King County has disproportionately awarded contracts to white-owned small businesses over Black and Hispanic-owned small businesses over the last several years, a new report from the King County Auditor’s Office found.

From 2015 to 2020, about 65% of the small businesses in the county’s directory of contractors and suppliers were white-owned, according to the report. But those businesses received 75% of county contracts, the report found.

Meanwhile, the 12% of listed small businesses that were Black-owned received 7% of contracts, and the 6% of small businesses that were Hispanic-owned received 3% of contracts, the report found.

The disparities grow larger still, the report found, when you look at the value of the contracts awarded, as opposed to just the number.

“While the County has made strides to increase contracting opportunities to small businesses, contracting inequities persist and the County could do more to reduce racial disparities,” the auditor’s office wrote.

Initiative 200, passed in 1998, banned affirmative action in Washington, but agencies can still set voluntary goals for increasing diversity in contracting. Agencies are also, generally, allowed to make some race- and gender-conscious choices as long as they don’t favor a less-qualified contractor over a more-qualified one.

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The very title of the auditor’s report, which refers to contracting inequities in a “race-neutral environment” hints at the challenges to government agencies of diversifying their contractors without running afoul of state law.

The county’s contracting program to boost small businesses, which it started in the wake of the statewide ban on affirmative action, handed out $137 million in contracts over the five years looked at by the auditor.

White-owned businesses who bid to be a prime contractor were awarded the contract 38% of the time. Black-owned businesses were awarded the contract 17% of the time, less than any other racial group, the report found.

The report says that the county has no specific program or person responsible for improving contracting with minority- and women-owned businesses and doesn’t have “specific, measurable goals.”

The governor, for instance, has a 12-agency subcabinet on business diversity. The city of Seattle requires each department to set a mayor-approved annual spending goal for minority- and women-owned businesses, which are then compiled into a citywide target.

King County Executive Dow Constantine set a target of increasing the number of minority- and women-owned businesses receiving contracts annually by 2020, but the county has no one tracking progress toward the goal, the report found.

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“Without clear roles and responsibilities, progress has been uneven,” the report says.

The report issued 14 recommendations, including that the county conduct a formal study of racial disparities in contracting and should clarify whose responsibility it is to monitor and boost contracting opportunities for minority- and women-owned businesses. The county should also increase tools and trainings available for contractors, the report said.

Constantine’s office agreed with all 14 recommendations and said it will implement a “new governance structure for pro-equity contracting.” Constantine issued an executive order last month, in response to the audit, that intends to “remove barriers, implement innovative contracting methods, and take other actions to make it easier for minority- and women-owned businesses.”

“This is a really positive first step toward implementing the recommendations,” King County Auditor Kymber Waltmunson said.

Dwight Dively, Constantine’s budget director, noted that a formal study would look into the availability and qualifications of potential contractors, something the auditor’s study did not do.

Chase Gallagher, a Constantine spokesperson, said that a formal study should look at the entire Puget Sound region, not just King County, to establish a baseline. He said the county is looking to partner with other jurisdictions to conduct a comprehensive study.

“The disparity study would need to include factors like availability of firms in the marketplace and qualifications of those firms,” Gallagher said. “The results of this study would help target our efforts where racial disparities in contracting exist.”