatic for local programs.
Denver’s M/WBE Program was upheld by the Tenth Court of
Appeals, and the Supreme Court declined review.262 The City
of Chicago’s M/WBE Program for local construction contracts was also held to meet compelling interest using this
framework.263

258

———. Telephone interview with Attorney D. Goldberg, Office of General
Counsel, U.S. Department of Transportation, February 28, 1998; and Statement
of Nancy E. McFadden, General Counsel, U.S. Department of Transportation,
before the Subcommittee on Constitution, Federalism, and Property Rights of
the U.S. Senate Committee on the Judiciary. Sept. 30, 1997, at 2.
259See, e.g., NERA Economic Consulting. 2006b. Race, Sex, and Business Enterprise: Evidence from the State of Maryland (Final Report), Chapter IX.
260515 U.S. 200 (1995) (applying strict scrutiny to federal legislation).
261Denver had commissioned disparity studies in 1990, 1991, 1995, and 1997.
262Concrete Works of Colorado, Inc. v. City and County of Denver, 321 F.3d 950
(10th Cir. 2003), cert. denied, 540 U.S. 1027 (2003) (Concrete Works IV).
263Builders Association of Greater Chicago v. City of Chicago, 298 F.Supp.2d 725
(N.D. Ill. 2003).

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

The Denver and Chicago decisions provide the most
detailed analysis of the evidence necessary to establish that the
government would be a passive participant in a discriminatory marketplace in the absence of race-based remedies. Particularly in light of the Ninth Circuit’s opinion in Western
States, these decisions provide important guidance to state
DOTs in determining what evidence is relevant to whether
DBEs experience discrimination in their marketplaces such
that race-conscious subcontracting goals are needed to level
the playing field for DBEs.
Concrete Works, Inc. v. City and County of Denver.
Denver’s local program had been challenged several years
earlier,264 and the trial was held in February 1999. Denver
adopted an ordinance in 1990 that provided for annual goals
of 16% for MBEs and 12% for WBEs in construction contracts, and 10% for both MBEs and WBEs in professional
design and construction services contracts. Bidders were to
meet contract-specific goals or make good faith efforts to do
so. The city revised the program in 1996 and 1998, reducing
the annual goals for both MBEs and WBEs in construction
contracts to 10% and prohibiting M/WBE prime contractors
from counting self-performed work toward the goals. After
conducting surveys and hearings, Denver extended the program and increased the goals in 1998.
At trial, Denver introduced evidence of its contracting activities dating back to the early 1970s. This consisted of reports of
federal investigations into the utilization and experiences of
local MBEs and of the City’s early affirmative action efforts.
M/WBE participation dramatically increased when the city
adopted its first MBE ordinance in 1984.
To comply with Croson, the city commissioned a study to
assess the propriety of the program. The 1990 study found large
disparities between the availability and utilization of M/WBEs
on city projects without goals. It likewise found large disparities on private sector projects without goals. Interviews and testimony revealed continuing efforts by white male contractors
to circumvent the goals. After reviewing the statistical and
anecdotal evidence, the city adopted the 1990 Ordinance. A
1991 study of goods, services, and remodeling industries also
found large disparities for city contracts not subject to goals.

264

Plaintiff Concrete Works of Colorado, Inc. (CWC), a construction firm owned
by a white male, sued the City in 1992, alleging that it had been denied three contracts for failure to meet the goals or to make good faith efforts and seeking
injunctive relief and money damages. The district court granted the City’s
motion for summary judgment. Concrete Works of Colorado, Inc. v. City &
County of Denver, 823 F.Supp. 821 (D. Colo. 1993) (Concrete Works I). The Tenth
Circuit reversed, holding that genuine issues of material fact precluded summary
judgment. Concrete Works of Colorado, Inc. v. City & County of Denver, 36 F.3d
1513 (10th Cir. 1994) (Concrete Works II). The district court, after a bench trial,
held the ordinance to be unconstitutional. Concrete Works of Colorado, Inc. v.
City & County of Denver, 86 F.Supp. 2d 1042 (D. Colo. 2000) (Concrete Works
III). Denver appealed.

When the Tenth Circuit reversed and remanded for trial in
Concrete Works II, the city commissioned another study. The
1995 study used U.S. Census Bureau data to determine MBE
and WBE availability and utilization in the construction and
design industries in the Denver Metropolitan Statistical Area
(MSA). It calculated separate disparity indices for firms with
and without employees. Census data were also used to examine
average revenues per employee and rates of self-employment.
Disparities in self-employment rates persisted even after holding education and length of work experience constant. A telephone survey to determine the availability and utilization of
M/WBEs in the Denver MSA showed large disparities in the
construction and professional design industries. The 1995 study
included discussion of a 1993 study for the Denver Housing
Authority which found disparities for M/WBEs in some areas
in some years, including those when it implemented an affirmative action program, and a 1992 study for the Regional Transportation District that found large disparities for both prime
and subcontracting in the Denver marketplace. Based upon this
evidence, the city enacted the 1996 Ordinance.
In 1997, Denver commissioned another study to examine
whether discrimination limited the opportunities of M/WBEs
in construction projects of the type undertaken by the city.
The court found this Study used a “more sophisticated”
method265 to calculate availability by: (1) specifically determining the city’s geographic and procurement marketplace;
(2) using Dun & Bradstreet’s Marketplace data to obtain the
total number of available firms and numerous directories to
determine the number of M/WBEs; (3) conducting surveys to
adjust for possible misclassification of the race and gender
of firms; and (4) presenting a final result of weighted averages
of availability for each racial group and women for both prime
and subcontracts.
The 1997 study then compared M/WBE availability and utilization in the Colorado construction industry. It also examined
1987 Census data from the Survey of Minority-Owned Business
and the Survey of Women-Owned Businesses, the most current then available. All comparisons yielded large and statistically significant disparities. The 1997 study also found that
the potential availability of M/WBEs, as measured by the rates
at which similarly situated white males form businesses, was significantly greater than their actual availability. The study next
examined whether minorities and women in the construction
industry earned less than white males with similar characteristics. Large and statistically significant disparities were found for
all groups except Asian Americans. A mail survey was conducted to obtain anecdotal evidence of the experiences of MBEs
and WBEs and non-M/WBEs in the construction industry.
Again, with the exception of Asian Americans, minorities,

265

321 F.3d at 966.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

and women with similar characteristics experienced much
greater difficulties than did their white male counterparts. A
follow-up telephone survey indicated that the disparities were
even greater than first indicated. Based upon the 1997 study,
the city enacted the 1998 Ordinance.
At trial, the city also introduced additional, comprehensive
anecdotal evidence. M/WBEs testified that they experienced
difficulties in prequalifying for private sector jobs; their low
bids were rejected; they were paid more slowly than nonM/WBEs; they were charged more for materials than nonM/WBEs; they were often required to do additional work not
required of white males; and there were barriers to joining
trade unions and associations. There was extensive testimony
detailing the difficulties M/WBEs suffered in obtaining lines
of credit. The “most poignant” testimony involved blatant
harassment suffered at work sites, including physical assaults.
The trial court found for the plaintiff.
The Tenth Circuit reversed and directed the entry of judgment for Denver. The district court’s legal framework “misstate[d] controlling precedent and Denver’s burden at trial.”266
The government need not prove that the statistical inferences of discrimination are “correct.” Strong evidence supporting the government’s determination that remedial action
is necessary need not be “irrefutable or definitive” proof of
discrimination. Statistical evidence creating inferences of discriminatory motivations is sufficient and therefore evidence
of marketplace discrimination can be used to meet strict
scrutiny.267 It is the plaintiff who must prove by a preponderance of the evidence that such proof does not support those
inferences.
Croson does not require that each group included in the
ordinance suffer equally from discrimination. In contrast to
Richmond, Denver introduced evidence of bias against each
group; that is sufficient.268
Nor must Denver demonstrate that the “ordinances will
change discriminatory practices and policies” in the local
marketplace; such a test would be “illogical” because firms
could defeat the remedial efforts simply by refusing to cease
discriminating.269
Next, a municipality need not prove that “private firms
directly engaged in any discrimination in which Denver passively participates do so intentionally, with the purpose of disadvantaging minorities and women. . . . Denver’s only burden
was to introduce evidence which raised the inference of discriminatory exclusion in the local construction industry and
link its spending to that discrimination. . . . Denver was under
no burden to identify any specific practice or policy that

resulted in discrimination. Neither was Denver required to
demonstrate that the purpose of any such practice or policy
was to disadvantage women or minorities. To impose such a
burden on a municipality would be tantamount to requiring
proof of discrimination and would eviscerate any reliance the
municipality could place on statistical studies and anecdotal
evidence.”270 Similarly, the trial court was wrong to reject the
statistical evidence because such evidence cannot identify the
individuals responsible for the discrimination.271
Contrary to the district court’s conclusion, the burden
of compliance need not be placed only upon those firms
directly responsible for the discrimination. The proper focus
is whether the burden on third parties is “too intrusive” or
“unacceptable.”272
Croson’s admonition that “mere societal” discrimination is
not enough to meet strict scrutiny273 does not apply where the
government presents evidence of discrimination in the industry targeted by the program. “If such evidence is presented, it
is immaterial for constitutional purposes whether the industry discrimination springs from widespread discriminatory
attitudes shared by society or is the product of policies, practices, and attitudes unique to the industry. . . . The genesis of
the identified discrimination is irrelevant.” The trial court
was wrong to require Denver to “show the existence of specific discriminatory policies and that those policies were more
than a reflection of societal discrimination.”274
The court further rejected the notion that a municipality
must prove that it is itself guilty of discrimination to meet its
burden. Denver can show its compelling interest by “evidence
of private discrimination in the local construction industry
coupled with evidence that it has become a passive participant in that discrimination . . . [by] linking its spending practices to the private discrimination.”275 Denver further linked
its award of public dollars to discriminatory conduct through
the testimony of M/WBEs that identified general contractors
who used them on City projects with M/WBE goals but
refused to use them on private projects without goals.
The court then turned to the evidence of discrimination
against M/WBEs in the market for commercial credit. The
lending discrimination studies and business formation studies are relevant and probative because they show a strong link
between the disbursement of public funds and the channeling of those funds due to private discrimination. “Evidence
that private discrimination results in barriers to business formation is relevant because it demonstrates that M/WBEs are

270

Id. at 971.
Id. at 973.
272Id.
273See 488 U.S. at 497.
274321 F.3d at 976.
275
Id. at 977.
271

266

Id. at 970.
Id. at 975.
268Id. at 976.
269
Id. at 973 (emphasis in the original).
267

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

precluded at the outset from competing for public construction contracts. Evidence of barriers to fair competition is also
relevant because it again demonstrates that existing M/WBEs
are precluded from competing for public contracts.”276 Plaintiff
failed to present evidence to rebut the lending discrimination
data, instead resting on its belief that such evidence is irrelevant.
Contrary to the trial court’s ruling, the business formation studies were not flawed because they did not control for “quality of
education,” “culture” and “religion.” Plaintiff failed not only to
define such vague terms but also to conduct its own study controlling for these factors or to produce expert testimony that to
do so would eliminate the disparities.277
The district court also erred in rejecting the disparity studies
because it did not control for firm size, area of specialization,
and whether the firm had bid on city projects. The circuit court
agreed with Denver’s experts that while it may be true that
M/WBEs are smaller in general than white male firms, most
construction firms are small and can expand and contract to
meet their bidding opportunities. Importantly, Denver established that size and experience are not race- and gender-neutral
variables: “M/WBE construction firms are generally smaller and
less experienced because of discrimination.”278 Further, plaintiff
failed to conduct any study showing that the disparities disappear when such variables are held constant. Likewise, it presented no evidence that controlling for firm specialization
explained the disparities. “Additionally, we do not read Croson
to require disparity studies that measure whether construction
firms are able to perform a particular contract.”279
That M/WBEs were overutilized on city projects with goals
goes only to the weight of the evidence because it reflects the
effects of a remedial program. Denver presented evidence
that goals and nongoals projects were similar in purpose and
scope and that the same pool of contractors worked on both
types. “Particularly persuasive” was evidence that M/WBE
participation declined significantly when the program was
amended in 1989. The “utilization of M/WBEs on City projects has been affected by the affirmative action programs that
have been in place in one form or another since 1977. Thus,
the non-goals data is the better indicator of discrimination in
public contracting” and supports the position that discrimination existed before the enactment of the ordinances.280
There is no requirement that anecdotal testimony be verified. “Denver was not required to present corroborating evidence and CWC was free to present its own witnesses to
either refute the incidents described by Denver’s witnesses or
to relate their own perceptions on discrimination in the Den-

Builders Association of Greater Chicago v. City of Chicago.
After more than seven years of pretrial motions and discovery and almost seven weeks of trial, the federal district court
found that the City of Chicago proved its compelling interest
in remedying identified discrimination against black-,
Hispanic- and women-owned construction firms.283 The
court relied in large part on the statistical analysis that was
similar to that upheld in Concrete Works. However, the program as implemented in 2003, which had not been reviewed
since its inception in 1990, was not sufficiently narrowly tailored to meet strict constitutional scrutiny. The court stayed
the final order against operation of the Program for construction contracts for six months to permit the city to review the
ruling and adopt a new program.
The opinion first reviews the historical proof of discrimination against minorities, particularly blacks, in the Chicago construction industry. While not legally mandated, Chicago was a
segregated city and “City government was implicated in that
history.” After the election of Harold Washington as the
first black mayor, several reports focused on the exclusion
of minorities and women from city procurement opportunities as well as pervasive employment discrimination by
city departments. Mayor Washington imposed an executive
order mandating that at least 25% of city contracts be awarded
to minority-owned businesses and 5% to women-owned
businesses.
In the wake of Croson, Chicago commissioned a Blue Ribbon Panel to recommend an effective program that would survive constitutional challenge. Based upon the panel’s report,
and 18 days of hearings with over 40 witnesses and 170 exhibits,
Chicago adopted a new program in 1990 that retained the
25%/5% goals; added a Target Market, wherein contracts were
limited to bidding only by M/WBEs; and provided that larger
construction contracts could have higher goals.
The Builders Association of Greater Chicago challenged
this ordinance in 1996. A similar suit was filed against Cook

276

281

Id.
Id. at 979.
278Id. at 983 (emphasis in the original).
279Id. at 987–88 (emphasis in the original).
280
Id.
277

ver construction industry.”281 This “failure” of the legislative
body to somehow verify testimony had been a favorite shibboleth of plaintiffs in other cases.282
Finally, as for the narrow tailoring requirement of strict
scrutiny, the court held that because plaintiff had waived its
claim that the ordinances were not narrowly tailored at an
earlier stage in this litigation, the district court’s holding in
Concrete Works I that the ordinances satisfy the other prong
of strict scrutiny was affirmed.

Id. at 989.
See, e.g., Builders Association of Greater Chicago v. County of Cook, 123
F.Supp.2d 1087 (N.D. Ill. 2000) (BAGC v. Cook).
283Builders Association of Greater Chicago v. City of Chicago, 298 F. Supp.2d 725
(N.D. Ill. 2003).
282

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

County’s Program, which was declared unconstitutional
in 2000.284
The court held that the playing field for minorities and
women in the Chicago area construction industry was still
not level. That does not mean, however, that speculation
about the greater number of M/WBEs that did exist in the
absence of discrimination is sufficient to support a current
race-based remedy. At the same time, that there was perhaps
overutilization of M/WBEs on city projects was not sufficient
to abandon remedial efforts, as that result is “skewed by the
program itself.”
The city presented a great amount of statistical evidence.
Despite the plaintiff’s attacks about over-aggregation and disaggregation of data and which firms were included in the
analyses, “a reasonably clear picture of the Chicago construction industry emerged. . . . While the size of the disparities
was disputed, it is evident that minority firms, even after
adjustment for size, earn less and work less, and have less sales
compared to other businesses.”
Further, while it is somewhat unclear whether disparities
for Asians and Hispanics result from discrimination or the language and cultural barriers common to immigrants, there were
two areas “where societal explanations do not suffice.” The first
is the market failure of prime contractors to solicit M/WBEs for
nongoals work. Chicago’s evidence was consistent with that
presented of the effects of the discontinuance or absence of
race-conscious programs throughout the country. Not only
did the plaintiff fail to present credible alternative explanations
for this universal phenomenon but also this result “follows as
a matter of economics. . . . [P]rime contractors, without any
discriminatory intent or bias, are still likely to seek out the subcontractors with whom they have had a long and successful
relationship. . . . [T]he vestiges of past discrimination linger on
to skew the marketplace and adversely impact M/WBEs disproportionately as more recent entrants to the industry. . . .
[T]he City has a compelling interest in preventing its tax
dollars from perpetuating a market so flawed by past discrimination that it restricts existing M/WBEs from unfettered competition in that market.”
The judge also relied upon the city’s evidence of discrimination against minorities in the market for commercial loans.
Even the plaintiff’s experts were forced to concede that, at
least as to Blacks, credit availability appeared to be a problem.
Plaintiff’s expert also identified discrimination against white
females in one data set.
After finding that Chicago met the compelling interest
prong, the court held that the city’s program was not nar-

rowly tailored to address these market distortions and barriers because:
• There was no meaningful individualized review of M/WBEs’
•
•
•
•
•
•
•

eligibility;
There was no sunset date for the ordinance or any means
to determine a date;
The graduation threshold of $27.5 million was very high
and few firms have graduated;
There was no personal net worth limit;
The percentages operated as quotas unrelated to the number of available firms;
Waivers were rarely granted;
No efforts were made to impact private sector utilization
of M/WBEs; and
Race-neutral measures had not been promoted, such as
linked deposit programs, quick pay, contract downsizing,
restricting prime contractors’ self-performance, reducing
bonds and insurance requirements, local bid preferences
for subcontractors, and technical assistance.

Chicago is the only city ever to have received a stay to
permit revision of its program to meet narrow tailoring. It
amended its ordinance to meet the court’s 2004 deadline and
continues to implement M/WBE subcontracting goals without interruption.
Narrowly Tailoring a Race-Conscious Program
Even if a jurisdiction has a strong basis in evidence to believe
that race-based measures are needed to remedy identified discrimination, the program must be narrowly tailored to that evidence. The courts have repeatedly examined the following factors in determining whether race-based remedies are narrowly
tailored to achieve their purpose:
• The efficacy of race-neutral remedies at overcoming iden•

•

•
•
•

tified discrimination;
The relationship of numerical benchmarks for government
spending to the availability of minority- and women-owned
firms and to subcontracting goal-setting procedures;
The flexibility of the program requirements, including the
provision for good-faith efforts to meet goals and contract
specific goal-setting procedures;
The congruence between the remedies adopted and the
beneficiaries of those remedies;
Any adverse impact of the relief on third parties; and
The duration of the program.285

284

BAGC v. Cook. In contrast to the City of Chicago, Cook County presented very
little statistical evidence and none directed toward establishing M/WBE availability, utilization, economy-wide evidence of disparities, or other proof beyond
anecdotal testimony.

