A granular examination of gender and racial disparities in federal procurement

Abstract

The U.S. federal government annually awards billions of dollars as contracts to procure different products and services from external businesses. Although the federal government’s immense purchasing power provides a unique opportunity to invest in the nation’s women-owned businesses (WOBs) and minority-owned businesses (MOBs) and advance the entrepreneurial dreams of many more Americans, gender and racial disparities in federal procurement are pervasive. In this study, we undertake a granular examination of these disparities by analyzing the data on 1,551,610 contracts awarded by 58 different federal government agencies. Specifically, we examine the representation of WOBs and MOBs in contracts with varying levels of STEM intensity and across 19 different contract categories, which capture the wide array of products and services purchased by the federal government. We show that contracts with higher levels of STEM intensity are associated with a lower likelihood of being awarded to WOBs and MOBs. Interestingly, the negative association between a contract’s STEM intensity and its likelihood to be awarded to MOBs is particularly salient for Black-, and Hispanic-owned businesses. Among the 19 categories of contracts, Black-owned businesses are more likely to receive contracts that are characterized by lower median pay levels. Collectively, these results provide data-driven evidence demonstrating the need to make a distinction between the different categories of MOBs and consider the type of products and services being procured while carrying out an examination of racial disparities in federal procurement.

Keywords

• federal contracts
• public procurement
• STEM
• supplier diversity