Why Disparity Studies Include Marketplace Disparities Analysis
A critical section of a Disparity Study is the Marketplace Disparities Analysis. While the rest of a Disparity Study is focused on analysis of the procurement process of the specific governmental entity that the Study is being conducted for, the Marketplace Disparities Analysis turns instead to look at relevant factors and experiences in the private sector/marketplace, understanding that these factors can cause downstream effects in public contracting outcomes. The marketplace, and the business environment that exists within that marketplace, is critical to understanding the public contracting and subcontracting success of disadvantaged firms.
The Marketplace Disparities Analysis is conducted with a lens that provides a larger story than what is offered through an analysis of statistical Availability, Utilization, and Disparity alone. For example, while Availability does show firms who are in the marketplace which are ready, willing, and able to participate in government contracting, on its own it does not consider barriers in the marketplace that may inhibit successful business formation or sustainability. Thus, Availability numbers or percentages may be suppressed due to these inhibiting factors present in the marketplace. In G&S’s Marketplace Disparities Analysis, we explore the impact of many of these factors such as interest rates, loan denials, access to capital, resource capacity, rates of business ownership, and more.
It is well established and documented through both qualitative and quantitative evidence that demographic-based market discrimination creates barriers to participation for business owners. Because the nature of these barriers limits the establishment, capacity, and/or sustainability of businesses, the barriers are constraining the number of firms that are available to be competitive in the marketplace. Competition is a key driver of market efficiency as it ensures public, taxpayer dollars are spent in the best interest of the taxpayers. When fewer firms are available due to barriers created by discrimination in the marketplace, supplier competition is lowered, thus leading to a raised market price for the good or service being procured. This dysfunctional market created by marketplace discrimination is marked by inefficient procurement, as government entities are using public dollars to procure higher priced, lower quality goods and services.
Remedial programs that address barriers to entry or participation in the market increase the robustness of the marketplace. Increased supplier competition drives prices down and encourages an increase in quality and innovation as suppliers are incentivized to compete to provide the best value good or service to the buyer. Therefore, an appropriately functioning, efficient marketplace increases a government entity’s buying power. Thus, G&S’s Marketplace Disparities Analysis examines business owners’ ability to participate and be successful in the marketplace and further how that may impact the efficiency of a governmental entity’s spending.