285

United States v. Paradise, 480 U.S. 149, 171 (1987); see also Sherbrooke, 345 F.3d
at 971–972; Drabik, 214 F.3d at 737–738.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

The Fourth Circuit Court of Appeals has described the narrow tailoring requirements as follows:
The preferences may remain in effect only so long as necessary to
remedy the discrimination at which they are aimed; they may not
take on a life of their own. The numerical goals must be waivable
if qualified minority applications are scarce, and such goals must
bear a reasonable relation to minority percentages in the relevant
qualified labor pool, not in the population as a whole. Finally, the
preferences may not supplant race-neutral alternatives for remedying the same discrimination.286

It is imperative that remedies not operate as fixed quotas.287
Firms that fail to meet the subcontracting goals but make good
faith efforts to do so must be eligible for contract awards.288
Further, firms that meet the goals cannot be favored over
those who made good-faith efforts. In Croson, the Court refers
approvingly to the contract-by-contract waivers used in the
U.S.DOT’s DBE Program.289 This feature has been central to
the holding that the DBE Program meets the narrow tailoring
requirement.290
The over- or under-inclusiveness of those persons to be
included in the program is an additional consideration, and
goes to whether the remedies truly target the evil identified.291
The “fit” between the problem and the remedy manifests
in three ways—which groups to include, how to define those
groups, and which persons will be eligible to be included
within those groups.
First, the determination of presumptive social disadvantage of each racial and ethnic group must be based upon the
evidence.292 In striking down the District of Columbia’s
MBE program, the court noted that there were no “findings with respect to discrimination in the construction
industry against Hispanic Americans, Asian Americans,
Pacific Islander Americans, or Native Americans, all of
whom are included in the Act’s definition of ‘minority.’ ”293

The “random inclusion” of groups that may never have
experienced discrimination in the entity’s marketplace may
indicate impermissible “racial politics.”294 Similarly, the
Seventh Circuit, in striking down Cook County’s program,
remarked that a “state or local government that has discriminated just against blacks may not by way of remedy
discriminate in favor of blacks and Asian Americans and
women.”295
However, at least one court has held that some quantum
of evidence of discrimination for each group is sufficient.
The Tenth Circuit held that Croson does not require that
each group included in the ordinance suffer equally from
discrimination.296
Next, the level of specificity at which to define beneficiaries
must be addressed. Approaches range from a single goal like
the DBE Program that includes all racial and ethnic minorities
and white women297 to separate goals for each minority group
and women.298 Ohio’s Program was specifically faulted for
lumping together all “minorities,” with the court questioning
the legitimacy of forcing black contractors to share relief with
recent Asian immigrants.299
Third, program remedies should be limited to those
firms that have a nexus to the harms sought to be ameliorated. Some courts have held that state and local programs
must provide proof that the individual owner of a
firm seeking to benefit from the program has suffered
discrimination.300
Failure to make “neutral” changes to contracting and procurement policies and procedures that disadvantage all small
businesses may result in a finding that the program unduly
burdens non-M/W/DBEs.301 However, “innocent” parties can

294

Webster, 51 F.Supp.2d at 1380–1381.
BAGC v. Cook County, 256 F.3d at 646 (no evidence of discrimination against
any group other than Blacks).
296
Concrete Work IV, 321 F.3d at 9761.
297See 49 C.F.R. §26.45(h) (overall goal must not be subdivided into groupspecific goals).
298See Engineering Contractors II, 122 F.3d at 900 (separate goals for blacks,
Hispanics and women).
299Associated General Contractors of Ohio v. Drabik, 214 F.3d 730, 737 (6th
Cir. 2000) (Drabik II); see also Western States, 407 F.3d at 998 (“We have previously expressed similar concerns about the haphazard inclusion of minority
groups in affirmative action programs ostensibly designed to remedy the
effects of discrimination.”).
300See, e.g., Drabik I, 50 F.Supp.2d at 766 (no “consideration given to whether the
particular MBE seeking a racial preference has suffered from the effects of past
discrimination by the state or prime contractors.”); Main Line Paving Co., Inc. v.
Board of Education, 725 F.Supp. 1349, 1362 (E.D. Penn. 1989) (“program contains no provisions to identify those who were victims of past discrimination and
to limit the program’s benefits to them”).
301See Engineering Contractors Assoc. of South Florida, Inc. v. Metropolitan Dade
County, 943 F.Supp. 1546, 1581–1582 (S.D. Fla. 1996) (Engineering Contractors I) (County chose not to change its procurement system).
295

286

Maryland Troopers Association, Inc. v. Evans, 993 F.2d 1072, 1076–77
(4th Cir. 1993) (citations omitted).
287See 49 C.F.R 26.43 (quotas are not permitted and set-aside contracts may be
used only in limited and extreme circumstances “when no other method could
be reasonably expected to redress egregious instances of discrimination”).
288See, e.g., BAGC v. Chicago, 298 F. Supp.2d at 740 (“Waivers are rarely or never
granted . . . The City program is a rigid numerical quota . . . formulistic percentages cannot survive strict scrutiny.”).
289488 U.S. at 508; see also Adarand VII, 228 F.3d at 1181.
290See, e.g., Sherbrooke, 345 F.3d at 972.
291Association for Fairness in Business, Inc. v. New Jersey, 82 F.Supp.2d 353, 360
(D.N.J. 2000).
292Contractors Association of Eastern Pennsylvania v. City of Philadelphia, 6 F.3d
990, 1007 (3rd Cir. 1993) (Philadelphia II) (strict scrutiny requires data for each
minority group; data was insufficient to include Hispanics, Asians or Pacific
Islanders or Native Americans); cf. Northeastern Florida Chapter of the AGC v.
Jacksonville, 508 U.S. 656, 660–661 (1993) (new ordinance narrowed to blacks
and women).
293
O’Donnell, v. District of Columbia, 963 F.2d at 427.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

be made to share some of the burden of the remedy for eradicating racial discrimination.302
Race-based programs must have duration limits.303 A racebased remedy must “not last longer than the discriminatory
effects it is designed to eliminate.”304 “Narrow tailoring also
implies some sensitivity to the possibility that a program might
someday have satisfied its purposes.”305 One of the factors leading to the court’s holding that the City of Chicago’s M/WBE
Program was no longer narrowly tailored was the lack of a sunset provision.306 As recently reiterated by the Eleventh Circuit
Court of Appeals, the “unlimited duration of the [District’s]
racial goals also demonstrates a lack of narrow tailoring. . . .
While the District’s effort to avoid unintentional discrimination
should certainly be ongoing, its reliance on racial classifications
should not.”307 In contrast, the U.S.DOT DBE Program’s periodic review by Congress has been repeatedly held to provide
adequate durational limits.308
This means that affirmative action programs must be regularly reviewed to ensure that a strong basis in evidence
remains to use the highly suspect tool of race in government
decision making. Very old studies will not suffice to support
current programs.309 The City of Augusta, Georgia’s program
failed to meet strict scrutiny, because “the [M/WBE] Program
is still in place 13 years after the [Disparity] Study was compiled without any further investigation into the underlying

302Concrete Works IV, 321 F.3d at 973; Wygant v. Jackson Board of Education, 476
U.S. 267, 280–281 (1986); Adarand VII, 228 F.3 at 1183 (“While there appears
to be no serious burden on prime contractors, who are obviously compensated
for any additional burden occasioned by the employment of DBE subcontractors, at the margin, some non-DBE subcontractors such as Adarand will be
deprived of business opportunities”); cf. Northern Contracting, Inc. v. Illinois
Department of Transportation, 2005 U.S. Dist. LEXIS 19868, *5 (Sept. 8, 2005)
(Northern Contracting II) (“Plaintiff has presented little evidence that it [sic] has
suffered anything more than minimal revenue losses due to the program.”);
Western States, 407 F.3d at 995.
303Drabik I, 50 F.Supp.2d at 766 (S.D. Ohio 1999) (“The 1980 MBE Act is unlimited in duration. . . . There is no evidence that, at any time during the nearly two
decades the Act has been in effect, the General Assembly has ever reconsidered
whether a compelling state interest exists which would justify the continuation
of a race-based remedy.”).
304515 U.S. at 238.
305Drabik II, 214 F.3d at 737.
306BAGC v. Chicago, 298 F.Supp.2d at 739; see also O’Donnell, 963 F.2d at 428 (the
District “reenacted the law in 1980 and deleted the sunset provision.
Fifteen years have now passed since the District put its minority contracting program into effect. The District has not suggested that an end is in sight.”). Webster, 51 F. Supp. 2d at 1382 (telling disqualifier was that the County had been
implementing a “quota” program since 1979 with no contemplation of program
expiration).
307Virdi v. DeKalb County School District, 2005 U.S. App. LEXIS 11203. At *18
11th Cir. June 13, 2005; see also Thompson Building Wrecking Co., Inc. v. City of
Augusta, Georgia, 2007 U.S. Dist. LEXIS 27127, 9 (S.D. Ga. 2007).
308See Western States, 407 F.3d at 995; H.B. Rowe, 2008 U.S. Dist. Lexis at *27
(state M/WBE program is reviewed every 5 years).
309See id. (old evidence was insufficient); Baltimore I, 83 F.Supp.2d at 620 (10year-old evidence to justify 1999 goals is equivalent to no evidence); Drabik I.

reasons for creating a program, and without any sunset or
expiration provision.”310 Likewise, Chicago’s program was
based on 14-year-old information, which while it supported
the program adopted in 1990, no longer was sufficient standing alone to justify the city’s efforts in 1994.311 How old is too
old is not definitively answered,312 but state DOTs would be
wise to analyze data at least once every five or six years.
Burdens of Production and Proof
Unlike most legal challenges, the state DOT in an Adarand
challenge has the initial burden of producing a “strong basis
in evidence” in support of its DBE Program. That is, the government has the burden to put forth evidence of its compelling interest in employing race and gender as decisionmaking factors.313 However, the plaintiff must then proffer
evidence to rebut the government’s case, and bears the ultimate burden of production and persuasion that the affirmative action program is unconstitutional.314 A plaintiff “cannot
meet its burden of proof through conjecture and unsupported
criticism of [the government’s] evidence.”315 For example, in
the challenge to the Minnesota and Nebraska DBE Programs,
“plaintiffs316 presented evidence that the data was susceptible
to multiple interpretations, but they failed to present affirmative evidence that no remedial action was necessary because
minority-owned small businesses enjoy non-discriminatory
access to and participation in highway contracts. Thus, they
failed to meet their ultimate burden to prove that the DBE
Program is unconstitutional on this ground.”317
Likewise, in rejecting cross motions for summary judgment, the court in the challenge to the City of Memphis’ local
M/WBE Program, held that:
Defendant has produced a study which concludes that the City
discriminated in the award of construction contracts. An enormous amount of data was analyzed and organized into the final

310

Thompson. v. Augusta, at *9.
BAGC v. Chicago, 298 F.Supp.2d at 739.
312See, e.g., Drabik I, 50 F.Supp.2d at 745, 750 (“A program of race-based benefits cannot be supported by evidence of discrimination which is now over twenty
years old. . . . The state conceded that it had no additional evidence of discrimination against minority contractors, and admitted that during the nearly two
decades the Act has been in effect, it has made no effort to determine whether
there is a continuing need for a race-based remedy.”); Brunet, 1 F.3d at 409 (14year-old evidence of discrimination “too remote to support a compelling governmental interest.”).
313See, e.g., Phillips & Jordan, Inc. v. Watts, 13 F.Supp.2d 1308, 1313 (N.D. Fla. 1998).
314Rothe Development Corporation v. U.S. Department of Defense, 262 F.3d 1306,
1317 (Fed. Cir. 2001) (Rothe V); Adarand VII, 228 F.3d at 1166; see also Scott, 199
F.3d at 219, Philadelphia III, 91 F.3d at 597.
315Concrete Works IV, 321 F.3d at 989; see also H.B. Rowe, 2008 U.S. Dist. Lexis at
*27.
316The plaintiffs in both cases were represented by the same counsel and
attempted to rely upon the same consultant.
317
Sherbrooke, 345 F.3d at 970
311

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

79
disparity study, including data about the non-WMBE and
WMBE contractors in the City. In producing the study, Defendant introduces evidence which raises the inference of discriminatory exclusion in the local construction industry and
links its public spending to that discrimination. . . . In a case
such as this, the party opposing the use of a remedial race classification must introduce credible, particularized evidence to
rebut the City’s initial showing of the existence of a compelling
interest.318

scrutiny.324 Just as in the local government context, when
evaluating federal legislation and regulations:
[t]he strict scrutiny test involves two questions. The first is
whether the interest cited by the government as its reason for
injecting the consideration of race into the application of law is
sufficiently compelling to overcome the suspicion that racial
characteristics ought to be irrelevant so far as treatment by the
government is concerned. The second is whether the government has narrowly tailored its use of race, so that race-based classifications are applied only to the extent absolutely required to
reach the proffered interest. The strict scrutiny test is thus a recognition that while classifications based on race may be appropriate
in certain limited legislative endeavors, such enactments must be
carefully justified and meticulously applied so that race is determinative of the outcome in only the very narrow circumstances
to which it is truly relevant.325

Therefore, it is not enough for a challenger to criticize the
government’s evidence; it must carry its “ultimate burden of
persuading the court that the [government entity’s] evidence
did not support an inference of prior discrimination and thus
a remedial purpose.”319
Standard of Appellate Review

We now turn to the application of strict scrutiny to the
U.S.DOT DBE Program. In Adarand v. Peña,323 the Court
extended the analysis of strict scrutiny under the Due Process
Clause of the Fourteenth Amendment to federal enactments.
It overruled existing case law that held federal racial classifications to be subject to a less rigorous standard than strict

In the wake of Adarand, Congress reviewed and revised the
DBE Program statute326 and implementing regulations327 for
Federal-aid contracts in the transportation industry. To date,
every court that has considered the issue has found the regulations to be facially constitutional.328
We note that a recent decision from the Federal Circuit
Court of Appeals struck down the Department of Defense
(DOD) Program for Small Disadvantaged Businesses (SDBs).329
The program set an overall annual goal of 5% for DOD contracting with SDBs. The court held that Section 1207,330 which
among other race-conscious remedies provides a 10% bid preference to SDBs, violates strict scrutiny because Congress did not
have a “strong basis in evidence” before it in 2006, upon which
to conclude that the DOD was a passive participant in racial discrimination in relevant markets across the country. The six local
disparity studies upon which DOD primarily relied did not
meet the compelling interest prong, and in any event were not
“before” Congress when it reenacted the program in 2006.
The opinion mostly restates the current strict scrutiny standards and reaffirms that with proper evidence, the federal government can adopt a race-conscious program to remedy

318

324

With one exception, the circuits that have directly addressed
the question have held that the proper standard of review of
a facial challenge to the constitutionality of government
race-based decision making is de novo review.320 The DBE Program has been reviewed under this test.321 The Eleventh Circuit, however, treated the district court’s determination
of the constitutionality of the local legislation as factual
findings and therefore applied the “clearly erroneous”
standard.322

Strict Scrutiny as Applied to
the Disadvantaged Business
Enterprise Program

West Tennessee Chapter of Associated Builders and Contractors, Inc. v. City of
Memphis, 302 F.Supp.2d 860, 864 (W.D. Tenn. 2004).
319Wygant, 476 U.S. at 293.
320See, e.g., Philadelphia III, 91 F.3d at 596 (whether a strong basis in evidence
exists is a question of law);. Scott. v. Jackson, 199 F.3d at 211 (“we review the
court’s findings of fact for clear error; its conclusions of law are reviewable de
novo”); Drabik II, 214 F.3d at 734 (“The constitutionality of a statute is a question of law, reviewable de novo.”); Northern Contracting III, 473 F.3d at 720 (“we
review the district court’s legal conclusion that IDOT’s program is constitutional
de novo and its factual determinations for clear error”); Adarand VII, 228 F.3d
at 1161; Rothe V, 262 F.3d at 1316.
321Northern Contracting III, 473 F.3d at 720 (“we review the district court’s legal
conclusion that IDOT’s program is constitutional de novo and its factual determinations for clear error”); cf. Sherbrooke, 345 F.3d at 970 (court took a “hard
look at the evidence”).
322Engineering Contractors II, 122 F.3d at 903–04.
323
515 U.S. 200 (1995) (Adarand III).

Fullilove v. Klutznick, 448 U.S. 448 (1980).
Adarand Constructors IV, 965 F. Supp. at 1569–1570; see also Adarand III, 515
U.S. at 227.
326Transportation Equity Act for the 21st Century (TEA-21), Pub. L. No. 105–178
(b)(1), 112 Stat. 107, 113.
32749 C.F.R. Part 26.
328Adarand Constructors, Inc. v. Slater, 228 F.3d 1147 (10th Cir. 2000) (Adarand
VII), cert. granted then dismissed as improvidently granted, 532 U.S. 941, 534 U.S.
103 (2001); Sherbrooke Turf, Inc. v. Minnesota Department of Transportation, 345
F.3d. 964 (8th Cir. 2003), cert. denied, 541 U.S. 1041 (2004); Northern Contracting, Inc. v. Illinois Department of Transportation, 2004 U.S. Dist. LEXIS 3226 at
*64 (N.D. Ill., Mar. 3, 2004) (Northern Contracting I); Western States Paving Co.,
Inc. v. Washington Department of Transportation, 407 F.3d 983, 993 (9th Cir.
2005), cert. denied, 126 S.Ct. 1332 (2006).
329Rothe Development Corporation v. U.S. Department of Defense, 545 F.3d 1023
(Fed. Cir. 2008) (Rothe VII).
330
10 U.S.C. § 2323.
325

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

identified discrimination that is supported by a strong basis in
evidence. Since this is the standard that governs the DBE Program, Rothe VII does not implicate or undermine Adarand VII,
Sherbrooke, Western States, or Northern Contracting. The opinion barely mentions those cases, let alone suggests that their
reasoning or results are wrong. Since DOD did not rely on the
evidence Congress relied upon in adopting Part 26, the court
did not consider that record. Of particular relevance to our
project is that the court opined that there is no fixed time limit
on the relevance of data; an agency should use the “most recent
available data.”331 Further, regression analysis is a proper tool.332
It noted that the six local government studies proffered by DOD
were the major evidence relied upon and questioned their
approaches to availability and “capacity.” The court noted “that
a minority-owned firm’s capacity and qualifications may themselves be affected by discrimination.”333 The opinion pointedly
made no blanket pronouncements about methodologies or
what evidence would suffice to support Congress’ legislation
for DOD. There was almost no consideration of narrow tailoring, which of course is the focus for state DOTs.

competing for public construction contracts. The government also
presents further evidence in the form of local disparity studies of
minority subcontracting and studies of local subcontracting markets after the removal of affirmative action programs.335

Relevant evidence included:
• Disparities between the earnings of minority-owned firms

and similarly situated white-owned firms;
• Disparities in commercial loan denial rates between black

business owners compared to similarly situated white business owners;
• The large and rapid decline in minorities’ participation in
the construction industry when affirmative action programs were struck down or abandoned; and
• Various types of overt and institutional discrimination by
prime contractors, trade unions, business networks, suppliers, and sureties against minority contractors.336
The Eighth Circuit Court of Appeals took a “hard look” at
the evidence and concluded that the legislature had:

