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Auditors find racial disparities in King County contracts

BIPOC-owned businesses earn contract bids at a much lower rate than white-owned businesses.

Auditors have identified significant racial and gender disparities in the way King County awards contracts to private firms.

King County disproportionately contracted with white-owned small businesses while under-contracting with Black-owned and Latinx/Hispanic-owned small businesses.

After state law banned race-based preferential treatment in contracting in 1998, the county started its Small Contractor and Supplier program, a race-neutral initiative focused on small businesses.

As of August 2020, there are more than 1,800 firms that meet the qualifications of a small contractor or supplier. The qualifications are that the owner’s net worth must not exceed $1.32 million and that the business income and staff size must not exceed 50% of federal standards.

The audit found that Black and Latinx/Hispanic-owned firms made up 12% and 6% of the small contractors and suppliers, respectively, but were only awarded 7% and 3% of the county contracts.

In contrast, white-owned firms make up 65% of small contractors, but were awarded 75% of the countywide contracts.

Auditors identified this disparity as a “significant statistical difference.”

Additionally, Black, Indigenous and people of color-owned businesses were awarded 25% of 86 contract bids, while white-owned businesses won 38% of 167 contract bids from the summer of 2015 until the summer of 2020.

In the same time frame, Black-owned businesses were only given 17% of their 33 contract bids, while all the other BIPOC businesses won bids at a much higher rate despite making fewer bids.

In 2019, King County awarded $2.1 billion in contracts. King County’s strategic equity goals include expanding contracting opportunities to businesses owned by minorities and women. While Washington state law prohibits preferential treatment in contracting, it allows agencies to set voluntary goals for contracting with minority- and women-owned businesses.

The state attorney general has interpreted state law to allow for some race and gender conscious measures in contracting, so long as they do not favor a less-qualified contractor over a more-qualified one, according to the audit.

County agencies have worked to increase outreach to minority and women-owned business enterprises, but the county has not done a disparity study that could lead to more targeted efforts, according to the audit.

Auditors recommended that the county “clarify roles and responsibilities for increasing opportunities for [minority and women-owned businesses], create specific, measurable targets for strategic equity goals, reduce barriers to contracting and increase access to resources that increase staff capacity to implement pro-equity contracting countywide.”

The auditors also said they believe there is no way to hold equity goals accountable without a mechanism or governing body to do so.


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