Frederick County’s first ever disparity study revealed substantial disparities, showing the county under utilizes businesses owned by people of color and women.
A disparity study looks at the availability of services within a market area, in this case Frederick County, and compares those numbers to how often the services are utilized. The scope of this study was contained to the county government’s contracting process.
The study itself stands on three “pillars,” explained Corlisha Mitchell, Project Manager for MGT, the company behind the study. The first is an analysis of the private sector, also known as the “market” itself.
Next is a review of the quantitative data, including how many companies are in the market and how often they are utilized. Lastly is the qualitative review, where the lived experiences of real people are taken into consideration.
Once the numbers are crunched, Mitchell explained disparity can be broken down into four categories. If the index falls between 80 and 100, the disparity is considered to be minor. If it lands at 100, that is parity, or equal usage. And if the index is above 100, that would mean services are being over utilized.
In the case of Frederick, minority and women owned business enterprises, or MWBEs, make up 17.47% of available businesses but only receive 4.23% of the county’s spending. With a combined index of 24.22, Mitchell said this indicates substantial disparity.
Mitchell said she wasn’t surprised to see these numbers as this was the county’s first time doing a study of this kind. While MGT treats each study as its own self contained investigation, she said she has seen numbers like these before. “The intentional discrimination that was found were instances that were occurring in the marketplace, but not as the direct result of something that the county was or was not doing,” Mitchell said.
Missing Data
When MGT investigated the spending habits of primary contractors, they discovered only 27% kept records of how they dealt with subcontractors. According to Daniel Lewis, Chief Financial Officer, this is substantially below what would be needed to paint a full picture. “A prime contractor can say, ‘Hey, I got a $10 million project from the county and I subbed out $8 million of that,’” Lewis explained. “But then we say, ‘Ok, to who, and what do they do?’ ‘Uh, I don’t know.’”
Due to this, Frederick County Executive Jessica Fitzwater said the county will have to take a race and gender neutral approach for now. That is due to strict legal standards surrounding any form of race or gender based remediations. “I know that the county has not been collecting the type of data that we need to really track these disparities,” Fitzwater said. “This disparity study is a required legal first step in us trying to set up a program that’s more responsive to our small and locally owned businesses.”
Supreme Court precedent holds that race and gender based programs must be held to strict scrutiny. Notably, Mitchell pointed out substantial evidence must be shown to prove race and gender based discrimination exists.
While she alleges the data makes the disparity clear, she explained data would need to be found from all three pillars of the study. Mitchell said they did not ultimately find enough evidence for a strong legal argument. “If all three of those things align, then you would be able to recommend a stronger program,” Mitchell explained.
Recommendations
Ideally, Fitzwater said, the county wants to create targeted race and gender based approaches to address the disparities uncovered through the study. She acknowledged the county will have to ensure it is compliant with federal standards first. “We know that collecting and tracking the data and that’s what we’re prepared to do now,” Fitzwater said.
Within the study, MGT recommended the county include an audit clause within any future contracts. This would require prime contractors to keep data on their dealings with subcontractors and how they spend their money.
The study also proposed an Equal Business Opportunity program (EBO) to help provide small businesses with equitable access to the county’s contracting process. Finally, the study recommended creating a specific threshold designed to target MWBEs. If a contract would be valued at or below a certain amount, it could be awarded directly to registered small businesses.
Jason Lee, Frederick businessman and CEO of Lee Building Solutions, said he has been talking about the disparity for years. Having worked with many different groups over the years, he is happy to see what the county is doing, but thinks it is taking a long time. “We’re looking at other counties…they all have M[W]BE set-aside programs,” Lee said. “So that’s my goal, to always say how can we get that to be there?”
Lee thinks it is time for bold action and would like to see the county set aside even just one percent of its contract spending for MWBEs. “Bring together the folks in the county’s department of procurement, let’s bring together, let’s look at the numbers,” Lee said. “Let’s really look at how much gets spent out in the government here.”
Fitzwater said funding has already been earmarked to repeat the disparity study in the coming years once the needed data has been collected. Residents can speak out on the disparity study at two upcoming public meetings. The first will be held on April 20 at the C. Bur Artz Public Library, with the second on APril 24 at the Urbana Public Library.