Congress Established its Compelling Interest
in Remedying Discrimination
All courts agree that the first prong of strict scrutiny is satisfied by the Congressional record that forms the basis for the
DBE program. “In light of the substantial body of statistical and
anecdotal material considered at the time of TEA-21’s enactment, Congress had a strong basis in evidence for concluding
that—in at least some parts of the country—discrimination
within the transportation contracting industry hinders minorities’ ability to compete for federally funded contracts.”334
Congress’ conclusion that the effects of widespread race discrimination in the construction industry must be redressed is
supported by the record.
[T]he evidence presented by the government in the present case
demonstrates the existence of two kinds of discriminatory barriers to minority subcontracting enterprises, both of which show
a strong link between racial disparities in the federal government’s disbursements of public funds for construction contracts
and the channeling of those funds due to private discrimination.
The first discriminatory barriers are to the formation of qualified
minority subcontracting enterprises due to private discrimination, precluding from the outset competition for public construction contracts by minority enterprises. The second discriminatory barriers are to fair competition between minority and
non-minority subcontracting enterprises, again due to private
discrimination, precluding existing minority firms from effectively

spent decades compiling evidence of race discrimination in government highway contracting, of barriers to the formation of
minority-owned construction businesses, and of barriers to entry.
In rebuttal, [the plaintiffs] presented evidence that the data were
susceptible to multiple interpretations, but they failed to present
affirmative evidence that no remedial action was necessary because
minority-owned small businesses enjoy non-discriminatory access
to and participation in highway contracts. Thus, they failed to
meet their ultimate burden to prove that the DBE program is
unconstitutional on this ground.337

The Tenth Circuit specifically rejected the idea that in enacting the DBE Program, Congress must make specific findings
on every possible ethnic subgroup that might be subject to
discrimination.
[B]ecause of the unreliability of racial and ethnic categories and
the fact that discrimination commonly occurs based on much
broader racial classifications, extrapolating findings of discrimination against Native Americans, Asian-Pacific Americans, and
Asian-Americans to include Aleuts, Samoans, and Bhutanese,
respectively, is more a question of nomenclature than of narrow
tailoring. The Constitution does not erect a barrier to the government’s effort to combat discrimination based on broad racial classifications that might prevent it from enumerating particular ethnic origins falling within such classifications.338

335

Adarand VII, 228 F.3d at 1167–68.
Western States, 407 F.3d at 992–93.
337Sherbrooke Turf, 345 F.3d. at 970; see also Adarand VII, 228 F.3d at 1175 (Plaintiff has not met its burden “of introducing credible, particularized evidence to
rebut the government’s initial showing of the existence of a compelling interest in
remedying the nationwide effects of past and present discrimination in the federal construction procurement subcontracting market.”).
338
Adarand VII, 228 F.3d at 1185–86.
336

331

545 F.3d at 1039.
Id. at 1043.
333Id. at 1045.
334Western States, 407 F.3d at 993; see also Sherbrooke Turf, 345 F.3d. at 969;
Adarand VII, 228 F.3d at 1176; Northern Contracting III, 473 F.3d at 721.
332

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

It is important to note that courts have recognized that evidence beyond the results of the DBE Program is probative of
whether a recipient would be a passive participant in discrimination without affirmative action measures. “Furthermore, we
may consider public and private discrimination not only in the
specific area of government procurement contracts but also in
the construction industry generally; thus, any findings Congress
has made as to the entire construction industry are relevant.”339
DBE Regulations are Facially Narrowly Tailored
Next, the regulations meet the second prong of strict
scrutiny. Unlike the prior program,340 Part 26 is facially narrowly tailored because:
• The overall goal must be based upon demonstrable evi-

•
•

•
•
•
•

•
•

•

dence of the number of DBEs ready, willing, and able to
participate on the recipient’s federally assisted contracts.
The goal may be adjusted to reflect the availability of DBEs
but for the effects of the DBE Program and of discrimination.
The recipient must meet the maximum feasible portion of
the goal through race-neutral measures as well as estimate
that portion of the goal it predicts will be met through such
measures.
The use of quotas and set-asides is limited only to those situations where there is no other remedy.
The goals are to be adjusted during the year to remain narrowly tailored.
Absent bad-faith administration of the program, a recipient cannot be penalized for not meeting its goal.
The presumption of social disadvantage for racial and ethnic minorities and women is rebuttable, “wealthy minority owners and wealthy minority firms are excluded, and
certification is available to persons who are not presumptively disadvantaged but can demonstrate actual social and
economic disadvantage.”341
Anyone can challenge the disadvantage of any firm.342
Each firm’s owner is regularly reviewed to ensure that his
or her economic disadvantage has not exceeded the personal net worth limit.343
Exemptions and waivers from any or all Program requirements are available.

ulations place strong emphasis on the use of race-neutral means
to achieve minority and women participation. Relying upon
Grutter v. Bollinger, the Eighth Circuit held that while “[n]arrow
tailoring does not require the exhaustion of every conceivable
race-neutral alternative . . . it does require serious, good faith
consideration of workable race-neutral alternatives.”344
The DBE Program is also flexible. Eligibility is limited to
small firms owned by persons whose net worth is less than
$750,000. There are built-in Program time limits, and the
state DOT may terminate the use of any race-conscious measures if it meets its annual overall goal through race-neutral
means for two consecutive years. Moreover, the authorizing
legislation is subject to Congressional reauthorization that
will ensure periodic public debate.
Next, the goals are tied to the relevant market. “Though the
underlying estimates may be inexact, the exercise requires the
States to focus on establishing realistic goals for DBE participation in the relevant contracting markets. This stands in
stark contrast to the program struck down in Croson.”345
Finally, Congress has taken significant steps to minimize
the race-conscious nature of the program. “[W]ealthy minority owners and wealthy minority-owned firms are excluded,
and certification is available to persons who are not presumptively [socially] disadvantaged but can demonstrate actual
social and economic disadvantage. Thus, race is made relevant in the program, but it is not a determinative factor.”346
Nonminority males are not unduly burdened by the Program. “Implementation of the race-conscious contracting
goals for which TEA-21 provides will inevitably result in bids
submitted by non-DBE firms being rejected in favor of higher
bids from DBEs. Although this places a very real burden on
non-DBE firms, this fact alone does not invalidate TEA-21. If
it did, all affirmative action programs would be unconstitutional because of the burden upon non-minorities.”347
Challenges to the DBE program require more than vague
attacks or unsupported speculation about other possible outcomes and methodologies for narrow tailoring. While plaintiff:
presented evidence attacking the reliability of [the Availability
Study’s] data, it failed to establish that better data was [sic] available or that Mn/DOT was otherwise unreasonable in undertaking
this thorough analysis and in relying on its results. The precipitous
drop in DBE participation in 1999, when no race-conscious methods were employed, supports Mn/DOT’s conclusion that a substantial portion of its 2001 overall goal could not be met with raceneutral measures, and there is no evidence that Mn/DOT failed to
adjust its use of race-conscious and race-neutral methods as the
year progresses, as the DOT regulations require.348

These elements have led the courts to conclude that the DBE
Program meets the second prong of strict scrutiny. First, the reg-

339

Id. at 1166–67.
49 C.F.R. Part 23.
341Sherbrooke Turf, 345 F.3d. at 973.
34249 C.F.R. §26.87.
343See Adarand VII, 228 F.3d at 1186–87 (“The current regulations more precisely
identify the proper minority recipients of DBE certification by periodically
rescreening for economic disadvantage all candidates for such certification.”).
340

344

Sherbrooke Turf, 345 F.3d. at 972.
Id.
346Id. at 973.
347Western States, 407 F.3d at 995.
348
Id.
345

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

Finally, a plaintiff cannot use a challenge to a state’s implementation of the federal DBE Program under narrow tailoring
as a collateral attack on the regulation’s compelling interest.
“[A]ppellants cannot protest the federal program by claiming
the state’s implementation of it is unconstitutional.”349

State DOTs’ Implementation of
Part 26 Must be Narrowly Tailored
Part 26 requires that state DOTs narrowly tailor their DBE
efforts to the evidence of discrimination in their marketplace.
Especially in the context of considering options to respond to
the demands of narrow tailoring, it is important to focus
upon the overall objective of the DBE program “to achieve a
‘level playing field’ for DBEs seeking to participate in federalaid transportation contracting. To reach a level playing field,
recipients need to examine their programs and their markets
and determine the amount of participation they would expect
DBEs to achieve in the absence of discrimination and the
effects of past discrimination.”350
Among the objectives of the regulations is “help to remove
barriers to the participation of DBEs in DOT-assisted contracts”
and to “assist the development of firms that can compete successfully in the marketplace outside the DBE program.”351 A
goal-setting methodology that takes into account these objectives meets not only the letter of the regulations but also the
remedial objectives and spirit of the statute. It is not enough to
merely replicate the outcomes of the discriminatory marketplace Congress seeks to eliminate.
The 1999 revisions to the DBE Program prescribe narrowly
tailored methods for setting annual DBE goals to achieve a
level playing field for DBEs.352 49 C.F.R. § 26.45 provides:
(a) You must set an overall goal for DBE participation in
your DOT-assisted contracts.
(b) Your overall goal must be based on demonstrable evidence of the availability of ready, willing and able DBEs
relative to all businesses ready, willing and able to participate on your DOT-assisted contracts (hereafter, the
“relative availability of DBEs”). The goal must reflect
your determination of the level of DBE participation you
would expect absent the effects of discrimination. You
cannot simply rely on either the 10 percent national goal,
your previous overall goal or past DBE participation

349Harrison & Burrowes, 981 F.2d at 57, relying on Milwaukee County Pavers Ass’n
v. Fiedler, 922 F.2d 419, 424 (7th Cir. 1991), cert. denied, 500 U.S. 954 (1991).
35064 Fed. Reg. 5108.
35149 C.F.R. §26.1.
352Adarand VII, 228 F.3d at 1182 (“The process by which recipients of federal
transportation funding set aspirational goals is now much more rigorous [than
the prior Part 23].”).

rates in your program without reference to the relative
availability of DBEs in your market.
Step 1 Analysis: Estimation of DBE Availability
The process to set the overall annual DBE goal is divided
into two steps:
(c) Step 1. You must begin your goal-setting process by determining a base figure for the relative availability of DBEs.
The following are examples of approaches that you may
take toward determining a base figure. These examples are
provided as a starting point for your goal setting process.
Any percentage figure derived from one of these examples
should be considered a basis from which you begin when
examining all evidence available in your jurisdiction. These
examples are not intended as an exhaustive list. Other
methods or combinations of methods to determine a base
figure may be used, subject to approval by the concerned
operating administration.
(1) Use DBE Directories and Census Bureau Data. Determine the number of ready, willing, and able DBEs in
your market from your DBE directory. Using the Census Bureau’s County Business Pattern (CBP) database,
determine the number of all ready, willing, and able
businesses available in your market that perform work
in the same SIC codes.353 Divide the number of DBEs
by the number of all businesses to derive a base figure
for the relative availability of DBEs in your market.
(2) Use a bidders list. Determine the number of DBEs that
have bid or quoted on your DOT-assisted prime contracts or subcontracts in the previous year. Determine
the number of all businesses that have bid or quoted on
prime or subcontracts in the same time period. Divide
the number of DBE bidders and quoters by the number for all businesses to derive a base figure for the relative availability of DBEs in your market.
(3) Use data from a disparity study. Use a percentage figure derived from data in a valid, applicable disparity
study.
(4) Use the goal of another DOT recipient. If another DOT
recipient in the same, or substantially similar, market
has set an overall goal in compliance with this rule, you
may use that goal as a base figure for your goal.
(5) Alternative methods. Subject to the approval of the
DOT operating administration, you may use other
methods to determine a base figure for your overall
goal. Any methodology you choose must be based on
demonstrable evidence of local market conditions
353See www.census.gov/epcd/cbp/view/cbpview.html for information about the
CBP database.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

and be designed to ultimately attain a goal that is
rationally related to the relative availability of DBEs
in your market.
The commentary stresses the examples provided embody
principles rather than rules “recipients are free to adopt in
their entirety or to use as guidelines for how to devise their
own measurement.”354 This flexible approach allows each
recipient to use “the best data available.”355 As noted in the
discussion about using example 1—dividing the DBE directory over County Business Patterns data—“[a]ny recipient
that believes it has available to it better sources of local data
from which to make a similar calculation for its base figure is
encouraged to use them.”356
As discussed in Chapter 2, the bidders list approach has
been commonly used by state DOTs to estimate the Step 1 base
figure. However, those courts that have addressed this approach
directly have pointed out that lists can be either under-inclusive
or over-inclusive. Bidders lists may be under-inclusive because
they do not cast a broad net in the geographic market of the
agency,357 and are possibly tainted by the effects of discrimination.358 To the extent that minority- and women-owned firms
have been encouraged to apply for the lists, such firms may be
overrepresented and thus the lists are over-inclusive.359 Further,
bidders lists rarely capture full data on subcontractors, who bid
to the prime contractor not the agency. As noted in the commentary to Part 26, “[w]e realize that identifying subcontractors, particularly non-DBEs and all subcontractors that were
unsuccessful in their attempts to obtain contracts, may well be
a difficult task for many recipients.”360
Step 2 Analysis: Examining Evidence of Disparities
in DBE Opportunities
After the state DOT has estimated its Step 1 base figure of
DBE availability, it must estimate the level of DBE availability in a discrimination free market, that is, DBE availability
“but for” discrimination.

354

64 Fed. Reg. 5109.
Id.
356Id. at 5110.
357Associated General Contractors of America v. City of Columbus, 936 F. Supp.
1363, 1389 (S.D. Oh. 1996) (“This [list] is only a small fraction of the total number of construction firms in the Columbus MSA, as shown by U.S. Census
Bureau data.”).
358Philadelphia III, 91 F.3d at 604 (“if there has been discrimination in City contracting, it is to be expected that black firms may be discouraged from applying,
and the low numbers may tend to corroborate the existence of discrimination
rather than belie it.”).
359AGC v. Columbus, 936 F.Supp. at 1389 (City actively recruited MBEs but not
majority-owned firms to register and the set aside program provided an incentive for them to do so).
360
64 Fed. Reg. 5104–05.
355

Step 2. Once you have calculated a base figure, you must
examine all of the evidence available in your jurisdiction
to determine what adjustment, if any, is needed to the base
figure in order to arrive at your overall goal.
(1) There are many types of evidence that must be considered when adjusting the base figure. These include:
(i) The current capacity of DBEs to perform work in
your DOT-assisted contracting program, as measured by the volume of work DBEs have performed
in recent years;
(ii) Evidence from disparity studies conducted anywhere within your jurisdiction, to the extent it is
not already accounted for in your base figure; and
(iii) If your base figure is the goal of another recipient,
you must adjust it for differences in your local
market and your contracting program.
(2) You may also consider available evidence from related
fields that affect the opportunities for DBEs to form,
grow, and compete. These include, but are not limited to:
(i) Statistical disparities in the ability of DBEs to get
the financing, bonding and insurance required
to participate in your program;
(ii) Data on employment, self-employment, education, training, and union apprenticeship programs, to the extent you can relate it to the opportunities for DBEs to perform in your program.
(3) If you attempt to make an adjustment to your base
figure to account for the continuing effects of past
discrimination (often called the “but for” factor) or
the effects of an ongoing DBE Program, the adjustment must be based on demonstrable evidence that is
logically and directly related to the effect for which
the adjustment is sought.361
The case law is very sparse regarding the elements of the
“but for” determination. The Western States opinion does not
address it, and IDOT determined not to make a Step 2 adjustment since the Step 1 base figure was the “plausible lower
bound estimate” of DBE availability. The Eight Circuit in
Sherbrooke noted without further comment that “[b]ased
upon [the Availability Study’s] analysis of business formation
statistics, NERA next estimated that the number of participating minority owned businesses would be 34 percent higher in
a race-neutral market. Therefore, NERA adjusted its DBE
availability figure from 11.4 to 11.6 percent.”362 In considering
whether Part 26 has a strong basis in evidence, the Tenth Circuit commented that while data showing that discriminatory

361
362

49 C.F.R. § 26.45(d).
345 F.3d at 973.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

factors discourage both the formation and utilization of
minority firms was significant, “[o]f course, it would be ‘sheer
speculation’ to even attempt to attach a particular figure to
the hypothetical number of minority enterprises that would
exist without discriminatory barriers to minority DBE formation. [citation omitted] However, the existence of evidence
indicating that the number of minority DBEs would be significantly (but unquantifiably) higher but for such barriers is
nevertheless relevant to the assessment of whether a disparity
is sufficiently significant to give rise to an inference of discriminatory exclusion.”363
We therefore look to cases construing state and local
M/WBE Programs for guidance on the types of evidence that
are relevant to whether discrimination continues to affect the
Step 1 base figure.
Much of the discussion in the case law on local programs
has revolved around what type of evidence is sufficiently
“strong” to establish the continuing existence and effects of
economic discrimination against minorities resulting in
diminished opportunities to do business with the government. Proof of the disparate impacts of economic factors
on M/W/DBEs and the disparate treatment of such firms by
actors critical to success is necessary to meet strict scrutiny.
Discrimination must be shown using statistics and economic models to examine the effects of systems or markets
on different groups, as well as by evidence of personal experiences with discriminatory conduct, policies or systems.364
Specific evidence of discrimination or its absence may be
direct or circumstantial, and should include economic factors and opportunities in the private sector affecting the
success of M/W/DBEs.365 This framework is similar to that
of the required and suggested Step 2 analysis.

Northern Contracting, Inc. v. Illinois Department
of Transportation
Most recently, the Seventh Circuit Court of Appeals affirmed
the district court’s trial verdict that the IDOT’s application of
Part 26 was narrowly tailored.367 IDOT had a compelling interest in remedying discrimination in the marketplace for federally
funded highway contracts, and its FFY 2005 DBE Plan was narrowly tailored to that interest and in conformance with the DBE
Program regulations.
Having affirmed that the regulations pass constitutional
muster, the court turned to whether IDOT met its constitutional and regulatory burdens under Part 26. The court
reviewed the Availability Study of DBEs in the state’s construction and design marketplaces, and evidence of discrimination against minority and women construction firms in
the Illinois area, upon which IDOT relied in developing its
DBE goals.
The IDOT availability study included a “custom census”
designed to provide an accurate calculation of the current
relative availability of DBEs, employing a seven-step analysis that:
• Created a database of representative IDOT projects;
• Identified the appropriate geographic market for IDOT’s

contracting activity;
• Identified the appropriate product market for IDOT’s

contracting activity;
• Counted all businesses in those relevant markets;
• Identified minority-owned and women-owned businesses

in those markets;
• Verified the ownership status of minority-owned and

women-owned businesses; and

Judicial Review of DBE Goal Setting
Under Part 26

• Verified the ownership status of all other firms.

To develop a model disparity or availability study for state
DOTs, it is critical to understand the cases reviewing the
application of Part 26 by state DOTs. We review these cases
in the order they were decided.366

The IDOT Availability Study estimated that DBEs comprised 22.77% of IDOT’s available firms.368 The IDOT Study
next examined whether and to what extent there are disparities between the rates at which DBEs form businesses relative to similarly situated White men, as well as disparities in
the relative earnings of those businesses. The presence of
large and statistically significant disparities allowed an inference of discrimination to be made. Controlling for numerous variables such as the owner’s age, education, and the
like, the study found that in a race- and gender-neutral marketplace the availability of DBEs would be approximately

363

Adarand VII, 228 F.3d at 1174. As discussed above in Chapter 2, a highquality disparity study can now go farther than this and actually provide a quantitative estimate of how much higher DBE availability would be in a race-neutral
marketplace. See Chapter 2, Economy-Wide Disparity Analysis, supra.
364Adarand VII, 228 F.3d at 1166 (“statistical and anecdotal evidence are appropriate”). The study’s adjustment reflected the impact of discrimination on Blackowned firms.
365Id.
366Adarand VII did not review whether Colorado DOT’s application of Part 26
was narrowly tailored because the plaintiff did not litigate that issue before the
Tenth Circuit.

