Murphy administration releases statewide disparity study of contracting opportunities for Minority and Women-Owned businesses

NEW JERSEY –  Governor Phil Murphy and Treasurer Elizabeth Maher Muoio Tuesday announced the release of a comprehensive statewide disparity study examining public contracting opportunities for Minority and Women-Owned (MWBE) businesses.

The study, conducted by Mason Tillman and Associates (MTA), reviewed statewide procurement data relating to goods and services, professional services, and construction over a five-year span and concluded that disparity in the awarding of public contracts exists across multiple minority-owned and women-owned business enterprises in those sectors.

Commissioned by the Murphy Administration in 2020, the purpose of the disparity study was to evaluate the participation of MWBEs in the State’s multi-billion dollar contracting universe and determine if additional programs are warranted to create a more equitable business environment in New Jersey.

“In New Jersey, our diversity is our greatest strength, and it is imperative that our procurement processes reflect these values,” Murphy said. “The critical findings from this study will ensure the State is well equipped to address the inequities in public contracting opportunities faced by Women-owned, Minority-owned businesses, and service-disabled Veteran-owned businesses. I look forward to the work ahead as we identify responsive state action while launching initiatives to promote equitable contracting practices with the support of our lawmakers and the business community.”

“The completion of this study marks a critical step in achieving the State’s goal of identifying and addressing disparities in public contracting,” Muoio said. “I’d like to thank the Office of Diversity and Inclusion, led by Chief Diversity Officer Candice Alfonso, for their work in overseeing this study, and for their continued efforts to create greater equity in the State’s procurement process. I’d also like to thank the countless staff, departments and agencies, schools, businesses, and chambers who provided data and input necessary for this comprehensive study.”

“I’d like to thank my predecessor Hester Agudosi for laying the foundation for this important work, and I’m honored to have been able to bring the study to completion,” said Chief Diversity Officer Candice M. Alfonso. “This years-long effort will have an outsized impact in affording equitable opportunities to diverse businesses. I look forward to working with the Legislature, Administration, and the business community in transforming this space.”

In conducting the study, the State’s first since 2005, MTA reviewed more than 1.2 million records and 240,000 contracts from over 60 contracting agencies, authorities, commissions, state colleges and universities. The contracts reviewed were awarded between July 1, 2015 and June 30, 2020 and included procurement of goods and services, professional services, and construction. Based on the data that MTA received, key findings from the study include:

Statistically significant disparities were found in contracting with Minority Business Enterprises – including specifically in contracting with businesses owned by Black Americans, Asian Americans, and Hispanic Americans – for formal prime contracts in construction, professional services, and goods and services and for informal prime contracts across all industries studied. For example, minority-owned businesses represented 27.97% of the available construction businesses but received only 3.69% of the dollars for prime construction contracts valued from $65,000 to $5,710,000. Likewise, minority-owned businesses represented 23.56% of the available goods and services businesses but received only 4.24% of the dollars on prime goods and services contracts valued from $40,000 to $360,000.

Statistically significant disparities were found in contracting with Woman Business Enterprises – including in contracting with businesses owned by Caucasian females – for formal prime contracts in construction, professional services, and goods and services and for informal prime contracts across all industries studied. For example, woman-owned businesses represented 37.75% of the available professional services businesses but received only 9.91% of the dollars on prime professional services contracts valued from $40,000 to $800,000.

In the award of State contracting agencies’ subcontracts in the construction industry, the study found statistically significant disparities in subcontracts awarded to Minority Business Enterprises, including specifically businesses owned by Black Americans and Asian Americans.

In the award of State contracting agencies’ subcontracts for professional services, the study found statistically significant disparities in subcontracts awarded to businesses owned by Black Americans and Hispanic Americans and to Woman Business Enterprises, including businesses owned by Caucasian females.

Conversely, the study found statistically significant overutilization of businesses owned by non-minority males across all areas studied.

The Office of Diversity and Inclusion within the Department of the Treasury oversaw the disparity study. The Office is headed by the Chief Diversity Officer, a position that was created by statute and tasked with the authority to monitor State procurement and contracting practices on the awarding of contracts to minority-owned and women-owned businesses.

In conducting its review, MTA performed extensive community outreach, working with business organizations throughout the State, including the African American Chamber of Commerce, the Statewide Hispanic Chamber of Commerce, the New Jersey Diverse Business Council, the Alliance of Asian Architects, and the New Jersey Veterans Chamber of Commerce, to ensure consideration of views from minority-, woman-, and service-disabled veteran-owned businesses as well as small businesses from across New Jersey.

In September of 2021, over 500 businesses attended six virtual business community meetings held in all regions of the State.

In addition to its analysis of contracting disparities for minority- and woman-owned businesses, the report presents anecdotal analysis of obstacles faced by small business enterprises and serviced-disabled veteran-owned businesses seeking to contract with State contracting agencies. Last week, the Governor also signed legislation, S2249/A4211, that revises the number of disabled veterans’ businesses required to designate a set-aside contract from three to two. The “Set-Aside Act for Disabled Veterans’ Businesses” had established a goal for contracting agencies to set aside at least three percent of their contracts for disabled veterans’ businesses, but the act required that at least three disabled veterans’ businesses be reasonably likely to bid for a contract for the set-aside to apply to the contract. The legislation signed last week underscores Governor Murphy’s commitment to increasing access to state contracting opportunities.

While the study was proceeding, Treasury has been undertaking a series of initiatives to promote equitable contracting practices. For example, after determining that the lack of a statewide, centralized repository with uniform data for collection and retrieval made it harder to analyze contractor diversity, in January 2023, Treasury launched a statewide web-based Supplier Diversity Management System (SDMS) to collect real-time vendor, contract, and diverse spending data. The SDMS will allow for real-time monitoring and analysis of statewide diverse spending data, so State agencies are better able to take action when necessary. In an effort to encourage certification of MWBEs, in 2021 Treasurer Elizabeth Maher Muoio announced the waiver of the $100 fee required for all business certifications.

Now that it has been completed, the study will provide a foundation for additional initiatives to address disparities in state contracting. The Administration looks forward to working with lawmakers and the business community to identify responsive state action.