A newly launched four-year “Disparity Study” in California is seeking to improve contracting equity and achieve greater diversity among the state’s suppliers of goods and services. The object is to expand the pool of certified small businesses, and explore the extent to which minority, women, disabled veterans and LGBTQ businesses can learn about and access opportunities to bid on state contracts.  Similar studies have been launched in 2023 and 2024 by such states as New Jersey, New York, Oregon and Connecticut.

Starting the week of October 15, California will hold public meetings to learn more about the issues that stand in the way of increased participation for certified small business, minority, women-owned and disabled veteran businesses in contracting opportunities. 

The following week an opportunity for online input is planned, as well. These public forums will provide qualitative information – for example, lessons learned about the outreach and education efforts that have worked in the past and those that haven’t. They will also provide an opportunity for interviews with small businesses, and a chance for businesses and interested stakeholders to hear about the study and how they can participate.

But this study is also badly in need of good solid data. And that’s something California doesn’t have. Nearly thirty years ago – in 1996 -- Proposition 209 amended the state constitution prohibiting the government from considering race, sex or ethnicity in public employment, public contracting and public education.  That proposition has prevented the public sector from gathering key demographic information that would shed light on its contractors, and it creates a significant barrier to the Disparity Study that Assembly Bill 2019 required the Department of General Services to release in 2025. 

Since California can’t require businesses to provide key demographic information, it needs to rely on voluntary submissions. Data collection started in April 2022 and by the end of August, 12,251 businesses had complied, but that’s still far below the approximately 55,000 that have done business with the state. 

To convince more businesses to share their demographic data, the state has embarked on an active effort to demonstrate why this is important. 

“It’s going to help us identify where we can improve our outreach and education efforts across the various cities, counties and industries,” says Danetta Jackson, Chief, Statewide Supplier Diversity Program in the California Department of General Services. “And it’s going to be crucial for developing policies that promote fair and equitable access to contracting opportunities.” 

Policies like these “can boost financial stability and wealth for diverse business owners and their communities,” according to a May 2024 Urban Institute research publication. That report, as well as many others, emphasizes the critical importance of having solid data and technology systems that procurement departments need to expand contracting opportunities to small and diverse businesses.

For some states and local governments, the problem in collecting solid data comes from legacy technology, but the current legal and political environment may steer others away from even collecting the demographic information that procurement departments need to evaluate what they’re doing, potentially creating similar data barriers to the ones faced by California.

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