367

Northern Contracting, Inc. v. Illinois Department of Transportation, 473 F.3d
715 (7th Cir. 2007) (Northern Contracting III).
368This baseline figure of DBE availability is the “Step 1” estimate U.S.DOT grant
recipients must make pursuant to 49 C.F.R. §26.45.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

85
ing, insurance, and financing markets erected barriers to DBE
formation and prosperity. Such discrimination inhibits the
ability of DBEs to bid on prime contracts, thus allowing the
discrimination to indirectly seep into the award of prime contracts, which are otherwise awarded on a race- and genderneutral basis. This indirect discrimination is sufficient to
establish a compelling governmental interest in a DBE program . . . Having established the existence of such discrimination, a governmental entity “has a compelling interest in
assuring that public dollars, drawn from the tax contributions of all citizens, do not serve to finance the evil of private
prejudice.”371

20.8% higher, yielding a “Step 2” estimate of DBE availability
“but for” discrimination of 27.51%.
In addition to the IDOT Study, the court also relied upon:
• An Availability Study conducted for Metra, the Chicago

commuter rail agency, designed to meet Part 26;
• Expert reports relied upon by an earlier trial court in find-

•

•
•
•

•

ing that the City of Chicago had a compelling interest in its
minority and women business program for construction
contracts;369
Expert reports and anecdotal testimony presented to the
Chicago City Council in support of the city’s revised M/WBE
Program ordinance in 2004;
Anecdotal evidence gathered at IDOT’s public hearings on
the DBE Program;
Data on DBE involvement in construction projects in markets without DBE goals;
DBE utilization by the Illinois State Toll Highway Authority, which does not receive federal funding. “[T]hough the
Tollway has a DBE goal of 15 percent, this goal is completely voluntary—the average DBE usage rate in 2002 and
2003 was 1.6%;”370 and
IDOT’s “zero goal” experiment, where DBEs received
approximately 1.5% of the total value of the contracts. This
was designed to test the results of “race-neutral” contracting policies, that is, the utilization of DBEs on contracts
without goals, which several courts have held to be highly
relevant and probative of the continuing need for raceconscious remedies.

Of particular importance for the present study, a key component of the plaintiff’s appeal of the lower court’s ruling was
that IDOT miscalculated the availability of DBEs by relying on
the “custom census” approach rather than simply counting the
certified DBEs among IDOT bidders, prequalified contractors,
and registered subcontractors. During the trial the data, methods, and findings of IDOT’s Availability Study were subjected
to intense scrutiny. The court of appeals rejected the plaintiff’s
argument, noting:
The gravamen of NCI’s first noncompliance argument is that
IDOT miscalculated the number of DBEs that were ‘ready,
willing, and able’ by utilizing the NERA custom census instead
of a simple count of the number of registered and prequalified
DBEs under Illinois Law. But as the district court correctly
observed, NCI has pointed to nothing in the federal regulations indicating that a recipient must so narrowly define the
scope of ready, willing, and available firms. The NERA custom
census reflects an attempt by IDOT to arrive at more accurate
numbers than would be possible through use of just the list.
Indeed, the method used here by NERA is the very methodology
that was used by the Minnesota Department of Transportation
in the unsuccessful challenge to its program in Sherbrooke. We
agree with the district court that the remedial nature of the federal
scheme militates in favor of a method of DBE availability calculation that casts a broader net. This conclusion is bolstered by guidance offered by USDOT on its website, where it suggests that
recipients might supplement their DBE directories, for goalsetting purposes. . . . We are unpersuaded that NCI has demonstrated any noncompliance with 49 C.F.R. § 26.45(b).372

Based upon the record produced at trial, the court of
appeals agreed with the trial court’s judgment that the program was narrowly tailored. IDOT’s plan was based upon sufficient proof of discrimination such that race-neutral measures alone would be inadequate to ensure that DBEs operate
on a “level playing field” for government contracts.
The stark disparity in DBE participation rates on goals
and non-goals contracts, when combined with the statistical and anecdotal evidence of discrimination in the relevant
marketplaces, indicates that IDOT’s 2005 DBE goal represents
a “plausible lower-bound estimate” of DBE participation in
the absence of discrimination. . . . Plaintiff presented no persuasive evidence contravening the conclusions of IDOT’s studies, or explaining the disparate usage of DBEs on goals and
non-goals contracts. . . . IDOT’s proffered evidence of discrimination against DBEs was not limited to alleged discrimination by prime contractors in the award of subcontracts.
IDOT also presented evidence that discrimination in the bond-

The “custom census” approach, which was also used by
Mn/DOT in the Sherbrooke case, Denver in the Concrete Works
case, and Chicago in the BAGC case, is the only measure of
DBE or M/WBE availability that has survived strict scrutiny
review at trial and on appeal.373

371

369

Builders Association of Greater Chicago v. Chicago, 298 F. Supp. 2d 725
(N.D. Ill. 2003).
370
Northern Contracting III, 473 F.3d at 719.

Northern Contracting II, at 82 (internal citations omitted); see Croson, 488 U.S.
at 492.
372Northern Contracting III, 473 F.3d at 723 (citations omitted) (emphasis
added).
373The Eighth circuit did not address the availability method used by the study
for the Nebraska Department of Roads.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

Sherbrooke Turf, Inc. v. Minnesota Department
of Transportation
Mn/DOT’s implementation of Part 26, based on an availability study, was held to be constitutional.374 After holding
that Congress had ample evidence of discrimination against
DBEs in the market for Federal-aid transportation contracts,
the Eighth Circuit noted:
Following promulgation of the current DOT regulations,
MnDOT commissioned . . . [a] study [of] the highway contracting market in Minnesota. . . . Based on NERA’s study, MnDOT
adopted an overall goal of 11.6 percent DBE participation for
federally assisted highway projects in fiscal year 2001. MnDOT
predicted that it would need to meet nine percent of that overall
goal through race- and gender-conscious means, based on the
fact that DBE participation in state highway contracts dropped
from 10.25 percent in 1998 to 2.25 percent in 1999, when its previous DBE program was suspended by the district court’s injunction in Sherbrooke. . . . Sherbrooke presented evidence attacking
the reliability of the data NERA used in determining its recommended overall goal. But Sherbrooke failed to establish that better data was [sic] available or that MnDOT was otherwise unreasonable in undertaking this thorough analysis and in relying on
its results. The precipitous drop in DBE participation in 1999,
when no race-conscious methods were employed, supports
MnDOT’s conclusion that a substantial portion of its 2001 overall goal could not be met with race-neutral measures. . . . On this
record, we agree with the district court that the revised DBE program serves a compelling government interest and is narrowly
tailored, on its face and as applied in Minnesota.375

In Sherbrooke’s companion case, the Nebraska Department
of Roads (NDOR) DBE goal based on an availability study376
was upheld. “Having carefully reviewed the trial record, we
conclude that Gross Seed, like Sherbrooke, failed to prove
that the revised DBE program is not narrowly tailored as
applied in Nebraska.”377
Western States Paving Co., Inc. v. Washington State
Department of Transportation
The Ninth Circuit Court of Appeals held while the DBE
Program’s legislation and regulations satisfy strict constitutional scrutiny on their face, Washington State Department
of Transportation’s (WSDOT’s) FFY 2000 implementation of
the regulations was not sufficiently narrowly tailored.378

In reversing the district court on the as applied challenge, the
court agreed with the analysis in Sherbrooke that although a
recipient need not demonstrate an independent compelling
interest for its DBE Program, it is necessary to undertake an “as
applied” inquiry into whether the state’s program is narrowly
tailored to its marketplace. While both sides and the court
agreed that WSDOT’s program complied with Part 26, the
court rejected the state’s position that its “DBE program is constitutional because it comports with the federal statute and regulations.”379 A recipient independently must meet the narrow
tailoring requirement. “To the extent the federal government
delegates this tailoring function, a State’s implementation
becomes critically relevant to a reviewing court’s strict
scrutiny.”380 The Ninth Circuit was persuaded by U.S.DOT’s
argument that race-conscious goals can only be applied by
recipients in those localities where the effects of discrimination
are present. “As the United States correctly observed in its brief
and during oral argument, it cannot be said that TEA-21 is a
narrowly tailored remedial measure unless its application is limited to those States in which the effects of discrimination are
actually present.”381 Grantees must proffer evidence of discrimination to apply race-conscious measures to meet the annual
goal, apparently in addition to meeting the mandates of Part 26.
Not only must WSDOT prove that discrimination has current effects in its market but also that such discrimination must
have affected all of the presumptively socially disadvantaged
groups included in Part 26.382 “We have previously expressed
similar concerns abut the haphazard inclusion of minority
groups in affirmative action programs ostensibly designed to
remedy the effects of discrimination. . . . [E]ach of the principal minority groups benefited by Washington’s DBE program . . . must have suffered discrimination within the State.”383
The court rejected WSDOT’s approved goal-setting methodology that closely tracked the Sample Program384 developed by
U.S.DOT. “Both Minnesota and Nebraska had hired outside
consulting firms to conduct statistical analyses of the availability and capacity of DBEs in their local markets, and the Eighth
Circuit relied upon those studies to hold that the States’ DBE
programs independently satisfied strict scrutiny’s narrow tailoring requirement.”385 In contrast, WSDOT had chosen option 1
in § 26.45(c) to determine its Step 1 base figure of DBE availability: divide the number of certified DBEs by the total

379
374

NERA Economic Consulting. September 2005. “Race, Sex, and Business
Enterprise: Evidence from the State of Minnesota.”
375Sherbrooke, 345 F.3d. at 973–74. The consultant provided expert deposition
testimony regarding the data, methods, and findings of its study during the district court proceedings.
376MGT of America, Inc., September 2000, “Availability and Goal Setting Study.”
377Sherbrooke, at 974. The court did not opine on the method used to calculate availability for the NDOR, which was a bidders list approach at “capacity” adjustment.
378
407 F.3d 983 (9th Cir. 2005).

Id. at 996.
Id. at 997, citing Sherbrooke.
381407 F.3d at 998.
382The opinion recognizes in the discussion of Congress’ narrow tailoring that
Part 26 does not permit disaggregated goals by race, ethnicity and gender. Id.
at 990.
383407 F.3d at 998–99.
384See http://osdbuweb.dot.gov/documents/pdf/dbe/SampleDB.pdf. (viewed
12 December 2008).
385
407 F.3d at 997.
380

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

number of establishments in the Census Bureau’s County Business Patterns database. In Step 2, it followed the U.S.DOT’s
guidance and adjusted the base figure of 11.17% to 14%, based
upon the average of the Step 1 estimate averaged with the
median (18%) of prior years’ DBE participation;386 there was
no explanation of how this figure reflected expected DBE
availability in a race-neutral market. WSDOT did not have
evidence upon which to make an adjustment for discriminatory barriers in obtaining bonding and financing or for the
effects of past or present discrimination because it lacked statistical studies of such discrimination. WSDOT then projected
that it would achieve the 14% goal through 9% DBE participation from race-neutral means, based upon its utilization on
state-funded contracts without goals, and 5% DBE participation from race-conscious subcontracting goals.
Lacking other statistical evidence of discrimination, the state
could only rely upon the gap between its estimate of 14% and
the 9% DBE participation on contracts without affirmative
action remedies. However, the court held that this 14% figure
reflects the effects of the DBE Program, and thus is not indicative of DBE utilization in a race-neutral market. “Indeed, even
in States in which there has never been discrimination, the proportion of work that DBEs receive on contracts that lack affirmative action requirements will be lower than the share that
they obtain on contracts that include such measures because
minority preferences afford DBEs a competitive advantage.”387
Therefore, the only figure upon which WSDOT can “plausibly rely to demonstrate discrimination is the disparity between
the proportion of DBE firms in the state (11.17%) and the percentage of contracting funds awarded to DBEs on race-neutral
contracts (9%). This oversimplified statistical evidence is entitled to little weight, however, because it does not account for
factors that may affect the relative capacity of DBEs to undertake contracting work.”388 According to the Ninth Circuit, that
DBEs may be smaller, less experienced, and more expensive
than non-DBEs may explain the difference. To the extent that
this “small disparity has any probative value, it is insufficient,
standing alone, to establish the existence of discrimination
against DBEs.”389 What is necessary is statistical significance.390
The state did not rely upon any anecdotal evidence of discrimination in Washington’s transportation marketplace in

386

Tips for Goal Setting in the Disadvantaged Business Enterprise (DBE) Program,
http://osdbuweb.dot.gov/business/dbe/tips.cfm (“[C]alculate your median past
participation percentage and use that figure to adjust your Step One Base Figure
by taking the average of your median past participation figure and your Step One
Base Figure.”).
387407 F.3d at 1000.
388Id.
389Id. at 1001.
390We note that the court is wrong in its characterization of the disparity as
“small.” In fact, this disparity is 0.8, which would be considered “large” pursuant
to, for example, the Equal Employment Opportunity Commission’s four-fifths
rule. See 29 C.F.R. § 1607.4(d).

setting its goal. According to the Ninth Circuit, the affidavits
required from applicants for DBE certification attesting that
they have suffered discrimination established no more than
general assertions of societal bias.391
“The record is therefore devoid of any relevant evidence suggesting that minorities currently suffer- or have ever suffereddiscrimination in the Washington transportation contracting
industry. . . . The ‘exact connection’ between means and ends
that is a prerequisite to the use of racial classifications is demonstrably absent from Washington’s DBE program.”392 WSDOT’s
program failed to meet strict scrutiny.
How much evidence of discrimination in a recipient’s jurisdiction is necessary is uncertain. While the regulations are constitutional, a grantee must still go beyond their terms to prove
that discrimination requires a race-conscious goal. The court
somewhat collapses the compelling interest requirement of
“strong evidence” of discrimination with the requirement that
the remedy be narrowly tailored to that evidence. The regulations the court holds to be constitutional explicitly disavow the
need for grantees to conduct disparity studies, yet it demands
evidence that closely resembles a disparity study. It also seems
to confuse the setting of an overall agency goal—the expected
DBE participation in a discrimination-free market—with the
means used to achieve that goal—the use of race-conscious
subcontracting goals. Even if a recipient concluded that its
market was fully fair and open, that does not mean that it
would not set a goal, only that it would not employ race-based
measures to meet it. The constitutionally acceptable regulations provide for just such an outcome.
Perhaps this merely illustrates that when a party presents no
evidence and no expert testimony, the court then lacks guidance
on the correct economic and legal analysis of discrimination. As
a result, the Ninth Circuit made several serious errors:
• Contrary to the court’s assertion that a state is “required”

to adjust its base figure of DBE availability to account for
the effects of discrimination, only consideration of such an
adjustment is mandated.393
• Factors affecting the competitiveness of DBEs, such as firm
revenues, length of time in operation, bonding capacity,
etc., are infected by discrimination. As previously discussed,

391

407 F.3d at 1002.
Id.
393The court incorrectly states that grantees must apply a Step 2 analysis. 407 F.3d
at 989 (“Under Step two, a State is required to adjust this base figure upwards or
downwards to reflect the proven capacity of DBEs to perform work (as measured
by the volume of work allocated to DBEs in recent years) and evidence of discrimination against DBEs obtained from statistical disparity studies.”); cf. 49 C.F.R.
§26.45(d)(3) (“If you attempt to make an adjustment to your base figure to account
for the continuing effects of past discrimination (often called the “but for” factor)
or the effects of an ongoing DBE program, the adjustment must be based on
demonstrable evidence that is directly and logically related to the effect for which
the adjustment is sought.”) (emphasis added).
392

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

DBEs may be smaller, newer, and otherwise less competitive because of the very discrimination sought to be remedied by the adoption of the program. It is simply wrong to
use the outcomes of discrimination as the measure of a
race-neutral market.394
• The disparity between the estimated 11.17% DBE availability and the actual 9% utilization of DBEs on contracts
without goals is not “small.” In fact, this disparity is 0.8,
which would be considered “large,” or “substantively significant,” or “constitutionally significant” pursuant to, for
example, the Equal Employment Opportunity Commission’s four-fifths rule.395
Given the Ninth’s Circuit’s reliance on Sherbrooke, what
WSDOT lacked was the type of expert statistical evidence presented by Mn/DOT in support of its program.396,397 The Mn/
DOT Availability Study provided a comprehensive, marketwide estimate of DBE availability weighted by the geographic
and products markets in which Mn/DOT did business. This
addresses the Ninth Circuit’s concern that DBEs may not be
located where WSDOT’s prime contractors awarded subcontracts. The study further provided a detailed Step 2 analysis of
statistical disparities in DBEs’ formation and earnings relative
to similarly situated non-DBEs and summarized the anecdotal
evidence extant in that jurisdiction. Thus, the Sherbrooke court
reviewed ample targeted evidence of DBEs’ availability to perform on Mn/DOT’s contracts and subcontracts as well as evidence of the discriminatory barriers those firms face in pursuing those contracts and subcontracts.
Western States implies that when a recipient determines that
not all the enumerated groups have suffered discrimination in
its market, it must petition U.S.DOT for a waiver of the prohibition against separate goals for racial and ethnic minorities and
white women. Waivers to remove some racial or ethnic groups
or white women from credit toward meeting DBE contract goals
have been filed by at least two state DOTs. The court’s concern
about the application of TEA-21’s “laundry list” of racial and
ethnic minorities to particular markets suggests that serious consideration must be given to a waiver petition to permit the use of
subcontracting goals that exclude DBEs owned by members of

394See, e.g., Concrete Works VII, 321 F.3d at 981, 983 (“M/WBE construction firms
are generally smaller and less experienced because of discrimination. . . . Additionally, we do not read Croson to require disparity studies that measure whether
construction firms are able to perform a particular contract.”) (emphasis in the
original).
39529 C.F.R. § 1607.4(d).
396“Both Minnesota and Nebraska had hired outside consulting firms to conduct
statistical analyses of the availability and capacity of DBEs in their local markets,
and the Eighth Circuit relied upon those studies to hold that the states’ DBE Programs independently satisfied strict scrutiny’s narrow tailoring requirement.”
407 F.3d at 997.
397To its credit, WSDOT had commissioned such a study during the litigation,
which formed the basis for its FFY 2006, 2007, and 2008 DBE goal submissions.

minority groups for which insufficient evidence is found of discrimination from DBE goal credit.398
At a minimum, Western States counsels that Ninth Circuit
state DOTs must significantly customize their goals to withstand strict scrutiny. It is not enough to plug the Step 1 availability estimate into a formula without consideration of the
effects of discrimination on the analysis. While the opinion
affirms that the Step 2 adjustment is the appropriate point at
which to undertake this inquiry, a conceptually rigorous model
must be applied. That does not mean that an adjustment is
always warranted or supportable, but there must be evidence
and discussion of discrimination in the goal setting submission. The court’s analysis also casts doubt on the value of using
the recipient’s past levels of DBE utilization as a measure of the
availability of DBEs “but for” discrimination. In any event, any
adjustment undertaken must be statistically valid. It must be a
quantifiable representation of the qualitative judgment that the
ongoing effects of past or current discrimination either do or
do not continue to impede DBEs’ full and fair access to the
recipient’s market.
If WSDOT had presented a Sherbrooke-type study and
proffered expert testimony in support of its analysis, the court
may very well have approved the program. Whether additional evidence of discrimination should be included in a disparity study for Ninth Circuit state DOTs is not clear. While
the court suggests disparity study evidence is required, it also
clearly relied upon cases where such evidence was not presented. The Ninth Circuit’s misreading of a previous Seventh
Circuit case399 led it to reject the proposition that meeting the
requirements of a constitutional federal mandate by a recipient is sufficient. Perhaps the Seventh Circuit’s clarification,
discussed below, of this misreading will affect the outcome of
a future challenge to a Ninth Circuit grantee’s program.

