Affirmative action retrenchment in public procurement and contracting

Abstract

This article provides estimates of the impacts of a race-neutral programme called an Emerging Small Business Enterprise (ESBE) Programme in New Jersey in 2003–2004 on women- and minority-owned contractors. We show that although women- and minority-owned firms conceptually benefit from ESBE set-asides, they do not benefit as much as non-Disadvantaged Business Enterprises (DBEs), resulting in a reduced share of total contract dollars awarded to DBEs.

Keywords:

• affirmative action
• retrenchment
• procurement
• minorities

JEL Classification:

• J15
• H57
• J78

Notes

¹ According to NJDOT, the DBE certification requires that the firm is controlled by a socially and economically disadvantaged individual, based on race (African American, Hispanic American, Native American, Asian–Pacific Islander American and others) or gender (women). More details about the programme can be found in the Civil Rights Affirmative Action information on the NJDOT webpage (https://www.state.nj.us/transportation/business/civilrights/).

² The federal fiscal year ‘t’ runs from October of the year ‘t – 1’ until September.

³ The NAICS is the classification system for industries used by the statistical agencies of the United States for categorizing business establishments (which replaced the previous system based on the Standard Industrial Classification (SIC)).

⁴ A firm is considered small size if it is below the size standards and large size otherwise. Source of the size standards: https://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf.

⁵ A contract may have only an ESBE or a DBE goal at any time.

⁶ There were 242 total prime contracts but missing contract award or year data for three cases.

⁷ Alternative specifications as well as details of the data and descriptive results are available from the authors.

⁸ In fact, DBE goals themselves declined during the period. Contracts with a DBE goal declined from 12% in fiscal year 2004 to 9% in fiscal year 2005 and to none in fiscal year 2006.