NJ study finds wide disparity in public construction contracts

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Dive Brief:

  • A recent study of public construction contracting in New Jersey found an overwhelming disparity between the number of minority- and women-owned construction companies and the percentage of projects they win in the state.
  • While nearly 28% of construction firms in the state are minority-owned, they received just 3.7% of state-awarded funds for prime construction contracts valued up to $5.7 million, according to the New Jersey Disparity Study released this month. Likewise, women-owned businesses comprised nearly 38% of all professional services firms, but received less than 10% of contracts up to $800,000. 
  • For prime goods and services contracts, minority businesses represented 23.6% of all firms, but won just 4.2% of contracts, according to a Jan. 23 news release from the New Jersey Department of the Treasury, which commissioned the study. The report also found what it called “statistically significant” disparities for awarding construction subcontracts to minorities, specifically businesses owned by Black and Asian Americans. 

Dive Insight:

“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 and service-disabled veteran-owned businesses,” said Gov. Phil Murphy, in the release. 

The state reviewed more than 1.2 million records and 240,000 contracts from over 60 contracting agencies, authorities, commissions, state colleges and universities awarded between July 2015 and June 2020. The contracts covered the procurement of goods and services, professional services and construction. 

“This study sheds light on a disconcerting historical pattern in the way minority- and women-owned businesses are impacted by the state’s multibillion-dollar contracting system,” said New Jersey State Assemblyman Sterley Stanley in the release. 

A similar study in Massachusetts in 2022 found that 95% of that state’s construction contracts failed to meet inclusion goals for minorities and women. 

Workforce participation by minority-, women- and disabled veteran-owned groups has gained increased attention in major construction contracts, as both public and private owners call for more diversity in construction’s ranks, an industry that is overwhelmingly White and male. 

Nationally, women and Black workers make up approximately 47% and 13% of workers in all industries, respectively, according to the Bureau of Labor Statistics. But in construction, women represent just 11% of workers and only 7% are Black. Nearly 88% are White. 

Legal challenges

Codified goals for diversity thresholds in the awarding of public dollars in construction contracts — including programs from the U.S. DOT and Small Business Administration — have come under fire in the wake of the Supreme Court’s decision last year that effectively banned affirmative action based on race at institutions of higher learning. 

New Jersey commissioned its study in 2020, three years prior to that ruling. In the release, Murphy indicated the state intends to act on the report’s findings. 

“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,” Murphy said.  

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