Additional Evidence
of Discrimination
Past Utilization of DBEs on State DOT Contracts
Past utilization of DBEs on department contracts is useful
in suggesting a “floor” of the availability of DBEs in that the
award of prime contracts and subcontracts without doubt
means the DBEs are “ready, willing and able.” Utilization can
also form the basis for an analysis of whether there remain
statistically significant disparities between the availability of

398

407 F.3d at 998 (“We have previously expressed similar concerns about the
haphazard inclusion of minority groups in affirmative action programs ostensibly designed to remedy the effects of discrimination. . . . The overly inclusive designation of benefited minority groups was a ‘red flag’ that the legislation is not
narrowly tailored.”).
399Milwaukee County Pavers Ass’n v. Fiedler, 922 F.2d 419, 424 (7th Cir. 1991),
cert. denied, 500 U.S. 954 (1991).

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

minority- and women-owned firms and the utilization of
such firms in the department’s contracting activities. “Where
there is a significant statistical disparity between the number
of qualified minority contractors willing and able to perform
a particular service and the number of such contractors actually engaged by the locality or the locality’s prime contractors, an inference of discriminatory exclusion could arise.”400
This is known as the “disparity index” or “disparity ratio.”
This index is calculated by dividing the utilization of M/W/
DBEs by the availability of M/W/DBEs. Courts have looked
to disparity indices in determining whether Croson’s evidentiary foundation is satisfied.401 An index less than 100% indicates that a given group is being utilized less than would be
expected based on its availability.
The government need not prove that the statistical inferences of discrimination are “correct.” For example, in upholding Denver’s M/WBE Program, the Tenth Circuit noted that
strong evidence supporting Denver’s determination that
remedial action was necessary need not have been based upon
“irrefutable or definitive” proof of discrimination. Statistical
evidence creating inferences of discriminatory motivations
was sufficient and therefore evidence of marketplace discrimination was properly used to meet strict scrutiny. It is the
plaintiff who must prove by a preponderance of the evidence
that such proof does not support those inferences.402
That DBEs are utilized on the agency’s contracts at greater
percentages than the Step 1 headcount does not end the
inquiry into whether discrimination still creates barriers to
equal contracting opportunities. Where the government has
been implementing affirmative action remedies like the longstanding U.S.DOT DBE Program, DBE utilization reflects
those efforts; it does not signal the end of discrimination. In
denying the plaintiff’s motion for summary judgment against
the IDOT’s program, the court was “convinced that the relatively high (or appropriately high) level of DBE participation
on goals contracts has resulted not from a lack of discrimination, but from the success of IDOT’s DBE Program. . . . Plaintiff presented no persuasive evidence contravening the conclusions of IDOT’s studies.”403
Likewise, the Tenth Circuit held that Denver’s overutilization of M/WBEs on city projects with goals went only to the
weight of the evidence because it reflected the effects of a
remedial program. Denver presented evidence that goals and
nongoals projects were similar in purpose and scope and that
the same pool of contractors worked on both types. “Partic-

400

Croson, 488 U.S. at 509; see Webster, 51 F.Supp.2d at 1363, 1375.
Scott, 199 F.3d at 218; Concrete Works II, 36 F.3d at 1526–1527; O’Donnell v.
District of Columbia, 963 F.2d at 426; Cone Corp. v. Hillsborough County, 908 F.2d
908, 916 (11th Cir. 1990), cert. denied, 498 U.S. 983 (1990).
402Concrete Works IV, 321 F.3d at 971.
403
Northern Contracting II, 2004 U.S. Dist. Lexis at *81.
401

ularly persuasive” was evidence that M/WBE participation
declined significantly when the program was amended in
1989. The “utilization of M/WBEs on City projects has been
affected by the affirmative action programs that have been in
place in one form or another since 1977. Thus, the non-goals
data is [sic] the better indicator of discrimination in public
contracting” and supports the position that discrimination
was present before the enactment of the ordinances.404
While § 26.45(d) clearly defines “capacity” as past utilization, some agencies have added a gloss of “capacity analysis”
to lower the Step 1 base figure.405 They note that DBEs are
often smaller and newer than established white male-owned
businesses406 and may lack the qualifications needed for DOT
work (prior DOT track record, high bonding capacity, ownership or long term leases of equipment, existing union agreements, etc.). The agency therefore lowers the remedial goal to
reflect the “real world” effects of discrimination.407
The Ninth Circuit has further confused the issue by rejecting the only type of “capacity” marker required to be considered by the regulations it held to be constitutional: past state
DOT DBE utilization. WSDOT argued that DBE capacity
should reflect the relationship between its Step 1 availability
estimate and its past utilization. The court, however, held that
was “no evidence of discrimination” because utilization was
affected by the imposition of DBE contract goals.408
DBE “Capacity”
Some cases have stated that DBE “capacity,” usually as measured by firm size, number of contracts awarded, etc., must be
controlled for to determine availability. For example, the Ninth
Circuit rejected the disparity between DBE availability and
WSDOT’s utilization because the availability measure did not
statistically control for “factors that may affect the relative
capacity of DBEs to undertake contracting work. Indeed, the
fact that DBEs constitute 11.17% of the Washington market
does not establish that they are able to perform 11.17% of the

404Concrete Works IV, 321 F.3d at 987–88; see also Western States, 407 F.3d at 992;
Hershell Gill Consulting Engineers, Inc. v. Miami-Dade County, Florida,
333 F.Supp.2d 1305, 1318 (S.D. Fla. 2004) (“[The court] will keep the potential
effect of the MWBE programs in mind when analyzing the evidence presented
by the County”).
405But cf. Western States, 407 F.3d at 1000 (rejecting WSDOT’s upward capacity
adjustment as influenced by the operation of the program goal).
406See, e.g., the 2002 Survey of Business Owners, Geographic Area Series:
Economy-Wide Estimates of Business Ownership by Gender, Hispanic or
Latino Origin, and Race: 2002 (available online at http://factfinder.census.gov/
servlet/IBQTable?_bm=y&-geo_id=D&-ds_name=SB0200A1&-_lang=en, and
http://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-fds_name=
EC0200A1&-ds_name=SB0200CSCB01&-_lang=en.)
407For example, Maine DOT lowered its FFY 2008 goal by the percentage of DBEs
that reported difficulties with obtaining bonding or cash flow or other business
issues, based on its interpretation of § 26.45(d)(2)(i).
408
Western States, 407 F.3d at 1000.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

work.”409 Rothe VII likewise discusses the lack of capacity controls as problematic for the six local studies relied upon by
DOD, although it does not refer to Western States.410 Neither
court addressed opinions that reject using the effects of discrimination, that is, DBEs’ size and experience, as “neutral”
outcomes. There is also no discussion of the effects of the program on DBE “capacity” (that is, supply) by creating more
opportunities to work (that is, demand) by the application of
contract goals.
Northern Contracting II and III, the most recent decisions
examining the DBE program, cut through this analytical fog.
The trial court accepted the testimony of IDOT’s expert that
capacity measures are themselves reflective of discrimination.411 The Seventh Circuit agreed: lack of DBE “capacity”
reflects the taint of discrimination; it is not an argument for
limiting the cure. Size, longevity, bonding limits, past bidding
history, etc. have been affected and reduced by the discrimination the legislation seeks to cure, and therefore cannot be
used to dilute the remedy. The court agreed with IDOT that
“such discrimination indirectly affects the ability of DBEs to
compete for prime contracts, despite the fact that they are
awarded solely on the basis of low bid, cannot be doubted.”412
Proper statistical analysis should not control for the variables
affected by the behavior sought to be isolated.
As recognized by the Tenth Circuit in the Denver case,
while there was:
uncontroverted evidence that M/WBEs are generally smaller and
less experienced than majority firms . . . M/WBE construction
firms are generally smaller and less experienced because of discrimination. In addition, Denver’s expert . . . testified that discrimination by banks or bonding companies would reduce a
firm’s revenue and the number of employees it could hire. . . .
Additionally, we do not read Croson to require disparity studies
that measure whether construction firms are able to perform a
particular contract. . . . Based on the uncontroverted evidence
presented at trial, we conclude that the district court did not give
sufficient weight to Denver’s disparity studies because of its erroneous conclusion that the studies failed to adequately control for
size and experience. Denver is permitted to make assumptions
about capacity and qualification of M/WBEs to perform construction services if it can support those assumptions. The
assumptions made in this case are consistent with the evidence
presented at trial and support the City’s position that a firm’s size
does not affect its qualifications, willingness, or ability to perform construction services and that the smaller size and lesser
experience of M/WBEs are, themselves, the result of industry
discrimination.413

409

Id.
545 F.3d at 1043.
411Northern Contracting II, 2004 U.S. Dist. Lexis at *76 (“IDOT presented an
array of statistical studies concluding that DBEs face disproportionate hurdles in
the credit, insurance, and bonding markets.”).
412Id. at *77.
413
Concrete Works IV, 321 F.3d at 981, 983.
410

Moreover, the construction industry—by far the most
common target of M/W/DBE challenges—is particularly elastic, such that any firm’s “capacity” today is not its “capacity”
tomorrow, as the award of new contracts, the completion of
existing projects, and the ability to employ temporary workers
and rent equipment make the ability to perform a contract
impossible to determine. “At trial, Denver introduced evidence
that the median number of employees of all construction firms
in the Denver MSA is three and presented testimony that even
firms with few permanent employees can perform large, public contracts by hiring additional employees or subcontractors
and renting equipment.”414 In fact, at least one court has noted
that the plaintiff in the case was a “small firm whose only
employee other than the owner is the secretary.”415
If WSDOT and DOD had presented expert testimony on
proper statistical modeling, the elasticity of the construction
industry, and business formation and earnings and credit market disparities, in conjunction with anecdotal testimony,416 then
perhaps those programs would likewise have met strict scrutiny.
Unremediated Markets Data
It is critical to measure the participation of minority- and
women-owned firms in the absence of affirmative action goals,
if such evidence is available. Evidence of race and gender discrimination in relevant “unremediated”417 markets provides an
important indicator of what level of actual DBE participation
can be expected in the absence of government-mandated affirmative efforts to contract with M/W/DBEs.418 For example, in
finding that Congress had strong evidence of discrimination in
the construction industry, the Tenth Circuit noted that:
The government presents powerful evidence that “[a]ll too
often, contracting remains a closed network, with prime contractors maintaining long-standing relationships with subcontractors

414

Id.
North Shore v. City of New York, 1998 U.S. Dist. Lexis 6785 at *25 (“plaintiff
North Shore is a small firm whose only employee other than the owner is a secretary. It, however, has bid on projects worth over $1 million, including the [contract] which is at issue in this litigation”).
416Concrete Works IV, 321 F.3d at 981 (anecdotal testimony about discrimination
bolstered the statistical evidence); Northern Contracting II, 2004 U.S. Dist. Lexis
at *76 (“The results of these [statistical] studies were consistent with the testimony of DBE owners.”).
417“Unremediated market” means “markets that do not have race- or genderconscious subcontracting goals in place to remedy discrimination.” Northern
Contracting II, at *36.
418See, e.g., Western States, 407 F.3d at 992 (Congress properly considered evidence
of the “significant drop in racial minorities’ participation in the construction
industry” after state and local governments removed affirmative action provisions); Adarand VII, 228 F.3d at 1186 (evidence included “studies of local subcontracting markets after the removal of affirmative action programs”); H.B.
Rowe, Inc. v. Tippett, 2008 U.S. Dist. LEXIS 100569, * 25 (E.D. N.C. 2008) (“evidence relied upon by the legislature demonstrated a dramatic decline in the utilization of MBEs during the program’s suspension”).
415

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

91
contracts and the channeling of those funds due to private discrimination. The first discriminatory barriers are to the formation of qualified minority subcontracting enterprises due to private discrimination, precluding from the outset competition for
public construction contracts by minority enterprises. The second discriminatory barriers are to fair competition between
minority and non-minority subcontracting enterprises, again
due to private discrimination, precluding existing minority firms
from effectively competing for public construction contracts.425

with whom they prefer to work. Because minority owned firms are
new entrants to most markets, the existence and proliferation of
these relationships locks them out of subcontracting opportunities. As a result, minority-owned firms are seldom or never invited
to bid for subcontracts on projects that do not contain affirmative
action requirements.”419

The courts are clear that the government has a compelling
interest in not financing the evil of private prejudice with
public dollars.420 If DBE utilization is below availability in
unremediated markets, an inference of discrimination may
be supportable. The virtual disappearance of M/W/DBE participation after programs have been enjoined or abandoned
strongly indicates substantial barriers to minority subcontractors, “raising the specter of racial discrimination.”421 This
analysis addresses whether the government has been and continues to be a “passive participant” in such discrimination, in
the absence of affirmative action remedies.422
The results of nongoals contracts can help to demonstrate that, but for the interposition of remedial affirmative
action measures, discrimination would lead to disparities in
government contracting. The “dramatic decline in the use of
M/W/DBEs when an affirmative action program is terminated,
and the paucity of use of such firms when no affirmative action
program was ever initiated,” was proof of the government’s
compelling interest in employing race- and gender-conscious
measures.423 Evidence of unremediated markets “sharpens the
picture of local market conditions for MBEs and WBEs.”424

Thus, if DBEs are suffering discrimination in the private
markets, the government has an interest in ensuring that it
ameliorates this pattern to the best of its abilities in its own
contacting activities. In holding that the City of New Haven’s
M/WBE Program lacked a sufficient evidentiary basis, the
court noted that:
[w]hat is lacking is information which would suggest that a reasonable level of minority contract awards would not continue,
absent a set aside. For example, statistics or other evidence might
show that a level of private contracts commensurate with the
number of MBEs/WBEs available and able to do the work are not
and/or will not be awarded to them now or in the future. By producing evidence that MBEs and WBEs attempted to win private
contracts and were systematically rejected despite their bids having been the lowest, the city might have shown that discrimination exists and, thus, that the need for a set aside existed. There
was some evidence that in 1987–88 WBEs and MBEs received
only 17% and 27%, respectively, of their income from private
contracts. Though it has not been shown if private contracts
exceed, in dollar amount, public contracts, MBEs and WBEs
would not seem to be getting contracts from the private sector in
any proportion close to the percentage of their participation in
public contracts. Without set asides, it could then be argued that
contractors on public contracts will award subcontracts more
closely following patterns of private subcontract awards in private contracts, i.e., at a lower rate to MBEs and WBEs, perhaps
so low as to constitute the requisite disparity. Such a practice, and
likelihood in the future, however, is not established in the
record.426

Economy-Wide Utilization of DBEs
In addition to data for other governments’ utilization of
DBEs in the absence of affirmative remedies, courts have held
that evidence of discriminatory barriers in the private sector
or economy-wide activities is relevant.
[T]he evidence presented by the government in the present case
demonstrates the existence of two kinds of discriminatory barriers to minority subcontracting enterprises, both of which
show a strong link between racial disparities in the federal
government’s disbursements of public funds for construction

Economy-wide evidence has consisted of various types. Barriers to the formation of DBE subcontractors have included the
following:
• Exclusion from “good old boy” networks, often the result of

419

Adarand VII, 228 F.3d at 1170 (quoting The Compelling Interest, 61 Fed. Reg,
26,058, nn.98–99).
420See, e.g., Drabik, 214 F.3d at 734–735.
421Adarand VII, 228 F.3d at 1174; cf. AGC v. New Haven, 791 F.Supp. at 947 (“The
record does not reflect whether the existing MBEs and WBEs will be able to attract
and obtain business on the basis of relevant competitive criteria, such as price,
quality, reliability, without being excluded on the basis of discrimination. What
is lacking is the information which would suggest that a reasonable level of minority contract awards would not continue, absent a set aside.”).
422See also Philadelphia III, 91 F.3d at 599–601.
423BAGC v. Chicago, 298 F. Supp.2d at 737; see also Concrete Works IV, 321 F.3d
at 987–988.
424
Concrete Works II, 36 F.3d at 1529.

several generations of family participation in the industry;
• Barriers to union membership; and
• Race-based denial of access to start-up and working

capital.427

425

Adarand VII, 228 F.3d at 1167–68.
AGC v. New Haven, 791 F.Supp at 947.
427Id, at 1168–70, n.13 (While “[l]ending discrimination alone of course does not
justify action in the construction market . . . discrimination, which is already
unlawful under federal law, supports the assertion that the formation, as well as
utilization, of minority-owned construction enterprises has been impeded.”).
426

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

business networks”;
• Discrimination by surety bonding companies; and
• Price and delivery discrimination by suppliers.428

Anecdotal Evidence
Anecdotal evidence of experiences with discrimination
in contracting opportunities, including testimony from other
governments’ studies and programs, is relevant since it goes
to the question of whether observed statistical disparities
are due to discrimination and not to some other nondiscriminatory cause or causes.429 Testimony about discrimination by prime contractors, unions, bonding companies, suppliers and lenders has been found relevant regarding barriers
both to minority subcontractors’ business formation and
to their success on governmental projects.430 While anecdotal evidence is insufficient standing alone, “[p]ersonal
accounts of actual discrimination or the effects of discriminatory practices may, however, vividly complement
empirical evidence. Moreover, anecdotal evidence of a
[government’s] institutional practices that exacerbate discriminatory market conditions are [sic] often particularly
probative.”431 Anecdotal proof “may bring cold numbers
convincingly to life.”432 “[W]e do not set out a categorical
rule that every case must rise or fall entirely on the sufficiency of the numbers. To the contrary, anecdotal evidence
might make the pivotal difference in some cases; indeed, in
an exceptional case, we do not rule out the possibility that
evidence not reinforced by statistical evidence, as such, will
be enough.”433
There is no requirement that anecdotal testimony be verified. “Denver was not required to present corroborating evidence and [plaintiff] was free to present its own witnesses to
either refute the incidents described by Denver’s witnesses or
to relate their own perceptions on discrimination in the Denver construction industry.”434

428

Id. at 1170–72.
Webster, 51 F.Supp.2d at 1363, 1379.
430Adarand VII, 228 F.3d at 1168–1172; see also AGC v. Coalition for Economic
Equity, 950 F.2d at 1415.
431Concrete Works II, 36 F.3d at 1520.
432Id. at 1521.
433Engineering Contractors II, 122 F.3d at 926.
434
Concrete Works IV, 321 F.3d at 989.
429

Additional Elements of Narrowly
Tailored DBE Goal Setting
Definition of State DOT’s Marketplace
Part 26 directs grantees to set goals based on the “relative
availability of DBEs in your market.”435 State DOTs must
therefore apply economic principles to empirically establish
the geographic and industry dimensions of their contracting
marketplace in order to ensure that the evidence is narrowly
tailored. The studies relied upon by IDOT and Mn/DOT
defined the geographic and industry markets as the location
and industries that comprised over 80% of the contract dollars awarded.
Race- and Gender-Neutral Remedies
Race- and gender-neutral approaches are a necessary component of a defensible and effective DBE Program.436 They
must be used to the maximum feasible extent and applied in
good faith.437 Such measures include unbundling of contracts
into smaller units, providing technical support, and addressing issues of financing, bonding, and insurance important to
all small and emerging businesses.438 Difficulty in accessing
procurement opportunities, restrictive bid specifications,
excessive experience requirements, and overly burdensome
insurance and/or bonding requirements, for example, might
be addressed by recipients without resort to using race or gender in their decision making. Further, governments have a
duty to ferret out and punish discrimination against minorities and women by their contractors, staff, lenders, bonding
companies, or others.439 Enforcement of anti-discrimination
legislation is another race-neutral approach that has been
implemented.440
Collecting data is another necessary race-neutral measure. Agencies should track the utilization of M/W/DBEs as
a measure of their success in the bidding process, including
as subcontractors.441 Part 26 goes further in mandating the
creation and maintenance of a “bidder’s list, consisting of
all firms bidding on prime contracts and bidding or quoting

435

49 CFR §26.45(b).
Croson, 488 U.S. at 507 (Richmond considered no alternatives to race-based
quota); Drabik, 214 F.3d at 738; Philadelphia III, 91 F.3d at 609 (city’s failure
to consider race-neutral alternatives was particularly telling); Webster, 51 F.
Supp.2d at 1380 (for over 20 years county never seriously considered raceneutral remedies).
437See 49 C.F.R. § 26.51(a).
43849 C.F.R. § 26.51(b).
439Croson, 488 U.S. at 503 n.3; Webster, 51 F.Supp.2d at 1380.
440Associated General Contractors of California, Inc. v. Coalition for Economic
Equity, 950 F.2d 1401, 1417 (9th Cir. 1991) (San Francisco “continues to make
efforts to enforce the anti-discrimination ordinance”).
441
See, e.g., Virdi, 2005 U.S. App. LEXIS 11203 at n.8 (11th Cir. June 13, 2005).
436

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

on subcontracts . . . [including] (1) Firm name; (2) Firm
address; (3) Firm’s status as a DBE or non-DBE; (4) The age
of the firm; and (5) The annual gross receipts of the firm.”442
However, strict scrutiny does not require that every raceneutral approach must be implemented and then proven
ineffective before race-conscious remedies may be utilized.443
While an entity must give good faith consideration to raceneutral alternatives, “strict scrutiny does not require exhaustion of every possible such alternative . . . however irrational,
costly, unreasonable, and unlikely to succeed such alternative
might be. . . . [s]ome degree of practicality is subsumed in the
exhaustion requirement.”444
Annual and Contract Goal Setting
Numerical goals or benchmarks for M/W/DBE participation must be substantially related to the availability of such
firms in the relevant market.445
One unanswered question is whether goals or benchmarks
for overall agency contracting may be set higher than estimates
of actual current availability. To freeze the goals at current head
counts would set the results of discrimination—depressed
M/W/DBE availability—as the marker of the elimination of
discrimination. It therefore should be reasonable for the government to seek to attempt to level the racial playing field by
setting targets somewhat higher than current headcount. For
example, 49 C.F.R. Part 26 requires grant recipients to determine the availability of DBEs in their marketplaces absent the
presence of discrimination.446 In upholding the DBE regulations, the Tenth Circuit stated that:
because Congress has evidence that the effects of past discrimination have excluded minorities from the construction industry
and that the number of available minority subcontractors reflects
that discrimination, the existing percentage of minority-owned
businesses is not necessarily an absolute cap on the percentage
that a remedial program might legitimately seek to achieve.
Absolute proportionality to overall demographics is an unreasonable goal. However, Croson does not prohibit setting an aspirational goal above the current percentage of minority-owned
businesses that is substantially below the percentage of minority
persons in the population as a whole. This aspirational goal is
reasonably construed as narrowly tailored to remedy past discrimination that has resulted in homogenous ownership within
the industry. It is reasonable to conclude that allocating more
than 95% of all federal contracts to enterprises owned by nonminority persons, or more than 90% of federal transportation

contracts to enterprises owned by non-minority males, is in and
of itself a form of passive participation in discrimination that
Congress is entitled to seek to avoid. See Croson, 488 U.S. at 492
(Op. of O’Connor, J.).447

At least one court has recognized that goal setting is not an
absolute science. In holding the DBE regulations to be narrowly tailored, the Eighth Circuit noted that “[t]hough the
underlying estimates may be inexact, the exercise requires the
States to focus on establishing realistic goals for DBE participation in the relevant contracting markets. This stands in
stark contrast to the program struck down in Croson.”448 On
the other hand, “sheer speculation” cannot form the basis for
an enforceable measure.449
A related issue is whether goals can be set to reflect the
expected availability “but for” the continued effects of discrimination. The DBE regulations direct recipients to consider making this adjustment to the baseline “headcount” of
DBEs, to reflect the results of a level playing field for DBEs.
This embodies the fundamental remedial purpose of the program: “[u]ntil that future day when national aspiration and
national reality converge, the [Supreme] Court has made clear
that under certain circumstances the federal government may
use race-conscious means to remedy the effects of historical
and present-day racial discrimination.”450
In addition to the overall aspirational goals for their annual
aggregate spending, state DOTs must set subcontracting goals
for specific projects based upon the availability of DBEs to
perform the anticipated scopes of subcontracting.451 As provided in Part 26, goals should reflect the particulars of the contract, not reiterate annual aggregate targets.452 For example,
in considering a challenge to the City of Baltimore’s M/WBE
Program, the court noted that the new ordinance, in contrast to an earlier program struck down as unconstitutional,
specifically required that goals be set on a contract-by-contract
and craft-by-craft basis.453 Not only is contract-specific goal
setting probably necessary to ensure flexibility,454 but also setting goals that reflect the reality of the scopes of work of the
job instead of overall agency spending targets reduces the need
to conduct good faith efforts reviews because the goal will
reflect the realities of actual subcontractable scopes of work as
well as the temptation to create “front” companies and sham
participation.

447

Adarand VII, 228 F.3d at 1181 (emphasis in the original).
Sherbrooke, 345 F.3d. at 972.
449Adarand VII, 228 F.3d at 1174; See Croson, 488 U.S. at 499.
450Adarand VII, 228 F.3d at 1155.
45149 C.F.R. § 26.51(d).
45249 C.F.R. § 26.51(e).
453Baltimore II, 218 F.Supp.2d at 751–52.
454See Western States, 407 F.3d at 990, 994; Sherbrooke, 345 F.3d at 972; Coral
Construction, 941 F.2d at 924.
448

442

49 C.F.R. § 26.11(c).
Grutter, 529 U.S. at 339.
444Coral Construction, 941 F.2d at 923.
445Webster, 51 F.Supp.2d at 1379, 1381 (statistically insignificant disparities are
insufficient to support an unexplained goal of 35% M/WBE participation in
county contracts); see also Baltimore I, 83 F.Supp.2d at 621.
446
49 C.F.R. § 26.45.
443

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

Third, program remedies should be limited to those firms
that have some nexus to the harms sought to be ameliorated.
Some courts have held that state and local programs must
provide proof that the individual owner of a firm seeking to
benefit from the program has suffered discrimination.455
In considering the eligibility of individual firms to participate
in the remedial benefits of the DBE Program, the rebuttable
presumptions of social and economic disadvantage have
been central to the courts’ holdings that Part 26 is narrowly tailored. “While TEA-21 creates a rebuttable presumption that
members of certain racial minorities fall within that class,
the presumption is rebuttable, wealthy minority owners and
wealthy minority-owned firms are excluded, and certification
is available to persons who are not presumptively disadvantaged but can demonstrate actual social and economic disadvantage. Thus, race is made relevant in the program, but it is
not a determinative factor.”456 Moreover, anyone can challenge
the disadvantage of any firm.457 Finally, each firm’s owner is regularly reviewed to ensure that his or her economic disadvantage
has not exceeded the personal net worth limit.458

U.S.DOT Guidance for Ninth Circuit Recipients
In response to Western States, the General Counsel of
the U.S.DOT in 2005 provided guidance to Ninth Circuit
grantees on how to meet the new test imposed by the opinion. After summarizing the opinion, the guidance describes
the actions recipients should take regarding their next DBE
goal submissions.
• “Recipients should examine the evidence they have on hand

•

Flexibility of Contract Goals
It is imperative that remedies not operate as fixed quotas.
The ability of a prime contractor that has made good faith
efforts to meet a contract goal to receive a waiver has been
central to the holding that the DBE Program meets the narrow tailoring requirement. State DOTs should collect data on
the frequency and circumstances of waivers to ensure that its
implementation of Part 26 is flexible.

Implications of Western States
The implications of Western States have been profound.
All grantees in the Ninth Circuit have been directed to
comply by suspending the use of subcontracting goals until
the evidentiary standards are satisfied. How to meet those
standards led in large part to TRB’s commissioning of this
Report.

455See, e.g., Drabik II, 50 F.Supp.2d at 766 (no “consideration given to whether
the particular MBE seeking a racial preference has suffered from the effects of
past discrimination by the state or prime contractors.”); Main Line Paving, 725
F.Supp. at 1362 (“program contains no provisions to identify those who were
victims of past discrimination and to limit the program’s benefits to them”).
456Sherbrooke, 345 F.3d at 973; see also Grutter, 539 U.S. at 341; Adarand VII, 228
F.3d at 1183–1184 (personal net worth limit is element of narrow tailoring);
cf. Associated General Contractors v. City of New Haven, 791 F.Supp. 941, 948
(D. Conn. 1992), vacated on other grounds, 41 F.3d 62 (2nd Cir. 1992) (definition of “disadvantage” was vague and unrelated to goal).
45749 C.F.R. §26.87.
458Adarand VII, 228 F.3d at 1186–87 (“The current regulations more precisely
identify the proper minority recipients of DBE certification by periodically rescreening for economic disadvantage all candidates for such certification.”).

•

of discrimination and its effects. Does this evidence appear
to address successfully the problems the 9th Circuit’s decision articulated concerning the Washington State DOT DBE
Program?
If the recipient currently has sufficient evidence of discrimination or its effects, the recipient should go ahead and submit race- and gender-conscious goals where appropriate, as
provided in Part 26. (This submission would include the
normal race-conscious/race-neutral ‘split’ in overall goals.)
If the evidence of discrimination and its effects pertains to
some, but not all, of the groups that Part 26 presumes to be
socially and economically disadvantaged, then these raceand gender-conscious goals should apply only to the group
or groups for which the evidence is adequate.
If necessary, the Department may entertain program
waivers of Part 26’s prohibition of group-specific goals in
this situation.
If the recipient does not currently have sufficient evidence
of discrimination or its effects, then the recipient would
submit an all race-neutral overall goal for FY 2006. The
recipient’s submission would include a statement concerning the absence of adequate evidence of discrimination and
its effects.
A race-neutral submission of this kind should include a
description of plans to conduct a study or other appropriate evidence-gathering process to determine the existence
of discrimination or its effects in the recipient’s market. An
action plan describing the study and time lines for its completion should also be included.”

If a recipient lacks sufficient evidence of discrimination or its
effects, it “should immediately begin to conduct a rigorous and
valid study to determine whether there is evidence of discrimination or its effects. . . . this evidence-gathering effort [should
be] completed expeditiously. . . . [A study should] be designed
to determine, in a fair and valid way, whether evidence of the
kind the 9th Circuit decision determined was essential to a DBE
program including race-conscious elements exists.”
In particular:
• “The study should ascertain the evidence for discrimination

and its effects separately for each of the groups presumed by
Part 26 to be disadvantaged.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

95
• The study should include an assessment of any anecdotal

and complaint evidence of discrimination.
• Recipients may consider the kinds of evidence that are used

•

in “Step 2” of the Part 26 goal-setting process, such as evidence of barriers in obtaining bonding and financing, and
disparities in business formation and earnings.
With respect to statistical evidence, the study should rigorously determine the effects of factors other than discrimination that may account for statistical disparities between
DBE availability and participation. This is likely to require
a multivariate/regression analysis.
The study should quantify the magnitude of any differences between DBE availability and participation, or DBE
participation in race-neutral and race-conscious contracts.
Recipients should exercise caution in drawing conclusions
about the presence of discrimination and its effects based
on small differences.
In calculating availability of DBEs, the study should not rely
on numbers that may have been inflated by race-conscious
programs or that may not have been narrowly tailored.
Recipients should consider, as they plan their studies,
evidence-gathering efforts that Federal courts have approved
in the past. These include the studies by Minnesota and
Nebraska cited in Sherbrooke Turf . . . [and] the Illinois evidence cited in Northern Contracting.”

DBE Goal Setting
While the Guidance provided the contours of the types of
evidence to be analyzed, precisely what evidence a defensible study should analyze in the Ninth Circuit is not clear. If
WSDOT had presented a Sherbrooke/IDOT-type availability
study and proffered expert testimony in support of its analysis,
the court may have approved the program. Whether additional
evidence of discrimination of the type presented at the Northern Contracting trial should also be included is uncertain

because while the Western States court suggests disparity evidence is required, it also relied upon Sherbrooke where such
evidence was not presented. The Seventh Circuit explained the
Ninth Circuit’s misreading of a previous Seventh Circuit case,
but the IDOT trial presented evidence of the type referred to by
the Ninth Circuit, so it again is impossible to know the outcome had Illinois relied solely upon its Availability Study.
What is certain is that at a minimum, Ninth Circuit state
DOTs, and perhaps all recipients, must significantly customize
their goals to withstand strict scrutiny. It is not enough to plug
the Step 1 availability estimate into a formula without considering the effects of discrimination. Western States also casts
doubt on the value of using the state DOT’s past levels of DBE
utilization as a measure of the availability of DBEs “but for”
discrimination because of the interposition of the DBE Program. While the opinion affirms that the Step 2 adjustment is
the appropriate point at which to undertake this inquiry, a conceptually rigorous model must be applied. Any adjustment
must be a quantifiable representation of the qualitative judgment that the ongoing effects of past or current discrimination
either do or do not continue to impede DBEs’ full and fair
access to the recipient’s market.
Western States further implies, and the U.S.DOT Guidance
provides, that when a recipient determines that not all the enumerated groups have suffered discrimination in its market it
must petition U.S.DOT for a waiver of the prohibition against
separate goals for racial and ethnic minorities and white
women. If a group is not found to suffer discrimination in the
state DOT’s marketplace, certified DBEs owned by such
persons cannot be counted by a prime contractor toward
meeting a DBE contract goal. DBE directories must be revised
to provide race and gender information and clearly spell out
which firms are eligible for goal credit. Waivers to remove
some racial or ethnic groups or white women from credit
toward meeting DBE contract goals have been filed by at
least two state DOTs.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

APPENDIX D

Glossary

Aggregation, aggregated: Refers to the practice of combining smaller
groups into larger groups. In the present context this term is typically
used in reference to the presentation of utilization, availability, or
related statistics according to industry. For example, statistics presented for the “Construction” sector as a whole are more aggregated
than separate statistics for “Building Construction,” “Heavy Construction,” and “Special Trades Construction” industries. See also
“Disaggregation, disaggregated.”
ADOT: Arizona Department of Transportation.
Alaska DOT&PF: Alaska Department of Transportation & Public
Facilities.

CWC: Concrete Works of Colorado, Inc.
Constitutional Significance or Substantive Significance: Refers to a
case where a disparity is “large.” Under the EEOC’s four-fifths rule,
a disparity is large if it is 0.8 or less. For example, if DBE utilization
in a given industry category is 8% and corresponding DBE availability is 10%, the resulting disparity ratio would be considered constitutionally or substantively significant.
Crosswalk table: A table that links Standard Industrial Classification
(SIC) codes to their corresponding North American Industrial Classification System (NAICS) codes and vice-versa.
DBE: Disadvantaged Business Enterprise.

ALDOT: Alabama Department of Transportation.
Anecdotal evidence: Qualitative data regarding business owners’
accounts of experiences with disparate treatment and other barriers
to business success.
Baseline Business Population: The underlying universe of business
establishments used in an availability analysis. The denominator in a
DBE availability measure.
But-for: A term that refers to a hypothetical market that is unaffected
by the presence of business discrimination. Often used to describe
what level of DBE availability would be expected to be observed in a
perfectly race-neutral marketplace.
Caltrans: California Department of Transportation.
Capacity: This term has no single definition. See Appendix B for
discussion.
CBP: The U.S. Census Bureau’s County Business Patterns statistical data
series. Additional information about the CBP is available from the
Census Bureau Web site: http://www.census.gov/epcd/cbp/view/
cbpview.html.
CCD: (Colorado) Center for Community Development.
CDOT: Colorado Department of Transportation.

De novo: “Anew.” A de novo review is a completely new review of evidence held in a higher or appellate court as if the original trial court’s
review had never taken place.
Decennial: Refers to the census conducted every decade by the U.S.
Census Bureau. The last decennial census was conducted in 2000.
The next will be conducted in 2010.
Demand-side: Refers to activity on the demand-side of an economic
market. For example, when state DOT’s conduct bid-lettings and hire
contractors, they are creating market demand. See also “Supply-side.”
Dependent variable: In a regression analysis, a variable whose value is
postulated to be influenced by one or more other “independent”
or “exogenous” or “explanatory” variables. For example, in business
owner earnings regressions, business owner earnings is the dependent
variable, and other variables, such as industry, geographic location,
or age are the explanatory variables. See also “Independent variable,”
“Exogenous variable.”
Disaggregation, disaggregated: Refers to the practice of splitting larger
groups into smaller groups. In the present context this term is typically used in reference to the presentation of utilization, availability,
or related statistics according to industry. For example, statistics presented for “Building Construction,” “Heavy Construction,” and “Special Trades Construction” industries are more disaggregated than
statistics for the “Construction” sector as a whole.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

97
Disparate impact: A synonym for “disparity,” often used in the employment discrimination litigation context. A disparate impact occurs when a “good” outcome for a given group occurs significantly
less often than expected given that group’s relative size, or when a
“bad” outcome occurs significantly more often than expected.
DOD: Department of Defense.
Econometrics, econometrically: Econometrics is the field of economics that concerns itself with the application of statistical inference to
the empirical measurement of relationships postulated by economic
theory. See also “Regression.”
Endogenous variable: A variable that is correlated with the residual in
a regression analysis or equation. Endogenous variables should not
be used in statistical tests for the presence of disparities. See also
“Exogenous variable.”

MDOT: Maryland Department of Transportation.
MDT: Montana Department of Transportation.
Median: A term of art in statistics, meaning the middle value of a series
of numbers. For example, the median value of the series 1, 1, 2, 2, 2,
4, 5 is 2.
Microdata or micro-level data: Quantitative data rendered at the level
of the individual person or business, as opposed to data rendered for
groups or aggregates of individuals or businesses. For example, Dun &
Bradstreet provides micro-level data on business establishments. The
Census Bureau’s Survey of Business Owners (SBO) provides grouped or
aggregated data on businesses.
Misclassification: In the present context, this term refers to a situation
when a listing or directory of minority-owned or women-owned firms
has incorrectly classified a firm’s race or gender status. For example,
when a firm listed as Hispanic owned is actually African American
owned, or when a firm listed as white female-owned is actually white
male owned. See also “Nonclassification.”

Exogenous variable: A variable that is uncorrelated with the residual
in a regression analysis or equation. Exogenous variables are appropriate for use in statistical tests for the presence of disparities. See
also “Endogenous variable,” “Independent variable,” “Dependent
variable.”

Mn/DOT: Minnesota Department of Transportation.

FDOT: Florida Department of Transportation.

MoDOT: Missouri Department of Transportation.

FFY: Federal Fiscal Year. The Federal Fiscal Year runs from October 1
through September 30.

MSA: Metropolitan Statistical Area. As defined by the federal Office of
Management and Budget, an urban area that meets specified size criteria: either it has a core city of at least 50,000 inhabitants within its
corporate limits, or it contains an urbanized area of at least 50,000
inhabitants and has a total population of at least 100,000.

First-tier subcontractors: Subcontractors or suppliers hired directly by
the prime contractor.
GDOT: Georgia Department of Transportation.

M/WDBE: Minority- and Women-Owned Disadvantaged Business
Enterprise.

HDOT: Hawaii Department of Transportation.
IDOT: Illinois Department of Transportation.
Independent variable: In a regression analysis, one or more variables that
are postulated to influence or explain the value of another, “dependent” variable. For example, in business owner earnings regressions,
business owner earnings is the dependent variable, and other variables,
such as industry, geographic location, or age are the independent
or explanatory variables. See also “Dependent variable,” “Exogenous
variable.”

NAICS: North American Industry Classification System. The standard
system for classifying industry-based data in the U.S. NAICS superseded the Standard Industrial Classification (SIC) System in 1997.
See also “SIC.”
NCDOT: North Carolina Department of Transportation.
NDDOT: North Dakota Department of Transportation
NDOR: Nebraska Department of Roads.

ITD: Idaho Transportation Department.

NDOT: Nevada Department of Transportation.

MBE: Minority-Owned Business Enterprise. A business establishment
that is 51% or more owned and controlled by racial or ethnic minorities (i.e., African Americans, Hispanics, Asians or Pacific Islanders,
American Indians, or Alaska Natives).

NIGP: National Institute of Government Purchasing.

Mean: A term of art in statistics, synonymous in this context with the
arithmetic average. For example, the mean value of the series 1, 1, 2,
2, 2, 4, 5 is 2.43. This is derived by calculating the sum of all the values in the series (i.e., 17) and dividing that sum by the number of
elements in the series (i.e., 7).

NMDOT: New Mexico Department of Transportation.
Nonclassification: In the present context, this term refers to a type of
misclassification when a listing or directory has not identified firms
as minority owned or women owned when, in fact, they are. See
“Misclassification.”
Nonresponse bias: See “Response bias.”

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

98
NSSBF: National Survey of Small Business Finances.

among a given subset of contractors, for example minority-owned
and women-owned contractors.

ODOT: Oregon Department of Transportation.
One-sided statistical test, two-sided statistical test: A “two-sided” test
means that one is testing the hypothesis that two values, say u (utilization) and a (availability), are equal against the alternate hypothesis
that u is not equal to a. In contrast, a one-sided test means that you
are testing the hypothesis that u and a are equal against the alternate
hypothesis u is not equal to a in only one direction. That is, that it is
either larger than a or smaller than a.

SIC: Standard Industrial Classification System. Prior to 1997, the standard system for classifying industry-based data in the U.S. SIC was
superseded by the North American Industry Classification System
(NAICS). See also “NAICS.”
Statistical significance: A statistical outcome or result that is unlikely
to have occurred as the result of random chance alone. The greater
the statistical significance, the smaller the probability that it resulted
from random chance alone. See also “p-value.”

OSDBU: Office of Small and Disadvantaged Business Utilization.
PUMS: Public Use Microdata Samples.
p-value: A standard measure used to represent the level of statistical
significance. It states the numerical probability that the stated relationship is due to chance alone. For example, a p-value of 0.05 or 5%
indicates that the chance a given statistical difference is due purely
to chance is 1-in-20. See also “Statistical Significance.”
Regression, multiple regression, multivariate regression: A type of
statistical analysis that examines the correlation between two variables (“regression”) or three or more variables (“multiple regression” or “multivariate regression”) in a mathematical model by
determining the line of best fit through a series of data points.
Econometric research typically employs regression analysis. See
also “Econometrics.”

Stratified: In the present context, this refers to a statistical practice
where random samples are drawn within different categories or
“strata,” such as time period, industry sector, or DBE status.
Substantive significance or constitutional significance: An indication
of the how large or small a given disparity is. Under the EEOC’s
“four-fifths” rule, a disparity ratio is substantively significant if it is
0.8 or less on a scale of 0 to 1.
Supply-side: Refers to activity on the supply-side of an economic market. For example, when new businesses are formed, other things
equal, the supply of contractors to the market is increased. See also
“Demand-side.”
TEA-21: Transportation Equity Act for the 21st Century (1998).
TDOT: Tennessee Department of Transportation.

Residual: The difference between an observed value and a value predicted
by a regression. A positive residual occurs where the observed value
exceeds the value computed by the regression; a negative residual is the
opposite.
Response bias: Response bias can occur in survey research when the
survey answers provided by respondents differ in important ways
from the answers that would have been provided by those who did
not respond to the survey. In survey research for disparity or availability studies, response bias can be tested by eliciting additional
information from nonrespondents through supplemental survey
methods.
RFP: Request for Proposal.

t-test, t-statistic, t-distribution: Often employed in disparity studies to
determine the statistical significance of a particular disparity statistic.
A t-test is a statistical hypothesis test based on a test statistic whose
sampling distribution is a t-distribution. Various t-tests, strictly speaking, are aimed at testing hypotheses about populations with normal
probability distributions. However, statistical research has shown
that t-tests often provide quite adequate results for nonnormally distributed populations as well.
Two-sided statistical test, One-sided statistical test: A “two-sided” test
means that one is testing the hypothesis that two values, say u (utilization) and a (availability), are equal against the alternate hypothesis
that u is not equal to a. In contrast, a one-sided test means that you
are testing the hypothesis that u and a are equal against the alternate
hypothesis u is not equal to a in only one direction. That is, that it is
either larger than a or smaller than a.

SBO: The U.S. Census Bureau’s Survey of Business Owners statistical data
series. Part of the 5-year Economic Census series. Additional information about the SBO is available from the Census Bureau Web site:
http://www.census.gov/csd/sbo.

TxDOT: Texas Department of Transportation.

SCDOT: South Carolina Department of Transportation.

VDOT: Virginia Department of Transportation.

SDB: Small Disadvantaged Business.

WBE: Women-Owned Business Enterprise: A business establishment
that is 51% or more owned and controlled by women.

Set-aside, set-asides: A contracting practice where certain contracts or
classes of contracts are reserved for competitive bidding exclusively

WSDOT: Washington State Department of Transportation.

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

References

Cases (Alphabetical)
Adarand Constructors, Inc. v. Peña, 515 U.S. 200 (1995) (Adarand III).
Adarand Constructors, Inc. v. Peña, 965 F. Supp. 1556 (D. Colo. 1997),
rev’d, 228 F.3d 1147 (2000) (Adarand IV).
Adarand Constructors, Inc. v. Slater, 228 F.3d 1147 (10th Cir. 2000), cert.
granted, 532 U.S. 941, then dismissed as improvidently granted, 534
U.S. 103 (2001) (Adarand VII).
Association for Fairness in Business, Inc. v. New Jersey, 82 F.Supp.2d 353
(D. N.J. 2000).
Associated General Contractors of America v. City of Columbus, 936 F.
Supp. 1363 (S.D. Ohio 1996).
Associated General Contractors of California, Inc. v. Coalition for Economic
Equity, 950 F.2d 1401 (9th Cir. 1991).
Associated General Contractors of Connecticut v. City of New Haven, 791
F.Supp. 941 (D. Conn. 1992).
Associated General Contractors of Ohio, Inc. v. Drabik, 50 F.Supp.2d 741
(S.D. Ohio 1999) (Drabik I).
Associated General Contractors of Ohio v. Drabik, 214 F.3d 730 (6th Cir.
2000) (Drabik II).
Associated Utility Contractors of Maryland, Inc. v. Mayor and City Council of Baltimore, 83 F.Supp.2d 613 (D. Md. 2000) (Baltimore I).
Associated Utility Contractors of Maryland, Inc. v. Mayor and City Council of Baltimore 218 F.Supp.2d 749 (D. Md. 2002) (Baltimore II).
Brunet v. City of Columbus, 1 F.3d 390 (6th Cir. 1993), cert. denied sub
nom Brunet v. Tucker, 510 U.S. 1164 (1994).
Builders Association of Greater Chicago v. City of Chicago, 298 F. Supp.2d
725 (N.D. Ill. 2003).
Builders Association of Greater Chicago v. County of Cook, 123 F.Supp.2d
1087 (N.D. Ill. 2000) (Cook I).
Builders Association of Greater Chicago v. County of Cook, 256 F.3d 642
(7th Cir. 2001) (Cook II).
City of Richmond v. J. A. Croson Co., 488 U.S. 469 (1989).
Concrete Works of Colorado, Inc. v. City and County of Denver, 823
F.Supp. 821 (D. Colo. 1993) (Concrete Works I).
Concrete Works of Colorado, Inc. v. City and County of Denver, 36 F.3d
1513 (10th Cir. 1994) (Concrete Works II).
Concrete Works of Colorado, Inc. v. City and County of Denver, 86
F.Supp.2d 1042 (D. Colo. 2000) (Concrete Works III).
Concrete Works of Colorado, Inc. v. City and County of Denver, 321 F.3d
950 (10th Cir. 2003) (Concrete Works IV), cert. denied, 540 U.S.
1027 (2003).
Cone Corporation v. Hillsborough County, 908 F.2d 909 (11th Cir. 1990),
cert. denied, 498 U.S. 983 (1990).

Contractors Association of Eastern Pennsylvania v. City of Philadelphia,
6 F.3d 990 (3rd Cir. 1993) (Philadelphia II).
Contractors Association of Eastern Pennsylvania v. City of Philadelphia,
91 F.3d 586 (3rd Cir. 1996) (Philadelphia III).
Coral Construction Co. v. King County, 941 F.2d. 910 (9th Cir. 1991).
Engineering Contractors Assoc. of South Florida, Inc. v. Metropolitan Dade
County, 943 F.Supp. 1546 (S.D. Fla. 1996) (Engineering Contractors I).
Engineering Contractors Association of South Florida, Inc. v. Metropolitan Dade County, 122 F.3d 895 (11th Cir. 1997) (Engineering
Contractors II).
F. Buddie Contracting Ltd., v. Cuyahoga Community College District,
31 F.Supp.2d. 571 (N.D. Oh. 1998).
Fullilove v. Klutznick, 448 U.S. 448 (1980).
Grutter v. Bollinger, 539 U.S. 306 (2003).
Harrison & Burrowes Bridge Constructors, Inc. v. Cuomo, 981 F.2d 50
(2nd Cir. 1992).
H. B. Rowe, Inc. v. Tippett, 2008 U.S. Dist. LEXIS 100569 (E.D. N.C.
2008).
Hershell Gill Consulting Engineers, Inc. v. Miami-Dade County, Florida,
333 F.Supp.2d 1305 (S.D. Fla. 2004).
Main Line Paving Co., Inc. v. Board of Education, 725 F.Supp. 1349 (E.D.
Penn. 1989).
Maryland Troopers Association, Inc. v. Evans, 993 F.2d 1072, 1076–77
(4th Cir. 1993).
Milwaukee County Pavers Ass’n v. Fiedler, 922 F.2d 419, 424 (7th Cir.
1991), cert. denied, 500 U.S. 954 (1991).
North Shore Concrete and Associates, Inc. v. City of New York, 1998 U.S.
Dist. LEXIS 6785 (E.D. N.Y. 1998).
Northeastern Florida Chapter of the AGC v. Jacksonville, 508 U.S. 656
(1993).
Northern Contracting, Inc. v. Illinois Department of Transportation,
2004 U.S. Dist. LEXIS, 3226 (N.D. Ill., Mar. 3, 2004) (Northern
Contracting I).
Northern Contracting, Inc. v. Illinois Department of Transportation, 2005
U.S. Dist. LEXIS 19868 (Sept. 8, 2005) (Northern Contracting II).
Northern Contracting, Inc. v. Illinois Department of Transportation, 473
F.3d 715 (7th Cir. 2007) (Northern Contracting III).
O’Donnell Construction Co., Inc, v. District of Columbia, 963 F.2d 420
(D.C. Cir. 1992).
Phillips & Jordan, Inc. v. Watts, 13 F.Supp.2d 1308 (N.D. Fla. 1998).
Rothe Development Corporation v. U.S. Department of Defense, 262 F.3d
1306 (Fed. Cir. 2001) (Rothe V).
Rothe Development Corporation v. U.S. Department of Defense, 545 F.3d
1023 (Fed. Cir. 2008) (Rothe VII).

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

100
Sherbrooke Turf, Inc. v. Minnesota Department of Transportation, 345 F.3d.
964 (8th Cir. 2003), cert. denied, 541 U.S. 1041 (2004).
Thompson Building Wrecking Co., Inc. v. City of Augusta, Georgia, 2007
U.S. Dist. LEXIS 27127 (S.D. Geo. March 14, 2007).
United States v. Paradise, 480 U.S. 149 (1987).
United States v. Virginia, 518 U.S. 515 (1996).
Virdi v. DeKalb County School District, 2005 U.S. App. LEXIS 11203
(11th Cir. June 13, 2005).
W.H. Scott Construction Co., Inc. v. City of Jackson, Mississippi, 199 F.3d
206 (5th Cir. 1999).
Webster v. Fulton County, Georgia, 51 F.Supp.2d 1354 (N.D. Ga. 1999).
Western States Paving Co., Inc. v. Washington Department of Transportation, 407 F.3d 983 (9th Cir. 2005), cert. denied, 546 U.S. 1170 (2006).
West Tennessee Chapter of Associated Builders and Contractors, Inc. v.
City of Memphis, 302 F.Supp.2d 860 (W.D. Tenn. 2004).
Wygant v. Jackson Board of Education, 476 U.S. 267 (1986).

Cases (By Circuit)

Fifth Circuit Court of Appeals
W. H. Scott Construction Co., Inc. v. City of Jackson, Mississippi, 199 F.3d
206 (5th Cir. 1999).

Sixth Circuit Court of Appeals
Associated General Contractors of America v. City of Columbus, 936 F.
Supp. 1363 (S.D. Ohio 1996).
Associated General Contractors of Ohio, Inc. v. Drabik, 50 F.Supp.2d 741
(S.D. Ohio 1999) (Drabik I).
Associated General Contractors of Ohio v. Drabik, 214 F.3d 730 (6th Cir.
2000) (Drabik II).
Brunet v. City of Columbus, 1 F.3d 390 (6th Cir. 1993), cert. denied sub
nom Brunet v. Tucker, 510 U.S. 1164 (1994).
F. Buddie Contracting Ltd., v. Cuyahoga Community College District,
31 F.Supp.2d. 571 (N.D. Oh. 1998).
West Tennessee Chapter of Associated Builders and Contractors, Inc. v.
City of Memphis, 302 F.Supp.2d 860 (W.D. Tenn. 2004).

United States Supreme Court
Adarand Constructors, Inc. v. Peña, 515 U.S. 200 (1995) (Adarand III).
City of Richmond v. J. A. Croson Co., 488 U.S. 469 (1989).
Fullilove v. Klutznick, 448 U.S. 448 (1980).
Grutter v. Bollinger, 539 U.S. 306 (2003).
United States v. Paradise, 480 U.S. 149 (1987).
United States v. Virginia, 518 U.S. 515 (1996).
Wygant v. Jackson Board of Education, 476 U.S. 267 (1986).

Seventh Circuit Court of Appeals

Associated General Contractors of Connecticut v. City of New Haven, 791
F.Supp. 941 (D. Conn. 1992).
Harrison & Burrowes Bridge Constructors, Inc. v. Cuomo, 981 F.2d 50
(2nd Cir. 1992).
North Shore Concrete and Associates, Inc. v. City of New York, 1998 U.S.
Dist. Lexis 6785 (E.D. N.Y. 1998).

Builders Association of Greater Chicago v. City of Chicago, 298 F. Supp.2d
725 (N.D. Ill. 2003).
Builders Association of Greater Chicago v. County of Cook, 123 F.Supp.2d
1087 (N.D. Ill. 2000) (Cook I).
Builders Association of Greater Chicago v. County of Cook, 256 F.3d 642
(7th Cir. 2001) (Cook II).
Milwaukee County Pavers Ass’n v. Fiedler, 922 F.2d 419, 424 (7th Cir.
1991), cert. denied, 500 U.S. 954 (1991).
Northern Contracting, Inc. v. Illinois Department of Transportation,
2004 U.S. Dist. LEXIS, 3226 (N.D. Ill., Mar. 3, 2004) (Northern
Contracting I).
Northern Contracting, Inc. v. Illinois Department of Transportation, 2005
U.S. Dist. LEXIS 19868 (Sept. 8, 2005) (Northern Contracting II).
Northern Contracting, Inc. v. Illinois Department of Transportation, 473
F.3d 715 (7th Cir. 2007) (Northern Contracting III).

Third Circuit Court of Appeals

Eighth Circuit Court of Appeals

Association for Fairness in Business, Inc. v. New Jersey, 82 F.Supp.2d 353
(D. N.J. 2000).
Contractors Association of Eastern Pennsylvania v. City of Philadelphia,
6 F.3d 990 (3rd Cir. 1993) (Philadelphia II).
Contractors Association of Eastern Pennsylvania v. City of Philadelphia,
91 F.3d 586 (3rd Cir. 1996) (Philadelphia III).
Main Line Paving Co., Inc. v. Board of Education, 725 F.Supp. 1349 (E.D.
Penn. 1989).

Sherbrooke Turf, Inc. v. Minnesota Department of Transportation, 345
F.3d. 964 (8th Cir. 2003), cert. denied, 541 U.S. 1041 (2004).

Second Circuit Court of Appeals

Fourth Circuit Court of Appeals
Associated Utility Contractors of Maryland, Inc. v. Mayor and City Council of Baltimore, 83 F.Supp.2d 613 (D. Md. 2000) (Baltimore I).
Associated Utility Contractors of Maryland, Inc. v. Mayor and City Council
of Baltimore 218 F.Supp.2d 749 (D. Md. 2002) (Baltimore II).
H. B. Rowe, Inc. v. Tippett, 2008 U.S. Dist. LEXIS 100569 (E.D. N.C.
2008).
Maryland Troopers Association, Inc. v. Evans, 993 F.2d 1072, 1076–77
(4th Cir. 1993).

Ninth Circuit Court of Appeals
Associated General Contractors of California, Inc. v. Coalition for Economic
Equity, 950 F.2d 1401 (9th Cir. 1991).
Coral Construction Co. v. King County, 941 F.2d. 910 (9th Cir. 1991).
Western States Paving Co., Inc. v. Washington Department of Transportation, 407 F.3d 983 (9th Cir. 2005), cert. denied, 546 U.S. 1170 (2006).

Tenth Circuit Court of Appeals
Adarand Constructors, Inc. v. Peña, 965 F. Supp. 1556 (D. Colo. 1997),
rev’d, 228 F.3d 1147 (2000) (Adarand IV).
Adarand Constructors, Inc. v. Slater, 228 F.3d 1147 (10th Cir. 2000), cert.
granted, 532 U.S. 941, then dismissed as improvidently granted, 534
U.S. 103 (2001) (Adarand VII).

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

101
Concrete Works of Colorado, Inc. v. City and County of Denver, 823
F.Supp. 821 (D. Colo. 1993) (Concrete Works I).
Concrete Works of Colorado, Inc. v. City and County of Denver, 36 F.3d
1513 (10th Cir. 1994) (Concrete Works II).
Concrete Works of Colorado, Inc. v. City and County of Denver, 86
F.Supp.2d 1042 (D. Colo. 2000) (Concrete Works III).
Concrete Works of Colorado, Inc. v. City and County of Denver, 321 F.3d
950 (10th Cir. 2003) (Concrete Works IV), cert. denied, 540 U.S.
1027 (2003).

Eleventh Circuit Court of Appeals
Cone Corporation v. Hillsborough County, 908 F.2d 909 (11th Cir. 1990),
cert. denied, 498 U.S. 983 (1990).
Engineering Contractors Assoc. of South Florida, Inc. v. Metropolitan
Dade County, 943 F.Supp. 1546 (S.D. Fla. 1996) (Engineering
Contractors I).
Engineering Contractors Association of South Florida, Inc. v. Metropolitan Dade County, 122 F.3d 895 (11th Cir. 1997) (Engineering
Contractors II).
Hershell Gill Consulting Engineers, Inc. v. Miami-Dade County, Florida,
333 F.Supp.2d 1305 (S.D. Fla. 2004).
Northeastern Florida Chapter of the AGC v. Jacksonville, 508 U.S. 656
(1993).
Phillips & Jordan, Inc. v. Watts, 13 F.Supp.2d 1308 (N.D. Fla. 1998).
Thompson Building Wrecking Co., Inc. v. City of Augusta, Georgia, 2007
U.S. Dist. LEXIS 27127 (S.D. Geo. March 14, 2007).
Virdi v. DeKalb County School District, 2005 U.S. App. LEXIS 11203
(11th Cir. June 13, 2005).
Webster v. Fulton County, Georgia, 51 F.Supp.2d 1354 (N.D. Ga. 1999).

District of Columbia Court of Appeals
O’Donnell Construction Co., Inc, v. District of Columbia, 963 F.2d 420
(D.C. Cir. 1992).

Federal Circuit Court of Appeals
Rothe Development Corporation v. U.S. Department of Defense, 262 F.3d
1306 (Fed. Cir. 2001) (Rothe V).
Rothe Development Corporation v. U.S. Department of Defense, 545 F.3d
1023 (Fed. Cir. 2008) (Rothe VII).

Statutes
Transportation Equity Act for the 21st Century (TEA-21), Pub. L. No.
105-178 (b)(1), 112 Stat. 107, 113

Regulations
29 C.F.R. Part 1607
49 C.F.R. Part 23
49 C.F.R. Part 26

General References
Areeda, P., L. Kaplow, and A. S. Edlin, Antitrust Analysis: Problems,
Text, Cases, 6th ed., New York: Aspen Publishers, 2004.

Aronson R. L., Self-employment: A labor market perspective. Ithaca, NY:
ILR Press, 1991.
Bourdon, C. C. and R. E. Levitt, Union and open-shop construction, compensation, work practices, and labor markets. Lexington Books:
Lexington, Massachusetts, 1980.
Brimmer and Marshall Economic Consultants, Inc., Public Policy and
Promotion of Minority Economic Development: City of Atlanta and
Fulton County, Georgia: Part I, Washington, D.C., 1990.
The Colorado Center for Community Development, University of Colorado at Denver, Survey of Small Business Lending in Denver: Prepared for the City and County of Denver, Colorado Capital Initiatives,
and the Denver Community Reinvestment Alliance, 1996.
Connolly, W. B., Jr., D. W. Peterson, and M. J. Connolly, Use of Statistics in Equal Employment Opportunity Litigation (Release 16), New
York: Law Journal Press, 2001.
Dowall, D. E. and L. C. Barone, “Improving Construction Industry
Performance: Issues and Opportunities,” U.C. Berkeley, prepared
for the United Nations Industrial Development Organization,
May 1993.
Eccles, R. G., “Bureaucratic versus Craft Administration: The Relationship of Market Structure to the Construction Firm.” Administrative Science Quarterly. Vol. 26, 1981.
Enchautegui, M. E., M. Fix, P. Loprest, S. von der Lippe, and D. Wissoker, Do minority-owned businesses get a fair share of government
contracts? Washington, D.C.: The Urban Institute, 1996.
Fairlie, R. and B. Meyer, The ethnic and racial character of selfemployment. NBER Working Paper Series. No. 4791, 1994.
———. “Trends in self-employment among white and black men
during the twentieth century,” Journal of Human Resources 35(4),
2000. 643–669.
Gastwirth, J. L., Statistical reasoning in law and public policy, Volume 1:
Statistical concepts and issues of fairness. Boston: Academic Press,
Inc., 1988.
Gould, F. E., Investigation in Construction Entrepreneurship. Masters Thesis, Massachusetts Institute of Technology, Cambridge, May 1980.
Greene, W. H., Econometric Analysis, 3rd ed., Upper Saddle River, New
Jersey: Prentice Hall, 1997.
Holt, C. and J. Wainwright, “Western States Paving Company v. Washington State Department of Transportation: Ninth Circuit Upholds Federal Disadvantaged Business Enterprise Program for Transportation
Contracts But Strikes Down State’s Implementation of Program
Regulations,” American Bar Association, Section of Antitrust Law,
The Transportation Antitrust Update, No. 16 (Spring), 2007, 9–14.
La Noue, G. R., “Standards for the second generation of Crosoninspired disparity studies,” The Urban Lawyer 26 (Summer), 1994,
485–540.
———. “Report of Plaintiff ’s Expert,” Concrete Works of Colorado, Inc.
v. The City and County of Denver, Case No. 92 M 21, 15 September,
1998a.
———. “Deposition of George R. La Noue,” Concrete Works of Colorado, Inc. v. The City and County of Denver, Case No. 92 M 21,
28 October, 1998b.
———. “The economics of discrimination as applied to business development,” Horowitz, Irving Louis, ed., Eli Ginzberg: The Economist
as a Public Intellectual. New Brunswick, NJ: Transaction Publishers, 2002, 67–106.
———. Minority and female business development after Croson
Unpublished manuscript, 1991.
Meier, P., J. Sacks, and S. L. Zabell, “What happened in Hazelwood: Statistics, employment discrimination, and the 80% rule,” Statistics
and the Law. DeGroot, Morris H., Stephen E. Fienberg, and Joseph
B. Kadane, eds., New York: John Wiley & Sons. 1986, 1–40.

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Myrdal, G., An American dilemma, the negro problem and modern
democracy, Volume 1, New York, Harper & Row, 1944.
Oaxaca, R. L., “Male-female wage differences in urban labor markets,”
International Economic Review, 14(3), October 1973, 693–709.
Richardson Engineering Services, Inc., Process Plant Construction Estimating Standards. Mesa, Arizona, 2000.
Texas Building and Procurement Commission, Analysis of the 2007
Mason Tillman Draft Disparity Study. Austin, Texas, 2007.
U.S. Census Bureau. Wealth and Asset Ownership, 2008. http://www.
census.gov/hhes/www/wealth/2002_tables.html. Accessed May 5,
2008.
———. 2002 Survey of Business Owners, 2006. http://www.census.gov/
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———. “1987 economic censuses: Survey of minority-owned business
enterprises: Table 4. Statistics for All U.S. Firms by Industry Division for Metropolitan Statistical Areas,” Photocopy [n.p.], 1991.
U.S. Department of Justice. “Proposed Reforms to Affirmative Action
in Federal Procurement,” 61 Federal Register 101, 26042–26063,
1996.
U.S. Department of Labor, Bureau of Labor Statistics. 2008. “Consumer
Price Index, All Urban Consumers—(CPI-U), U.S. City Average,
All Items, 1982–84=100,” ftp://ftp.bls.gov/pub/special.requests/
cpi/cpiai.txt. Accessed May 17, 2008.
U.S. Department of Transportation, Federal Highway Administration.
2008. Highway Statistics Series: Highway Finance, FFY 1995–FFY2007,
http://www.fhwa.dot.gov/policy/ohpi/qffinance.cfm. Accessed May
17, 2008.
———. Office of Small and Disadvantaged Business Utilization
(OSDBU). nd. “Tips for Goal-Setting in the Disadvantaged Business
Enterprise (DBE) Program,” http://osdbu.dot.gov/DBEProgram/
tips.cfm (18 May 2008).
———. Office of Small and Disadvantaged Business Utilization. n.d.
“Guidance for DBE Program Administrators.” http://osdbu.dot.
gov/DBEProgram/GuidanceforDBEProgramAdministrators/index
.cfm Accessed May 18, 2008.
Wainwright, J. S., Racial discrimination and minority business enterprise,
evidence from the 1990 Census, Studies in Entrepreneurship Series,
edited by S. Bruchey, New York, Garland Publishing, 2000.
Wiley Publishing, Inc. 2008. “Knowing Just Enough About Relational Databases,” http://www.dummies.com/WileyCDA/Dummies
Article/Knowing-Just-Enough-about-Relational-Databases.id-4161.
html. Accessed May 21, 2008.

Disparity and Availability Studies
Alaska Department of Transportation & Public Facilities (Alaska
DOT&PF). 2008.
D. Wilson Consulting Group, LLC. 2008. Final Report: Alaska Disadvantaged Business Enterprise Study—Availability and Disparity.
D. Wilson Consulting Group, LLC. 2007. [Proposal to Alaska Department of Transportation & Public Facilities].
Arizona Department of Transportation (ADOT). 2009.
MGT of America, Inc. 2009. Availability Analysis and Disparity Study
for the Arizona Department of Transportation: Final Report.
City of Austin, Texas (Austin). 2008.
NERA Economic Consulting. 2008. Race, Sex, and Business Enterprise: Evidence from the City of Austin: Final Report Prepared for the
City of Austin, Texas. (May 15).

California Department of Transportation (Caltrans). 2007.
BBC Research & Consulting. 2007. Availability and Disparity Study:
Prepared for California Department of Transportation. (June 15).
Colorado Department of Transportation (CDOT). Ongoing.
D. Wilson Consulting, LLC. 2007. A Request for Proposal to Conduct a
Statewide Transportation Study: RFP No. HAA 10-07/BL. (August 20).
Colorado Department of Transportation (CDOT). 2001.
MGT of America, Inc. 2001. Colorado Department of Transportation
Disparity Study Update. (April 6).
City and County of Denver (CCD). 2006.
NERA Economic Consulting. 2006a. Race, Sex, and Business Enterprise: Evidence from Denver, Colorado. (May 5).
Florida Department of Transportation (FDOT). 1999.
MGT of America, Inc. 1999. Florida Department of Transportation
Disparity Study, July 1991 through December 1997: Final Report.
Georgia Department of Transportation (GDOT). 2005.
Boston Research Group, Inc. 2005. Georgia Department of Transportation Disparity Study: Final Report. (March).
Hawaii Department of Transportation (HDOT). Ongoing.
NERA Economic Consulting. 2007a. Proposal to Conduct a Disadvantaged Business Enterprise (DBE) Availability and Disparity Study.
(August 30).
Idaho Transportation Department (ITD). 2007.
BBC Research & Consulting. 2007. A Study to Determine DBE Availability and Analyze Disparity in the Transportation Contracting
Industry in Idaho. (September 28).
Illinois Department of Transportation (IDOT). 2004.
NERA Economic Consulting. 2004a. Disadvantaged Business Enterprise
Availability Study: Prepared for the Illinois Department of Transportation. (August 16).
Commonwealth of Kentucky (KY). 2003.
Griffin & Strong, P.C. 2003. Disparity Study for the Commonwealth of
Kentucky.
State of Louisiana (LA). 1990.
Lunn, John and Huey L. Perry. 1990. State of Louisiana Disparity
Study, Volume I. (April).
State of Louisiana (LA). 1991.
D. J. Miller & Associates. 1991. State of Louisiana Disparity Study,
Volume II. (June).
State of Maryland (MD). 2006.
NERA Economic Consulting. 2006b. Race, Sex, and Business Enterprise: Evidence from the State of Maryland (Final Report). (March 8).
State of Maryland (MD). 2001.
NERA Economic Consulting. 2001. The Utilization of Minority Business Enterprises by The State of Maryland. (January 8).
Maryland Department of Transportation (MDOT). 2006.
NERA Economic Consulting. 2006c. Disadvantaged Business Enterprise Availability Study: Prepared for the Maryland Department of
Transportation, State Highway Administration. (November 2).
Commonwealth of Massachusetts (MA). 2006, 2008.
NERA Economic Consulting. 2006d. Race, Sex, and Business Enterprise: Evidence from the Commonwealth of Massachusetts: Volume I: Prepared for the Massachusetts Housing Finance Agency.
(November 30).
NERA Economic Consulting. 2008. Race, Sex, and Business Enterprise: Evidence from the Commonwealth of Massachusetts: Volume II:
Prepared for the Division of Capital Asset Management (July).
Minnesota Department of Transportation (Mn/DOT). 2005.
NERA Economic Consulting. 2005a. Race, Sex, and Business Enterprise: Evidence from the State of Minnesota: Prepared for the Missouri
Department of Transportation. (September 27).

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

103
Missouri Department of Transportation (MoDOT). 2004.
NERA Economic Consulting. 2004b. Disadvantaged Business Enterprise Availability Study: Prepared for the Missouri Department of
Transportation. (November 26).
Montana Department of Transportation (MDT). Ongoing.
D. Wilson Consulting, LLC. 2006. A Proposal to Conduct a Disparity/
Availability Study for the State of Montana Department of Transportation: #HWY-308090-RP. (October 27).
Nebraska Department of Roads (NDOR). 2000.
MGT of America, Inc. 2000. Nebraska Department of Roads Availability and Goal-Setting Study: Final Report. (September 7).
Nevada Department of Transportation (NDOT). 2007.
BBC Research & Consulting. 2007. Availability and Disparity Study:
Nevada Department of Transportation. (June 29).
State of New Jersey (NJ). 2005.
Mason Tillman Associates, Ltd. 2005. State of New Jersey Construction
Services Disparity Study, 2000–2002. (October).
New Mexico Department of Transportation (NMDOT). 1995.
BBC Research & Consulting. 1995. New Mexico State Highway &
Transportation Department Disparity Study. (January).
State of New York (NY). Ongoing.
NERA Economic Consulting. 2007b. Proposal to Conduct a Disparity Study: Prepared for the New York State Department of Economic
Development. (August 27).
North Carolina Department of Transportation (NCDOT). Ongoing.
EuQuant. 2008. [Proposal to North Carolina Department of Transportation].
North Carolina Department of Transportation (NCDOT). 2004.
MGT of America, Inc. 2004. North Carolina Department of Transportation Second Generation Disparity Study: Final Report. (March 30).

State of Ohio (OH). 2001a.
D. J. Miller & Associates. 2001. State of Ohio Predicate Study: Final
Report. (July 31).
State of Ohio (OH). 2001b.
Mason Tillman Associates, Ltd. 2001. State of Ohio Disparate Treatment Study: Historical and Contemporary Evidences. (July).
Oregon Department of Transportation (ODOT). 2007.
MGT of America, Inc. 2007. State of Oregon Department of Transportation Disparity and Availability Study: Final Report. (October 31).
South Carolina Department of Transportation (SCDOT). 1995.
MGT of America, Inc. 1995. A Study of Minority and Women-Owned
Business Participation in the South Carolina Department of Transportation’s Construction Contracts: Final Report. (July 7).
Tennessee Department of Transportation (TDOT). 2007.
Mason Tillman Associates, Ltd. 2007. [Tennessee Department of
Transportation Disparity Study]. (June).
State of Texas (TX). 1994.
NERA Economic Consulting. 1994. State of Texas Disparity Study:
A Report to the Texas Legislature as Mandated by H. B. 2626, 73rd
Legislature. (December).
Virginia Department of Transportation (VDOT). 2004.
MGT of America, Inc. 2004. VDOT Utilization and Availability Study:
Final Report. (March 11).
Washington Department of Transportation (WSDOT). 2006.
NERA Economic Consulting. 2005b. Race, Sex, and Business Enterprise: Evidence from the State of Washington: Prepared for the Washington State Department of Transportation. (October 20).
Colette Holt & Associates. 2006. Anecdotal Evidence of Race and Sex
Disparities in the Washington State Department of Transportation’s
Contracting Market Place. (July).

Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program

Abbreviations and acronyms used without definitions in TRB publications:
AAAE
AASHO
AASHTO
ACI–NA
ACRP
ADA
APTA
ASCE
ASME
ASTM
ATA
ATA
CTAA
CTBSSP
DHS
DOE
EPA
FAA
FHWA
FMCSA
FRA
FTA
HMCRP
IEEE
ISTEA
ITE
NASA
NASAO
NCFRP
NCHRP
NHTSA
NTSB
PHMSA
RITA
SAE
SAFETEA-LU
TCRP
TEA-21
TRB
TSA
U.S.DOT

American Association of Airport Executives
American Association of State Highway Officials
American Association of State Highway and Transportation Officials
Airports Council International–North America
Airport Cooperative Research Program
Americans with Disabilities Act
American Public Transportation Association
American Society of Civil Engineers
American Society of Mechanical Engineers
American Society for Testing and Materials
Air Transport Association
American Trucking Associations
Community Transportation Association of America
Commercial Truck and Bus Safety Synthesis Program
Department of Homeland Security
Department of Energy
Environmental Protection Agency
Federal Aviation Administration
Federal Highway Administration
Federal Motor Carrier Safety Administration
Federal Railroad Administration
Federal Transit Administration
Hazardous Materials Cooperative Research Program
Institute of Electrical and Electronics Engineers
Intermodal Surface Transportation Efficiency Act of 1991
Institute of Transportation Engineers
National Aeronautics and Space Administration
National Association of State Aviation Officials
National Cooperative Freight Research Program
National Cooperative Highway Research Program
National Highway Traffic Safety Administration
National Transportation Safety Board
Pipeline and Hazardous Materials Safety Administration
Research and Innovative Technology Administration
Society of Automotive Engineers
Safe, Accountable, Flexible, Efficient Transportation Equity Act:
A Legacy for Users (2005)
Transit Cooperative Research Program
Transportation Equity Act for the 21st Century (1998)
Transportation Research Board
Transportation Security Administration
United States Department of Transportation

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